The Market Speaks: The procurement practitioner’s digital challenges – Part 2 (Opacity)

In part 1, Ian Nethercot, head of supply chain at IT marketplace and advisory service Probrand talked to us about what challenges his customers are facing in the world of IT buying. He cites a greater need for visibility around supply availability, price and supplier honesty. In part 2 he goes further and addresses how that barrier can be lifted by a digital enabler.

How do we solve the problem of opaqueness?

“How buyers become more efficient is quite simple,” says Ian. “The answer is digital.

“The type of tech that can help is a digital solution that gives a customer a direct data connection into authorized channels in terms of stock, pricing, discounts and entitlements, in a live environment. This instantly takes away all of the drain on buyers. The data is all in one place that acts as a price comparison engine.

“The best analogy is to look at what Go Compare does for car insurance. In our industry, we aggregate the IT authorized channel and bring it together in one price comparison table at a line item level. We do that for in excess of 300,000 IT products and services across the market. It’s those kinds of systems that a buyer needs in order to combat the problems of market opacity.”

The data situation

These types of systems solve other problems too. What Ian comes across every day is poor data management. “Many organizations don’t record key pieces of data for their analysis,” he says. “For example, the part number of what they’re buying, the quantity, the price, believe it or not, they actually don’t record in most industries. But if they don’t record all of those pieces of data, how can they possibly truly analyze and benchmark their IT spend.” And that goes for all spend.

“I genuinely see, on a daily basis, purchase orders from big, reputable, well-known organizations with a ‘dot’ in the field where the part number should be, because it’s quicker. They don’t know or can’t find the number, so they input: ‘as per quote, ABC 123,’ and they’ll put a price as well. But when they go back in six months’ time, and look for what was bought, they’ll have absolutely no idea because they don’t know the part number or the description or even the supplier.

“In 95% of cases when we try to do spend analysis for organizations, they admit to not having the data, and that’s because they don’t record anything. It’s actually quite rare to get a purchase order that has all of this information. But by digitizing and procuring through a platform, it does that for you, it gives you the SKU, the price, the quantity and obviously the supplier. This all means that typically you’ll be able to do reporting from the system too.”

Spend Matters covers the technical capabilities of AP automation and invoice-to-pay in its Insider offering.

Barriers to digital uptake

Ian is constantly reminded that given that IT will always be one of the largest areas of indirect spend for any organization, most are far off the mark when it comes to managing their IT and tech spend.

“Since the pandemic we’ve observed that there is a desire and a demand for organizations to want to self-serve more and they have a passion to digitize more. It’s becoming far higher on everyone’s agenda. I think that’s driven by the amount of remote working. So, I have seen a shift in terms of demand for these types of digital procurements. One of the drivers is that pre-pandemic, people often enjoyed picking up the phone to someone because they had been talking to them for a while. But that isn’t the case anymore. People are more inclined to procure online, it’s the consumerization of how things are done; we all buy online in our home lives, and that has played more into the workplace. So people want more tech to help them do their job better – but the big challenge is finding the right solution and knowing what solutions are out there.”

In our next article in this series from Probrand, we will look into the various shifts in tech buying focus, and how a digital marketplace can help ‘un muddy’ the waters.

This forms part of a Spend Matters series of interviews with practitioners and consultants on their tech buying challenges and habits. More to come …