Procurement Technology - Premium Content

Aligning your digital P2P strategy to your ‘post COVID-19’ business environment (Introduction) [PRO]

Companies’ plans and the markets' demands for procure-to-pay process digitization have accelerated and evolved over the last five years, but that change is nothing compared to the COVID-19 disruption seen in the first half of 2020.

The coronavirus crisis made all organizations react and rethink the pace of their digital transformation strategies, which now often must be carried out in months rather than years. As we say in Mexico, "El miedo no anda en burro" or "fear does not ride a donkey,” which means it hits you fast.

Digital transformation (in this case for P2P processes) must now take place ASAP — especially if you’re trying to match invoices back to manual contracts that are sitting in the deserted office! Organizations can no longer think that situations like COVID-19 will never happen again, and businesses that do not digitize their processes now will not be able to compete or even survive.

But to have a great P2P digital strategy, there is more to understand. The changes that businesses are facing are not just about those caused by COVID-19; it is about those forces that are magnified by COVID-19: geo-political accommodation that is happening in the world, the change of global powers, oil prices, gold, the U.S. dollar volatility, social responsibility, global sustainability, global supply chain risks, security.

All of these and other factors greatly affect "B2B procurement" — and we intend to discuss what can be done about it.

The goal of this Spend Matters PRO series is to support buying organizations with a list of key questions (and potential answers) to build a solid and holistic procure-to-pay digital strategy. I will outline 10 major business requirements within the current environment that require strong P2P capabilities. I will then highlight 13 critical digital P2P capabilities that support these requirements.

P2P becoming central to meet key business demands

P2P solution providers know that today is the perfect time for procurement to generate value for a business because COVID-19 has disrupted supply chains (see our Coronavirus Response series here) and the crisis has shown that P2P activities have become central to keeping businesses' operations on track, efficient, financially healthy (and keeping suppliers healthy too), and protected from risk/fraud. P2P is obviously more than just issuing POs and processing invoices, but also includes capabilities (described in great detail in our SolutionMap vendor rankings) such as:

  • Integrating e-procurement, e-invoicing and e-payments processes with each other and also to upstream sourcing and supplier management processes.
  • Keeping spend under management, in compliance, optimized and risk-free (e.g., supporting category management objectives)
  • Supporting effective cash-flow planning, monitoring and “optimization” (e.g., with supply chain financing possibilities)
  • Strengthening suppliers collaboration and relationship management as everything is becoming virtual

These business demands are core focus areas for companies. And there are new ones — but let's first illustrate how a changing business environment, a constantly evolving global organization, an ever-growing and more prepared competition that pushes to keep innovating, etc. are making all these demands continuously evolve. They are creating a more complex P2P scenario for all organizations that the P2P strategy and solution providers need to support to keep businesses’ eyes on the prize.

Just as an example to illustrate how business demands are evolving, let’s consider this: Not long ago, the most important topic in B2B procurement was to achieve e-procurement user adoption in order to increase spend under management. Vendors such as BuyerQuest and Coupa came up with an Amazon-like user interface, which became the most important e-pro feature to have.

Today that is not enough.

Now the UI is more about having the user experience (UX) not just delight the users, but now includes “pathing” them on intelligent workflows — and this intelligence keeps evolving and improving. The changing business environment keeps ratcheting up new demands for P2P processes and the value they need to create. It’s not an easy task to meet those demands, but it is possible with today's emerging technologies and system's integration platforms.

In the rest of this Spend Matters PRO article, I will discuss the business issues/requirements that P2P leaders need to satisfy in order to align with them and deliver P2P value, and then use this to discuss the critical P2P capabilities needed to support them. Only then can these leaders (and supporting solution/service providers) align their digital capabilities to them as well.

In future analyses, we’ll dive into these specific capabilities, link them to business pain points (and ROI and business cases), and detail what digital strategies and providers can help implement them.

Intelligent software agents in advanced sourcing: The bots really are the experts

Exciting times for Ireland-based, sourcing automation and optimisation software firm Keelvar. We don’t hear from them for a few years then, suddenly, major news! Keelvar, […]

Artificial intelligence levels show AI is not created equal. Do you know what the vendor is selling? [PRO]

Just like there are eight levels to analytics as mentioned in a recent Spend Matters PRO brief, artificial intelligence (AI) has various stages of the technology today — even though there is no such thing as true AI by any standard worth its technical weight.

