Change Management Content

Automation, digitization, global trade pose challenges for business leaders, report says

A new report by The Economist Intelligence Unit, sponsored by Basware, is shedding light on how technology innovation and shifting global trade dynamics are challenging businesses.

The report considers three trends — automation, digitization and shifting trade dynamics — that finance and procurement executives expect to affect their companies most, what their impacts will be, and how business leaders are preparing for the developments. The report’s findings are based on a survey of more than 400 finance and procurement leaders in the U.S., the UK, France and Germany.

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Finding the Right Fit and Function for Your Procurement Vision

Most procurement departments would agree that introducing a category management structure is a good way to secure the best-in-class status they crave. On the tactical-to-strategic spectrum, it’s still a notch below “trusted adviser” status, but it’s several more notches removed from reactive purchasing and the three-bid-and-buy mentality. While they’ve largely got a consistent end goal, procurement departments vary wildly when it comes to progress.

Many are still hard at work introducing even a foundational level of strategy. Others are mired in damage control after trying and failing to build a more strategic procurement function. Even those exemplary departments that can call category management a next step have a lot of work ahead. Like their less advanced peers, they’ve got to change their organization’s mindset if they want to truly transform procurement. To transform the function, they’ve got to first change the way other business units perceive and engage it.

SAP Intelligent Spend Group is future for Ariba, Fieldglass, Concur (Part 2): Hard Questions on Integration [PRO]

integration

In late April, SAP announced its “Intelligent Spend Group,” a combination of SAP Ariba, SAP Fieldglass and SAP Concur. As the new operating unit eventually becomes “one” from a product perspective as well, it is important to realize the level of complexity that SAP will confront along the way. For example, SAP Ariba product managers have to deal with their individual platforms/ecosystems (SAP Ariba, Fieldglass, and Concur), but also with integrating to the Ariba Network, relevant SAP applications (e.g., Integrated Business Planning), with partner apps in each of those ecosystems, and the move toward an SAP-centric application stack and platform stack.

For example, SAP has its own journey from ECC to SAP S/4HANA in the cloud via S/4HANA Cloud Foundation, S/4HANA Cross Engineering, S/4HANA Enterprise Architecture, and other toolsets. S/4HANA then needs to integrate to the SAP Cloud Platform applications that will themselves need to integrate with each other as they slowly migrate to an underlying SAP Cloud Platform that includes a range of areas described in this second of three briefs in Spend Matters' PRO research series.

It’s not simple to run — unlike SAP’s old slogan of “Run Simple” used to say.

Don’t Forget the Big 4 Questions to Ask During Any Mega-Acquisition

Four years ago, during the last big M&A frenzy, I published a post on my Sourcing Innovation blog on The First 4 Questions to Ask During Any Mega-Acquisition that is still just as relevant today as it was four years ago.

And while it was very direct and maybe even a bit confrontational, sometimes it’s a good idea to be direct because sometimes you need to let the new vendor know you’re not in the mood for any shenanigans. The reality is that while some mergers and acquisitions are with the intent of creating a better combined company that can better serve the respective customer bases, not all mergers and acquisitions are done for this reason. Some are done just to eliminate competition, and others are arranged by investors for the sole purpose of a short-term money grab (which will be accomplished by a short-term PE sale or initial public offering once the balance sheets are puffed up and the overhead reduced).

So, without further ado, let's get to the four questions you should ask to find out whether you and your new vendor are on the same page.

UPDATE: With Barry Padgett leaving SAP, what’s next for new Intelligent Spend Group? [PRO]

Barry Padgett has left SAP only weeks after being named president of the newly created SAP Intelligent Spend Group (ISG), a combination of SAP Ariba, SAP Concur and SAP Fieldglass.

Padgett had previously served as president of SAP Ariba, before being promoted to the new role as leader of the combined group. Spend Matters sources suggest he has accepted a new role as chief revenue officer for Stripe, a payments company, although this is unconfirmed at this time.

SAP’s Intelligent Spend Group told Spend Matters that Mike Eberhard, formerly president of SAP Concur, will take over for Padgett, at least as an interim leadership move. Eberhard had previously planned to “step back” from a daily role at SAP in Q3 to serve as an adviser. While on the surface, the move to promote Eberhard on a temporary basis may seem like a GE “moving around the management chess pieces,” type of maneuver, Eberhard has a unique foundation from which to sit on top of the combined organization at a pivotal time.

Not only has Eberhard had sales leadership experience and significant growing, global commercial responsibilities within Concur in the past decade, he brings leadership depth from other areas of procurement, payables and supplier management solutions earlier in his career. This includes holding previous P&L responsibilities for SAP Ariba, Xign, Peoplesoft and D&B.

Based in part on his diverse set of experiences in the “spend” universe, including P&L leadership within a number of different business cultures that sold to different economic buyers, we are enthusiastic about the selection of Eberhard as at least a temporary leader of the SAP Intelligent Spend Group.

