Procurement Strategy - Premium Content

The future of spend analytics: From Jason Alexander to Jerry Seinfeld [PRO]

In a previous article, “What the Jason Alexander hoodie ad teaches us about the past and future of spend analytics capabilities,” we talked about how spend analytics in the source-to-pay (S2P) world is a bit like George Costanza in Seinfeld's world. It's still a bit of a side-show, even if it shouldn't be. Sometimes we have to laugh at it, like when it tells us equipment shoes are footwear, even though we should be crying.

But just like the Jason Alexander hoodie from the Super Bowl commercial, if we can laugh at it, or at least acknowledge its flaws in terms of where analytics’ value generation typically comes up short, we will end up respecting its potential even more — because we will be open to the possibility of a new generation of solutions that will provide a level of value not previously seen. Then we will transition from the sideshow of George Costanza to the main act of Jerry Seinfeld as spend analytics begins to take center stage in its own show.

In this follow-up article, we will specify the properties of third-generation solutions and provide some detailed examples of value identification that will only be possible in next-generation systems. First, we'll highlight some of the major shortcomings of current second-generation solutions and overview a few best-of-breed providers that offer, or are close to offering, third-generation capabilities. While we touch on only a few key capabilities in this article, these should be enough to highlight what 2.x solutions are missing and just how deep the opportunity iceberg goes.

E-procurement as a strategic weapon — With BuyerQuest acquisition, ODP preps for war in omnichannel B2B [PRO]

ODP BuyerQuest acquisition

This Spend Matters PRO analysis looks at the deeper implications of Thursday’s news that the e-procurement specialist BuyerQuest was acquired by The ODP Corporation.

When many people think about e-procurement, especially for indirect procurement that is nonstrategic, it doesn’t seem very exciting. However, procurement can actually be a secret weapon — not just for improving back-office efficiency and driving down purchase-cost savings, but also a way for procurement to increase its value to the business, including supporting revenue uplift.

One perfect example here is the curious case of The ODP Corporation, previously known as Office Depot Inc.

ODP for years has recognized, and felt, the threat of digital disruption in the form of Amazon and other online retail taking business away from its on-premise retail operations. It made the pivot to B2B years ago, and its B2B business has been overtaking its B2C business, and the firm has set itself up as a B2B holding company to offer more than just B2B office supplies, but also IT (via its Compucom unit), and other horizontal business services and vertical solutions.

And it wants to stave off Staples’ recent bid (third time’s the charm?) and try to slough off the physical retail space that’s an albatross around its neck, especially in the times of a pandemic. (See related links below if you want to see our old coverage of the last edition of the Staples/ODP saga).

But, how can e-procurement help?

ODP, of course, has to use e-procurement itself to improve cost savings and efficiency, and it also has to integrate its B2B sell-side systems to various customer e-procurement systems (over 100 of them, to be exact).

But, why would ODP buy a nifty little e-procurement vendor (with some broader procure-to-pay capabilities) like BuyerQuest when it could continue pursuing the status quo?

And how could ODP lure Prentis Wilson, the B2B veteran who put Amazon Business on the map and left it to run Boxed.com, basically a digital-only version of retail discount warehouses?

The reason is threefold: opportunity, strategy and digital.

And it’s more than just something like Koch buying Infor — it’s actually more interesting and disruptive if you dive down into it. We’ve always used scenarios to get clients thinking — like, “What if Amazon bought Coupa (or plug in your favorite S2P vendor here)”?

Well, it’s potentially more than a hypothetical here, given what just happened!

In this PRO analysis, we’ll get into why this is such an important strategic move and we’ll address these issues:

  • Framing ODP’s strategy
  • Where Amazon Business fits in all of this (comparison)
  • What the transaction means for ODP and possible strategic thrusts
  • What the transaction means for BuyerQuest customers & prospects

If you want to come up to speed on BuyerQuest and how it compares in the procurement technology market, we recommend starting here:

What’s behind the investment in Globality’s services sourcing solution? [PRO]

Globality provides a procurement technology solution that uses AI to enable organizations to source complex services across multiple categories. At organizations across all industry verticals, services comprise, on average, 50%-60% of external spend. Most of these services categories are not well or comprehensively managed, and purpose-built technology solutions have been scarce.

Globality recently completed a $138 million Series E round from Sienna Capital, a wholly owned subsidiary of Groupe Bruxelles Lambert, and Softbank Vision Fund, bringing the company’s total funding to $310 million since its inception in 2015. This funding will support the company’s continued growth, including go-to-market and client-facing activities and, of course, product development, including user experience design (UX), industry vertical expansion, spend category additions, internationalization, etc.

To understand what is driving this investment, it is helpful to look back and examine Globality’s development as a business and its strategic momentum over the past 1-2 years. We were able to catch-up with Globality’s Chief Revenue Officer, Keith Hausmann and review what’s been happening at Globality and where it is headed.

