Author Archives: Nick Heinzmann



2020 Predicaments in Contract Management: Poor Adoption, CLM Market Fragmentation and Limited Imagination

contract lifecycle management

(Editor’s note: Spend Matters’ analysts are taking on the new year by looking at their areas of procurement technology to see what’s broken and what can and should be fixed this year. Here, analyst Nick Heinzmann lays out problems in contract lifecycle management (CLM). In another piece also published today for our PRO subscribers, he lays out his predictions for 2020.)

Businesses may be trying to bring themselves into the 21st century on a wave of digital transformation, especially as it relates to B2B e-commerce, but this technological evolution has a major stumbling block — contracts.

Across industries and company sizes, businesses exhibit low maturity for their approach to contract management.

This presents both a problem and a missed opportunity.

So what’s holding businesses back from attaining contract management enlightenment? We see a few major impediments:

2020 Predictions for Contract Management: Where the CLM Market Is Going This Year and This Decade

contract

Contract management technology is stuck between a rock and a hard place. At its full potential, CLM solutions promise the ability to plan and orchestrate the fundamental instruments of enterprise value creation — that is, an organization’s contracts — yet their current adoption and use within businesses (beyond their current role of legal risk transfer documents) is less robust than one might expect (see today’s post “2020 Predicaments in Contract Management: Poor Adoption, CLM Market Fragmentation and Limited Imagination”).

No one is fully to blame for this historical lackluster state of affairs regarding contract management transformation, but things are starting to change. 2019 has actually been an extremely strong market based on market demand because:

* A combination of the money at stake that is currently buried within opaque legal language in contracts — and the commercial risks that continue to ramp up as global business conditions become more volatile.
* An increasing realization by practitioners of the value leakage that is occurring because of contracts that are not adequately managing commercial complexity and are not integrated with execution systems.
* Since contracts are the lynchpin between sourcing and both P2P and supplier management, CLM becomes a natural extension of these areas into the other. * The need to cure M&A hangovers and gain enterprise scale by getting visibility of contracts, standardizing them (and the contracting process), and tying them into all business processes that touch contracts (hint: the majority of all processes!).
* A desire to apply AI in an area where it can have substantial impact on process costs (i.e., internal/external counsel rates for contract review are not cheap) and process effectiveness where CLM is the perfect candidate.
* Vendor dynamics that have impacted re-looking at CLM solutions — e.g., IBM Emptoris exiting the market; broader suite-level selections that include CLM; ERP upgrades; and/or legal groups looking to be proactive in finding solutions that go beyond glorified document management.

On the provider side, there’s also been some key growth drivers related to private equity investments in best-of-breed CLM players like Icertis, SirionLabs, Agiloft, etc. and also numerous niche AI-centric start-ups. And S2P suites have made incremental improvement, but only insomuch as to keep up competitive parity, rather than deeply innovativing.

But there are, in our view, a few key problems among providers of CLM systems that, if fixed, would go a long way toward improving the contract management maturity of their customers. Some problems are readily addressable, and we think procurement and legal organizations will see progress on these issues within the next year. Others are much thornier, and while a potential solution is conceivable, vendors will likely take several years to get there — if not the rest of the decade. There will also potentially be some disruptive moves in application categories outside of core CLM, S2P, CRM, etc. that we actually see as very feasible.

In this Spend Matters PRO brief, we’ll examine three of the biggest impediments to CLM system success within procurement and legal organizations, as discussed in our other blog post today. We’ll then project potential scenarios that vendors could follow to help solve these problems, including some “predictions” for how the market could evolve in the next year and beyond.

Preparing for 2020: Digital Procurement Trends in Review (Part 2: Vendors and Capabilities)

Zycus Horizon

For our first Spend Matters PRO series in 2020, we’re preparing for the future by understanding recent trends. So we’ll look at last year through the lens of category management. Since Spend Matters’ analysts are essentially category managers for the mega supply market of over 1,000 providers that help buy-side practitioners manage their spend, supplies, services and suppliers, we’ll look back at 2019 trends through both the demand-side lens of practitioners/buyers and the supply-side lens of providers. In this analysis, we’ll use:

— Findings from our advisory work with procurement practitioners (and supported by primary research)
— Trend analysis of top provider performance taken from our SolutionMap database — from a solution scoring standpoint and also from a customer satisfaction lens
— Observations from our M&A due diligence advisory work from our Nexus service offering
— Solution development activities from the providers in the market
— Insights from service providers in the market who are increasingly themselves developing technology to create hybrid service offerings

Part 1 focused on the practitioner trends of 2019, and Part 2 will review vendor trends in innovation, supplier networks, contingent workforce/services, M&A and other areas where our analyst team has weighed in.