But as Eberhard perhaps channels Constantine the Great, one of the great “uniters” of different factions in Roman history, he will nonetheless face a range of challenges on multiple fronts — internal and external — as SAP plans for simultaneous battles at the same time as it brings together three best-of-breed solutions under one roof, one that ideally represents more than just a united fighting commercial front.

Leadership Required on Simultaneous Fronts

The remainder of this research brief introduces some of the campaigns that SAP’s Intelligent Spend Business group will need to simultaneously embark upon if it is to align what is in the interests of customers and shareholders over the long term. We see three main fronts that SAP must target at the same time.

Before exploring these, we should note that Padgett left the SAP Intelligent Spend Group before having a chance to substantively make a mark on this newly created business unit. His departure at a formative, pivotal moment gives the opportunity to Eberhard (and/or a future leader) to chart a course for the future of a common SAP Ariba, SAP Concur and SAP Fieldglass at a time in which all three former independent operating units face new dynamics.

PRO subscribers can read more about the three fronts that SAP faces.

Read our analysis of SAP Intelligent Spend Group and SAP’s Ariba, Concur, Fieldglass for the last 12 months

Today's news about SAP’s change in leadership at its new division ("Barry Padgett Leaving SAP and new Intelligent Spend Group") had us thinking about Spend Matters’ analysis of the group recently forming and our ongoing coverage of its components: SAP Ariba, SAP Concur and SAP Fieldglass.

Since early 2018, Spend Matters has given PRO and SolutionMap subscribers deep insights into their solutions, including a comparative analysis of SAP Ariba’s S2P offering and a look at SAP Fieldglass’ Digital Network. Subscribers also have gotten head-to-head comparisons of SAP Ariba with competitors like Coupa, Ivalua, Basware, Tradeshift and GEP. (For companies considering SAP’s procurement solutions, Spend Matters’ SolutionMap Technology Selection Services are also available for procurement organizations that want a one-to-one map between their own business requirements and functional performance).

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For CPOs, Life Is Getting Complicated

During a routine meeting with one of our clients, the Chief Procurement Officer at a large Fortune 500 company, we were struck by something this person said: “I feel like I’m wearing so many hats these days, I need a hat stand to keep them all in one place!” Our client’s observation encapsulated something we were starting to see more often: a dramatic broadening of the role of the CPO.

A mere decade ago, a CPO’s job, while often difficult, was relatively straightforward: Find the best deal possible when sourcing raw materials or setting up production. But increasingly, that’s a fluid concept. What’s more, the changing nature of both technology and the manufacturing workforce has pulled CPOs into decisions that were once outside their purview.

Intrigued, we wanted to delve deeper into this trend, and we decided that this would be a fascinating area of focus for our annual “Chief Procurement Officer Survey.” Every year Deloitte conducts this global, cross-industry study to take the pulse of sourcing and procurement professionals. So, this year we’ll be exploring the role of the CPO — how it is evolving, and how procurement leaders are navigating and mastering complexity in the areas of technology, workforce management, and both the business and political environment.

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Better Business in a Digital World: The Need for Corporate Digital Transformation

The planning and vision for digital transformation starts at the top, but the change itself is driven from the bottom where it can be built piece by piece, ensuring the strongest foundation possible.

Important decisions must be made if a company wants to continue growing. Nowadays, decisions shouldn’t be made off instinct alone. Gut feelings aren’t enough. People will always have the final say, but their decision should be based on strong insights from trend analyses using big data to reveal patterns to better future-proof their businesses.

What should you expect from a corporate digital transformation strategy? Read on.

CRO-to-CRO Video Series: Episode 3 Peels Back the Digital Procurement Platform Onion

So you’ve decided your procurement function needs to “go digital” with its software solution needs.

But where to begin? How do you buy this stuff?

“You start with having your business challenges in mind,” says Michel Janssen, one half of the "CRO-to-CRO" discussion pairing we've been spotlighting with a series of videos over the last couple of weeks.

Recently, Janssen — chief research guru of Everest Group, a research and management consulting firm based in Dallas, Texas — had a chance to sit down with his  former colleague Pierre Mitchell, chief research officer of Spend Matters.

In Episode 3 of this video series, the two CROs share a comprehensive framework they call a digital capability platform, which paints a holistic picture for prospective buyers. Ultimately, through this framework, Janssen and Mitchell uncover what is available to buy (point solution or suite?), how a buyer can bundle solutions and/or capabilities, and who owns — or should own — the responsibility for digital decision making.

Defining AP Automation Functional Requirements (Part 1): Core Invoicing (Set-Up, Creation, Submission and Receiving) [PRO]

AP Automation is getting a lot of attention recently from multiple angles. This includes both finance/procurement organizations considering these solutions independently or as a component of broader invoice-to-pay or procure-to-pay investments. And it also counts the investment community, which continues to throw support behind a broad range of providers (just recently MineralTree raising $50 million).