Accounts Payables Automation update (Part 2) —  Re-evaluating e-pro, supplier enablement, invoicing, payments, financing, analytics [PRO]

Analytics

As Spend Matters re-evaluates the AP automation sector’s technology developments, Part 2 of this PRO analyst series will focus on the six key elements of AP automation that we evaluate for our SolutionMap’s scoring and ranking of vendor offerings. (Don't read this without reading Part 1, about re-evaluating the tech developments in AP automation.)

We saw these six areas change in 2020, so we’ll look at how the function is evolving. This post explores the technological, functional and document-level components required to automate the AP function, and it mentions the stakeholders involved.

There are likely use cases that require much more technology, or much less, than what we mention here. So give us your feedback.

In Part 3, we’ll discuss the market landscape for AP automation providers.

Accounts Payables Automation update (Part 1) — Re-evaluating the sector’s technology developments [PRO]

Accounts payables is a business process with great operational workload that needs to be handled with great efficiency and effectiveness. If not done well, it might generate significant additional costs to the business and add risks like business fraud or damage commercial relationships with suppliers — all of which harm a company’s bottom line.

Although the pain points of the accounts payable process are the same today as in the past, the importance of its automation has become greater recently as businesses look for more value creation than just operational efficiencies. And that counts even more so with the arrival of COVID-19, which has shaken up the status quo of all companies’ processes.

Today, procurement technology providers have been funded with millions of dollars to create better solutions to automate this process and improve AP’s integration with other business processes, like procurement (2- and 3-way match), accounting (reconciliation), and treasury (cash flow optimization).

New technologies and the development of advanced solutions have made it possible for many more companies to have access to AP automation solutions that were previously unthinkable for an SME, and for large and global companies. Examples include the cloud, API integrations, artificial intelligence, RPA, digital payments, data extraction solutions, etc.

Therefore a year ago, we at Spend Matters started with a new SolutionMap category that compares AP Automation offerings.

However, the evolution of the AP automation solutions in 2020, and the sector’s push to include other business processes, has led us to rethink the approach we take toward the AP automation function and how we'll analyze it in 2021.

In this three-part Spend Matters PRO series, we will explain what we are seeing in the AP automation market, the components of our analytical approach and the state of the AP automation solution market.

The 5 Levels of M&A Technology Integration: An Introduction [PRO]

integration

In this Spend Matters PRO series, we will define, introduce and explore the five levels of M&A technology integration that vendors must go through when bringing together different companies and platforms.

We hope this will allow everyone in the market — customers especially — to plan for and assess different levels of vendor integration, and ultimately, will contribute to aligning the value created over an extended time horizon for technology buyers and shareholders alike.

This is important because while mergers and acquisitions (M&A) often generate value for shareholders, they do not always do so for customers — or at least not at the level they are “sold.” Such a strategy can create obfuscation for users and result in solution components that do not necessarily “talk to each other” or “work together” as well as a PowerPoint or demonstration might suggest.

And since every suite vendor in the source-to-pay market (except Zycus) got to where they are at least in part — and sometimes as a primary strategy — by acquiring other providers, this is a particularly important topic. We should note Zycus does not get a free pass here either: It has had its own issues making different, internally developed platforms and codebases talk to each other, however, which mirror M&A integration challenges.*

Today, we introduce and define the five levels of M&A technology integration, where Stage 0 is no integration at all. And we’ll explain why the five stages matter, starting first with establishing a reference framework for customers, vendors, consultants and investors.



* This topic applies beyond M&A as well, in cases of internal vendor re-platforming of solutions, integrating different internally developed platforms and customer migration (e.g., a transition from enterprise software or early SaaS or to a modern cloud architecture).

Now let's delve into the details about solution integrations.

Let the bots battle to their elimination. They won’t help you either! [PRO]

robot

Editor’s note: This Spend Matters PRO post has been unlocked to continue our exploration of how to get the most value out of your procurement technology and to provide a sample of the depth we go into in our PRO material.

In our piece titled “Have You Mastered the Procurement Basics yet? we explained how AI won't save you if you haven't covered the basics, because even the best AI needs Big Data (which is likely bigger than you have) to learn from and considerable training to be effective.

Furthermore, while we briefly mentioned Automation, we didn't discuss it in depth, nor did we discuss it outside of AI. Nor did we discuss Robotic Process Automation, or Bots, which various vendors are vigorously vending to the virtuous, who will not gain from their implementation and, in fact, may lose dearly.

This is because, despite all the marketing claims to the contrary, at least today, Bots are nothing more than packaged automation scripts with simple rules and context that can be used to automate basic tasks, tasks that sometimes are less complex than those that can be figured to be handled automatically in more mature platforms.

The Direct Sourcing of Workers/Services (DSW/S) Solution Market Landscape [PRO]

direct sourcing contingent workforce

Spend Matters Contingent Workforce/Services SolutionMaps are made up of three maps covering the main enterprise software solutions used by organizations to manage contingent workforce and services (CW/S) procurement.

These three maps represent purpose-built solutions for:

  • Temporary Staffing (solutions known originally as VMS (vendor management system) has been the key enterprise technology for over 25 years)
  • Contracted Services/SOW (solutions — whether suite modules or stand-alone — designed to variously enable the management of corp-to-corp, third party services)
  • Direct Sourcing of Workers/Services (DSW/S) (solutions designed to enable enterprises to directly source and manage independent workers and small service providers or SSPs)

This Spend Matters PRO market landscape report covers the Direct Sourcing of Workers/Services (DSW/S).

