Technology Content

2020 & Direct Sourcing of Workforce/Services: What to Know [PRO]

Direct sourcing of workforce/services (DSW/S) has been one of the most consistent, rising trends in the evolving contingent workforce/services (CW/S) procurement space in recent years. To a limited extent, the sourcing of contingent workers with little or no involvement of third party intermediaries has been practiced by most organizations for decades. But more recently, it has been changing in several ways, driven by a number of factors, including the emergence of fit-for-purpose technology. It is no coincidence, therefore, that there is a Spend Matters SolutionMap category — Direct Sourcing of Workforce/Services — that currently ranks nine technology solution providers (with more set to participate).

While the idea of sourcing and engaging workers directly (e.g., not through a traditional staffing supplier arrangement) seems simple enough, there are various forms that direct sourcing takes (depending upon the business use case) and a variety of ways that technology is being used to enable it. In that respect, it is not that simple. But it is something CW/S practitioners should be following — and probably getting prepared to evaluate — in 2020.

This Spend Matters PRO brief explains direct sourcing of workforce/services (DSW/S) in the context of 2020 and provides input for practitioners trying to understand how direct sourcing applies in their own specific business contexts/use cases. It discusses the considerable diversity of solution providers/solutions (based on our SolutionMap data and other observations) and how that diversity is relevant to supplier shortlisting and selection (including the role of the Spend Matters’ DSW/S SolutionMap framework).

Omnia acquires InsightGPO: Putting M&A at the center of a growth strategy

This week, Omnia Partners announced it was acquiring InsightGPO, the group purchasing organization arm of Insight Sourcing Group. According to the announcement, the transaction closed on Dec. 31, 2019. Prior to the definitive agreement, “InsightGPO was one of five divisions of Insight Sourcing Group,” which provided its “clients with highly targeted offerings for office supplies, auto rental, MRO and office equipment,” according to the press release announcing the deal.

Yesterday, I had the chance to speak to Tom Beaty, CEO, Insight Sourcing Group, and M. Todd Abner, President and CEO of Omnia Partners, to learn more about the transaction.

This Spend Matters Nexus brief shares a bit of what was learned (Omnia facts, figures) along with our own transaction analysis and a back-of-the-napkin valuation and relative multiples in the GPO market. It also traces the history of Omnia and provides a perspective on the GPO today (at an investor level) and future scenarios. We will follow up this Nexus M&A analysis with a detailed vendor snapshot/overview of Omnia on Spend Matters PRO this quarter, including a full SWOT, customer recommendations, etc.

For those interested in learning the basics of GPOs and how to use them as part of a category management portfolio strategy, we suggest you start with our past coverage and a chart showing the primary GPO market segments:

● An Introduction to Group Purchasing Organizations (GPOs)
● Group Purchasing Organizations: Supplier Perspectives and the Evolving GPO Landscape
● All We Are “Saved” — Give Purchasing Consortia (Including GPOs) a Chance
● The Healthcare Group Purchasing Organization (GPO) Landscape: Background, History and Introduction



Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter and subscription service that publishes 50+ times per year. Spend Matters and Spend Matters Nexus are owned by Azul Partners. His investment disclosures and other activities can be found on LinkedIn.

Afternoon Coffee: Catalant raises $35 million; Amazon, DHL, 9 others join electric vehicle alliance; president to sign USMCA

Catalant Technologies, which enables organizations to leverage external talent and services in an agile way, announced its closing of a $35 million Series E equity round. In other news, an electric vehicle alliance gets the attention of some heavyweight companies like Amazon, DHL, Ikea North America and eight others. And the USMCA trade deal that replaces NAFTA will be signed into law Wednesday in Washington. Afternoon Coffee: A Friday jolt of procurement and supply chain news. Have a good weekend!

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

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 assess supplier risk management: An overview report and checklist

Procurement professionals must consider many factors when working to protect their organizations from risks — from reputational problems, compliance issues, changing regulations to cyber security and social responsibility. A WBR Insights report built on advice from the consulting firm GEP and the technology provider Global Risk Management Solutions (GRMS) focuses on supplier risk management.

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

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:



Source: http://www.samseely.com/blog/2016/5/2/the-amazon-flywheel-part-1

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.

Deploying AI-driven spend analytics: How to prepare your company for increased visibility

Modern spend analytics relies on artificial intelligence for a number of reasons, including the need for a robust tool to manage all of the data being generated and the need for advanced technology to make sense of different data streams. This innovation provides new visibility that can benefit procurement operations and generate business value overall, according to research by Spend Matters and others.