Preparing for 2020: Digital Procurement Trends in Review (Part 1)

For our first installment of Spend Matters PRO in 2020, it’s important to know the past as we prepare for a new year. So we’ll look at last year through the lens of category management.

Since Spend Matters’ analysts are essentially category managers for the mega supply market of over 1,000 providers that help buy-side practitioners manage their spend, supplies, services and suppliers, we’ll look back at 2019 trends through both the demand-side lens of practitioners/buyers and the supply-side lens of providers.

In this analysis, we’ll use:

— Findings from our advisory work with procurement practitioners (and supported by primary research)
— Trend analysis of top provider performance taken from our SolutionMap database — from a solution scoring standpoint and also from a customer satisfaction lens
— Observations from our M&A due diligence advisory work from our Nexus service offering
— Solution development activities from the providers in the market
— Insights from service providers in the market who are increasingly themselves developing technology to create hybrid service offerings

The two-part series will focus primarily on the overall market, and then dive into specific areas where our analyst team has weighed in. Finally, we’ll foreshadow some predictions that we’ll be making in the coming weeks regarding the biggest problems that still need to be solved in the market — issues that actually have a chance of being meaningfully addressed in 2020.

From Contract Lifecycles to Commercial Value (Part 1): Setting the Table for Digital Transformation (especially for procurement)

Are you looking to find that perfect business area for digital transformation this holiday season?

Well, look no further than contract management.

We know what you’re thinking: Improve the efficiency of processing legal documents? That doesn’t sound very festive, or even high impact! However, contract lifecycle management (CLM) itself is being transformed toward a more strategic and business-focused commercial approach that puts revamped contract information (which itself is being transformed to contract intelligence/knowledge through AI) at the commercial core of nearly all business processes. And yes, blockchain is obviously very relevant here too, but that’s a story for another day.

At Spend Matters, we use the term “commercial value management (CVM)” to denote this type of “CLM on steroids.” The word “contracts” (legal documents) is purposefully replaced with the term “commercial” (commerce / business) and “lifecycle” (of the contract) is replaced with “value” to denote the maximization and protection of monetary value embedded within all process lifecycles (e.g., source-to-pay, order-to-cash/configure-price-quote, plan-to-report, forecast-to-fulfill).

So, this area has a little something for all departments across a business to see and manage: spend (procurement), financial assets/liabilities (finance), legal obligations (legal department), service/asset management (IT), revenues (sales/marketing/CEO), risk/compliance (GRC), service-levels (supply chain/ops), vendors/suppliers (procurement, VMOs, etc.), SOW-based services (including contingent workforce), and all-of-the-above (global business services).

Most importantly, it’s an area that you can actually start small and increasingly collaborate cross functionally and generate hard-dollar financial value (although there’s still plenty of organizational land mines here). It’s also an area where artificial intelligence is being developed and implemented aggressively because of the money that is at stake and because of how broken the current processes and systems are.

In this Spend Matters PRO analysis, we will discuss:

* Priorities of more than 450 CPOs where CLM/CVM has direct relevance
* Why CLM/CVM is a critical competency for procurement professionals to master within source-to-pay (S2P) for planning your work strategically, doing better deals, eliminating value leakage, managing suppliers, etc. It also works hand-in-glove with sourcing, category management, and supplier management (relationship management, performance management, risk management, and information management)!
* Why CLM/CVM is also a critical influence tool to better engage stakeholders who are both spend owners and functional partners with a vested interest here. In later posts, we will share some stakeholder/category specific playbooks that you can use.

In subsequent Spend Matters PRO articles, we also will provide a detailed capability maturity model (and supporting digital capabilities/functionality of leading solutions) that practitioners can use to help plan their capability development, and, yes, their digital transformation.

