As digital technologies continue to affect how businesses evolve, the related risks and opportunities are pushing companies to expand their cost management strategies, according to Deloitte’s recently released second global cost survey.
The study, “Save-to-Transform as a Catalyst for Embracing Digital Disruption,” explains that although traditional cost-reduction methods remain important, many organizations are also investing aggressively in digital technologies that they believe can enhance operating efficiency and cost savings while improving overall performance and competitiveness.
Deloitte’s 2017 study said many businesses relied on the “save-to-grow” philosophy when digitally transforming, but the 2019 study sees businesses adopting the latest technology to fundamentally transform their operations.
The history of e-sourcing software stretches back to before the dot-com bubble burst, yet few of the original providers of RFX and auction management tools exist today as they did at their inception.
Some were bought and consolidated into the mega organizations we know today (e.g., SAP Ariba, which acquired FreeMarkets and Procuri), while others have slowly drifted into oblivion (RIP Emptoris). The result is that, with a few notable exceptions, procurement organizations today have few choices for standalone providers of e-sourcing tools.
One of those remaining options is K2 Sourcing, a provider of RFX and auction management software that has quietly served mid-market procurement organizations since 2003. Based in the Milwaukee area, K2 grew out of its founder’s frustrations as a procurement professional with the RFX and reverse auction platforms available then.
The young provider set out with one of the first cloud-based solutions in the space with a goal to “create the fastest, easiest and most transparent method for buyers to screen and select suppliers.” And while a lot has changed in the procurement and technology worlds in the past 16 years, K2 has managed, through a combined offering of subscription software and supporting sourcing services engagements, to build a stable and respectable client base, counting brands as varied as Verifone, Lozier Corp., Big Lots, Milwaukee Tool, Tempur Sealy, Kaiser Permanente and others.
This Spend Matters PRO Vendor Introduction offers a candid take on K2 Sourcing and its capabilities. The brief includes an overview of K2 Sourcing’s offering, a breakdown of what is comparatively good (and not so good) about the solution, a SWOT analysis and a selection requirements checklist for companies that might consider the provider.
If you google the term “services procurement,” you’ll see an article from my colleague Andrew Karpie touching on the topic front and center. He talks about the need to transcend the traditional contingent labor-centric view of what is in fact a much larger scope dealing with the procurement of all services. Aggregate annual spend on complex services by U.S. organizations is on the order of $9 trillion to $10 trillion, while spend on temporary staffing is only on the order of $0.02 trillion. When looked at with a wider-angle lense, the scope of services spend is huge. But ...
This is where I’m going to carry the discussion forward. The problem that I’ll address is, to put it bluntly, the management of services spend is shockingly poor.
There are many reasons for this. The first is organizational.
A spend category like direct materials is fairly straightforward in terms of organizational reporting ultimately into the supply chain organization (and/or business unit). The same can be said for lab supplies managed alongside R&D or data center equipment managed alongside IT. But services are trickier, not only in their inherent complexity and variability, but also because of their organizational governance. For example, if I’m looking to bring in some DevOps contractors to supplant my IT outsourcing provider’s capabilities, do I use an IT category team, a contingent labor Center of Excellence or perhaps an IT Vendor Management Office to have the ITO vendor provision the resources?
Beyond the organizational governance issue, the bigger problem is the fragmented nature of managing (not just procuring) services and the underlying systems to manage them — even just in source-to-pay. Case in point: There is not a single source-to-pay solutions provider in the market that offers deep support for all enterprise spend on a platform with a single code base and a unified data model.
And this is 20 years after e-procurement systems started being developed. Let that sink in.
But before a few of the S2P suite vendors get their knickers in a twist over this statement, keep in mind that what I’m including with the term “deep support” is being able to track services work to the contingent worker level that temporary labor solutions (aka “VMS” solutions) and those solutions supporting independent contractors. These contingent labor procurement platforms for their part are only touching a portion of the spend, and the expansion of many of them into SOW-based spend isn’t necessarily something that firms want to use for all their contract-based spend given that modern S2P suites can do a reasonably good job of setting up SOWs against MSAs, modeling basic rate-based service catalogs, and then matching them to the downstream invoice-to-pay processes. The trick, however, is how to go beyond the basics and handle the real life requirements of complex services categories.
This transformation will require a new way to understand/frame services and a new class of architecture and platforms to meet these needs — while also making some practical moves with existing tools (e.g., using modern CLM platforms as a critical core to modeling the commercial details/attributes of these services). It will also require procurement to align more tightly with IT and to leverage an emerging ecosystem of platform providers and approaches that can help rise above the functional silos that manage services spend in disjointed ways.