In the first article in this series, we discussed how companies decide if they need a full procurement technology system to understand their spend or if a best-of-breed spend analytics solution offers better insights into the future as well as analyzing past performance.

In today’s post, we’ll look broadly at the tech selection process, specific considerations for spend analytics, and the procurement-focused findings of an A.T. Kearney paper that shows how spend analytics fits within the digital transformation of all businesses.

2020 M&A and Procurement Investment Predictions: 10 Trends to Watch (Part 2)

procurement

M&A and investor interest in the procurement technology sector is at an all-time high. Of course it also helps that there are more than 1,000 providers in the procurement solutions market (software, consulting, outsourcing, managed services, market intelligence, etc.) and adjacent markets than ever before — and new start-ups popping up on what feels like a weekly basis.

In the first installment of this series, we covered the first three sector M&A and investments trends that we’re paying attention to in 2020. These are competition growing between strategic and financial buyers; ERP and big tech getting more active in the sector; and buyers/investors expanding their definition of procurement technology.

Today, we turn our attention to our next two trends. These are:

Trend 4: Convergence of sourcing, category and market intelligence solutions: blurring the lines (i.e., application/technology, services, content/intelligence, etc.)

Trend 5: Payments, accounts payable and procurement intersections accelerate

Customer reviews for Field Nation are in the new SolutionMap Customer Insights report

This week’s SolutionMap Customer Insights report focuses on customer reviews for Field Nation, a provider of workforce management solutions. The applicable SolutionMap category for this report is in Direct Sourcing of Workforce and Services (DSW/S).

SolutionMap Insider members can read about Field Nation in our latest report.

In each Customer Insights report, we provide a one-page summary of details from the SolutionMap peer review process. It includes ratings on how well the vendor meets its customers' expectations, three key differentiators for the vendor and a list of quotes from customers about the vendor’s greatest strengths.

2020 Predicaments in Supplier Management: Top 3 Problems in SXM

LinkedIn ProFinder

(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 Magnus Bergfors lays out the predicaments faced in supplier management (SXM). And for our PRO subscribers, his other post today offers his predictions for 2020.)

Just before the holidays we published a PRO brief (The 5 Building Blocks of Supplier Management Capabilities) on the complexity of the SXM market and created a framework for how to define this space. That article highlights one of the lingering issues with supplier management: There is no one-size-fits-all solution here. That is, however, a very broad predicament, and in this article we want to break this down into a few more specific predicaments.

2020 Predictions in Supplier Management: 5 Areas for Improvement in SXM [PRO]

In our other post today on SXM predicaments in 2020, we discussed some of the current predicaments around supplier management centered on supplier data, supplier segmentation and category management.

To address these issues, buying organizations need to get serious about supplier data management as well as overall supplier management strategies. Unfortunately supplier management is often a secondary responsibility for procurement organizations where the focus tends to be on sourcing and delivering savings. The exception is in some cases in the IT space where some organizations have established vendor management offices (VMOs) to manage the more strategic and critical supplier relationships.

The sourcing and savings focus also results in a lack of interest in making sure that supplier data is managed correctly. Onboarding suppliers often falls to accounts payable organizations whose focus is on making sure that the vendor master data is accurate from a standpoint of getting invoices paid and preventing fraud.

More mature organizations have, however, realized that suppliers need to be managed (not only sourced) and that there is an enormous amount of value to be realized through better supplier management and collaboration — as well as, in some cases, co-innovation.

But we also need improvement in the applications and technology to support this. In this Spend Matters PRO article, we will explore five predictions in how we think applications and the SXM market will evolve to meet these challenges and help procurement organizations manage their  suppliers better.

Givewith Q&A: How technology allows social impact to be ‘seamlessly embedded into transactions’

As social and environmental issues become more important to regulators, consumers, investors and C-suites, companies have begun programs to address sustainability, corporate social responsibility (CSR) and topics related to ESG — environmental, social and governance issues.

Besides satisfying outside interests, businesses also can find value in these pursuits — but they may not be getting all of the benefits that they could. So we interviewed the founder of Givewith, CEO Paul Polizzotto, to shed some light on the issues.

Givewith uses technology to help companies match their sustainability and ESG efforts with a nonprofit or social enterprise that benefits those areas. Givewith evaluates hundreds of nonprofits and social enterprises and works with companies all around the world to help turn everyday business into a social benefit.