OK, let’s dive in …

ConnXus brings its ‘Smart’ approach to supplier discovery with new SmartSearch product

supplier network

The supplier relationship experts at ConnXus on Wednesday announced the launch of SmartSearch, a new supplier discovery capability based on business intelligence that enables granular search across category, geographic and diversity criteria for millions of validated global vendor records.

SmartSearch takes advantage of ConnXus’ database of 22 million global suppliers to help buying organizations quickly identify potential suppliers that fit not only basic sourcing requirements but also various additional criteria, including diversity status and risk. It also bolsters the navigability of myConnXion, ConnXus’ open-ended supplier network, allowing ConnXus users to access richly maintained supplier profiles of current and potential partners as part of supplier discovery.

With SmartSearch, ConnXus is continuing to break further outside of its initial niche in the supplier diversity space, using its strengths in supplier master data management to power supplier discovery and sourcing efforts. This comes at a critical time for the Mason, Ohio-based vendor, which is defining its long-term vision alongside competitors Tealbook, Mastercard and others as they all attempt to define just what a next-generation supplier network looks like.

This SpendMatters PRO brief will look at ConnXus’ background and growing product footprint, like myConnXion that launched about a year ago; will provide an overview of SmartSearch; and will offer key takeaways about how this is an incremental release but an important one. SmartSearch is a key addition of usability for clients to get to all of the valuable supplier data available through ConnXus.

What’s the Price: Vendor Introduction (Part 2 — Product Strengths and Weaknesses)

In our last brief we introduced you to What’s the Price, a five-year-old Dutch vendor that offers should-cost modeling tools for supplier negotiations. Born out of the frustrations of two procurement professionals who wanted to get faster, more accurate price estimates to counteract supplier quotes, WTP makes smart use of publicly available big data to drastically cut the time and effort in building should-cost models. The solution is notably easy to use and provides a lot of guidance for users along the way, allowing WTP to get organizations up and running with just a two-hour training session. But as with all younger solution providers, there areas for growth, as well, including a few opportunities that could further support WTP’s preference for a self-service deployment approach.

Part 1 of this brief provided some background on What’s the Price and an overview of its offering. In Part 2, we provide a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis and a short selection requirements checklist that outlines the typical company for which WTP might be a good fit. We also give some final conclusions and takeaways.

What’s the Price: Vendor Introduction (Part 1 — Background and Solution Overview)

Successful supplier negotiations begin long before a category manager sits down at the negotiating table, physical or virtual. Effectively sourcing a product or component requires an understanding of the fundamentals driving a category, the competitive dynamics in a given industry, and a negotiation strategy based on realistic prices or savings that procurement hopes to attain.

But more often than not, determining how much something should cost — that is, what procurement should realistically pay for goods or services — is a process supported more by guesswork than by data science. And building such models can be time-consuming: Cost engineers creating clean-sheet calculations of a product’s likely cost often take weeks before coming back with an estimate.

What’s the Price, in contrast, can deliver an estimated price in less than five minutes — for any category, industry or product.

That may sound a bit like magic, and from an end user’s perspective, it can feel that way. But beneath the hood, WTP, a five-year-old Dutch vendor founded by two former senior procurement professionals, relies on a straightforward approach, underpinned by a smart application of big data.

WTP aggregates prices and cost drivers across hundreds of thousands of mostly public data sources to produce top-down estimates for commodity prices, industry cost structures and product cost models. The result is a fast and reasonably accurate expected market price that procurement can use to set the stage in supplier negotiations, putting the buy side on stronger footing against price increases or “black box” quotes from sales reps.

Part 1 of this Spend Matters PRO Vendor Introduction offers an overview of What’s the Price and its capabilities. Part 2 includes a look at WTP’s product strengths and weaknesses, a company SWOT analysis, and a selection requirements checklist for those that might consider the provider.

Givewith: Vendor Introduction (Background, Solution Overview, SWOT, Checklist)

wind power

Givewith and SAP Ariba announced a partnership today for Givewith to integrate with Ariba’s sourcing module so companies can find nonprofit groups that can help improve the companies' corporate social responsibility (CSR) and sustainability efforts.

In this Spend Matters PRO Vendor Introduction, let’s see what Givewith’s solution has to offer and why it’s important now.

Consumers, investors and governments are pushing businesses to consider the larger social impact of their operations. And corporations, for their part, are starting to evaluate the ways they can respond. The August 2019 Business Roundtable restatement on the purpose of a corporation is one prominent example, in which multiple CEOs affirmed that a company’s mission should include not only increasing shareholder value but also betterment of customers, employees, suppliers and communities.