But just because we don’t yet have true AI doesn’t mean today’s “AI” can’t help procurement improve its performance. We just need enough computational intelligence to allow software to do the tactical and non-value-added tasks that software should be able to perform with all of the modern computational power available to us. As long as the software can do the tasks as well as an average human expert the vast majority of the time (and kick up a request for help when it doesn't have enough information or when the probability it will outperform a human expert is less than the expert performing a task) that's more than good enough.

The reality is, for some basic tactical tasks, there are plenty of software options today (e.g., "intelligent" invoice processing). And even for some highly specialized tasks that we thought could never be done by a computer, we have software that can do it better, like early cancerous growth detection in MRIs and X-rays.

That being said, we also have a lot of software on the market that claims to be artificial intelligence but that is not even remotely close to what AI is today, let alone what useful software AI should be. For software to be classified as AI today, it must be capable of "artificial learning" and "evolving its models or codes" and improve over time.

So, in this PRO article, we are going to define the levels of AI that do exist today, and that may exist tomorrow. This will allow you to identify what truth there is to the claims that a vendor is making and whether the software will actually be capable of doing what you expect it to.

Not counting true AI, there are five levels of AI that are available today or will likely be available tomorrow:

  • Level 0: Applied Indirection
  • Level 1: Assisted Intelligence
  • Level 2: Augmented Intelligence
  • Level 3: Cognitive Intelligence
  • Level 4: Autonomous Intelligence

Let’s take a look at each group.

The basics of analytics: 8 levels — and the AI leverage [PRO]

Analytics is hot. In many organizations, analytics has gone from a "nice to have sometime in the future" to a "we need real-time, AI-backed predictive analytics yesterday to stem the flow of red."

But, as we've said before, not all analytics is created equal, and understanding what you are considering and what it can — and cannot — do is becoming more important than ever.

So in this Spend Matters PRO piece we're going to provide a short refresher on the levels of analytics — what they are, what to expect and what not to expect from each of them.

There are eight levels to analytics, and current solutions fall somewhere in the first seven. The majority offer functionality firmly contained in the first four levels, with only the minority truly offering full Level 5 functionality or higher.

We’ll also review some example functionality to help you understand what is, and isn't, out there and give you some guidance on how to compare the different platforms (and whether what a vendor is offering is sufficient for your organizational needs).

Coupa, BELLIN and Treasury Management Systems: What CPOs and CFOs need to know about TMS and links to procurement technology (S2P, P2P, AP) [PRO]

market intelligence

Earlier today, Coupa announced its acquisition of BELLIN, a treasury management system (TMS) provider. We covered the announcement on Spend Matters.

And on Spend Matters Nexus, a subscription service that focuses on sector M&A, we provided background insight into BELLIN, treasury (as a function) and the value proposition for procurement and AP in bringing procurement and treasury systems closer together from a systems perspective.

In this Spend Matters PRO analysis, we provide an introduction to treasury management system (TMS) components, describe the rationale for a TMS (over manual or kludged processes) and describe their touch points (foundational and advanced) with procurement technology systems / process architectures — including source-to-pay, procure-to-pay and accounts payable systems.

This research brief is aimed specifically at CPOs and CFOs, as well as source-to-pay process leads/owners and treasurers.*

But before we begin, let us tease out why this move should be perceived as exciting by CFOs. To bastardize one of the most famous statements of all time, this is a small step for Coupa, and a GIANT leap for procurement technology. Think about what “business spend management” is for a minute.

What is “spend”? It's cash flowing out the door.

So in practice, business spend management in Coupa jargon is essentially supplier cash disbursements management — ideally impacting cash before disbursement! But treasury is cash with a big C and therefore it’s spend with a capital "S." In practice, this is Coupa's first real foray — any vendor’s, for that matter — into broadening into "big spend management,” something we wrote about 5 years ago in fact!

Prior to making this more concrete in terms of what comprises a treasury management solution and its touchpoints with a source-to-pay (or procure-to-pay) procurement architecture, let us also keep our eyes on the prize by broadening the focus of business spend management.

If the business itself (i.e., CFO/CEO/board) is focused on return on invested capital (ROIC) and C as a proxy for cash (although in practice it’s always harder to liberate it than it is in theory), then procurement can transcend its role of just improving "R" through “spend”/savings, and take a more strategic role in bringing procurement and treasury together:

  • Freeing up cash through working capital improvement programs
  • Variabilizing costs to reduce invested capital and asset footprints
  • Reducing costs of capital and improving earnings (e.g., rebates) via innovative trade financing programs
  • Aligning spend planning and cash planning to sync up procurement and treasury with each other and the business during the FP&A process
  • Investing cash into innovative suppliers (e.g., digitally disruptive ones) rather than T-bills

OK, enough (attempting) to wax eloquent on the future of finance and procurement for now.

