Author Archives: Pierre Mitchell

About Pierre Mitchell

Pierre leads Spend Matters procurement research activities and has broader solution development responsibilities for intellectual property creation and firm strategy as Managing Director of Azul Partners. This includes spearheading efforts to build new types of interactive and social communities of interest within the procurement profession including overseeing the evolution of, Spend Matters PRO, MetalMiner, and other digital assets within Azul Partner’s umbrella. Pierre has 25 years of procurement and supply chain industry and consulting experience, and is a recognized procurement expert specializing in supply processes, practices, metrics, and enabling tools and services. He is a regular contributor to business publications, a frequent presenter at industry events around the world, and counts himself fortunate to have served and interacted with so many CPOs and future CPOs. Prior to his positions in research and advisory, he led numerous operations and systems transformations at Fortune 500 organizations. Industry positions include manufacturing project manager at The Timberland Company, materials manager at Krupp Companies and engineer at EG&G Torque Systems. He holds an engineering degree from Southern Methodist University and an MBA from the University of Chicago. In the early 2000's, Pierre was the first supply chain practitioner to become a procurement "industry analyst" as the VP of supply management research at AMR Research (now part of the Gartner Group) where he provided trusted counsel to procurement executives, business leadership, IT, and the solution providers who serve them. Most recently, he was the head of procurement research and adjunct business advisor at The Hackett Group, where he helped expand Hackett's procurement benchmarks and research studies while growing the Procurement Executive Advisory Program into a gold standard membership-based procurement advisory service in the market today.

2020 Predicaments and Predictions in Procurement Analytics: What’s Likely, What’s Revolutionary

It shouldn’t be a big shock to learn that procurement analytics is a big deal right now. After procurement organizations have built some basic spend cubes (or “spent cubes”) and dashboards, they’re looking for deeper predictive insights into spend, contracts, suppliers, costs, process improvements, supply risk and other areas. In fact, analytics was by far the most cited technology area expected to have a business impact within the next two years by CPOs surveyed in the recent 2019 Deloitte Global CPO Survey.

The biggest area of interest within analytics have been:

* Self-service analytics/visualization for business stakeholders and procurement staff
* Predictive analytics for power users (e.g., for price/cost/volume forecasting)
* Performance analytics and dashboards (e.g., supplier scorecarding, category dashboards, etc.)
* Support for digital initiatives such as AI/machine learning (which is usually about focused predictive analytics problems), RPA (that either requires some analysis within a process or conversely is about helping to automate the analytic workflows), or big data analytics (e.g., using IoT sensor data from the supply chain)

The Predicaments
However, while analytics are hot, the implementation barriers can be stone cold killers:

* Poor data quality. 40% of CPOs cited the inability to generate insights and analytics because an even greater number (60%) cited poor master data quality, standardization, and governance.
* The master data quality problem is very familiar to practitioners who run any type of analytics that have to do with suppliers, items and contracts — i.e., most of them!
* Some ERP suites and procurement suites have fragmented master data within their product lines, and nearly all these solutions don’t have master data that can be used as part of an MDM-type solution (e.g., having a supplier master that can serve a true SIM solution from an MDM standpoint rather than just creating another vendor master file to add to the heap).
* Generating forward-looking insights based on external data and intelligence rather than just simple spend forensics — especially category-specific insights that are typically built from scratch.
* The struggle to create analytics that go beyond off-the-shelf operational reports from the various modules/tools in the market.
* Dashboards that are attractive, but can be visually overwhelming and not help you prioritize where the key opportunities are.
* IT organizations that may be pushing legacy data warehouses and BI tools that don’t allow more democratized analytics to be developed with an increasingly digitally savvy generation of business users and tools (that might also need to get adopted by an older generation of procurement practitioners). Data visualization and predictive analytics were the top two digital skills prioritized for procurement technology training over the next year.

In the rest of this Spend Matters PRO brief, we’ll dive into the current and future state of the procurement analytics area, and make some predictions about what we expect to see in 2020 from a market standpoint, but also a more detailed technical standpoint.

How to Make Your Procurement Organization like Amazon — Use the Flywheel!

Many smart readers will be familiar with the Amazon flywheel. It is a graphical representation of Amazon’s business model that you can read about on this blogpost here.

The model from that post is shown below:


The graphic generally shows the self-reinforcing cycles of how Amazon’s focus on customer experience and product selection help drive demand — which in turn attract sellers while also then letting Amazon gain economies of scale (and also “economies of scope” when it jumps into adjacent markets) to then self-fund (i.e., re-invest all the profits) the offering of lower pricing AND the development of even better customer experiences … which then repeats the cycle continuously.