Extracting maximum commercial value from services can only be done at an end-to-end process level, and procurement has an opportunity to help optimize the sourcing, consumption, settlement and ongoing management of these increasingly digital and externalized services (and their providers). By more easily extending the capabilities of digitally savvy suppliers into internal value chains with internal stakeholders, but also ultimately out to external customers, procurement can proactively be part of broader enterprise digital transformation activities.
In this SpendMatters PRO analysis, we’ll dive into the challenges of segmenting external business services (e.g., understanding the interplay between digital-dominant and labor-dominant services) and how to look beyond the traditional contingent labor approaches (hint: Segmenting the market based on the presence of a statement-of-work is clearly not sufficient).
Later in this series, we’ll dive deeper into a new commercial framework for services and then map the resulting business requirements to technology requirements and associated vendor/solution types that transcend the source-to-pay market (e.g., enterprise CLM, ITSM, low-code platforms, etc.).
“Business intelligence” has been a staple of an effective corporate entity long before computers appeared on the scene, but leaps in computing power, cloud storage and advances in data processing and visualization have allowed businesses to use their resources vastly more effectively. The advances in business intelligence (BI) also make it accessible to hundreds or thousands of workers throughout the business, instead of just a few dozen data scientists using specialized skills and software. Against that backdrop, Tableau outlines 10 BI developments to watch in its 2019 Business Intelligence Trends report.
When you find yourself tasked with figuring out what ERP solution you are going to on-board for your organization, you do a quick search and find there are dozens of vendors offering a variety of ERP solutions. Where do you start in your process of determining which of these vendors and platforms would be best for you? You need to look at functionality, pricing and resourcing.
Spend Matters welcomes this guest post from Laurent Charpentier, Yooz Inc.'s chief innovation officer and COO.
The most useful business applications leverage cloud technology so that they can be accessed around the clock and from anywhere in the world on a mobile device. And the more widespread the use of smartphones, the more important it is for software engineers to build products that can be accessed in the cloud. Sure, there are still many uses for on-premise, enterprise level systems. But, for the thousands of start-ups and small businesses that are being created every day, many of which are using people in other parts of the country or world, they must be able to run around the clock. Cloud technology allows them to do that without having to worry about maintaining servers or IT support for technical issues.
Scanmarket, a strategic e-sourcing provider, announced it has sold a 90% stake in its source-to-contract (S2C) company to private equity firm Verdane. The founders of Scanmarket, CEO Betina Nygaard and CCO Ole Nielsen, will retain a 10% share and continue to lead development at the Denmark-based software firm, according to the announcement. Spend Matters lead analyst Michael Lamoureux said the company has “a lot of potential, and a track record to back it up.”
Known for its travel-and-expense software solution, Certify on Thursday announced that it is launching a procure-to-pay product. The new cloud-based P2P product is called Certify Purchasing and is billed as a way to automate key accounts payable tasks like requisitions and vendor payments. The SaaS-offering works with desktop and mobile devices, Certify said. CEO Robert Neveu said the move builds on the company’s travel-and-expense experience.
Earlier today, Tradeshift announced it had acquired Babelway — a technology provider that straddles the line between a cloud integration broker/hub and electronic data interchange (EDI) enablement. It will provide integration services to Tradeshift customers.
This Spend Matters PRO “First Take” analysis offers additional insight on what we know about Babelway and what it does (in plain English), insight into the acquisition/rationale, and a cursory analysis of what it means to Tradeshift customers, partners and competitors.
San Francisco-based Tradeshift, a platform provider for supply chain payments and marketplaces, announced Tuesday it has acquired Babelway, a Belgium firm that focuses on ways to simplify B2B integration. Tradeshift CEO Christian Lanng details the deal in an interview with Spend Matters' Jason Busch:
Spend Matters welcomes this guest post from Doug Hudgeon, a business automation expert.
The annual Amazon AWS Re:Invent conference has just finished. The most interesting announcement in the conference was not one of high-profile changes to their serverless and machine learning platforms. The most interesting announcement was a three-minute video about Textract, a new OCR (optical character recognition) service from Amazon. This service extracts text and tables from documents and is priced at $1.50 per 1,000 pages.
The Textract OCR service is interesting for three reasons, each of which is worthy of an article in itself, but we'll briefly look at all three here and the industries that are affected.
Spend Matters welcomes this guest post from Melissa Hendrick, Yooz North America's vice president of marketing.
Remember the early days of personal digital assistants and cellphones? Before they were “smart”? We were wowed by the first hand-held computers like the Palm Pilot and BlackBerry, but few among us knew then that in a few short years, we would become dependent upon them in all aspects of our personal and business lives. Technology and time march swiftly on, and business moves fast. Senior finance executives need to understand how today’s emerging innovations are already impacting business operations, profits and productivity, and how to adapt or consequently fall behind.