Let’s get down to what we’re here to introduce today: “TMS 101,” BELLIN, Coupa, the enterprise opportunity, and impact on the market.

* For vendor analysis, market and M&A-centric analysis, see our Spend Matters Nexus coverage of the deal.

CORONAVIRUS RESPONSE: Dear Procurement, AI won’t save you, but rules-based automation might! [PRO]

This Spend Matters analyst brief has been posted outside the PRO subscription paywall to share information that could help businesses take on the coronavirus disruption.

Given the coronavirus-related chaos going on now, you'd think now more than ever you'd want a solution that could just take some categories off your plate and source/procure them for you. But, all of these "AI" solutions are based on classical machine-learning algorithms that have produced standard responses based upon standard situations identified from large historical datasets where a significant amount of the time the data is consistent — price is relatively static over a period of time or rises over time in accordance with a predictable trend line, supply/demand imbalance is relatively consistent, there are no major shake-ups in the supply base or customer base or new major product introductions that significantly impact the supply/demand imbalance, etc.

Compare this to the current situation. There is no historical data that describes this chaotic coronavirus situation, and no standard responses in the platform's repertoire. There's no statistically relevant response and anything the platform did would be essentially random.

Now is NOT the time to deploy AI-based sourcing and procurement technology, and it's not the time to over-rely on any existing AI-based sourcing and procurement solution you might already have. You can use the analysis capabilities where you have access to daily information feeds and look at the recommendations, but definitely do not use any auto-sourcing/auto-procurement. Apply human oversight to every key step of the process until the global economic situation settles down to a new normal that has been consistent long enough to produce enough data for the algorithms to learn from and adapt to. Everything is an exception now, so there are no consistent rules.

On the flip side, you have no time for any tactical, semi-thoughtless tasks that can be automated, or at least automated the majority of the time and only escalated to human review in exceptional situations. Now that we're all stretched thin, working remotely, having to spend most of the day in online meetings, we need automation more than ever. In particular, we need all of the classic automation that has been used for years as well as the automation that is underlying modern AI-based sourcing and procurement programs, but manually (and not system) controlled through rules and semi-automated processes with exceptions and forced go/no-go confirmations by humans.

What's the difference?

Through this month, a Spend Matters' special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off. The discount applies to PRO subscription content from our analysts and other services. — Learn more

What’s the Price: Expert product cost management vendor review — a PRO Collab brief [PRO]


Editor’s note: This vendor review of What's the Price is the first in our "PRO Collab" series. Spend Matters will be inviting our expert friends in the industry to collaborate with us and complement our PRO coverage of the procurement, finance and supply chain solution landscape. Eric Hiller, the most knowledgeable person we’ve ever met in the product cost management sector, will kick off our Pro Collab initiative with his perspective on how the vendor What’s the Price fits into the cost modeling landscape.

Hello there, spend analytics crowd, product cost management fans and anyone else interested in improving the bottom line!

Back in December, Spend Matters was kind enough to invite me to do a two-part series on the most popular tools for product cost management on the market today (see Part 1 and Part 2). These tools spanned a wide range of use cases, including should-costing, target costing, design for manufacturing and assembly, parametric costing, spend analytics, etc.

Those articles were written from a historical perspective, and they classified solutions into sub-groupings by how they work. We received quite a lot of positive feedback on these articles, but many readers also asked us if we could go deeper into some of these applications and what their proper uses are in driving impact to the bottom line. We want to make sure that we help everyone as much as possible, so this is the first in hopefully a larger series of these spotlights on product cost management software tools.

We're starting today with one of the youngest tools on the market, What’s the Price, or WTP.

What's the Price entered the market about 2012 as the brainchild of three founders: CFO Jan-Paul Plieger, a former CEO and supply chain economist; CEO Robert Driessen, a seasoned supply chain procurement executive; and CTO Nico Bontenbal, a software entrepreneur.

User profile image

In January, Jan-Paul and Robert welcomed me to their offices in Rossum, Netherlands, where they gave me a personal demo of the software and an in-depth explanation of how they have been able to help customers. They even were kind enough to give me a demo license to tool around in the application and put the horse through its paces.