This graphical model is an oversimplification because there other things at play here:
* disintermediation in the supply chain to capture value
* building/buying capabilities to jump into adjacent markets
* driving not just experience and eyeballs, but also monopolistic power in categories
* acquisitions to accelerate category dominance
* subscription-based bundling and related incentives (“free” shipping with Amazon Prime)
* playing 3D chess by playing different roles — e-tailer, wholesaler, marketplace, platform — and then using that power with upstream suppliers
* speed to value and focused/driven/intense organizational culture on mission and results

I’m sure you could add more to the list above. That said, procurement and supply chain professionals understand many of these drivers when they look at supplier power and category strategy — especially when one of those suppliers may be Amazon (e.g., AWS)!

Many procurement organizations often have a difficult time expressing their organizational value-add to other stakeholders, or they end up focusing too narrowly just on cost savings. They need to be able to communicate higher impact value creation and also create some “branding” surrounding their spend/supply management services. So, they should consider adopting the Amazon flywheel to their organizations, and there are actually three ways in which they can do this:

* Apply the Amazon flywheel to the broader organization and then dovetail in how procurement helps to support the business flywheel. Most organizations want to be like Amazon in some respects, so this can help reinforce that.
* Apply the flywheel to the procurement organization as a spend/supply management “business” in its own right and then tweak the Amazon flywheel model to create a self-funding procurement flywheel.
* Apply the flywheel to sourcing, category management and supplier management as you engage suppliers.

In other words, change “growth” to “profitable growth” and then change “sellers” to “suppliers” and you get the general idea.

In the rest of this Spend Matters PRO research brief, we’ll share our adaptation of the Amazon flywheel to a “procurement flywheel” that procurement organizations (and to the digital solution/service providers who help support them) can adopt for themselves and their stakeholders.

For any qualified practitioners interested in this PRO content, please feel free to reach out to us and we can make it available to you if you’re looking for support in your digital transformation.

2020 Digital Procurement Series: Predicaments and Predictions, an Introduction

2020 is finally here and there’ve been many “2020 Visions” (get it?) published as various analyst firms and consultancies have published their predictions for the coming year. As you may know, we are generally not big fans of the typical predictions pieces because their insights are too obvious.

Don’t get me wrong — there’s nothing wrong with summarizing the trends that are happening right now and then extrapolating those forward with some prediction based on high likelihood scenarios. But if you overly focus on existing players in existing markets using traditional approaches, you may very well miss emerging threats and opportunities, both as a practitioner and as a solution/service provider.

So, next week, Spend Matters’ analyst team will be publishing a series of 2020 predictions within their respective areas based on:

* The largest digital procurement capability/vendor gaps that are plaguing practitioners.
* Vetting these areas to make sure they’re addressable technically and also commercially — e.g., total cost modeling and management is a foundational capability that has huge gaps and organizational disconnect (between procurement and finance) and an area that we geek out on, but will not likely see much movement as a breakout category even though a few interesting big data/AI start-ups are nobly charging at this windmill.
* Some higher probability scenarios, but also some scenarios where we’ll go out on a limb.

Today, you can read more about the predicaments and pain points that we’ll address regarding digital procurement:

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.

The 5 Building Blocks of Supplier Management Capabilities

supplier management

As an analyst you want to define things, classify them and put them in buckets to be able to analyze and compare them. Often that works fairly well, and we can rate vendors and solutions against each other to find the best fit in any given situation.

But in some areas this is more difficult, mainly because some areas of procurement are less defined from a process perspective. One such area is supplier management, where solutions go under many different names, among them different variations of supplier relationship management (which SAP laid claim to back in the day by naming its entire procurement suite “SRM” to create a nice analog to the “CRM” world), supplier lifecycle management, supply base management or just supplier management. The problem, however, is that both buying organizations and solution vendors often mean very different things by supplier management.  In our view of the market, we simply drop the “lifecycle” part (although we sometimes use “SXM” for shorthand to have the “X” represent everything supplier management related), and simply use the term “supplier management.”

So, in true analyst fashion for Spend Matters PRO, we have defined five supplier management capabilities, or building blocks, to get some structure:

* Supplier Information Management (SIM).
* Supplier Performance Management (SPM).
* Supplier Relationship Management (SRM).
* Supplier Risk Management.
* Supplier Quality Management (SQM).

So now we can classify supplier management solutions by these capabilities. Pretty straight forward, you would think, right? But not so fast.

VNDLY — A different breed of VMS or a different solution species altogether?

VNDLY, the cloud-based workforce management system (WMS) provider that has been creating waves in the VMS solution market, recently announced a $35 million Series B round. The equity funding to date of $49 million since the company’s inception in 2017 features some big hitter investors such as Insight Partners and Battery Ventures (and ServiceNow — but more on this later). According to the announcement, the $35 million from the Series B will be used “for continued product innovation, global expansion, and the continued investment in customer service and support” (a somewhat vanilla description of what is to come for a self-proclaimed innovator in the space). Nonetheless, VNDLY’s recent news has, in effect, thrown down a gauntlet to incumbent VMS providers — and also thrown up a flare to attract the interest of contingent workforce and services procurement managers looking for a next-generation platform (not just applications) to quickly build out diverse use cases.