Such declarations are noble on paper, but they also have profit-focused incentives behind them. ESG ratings (environmental, social and governance) are becoming more relevant in investor decisions, so corporations are finding investments in programs for sustainability and CSR are now required to attract funding. Similarly, a strong corporate responsibility vision and track-record of action on social issues is becoming a selling point with consumers, as well as a reason for those consumers to consider working for (and remaining employed at) those businesses.

So where does procurement fit into all of this? According to the thinking behind Givewith, B2B transactions represent a major opportunity to generate funding for nonprofit programs. If procurement can recommend a slate of potential CSR or sustainability initiatives to fund during an RFI (or, if a supplier can do the same when constructing a bid response, to create a unique selling point), the business can use existing sourcing processes to yield operational and social impacts.

It’s a unique concept in the B2B space, and one that Givewith aims to scale quickly via its major initial partnership: A prebuilt integration directly into SAP Ariba’s sourcing module.

This Vendor Introduction offers a deep look at Givewith and its capabilities. It includes an overview of Givewith’s B2B offering (Givewith Enterprise), a SWOT analysis and a selection requirements checklist for companies that might consider the provider.

Mintec: Vendor Introduction (Part 2 — Positives and Negatives, SWOT Analysis, Selection Checklist)

As we indicated in Part 1 of this Spend Matters Vendor Introduction of Mintec, there is no WaaS (weather-as-a-service) and, as a result, commodity price volatility in the agricultural sector is here to stay for the foreseeable future. But procurement professionals have to manage it somehow, and the only solution they have now is commodity market intelligence, of which Mintec is one of the largest, and oldest, market-intelligence providers in the sector.

With a database of over 14,000 unique market data sets across 20+ commodity categories and truly global geographies, Mintec is the go-to source for many large agricultural buying organizations around the world.

Should they be your go-to source too?

In this second part of our introduction, we’ll look at the positives and negatives and provide an overall SWOT and a selection checklist — all of which can help you make an informed decision.

Mintec: Vendor Introduction (Part 1 — Background and Solution Overview)

No matter how well they prepare, commodity buyers can do nothing about the weather. So until a supervillain decides to make a mid-life career shift to be a SaaS vendor — weather-as-a-service (WaaS), anyone? — procurement organizations buying in the food & beverage categories will have to manage commodity price volatility as it happens.

To do that, many businesses in the food retail, food manufacturing and hospitality industries turn to Mintec. Founded in 1982, Mintec is a UK-based provider of commodity data and analytics tools for the food and drink vertical. It collects, validates and organizes data across hundreds of agricultural commodities and related inputs (e.g., packaging, plastics, labor), which it then distributes via a SaaS platform designed for category planning and analysis.

This Spend Matters PRO Vendor Introduction offers a candid take on Mintec and its capabilities. It includes an overview of Mintec’s SaaS offering (Mintec Analytics). Part 2 will offer a breakdown of what is comparatively good (and not so good) about its solution, a SWOT analysis of Mintec, and a selection requirements checklist for businesses that might consider the provider.

Procurence Vendor Introduction (Part 2: Strengths/Weaknesses, SWOT, Selection Checklist and Market Overview)

In Part 1 of this two-part Spend Matters PRO series, we introduced you to Procurence — a relatively new entrant to the global direct material supplier management space, based out of Warsaw, Poland. It’s a recent entrant to our SolutionMap ranking of vendors, where its scores make it a customer leader in the SRM category. While still a small player, its solution already has a lot of the breadth of more established players like Jaggaer Direct (Pool4Tool), Ivalua (Directworks) and Allocation Network. Procurence’s utilization has been growing tenfold year-over-year by its buy-side user base of over 10,000 users and supply-side user base of over 30,000 users. Whether it has everything your organization needs, however, will come down to your mix of direct vs indirect, and how similar your needs are to its existing client base, which it has been developing its Meercat solution with for the past seven years.

While Part 1 of this brief provided some background on Procurence and a high-level overview of its offering, Part 2 will provide a breakdown of what is good (and not so good) about the solution, a high-level SWOT analysis and a short selection requirements checklist that outlines the typical company for which Procurence might be a good fit.