As we’ve noted before, from a breadth perspective, AP automation technology can encompass the following functional areas on the highest level, which include electronic invoice capture, paper/PDF invoice capture (scan/capture), core invoice processing, invoice validations/matching (e.g., match to a PO or goods receipt), invoice approvals, supplier portal, supplier enablement services, systems integration, pre-onboarded suppliers payment integration and payment.

As part of our continuing coverage of AP automation, this Spend Matters PRO series will explore the functional requirements that finance and procurement organizations should look for in a solution with “foundational” and “advanced” capabilities.

Part 1 takes our first look at the core invoicing requirements for AP automation and some of the criteria that Global 2000 and middle market organizations should consider when selecting solutions (i.e., invoicing set-up, paper scan/capture support and e-invoicing). Subsequent briefs in this series will analyze other AP automation requirements that customers should look for in a solution.

Procurement’s Digital Transformation Goals Not in Sync with Development Priorities, Hackett Study Finds

Digital transformation is making it easier for procurement organizations to “do more with less,” according to newly released research from The Hackett Group consulting firm. However, as bluntly stated in its 2019 CPO Agenda: Building Next Generation Capabilities report, “Procurement’s transformation agenda is poorly aligned with its most critical development priorities.”

The procurement industry, according to the report, remains under pressure to act on its critical development priorities for 2019, including improving analytical capabilities, aligning skills and talent with business needs, leveraging supplier relationships, enhancing agility and achieving true customer-centricity.

Q&A on Digital Procurement’s Role in Sustainability, Ethics and Compliance [PRO]

As supply chains get increasingly externalized and globalized, the broad scope of operations is subject to equally broad regulatory oversight and supply risk. Meanwhile, as consumers increasingly demand transparency and ethical behavior by value chain brand owners, supply chain organizations at those brands (and also at their suppliers), are having to increasingly respond to these demands. Procurement organizations, for their part, are trying their best to support this externalization on all fronts, but they are so busy with strategic sourcing and P2P execution that even the “basics” of supplier qualification, certification and on-boarding are suffering — never mind having time for more strategic activities in supplier innovation, advanced risk management, digital transformation and other areas.

So, what’s the solution? Well, procurement must first practice what it preaches by tapping supply market innovation for itself, and this innovation is taking many forms. In an everything-as-a-service (XaaS) world, procurement must not only take a leadership role in robustly contracting for these diverse cloud services, but also:

— identifying how various providers beyond cloud applications can help procurement execute much more efficiently — at the cadence of the business.
— embedding the best digital supply market innovations into its own service delivery in order to expand its own influence and brand within the enterprise.
— enabling and empowering functional partners in GRC, IT, Finance, Legal, HR, Risk/Audit, etc. to enable their own service value (increasingly in a cross-functional GBS environment) and integrate the disparate services together much more coherently.

For example, consider the question: Who is responsible for establishing the single face to the supplier when we digitally on-board and manage them to not only transact with them in a compliant manner, but also ensure that they’re operating securely, ethically and transparently more broadly? It’s not just procurement, but rather a combination of procurement, IT, GRC and various centers-of-excellence that should be working tightly together. Unfortunately, misalignment is the norm, but not because of outright conflict or malfeasance, but because functional folks are too busy just trying to execute within their own silos. And they’ll never extricate themselves from that situation unless they have drastically new capabilities to deploy.

This is where procurement organizations need to make smart choices on how they apply digital strategies and tools/services to this area of sustainability, ethics and compliance.

I was recently catching up with an industry colleague of mine named Tomas Wiemer on the topic (he’s a former procurement transformation leader from Nokia and Alcatel-Lucent). He is very deep into this area and typical of leaders at European firms who are definitely in the vanguard here. Tomas is considering some career changes right now, primarily with some emerging tech players who can have a dramatic impact in the industry. Tomas reminds me a bit of a European version of Roy Anderson, who just joined Tradeshift (here’s part 3 of an interview that I did with him), and I think that Tomas will do similarly well when he lands somewhere. He’s doing some interim work for a client, and I agreed to let him interview me for my inputs, but given my role, I asked him for the questions in writing so that I could fully respond in kind and publish it to our subscribers. The questions are below:

How do you view topics as compliance and sustainability in the procurement digitalization landscape?
Do you foresee a convergence/harmonization of sustainability/compliance requirements toward suppliers thanks to the rise of S2P platforms/marketplaces?
What do you believe is the greatest added value of procurement digitalization / AI for compliance and sustainability?
What do you think are the key conditions/requirements to enable the emergence of sustainability/compliance topics in digital procurement?

What’s interesting is that this topic is very hot right now. My business partner Jason Busch just attended the recent EcoVadis conference in Paris, and the buzz (beyond the buzz from the sustainably grown coffee that was undoubtedly served there) was palpable. Part of the reason is that the topic is giving many procurement organizations new ways to engage the business and the suppliers alike in a way that drives much more meaningful value across the value chain beyond just price-centric cost savings. And it also engages a new generation of procurement professionals who want to have a meaningful impact on value chains rather than just being deal-makers and “firefighters.”

Anyway, the questions above are big ones, and require very thorough answers, so without further ado, let’s get to answering them ...