Here’s my detailed take on the solution from a product cost management perspective.

DocuSign-Seal Software transaction analysis (Part 1): Looking at DocuSign’s CLM assets (DocuSign, SpringCM, Seal)

Spend Matters recently predicted that DocuSign, the electronic signature specialist, would buy the AI-assisted contract analytics firm Seal Software (another reason that subscribers to our PRO research are ahead of the market). As the prediction noted in January, “we can’t help but think that DocuSign will be actively looking for inorganic growth options in 2020, and Seal Software might be an obvious choice given its previous $15 million investment. DocuSign will also likely need to focus its attention to the buy-side to bring some parity to its SpringCM pickup.” And so the prediction came true. Perhaps faster than we might have guessed (although the transaction will not close until later this year).

In the coming weeks, Spend Matters Nexus will publish a series of briefs covering the transaction and what it means from a corporate strategy standpoint for DocuSign in regards to targeting CLM. Our approach will include exploring remaining gaps in buy-side CLM for DocuSign.

But let’s start today by focusing on DocuSign’s inventory of assets and what Seal brings to the table, specifically alongside SpringCM.

We’ll also tackle what Seal’s AI provides to DocuSign, and offer some initial analysis about the fallout for the competitive landscape in this brave new CLM-meets-AI-meets-“platform” world (spanning a range of providers like Icertis, Agiloft, Coupa, SAP Ariba, Conga, LegalSifter, Kira, Luminance, LawGeex, Zycus, etc.). An aside in this regard: Other buy-side providers who used Seal will now be likely looking elsewhere for CLM support for counterparty document shredding, analytics and repository creation (Seal’s partners include PwC, KPMG, E&Y, Deloitte, IBM, Coupa, SAP Ariba and many others).

Let’s dive in.

If you are new to CLM market, we recommend starting with the following research briefs:

* Seal Software: Vendor Snapshot — Part 1: Background and Solution Overview
* Part 2: Product Strengths and Weaknesses
* Part 3: Commentary and Summary Analysis
* For SolutionMap Insider subscribers, see the CLM Scoring Summary that shows where vendors rank and details their capabilities, including both pure play providers (e.g., Icertis, Agiloft, SirionLabs) and the S2P suite vendors. We’ll be adding Conga in our spring SolutionMap release in March — and then add Apttus and hopefully DocuSign (SpringCM) in the fall release. The public can see the SolutionMap CLM vendor rankings by persona here for free.
* Commercial Value Management: Making Contracts the Commercial Core of Enterprise Value (Part 1) [PRO]
* CVM (Part 2): Using Next-Generation Contract Systems to Integrate Operations, Financials, Risk and Technology [PRO]
* CVM (Part 3): Critical Commercial Use Cases to Align Extended CLM with the Enterprise [PRO]
* 2020 Predictions for Contract Management: Where the CLM Market Is Going This Year and This Decade [PRO]
* Free content: 2020 Predicaments in Contract Management: Poor Adoption, CLM Market Fragmentation and Limited Imagination
* Free content: Artificial Intelligence in Contract Management (4-part series)

2020 Procurement Predicaments and Predictions — Part 1 (Series Wrap-Up) [PRO]

As the first month in 2020 is drawing to a close, the holiday season is a distant memory and sleeves are being rolled up in earnest. As such, we’ll wrap up the Spend Matters analysts’ 2020 procurement predictions series for PRO subscribers as we look forward to this new year and new decade. We’ll first do a quick recap of our predictions in six procurement technology areas:

* Sourcing, by analyst Magnus Bergfors
* Supplier Management (SXM), by Magnus Bergfors
* Contract Lifecycle Management (CLM), by analyst Nick Heinzmann
* P2P (Procure to Pay), by analyst Xavier Olivera
* Services Procurement, by analyst Andrew Karpie
* Procurement Analytics, by analysts Michael Lamoureux and Pierre Mitchell, the series editor

For a discussion of problems in each of these areas, see the analysts’ non-subscription posts about the predicaments per category.

In this PRO brief, we’ll address some of the foundational platform elements and broader market shifts that are happening regarding areas such as low-code/no-code platforms, open source, AI, bots, mega-vendor ecosystems, microservices, analytics and other areas. These digital capabilities aren’t just happening in a vacuum, but rather, responding to:

* buyer needs for increased agility, innovation and market options to move at the pace of broader digital business transformation, but also more focused procurement needs for better analytics, supplier engagement, commercial excellence, category intelligence, etc.
* supply market changes as M&A and an influx of private equity is chasing new opportunities — especially related to AI and specific areas that are still decidedly problematic, such as services procurement, tail spend management (and guided buying), category-specific functionality, master data management and other areas.