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 8) — Beyond Continuous Improvement [PRO]

This is the last of our multi-part Spend Matters PRO series on transformation, focusing not just on digital procurement transformation, but also a broader supply-aware transformation of the value chain and the business (i.e., spend management and supply management improve business management). In the previous installment, we covered:

  • How procurement can use an empathetic, but deliberate, design-centered approach to align with stakeholders and meet them where they are at their many “tables” (albeit virtually given the pandemic)
  • The importance of a well-articulated procurement mission and “brand” that coherently communicates and speaks to the business stakeholders, rather than just being a technocratic procurement strategy that simply executes a narrow value proposition.
  • Pathways for procurement to be a little more proactive and structured in its transformation approach.
  • How procurement can formally “guide” a best-practices spend/supply management process supported by technology that goes beyond tactical “guided buying” processes.

We also featured our procurement adaptation of Amazon’s flywheel (and Covey’s influence model for good measure) before laying out a five stage transformation model with embedded recommendations and emerging techniques and tools that can help on the transformation journey.

But, there is still a chapter to be written here, and it deals with the problem of “the final mile” that links the procurement strategy and transformation to the actual projects in the trenches. When there is poor linkage, here are some of the issues:

  • Individual projects are considered in isolation without looking at the bigger picture relative to strategy and to other projects
  • Steady state processes are increasingly rare in today’s increasingly volatile environment, but yet, change management is still difficult to estimate and execute
  • The use of ‘wave planning’ for prioritizing sourcing projects (i.e., plotting impact vs. effort) is a noble goal, but the technique is less widely adopted across processes, and the methodology for estimating the effort is usually fairly crude
  • Speaking of sourcing, too often, the sourcing “intake” process is fairly reactionary and tactical in nature when in fact the opportunities could be made more strategic and transformational if they were better anticipated and coordinated with other efforts
  • Too much picking of low hanging fruit projects (i.e., strip mining for savings) without building “transformational muscle” makes it harder to attempt picking the higher hanging fruit with more complex cross-functional (and cross-enterprise) projects

In this last installment, we’ll share a simple five-step transformation project evaluation and implementation process that can be used for digitally intensive projects (or not), strategic projects/programs (or incremental improvements), and for cross-project transformation roadmapping. It will utilize 15 dimensions that can be used to estimate a degree of difficulty for specific projects (e.g. to help plot that wave chart discussed earlier) or for the broader transformation.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 7) — Blueprinting the Transformation [PRO]

In this multipart Spend Matters PRO series, we’ve outlined how procurement can move beyond traditional spend influence tactics to add more value to the business and thereby relevant procurement value as well.

In this installment, we will summarize and review the previous lessons that highlighted some of these engagement examples, and will then pull up a level to reflect on what these transformation examples have in common. And then we’ll preview a transformation framework that can provide some practical guidance.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 6) — Transforming the Supply Network [PRO]

In the previous two installments of this Spend Matters PRO series, we explored how procurement can improve its influence within the broader supply chain by supporting product/service lifecycles and transcending mechanistic BOM-based sourcing workflows to also focus on revenue uplift, supplier innovation and “design for supply” use cases.

In this installment, we will finish our coverage of how procurement (with the help of its functional partners) can enable the product/service lifecycle and the end-to-end supply network. And then we’ll wrap up this series on some transformation lessons learned in turning episodic moments of procurement influence into a more systematic evolution of procurement value.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

Part 3 dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process).

Part 4 was an introduction to attention to supply management and direct procurement influence. For Part 5, we dug into what it takes to create strategic supply partners and also consider the technology vendors needed for extended supply networks.

Now let’s look more into procurement’s role in transforming supply networks.

Beyond Spend Influence: Enabling Procurement’s Emerging Roles in Business Transformation (Part 5) — Supply Chain / Direct Procurement Influence (Cont.) [PRO]

market intelligence

In the previous installment of this Spend Matters PRO series, we explored how procurement can improve its influence within the broader supply chain by supporting product/service lifecycles and transcending just basic BoM-based direct materials sourcing workflows. In that piece we explored how procurement can support sales and marketing processes to improve revenue uplift.

In this installment, we will continue our exploration of the rest of the overall value lifecycle from design all the way through to service and then finishing up with supporting the most important aspect: the transformation process itself.

Part 1 of this series laid out the need for leadership in procurement to help bring about transformational change — and how to work with stakeholders. In Part 2, we discussed how progressive procurement organizations were improving their influence through coherent communication and alignment of procurement “services” to various stakeholders.

Part 3 dove into procurement improving its influence into indirect spending and how it can improve how the business gets more value from its spend and its “spend management” process (e.g., dovetailing into the business planning process). Part 4 was an introduction to attention to supply management and direct procurement influence.

Let’s dig into what it takes to create strategic supply partners and also consider the technology vendors needed for extended supply networks.