The investment ramp up seems to confer increasing confidence in VNDLY, its next-generation platform, business strategy and its ability to execute. Moreover, the company has reported traction in the marketplace, having added “multiple new clients (over the past) year, including 12 Fortune 500 companies.” VNDLY’s co-founder and CEO, Shashank Saxena, has stated, “we've not only been able to validate the market’s readiness for a new and modern cloud-native VMS platform, but also validate that large enterprise customers are willing to replace their legacy VMS solutions to upgrade and modernize with VNDLY.”

In this Spend Matters PRO brief — keeping contingent workforce and services procurement practitioners in mind — we provide some information about the VNDLY solution and approach to the market. Note: We have already covered VNDLY extensively in the past year in the Temp Staffing SolutionMap as well as related SolutionMap and PRO content (see VNDLY: What Makes It Great (Temp Staffing/VMS SolutionMap Analysis) and VNDLY Closes $11 Million Series A Funding Round: A VMS Category Buster in the Making? [PRO]). We will also discuss the bigger picture — the coincidence of VNDLY’s emergence and seemingly accelerating evolution in the contingent workforce and service technology space and what practitioners should be aware of as they think about addressing contingent workforce and services in the future.

So what is VNDLY? Let's find out.

Forrester rips SAP Ariba in its latest E-Procurement Wave

The Spend Matters team has known Duncan Jones, the lead author of Forrester’s latest E-Procurement Wave, for just about as long as the average technology solution provider in this sector has been in business. Duncan is known for trading humorous barbs with Jason Busch, Spend Matters’ founder, at various industry events with his typical acerbic British wit. However, there is nothing humorous about Forrester’s latest Wave when it comes to singling out SAP Ariba for failing to live up to its past prowess, especially in the technology area. What's going on with Ariba's product performance and personnel churn?

Wait a minute, is Pete Buttigieg a former procurement consultant?!?

This week, Democratic presidential candidate Pete Buttigieg, the mayor of South Bend, Indiana, disclosed client details from his previous job as a management consultant at McKinsey (the firm obtained permission from these clients to release "Mayor Pete" from his NDAs). One of those clients was insurance provider Blue Cross Blue Shield of Michigan. The 2007 job looked to be an overhead cost reduction project, but with a seeming procurement angle to it. The Buttigieg campaign released a statement that said of Buttigieg: “He was assigned to a team that looked at overhead expenditures such as rent, utilities and company travel. The project he was assigned to did not involve policies, premiums or benefits.”

Looking at these three spend areas, the majority of this spending is disbursed to suppliers, so it's likely not a headcount reduction effort, and more than likely focused within a procurement work stream. Attacking rent and utilities are not necessarily the easiest categories to go after as they are often being bound up in larger facilities, real estate and energy management spend, but the travel category is a little more straightforward of an area for a procurement consultant to cut his/her teeth on.

Regardless, should we care about this? Do we want a presidential candidate who understands procurement and cost discipline?

We have some hard questions about (and a soft spot for) Coupa’s new Business Spend Index (BSI)

Coupa recently released its Q4 Business Spend Index (BSI). Indexes such as ISM’s PMI and NMI can be helpful tools for procurement — not to mention economists, investors and policymakers — to gauge overall economic trends as well as underlying supply, demand and inventory conditions.

Coupa is a relative newcomer to publishing an index, but it offers a potentially promising approach based on underlying transactional data flowing through the Coupa system — as opposed to the polling data that is used for the ISM indexes, for example — to complement other economic indicators.

Still, we recommend that firms not read too much into the BSI for making procurement, economic or investment decisions without some additional details.

There are a few issues we’d like to see addressed if Coupa truly wants to make this a useful planning tool and not just a marketing vehicle for its community intelligence strategy:

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 …

Workday and Scout RFP: Customer Recommendations

This Spend Matters PRO research brief provides analysis in support of Workday and Scout RFP customers following last week’s news that Workday is acquiring the sourcing provider. Previous coverage of the transaction with content aimed at CEOs, strategy / corporate development leaders and investors can be found on Spend Matters Nexus (see Part 1, Part 2, Part 3 and Part 4).

Nexus coverage provides an overview of the transaction, an introduction to Scout RFP, Scout RFP strengths / weaknesses, competitive analysis and recommendations (for ERP providers, suite providers and best-of-breed providers, separately) and potential Workday and Scout RFP integration touchpoints.

Today on Spend Matters PRO, we turn our attention to those which will be most impacted by the announcement: Scout RFP and Workday customers. We encourage Spend Matters PRO practitioner clients who are using or considering Scout RFP or Workday for procurement to contact us for more information on how the acquisition could affect them.