So, in keeping with our series, let’s dive into the forecast scenarios where we think the market will respond to these buyer needs/predicaments.

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.

Invoice-to-Pay Tech Selection and the Turn-Key Persona: Analysis & Commentary [PRO]

The market for invoice-to-pay solutions, much like e-procurement, has grown in size and relevance to procurement organizations in recent years. We even expect the I2P market will begin to rival the EDI-based world in the 2020s, eventually overtaking it.

Despite this rapid growth, the total number of providers in this space will likely remain relatively small. As leading I2P solutions continue to grow their supplier networks, their increased clout, based on their ability to connect more and more buyers and suppliers, will impede new providers from breaking into the larger I2P market.

Yet competition will come from other fronts.

Procure-to-pay solution vendors, for example, have begun to invest significantly in developing the I2P half of their suites, rounding out transactional shopping/ordering capabilities with functionality for invoice processing and, in some cases, basic payments support. This could create competitive pressure on I2P specialists in tech selection scenarios where access to end-to-end P2P capabilities are an important criterion.

Similarly, AP automation solutions are taking a bite out of a different customer base altogether: the long underserved middle market. Small and medium-size businesses are increasingly seeing benefits to adopting software that automate invoice receipt, capture and validation processes (sometimes inclusive of payments execution), yet these customers also seem to be satisfied with an 80%, “good enough” solution in terms of functionality. This creates a new competitive dynamic for I2P solutions looking to move down market, as decisive tech selection criteria may revolve more around usability and collaboration features than supplier network breadth.

Given these different competitive fronts and the evolving needs of this market, how can companies with different technology requirements evaluate invoice-to-pay solutions amid an array of vendors with varying degrees and kinds of capabilities?

Spend Matters’ SolutionMap accounts for these differences using a persona-based approach. Each SolutionMap persona is calibrated to weight evaluation requirements so that it reflects the profile of certain kinds of buyers. For example, the “Nimble” persona reflects small and medium-size businesses that prioritize fast time-to-value and ease of use in the selections; the “CIO Friendly” persona emphasizes technical foundation and interoperability with other enterprise systems to make for a straightforward implementation.

So, what do SolutionMap personas look at in the Invoice-to-Pay rankings, and how can they help your organization make better technology decisions?

In this Spend Matters PRO series, we’ll analyze the invoice-to-pay market using our five I2P personas: Nimble, Deep, Turn-Key, Configurator and CIO Friendly. (See persona definitions* below.)

This review is organized just like our RFI for SolutionMap, according to these topics: platform capabilities, services, features & functionalities, and customer value.

Let’s look at the invoice-to-pay features and vendors as viewed by the Turn-Key persona.

E-Procurement Tech Selection and the CIO Friendly Persona: Analysis & Commentary [PRO]

The e-procurement solutions market has been growing for the last seven years. Because of this rapid growth, the market is also fragmented, with numerous vendors competing for procurement organizations’ attention. Yet no one vendor is an ideal fit for all companies, due to the unique requirements of different organizations’ sizes, industry/vertical and prior technology investments (or lack thereof).

So how can companies with different needs evaluate procurement solutions amid an array of vendors with different capabilities?

Spend Matters’ vendor rankings in SolutionMap account for these differences using a persona-based approach. Each SolutionMap persona is calibrated to weight evaluation requirements so that it reflects the profile of certain kinds of buyers. For example, the “Nimble” persona reflects small and medium-size businesses that prioritize fast time-to-value and ease of use in the selections; the “CIO Friendly” persona emphasizes technical foundation and interoperability with other enterprise systems to make for a straightforward implementation.

So what do SolutionMap personas look at for e-procurement, and how can they help your organization make better technology decisions?

In a series of PRO articles, we’ll analyze the market according to the different SolutionMap E-Procurement personas: Nimble, Deep, Configurator, Turn-Key and CIO Friendly. (See persona definitions* below.)

This review is organized just like our RFI sent to vendors that are ranked in SolutionMap, according to these topics: platform capabilities, services, features & functionalities, and customer value.

Let’s look at the e-procurement features and vendors as viewed by the CIO Friendly persona.