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2020 Predicaments in Strategic Sourcing: How to Make It More Strategic

(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 strategic sourcing. And for our PRO subscribers, his other post today offers his predictions for 2020.)

Strategic sourcing as a concept was introduced in the 1980’s and heavily influenced by consulting firms such as McKinsey (which gave us the famous Kraljic matrix) and A.T. Kearney — and is a process that is designed to help procurement organizations successfully source or renegotiate products and services in a deliberate manner.

While this process can deliver billions in savings, there is a larger problem. This approach is binary — you either run a strategic sourcing project or you don’t — and it’s very episodic in that once you have implemented the strategy, you then move on to the next project. This is the proverbial “drive-by sourcing” and “three bids and a buy and a cloud of dust.” This means that the follow-up and management of the contract is ignored.

Then there's the concept called category management. It has its roots going back to the Kraljic matrix (which profiles various spend/supply categories and then tailors the resulting supplier sourcing/management strategies), but the term “category management” really originates in retail, where the idea is to treat your categories as individual business units. Applied to procurement, it becomes a process to continuously manage your category.

In 2020, how should these two concepts be addressed by procurement technology vendors?

Tradeshift has $240 million funding round, plans to restructure and focus on near-term profitability

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Tradeshift, a solution provider known for its network, supply chain payment offerings and marketplaces, announced today that it has a funding round of $240 million in equity and debt that sets “the company on a direct path to profitability in the near future,” the announcement said.

CEO Christian Lanng spoke with Spend Matters and said this marks a time for refocusing on high-value efforts and restructuring the company, which was founded in 2010.

“It's been a very long journey to get critical mass. It actually doesn't feel this long today. Ten years is quick in our space,” Lanng said.

Read more about the changes at Tradeshift.

2019’s top 5 most-viewed Nexus posts: 20 Tips; Workday-Scout RFP deal insights; Icertis and the red hot CLM market

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In July, Spend Matters Founder Jason Busch launched Spend Matters Nexus — his focus on the M&A and business side of the procurement technology market. Here’s how he describes it:

“The Nexus membership program is designed for investors/acquirers (private equity, corporate development, etc.) and solution provider CEOs in the procurement and finance technology/solution ecosystem. Membership offers a new strategic lens to the solution areas covered on Spend Matters.

"Nexus was borne out of an increased demand for research subscriptions, due diligence and strategy support with our private equity clients in late 2018 (which has picked up exponentially this year). But recently, our team realized there was a flip side to working with technology acquirers — providing relevant market intelligence and fresh, data-driven analysis for solution provider CEOs, boards and leadership teams.”

And here is a countdown of the top 5 most-viewed Nexus stories of 2019:

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A Holiday Gift Your Team Will (Actually) Appreciate

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Forrester rips SAP Ariba in its latest E-Procurement Wave

The Spend Matters team has known Duncan Jones, the lead author of Forrester’s latest E-Procurement Wave, for just about as long as the average technology solution provider in this sector has been in business. Duncan is known for trading humorous barbs with Jason Busch, Spend Matters’ founder, at various industry events with his typical acerbic British wit. However, there is nothing humorous about Forrester’s latest Wave when it comes to singling out SAP Ariba for failing to live up to its past prowess, especially in the technology area. What's going on with Ariba's product performance and personnel churn?

Customer reviews for Vroozi are in the new SolutionMap Customer Insights report

This week’s SolutionMap Customer Insights report focuses on customer reviews for Vroozi, a provider of spend management, marketplace and invoicing automation solutions. The applicable SolutionMap category for this report is in E-Procurement, Invoice-to-Pay and Procure-to-Pay. SolutionMap Insider members can read about Vroozi 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.

SolutionMap: 59 procurement software companies ranked (Q4 2019 Update)

Spend Matters today released its Q4 2019 SolutionMap, ranking 59 procurement software companies across 12 solution categories, including E-Procurement, Sourcing, Spend Analytics, Supplier Relationship Management, Contract Lifecycle Management and Contingent Workforce & Services. Click on this article to see which new providers joined the rankings this quarter — and to see how to access the rankings for free!

Customer reviews for Bonfire are in the new SolutionMap Customer Insights report

This week’s SolutionMap Customer Insights report focuses on customer reviews for Bonfire, a cloud-based provider of sourcing whose offering is known for its ease of use.

The applicable SolutionMap category for this report is in Sourcing. SolutionMap Insider members can read about Bonfire 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.

Rob Handfield interviews Pierre Mitchell: What’s on the mind of CPOs in 2019?

For the equivalent of a fireside chat between two of the procurement and supply chain industry's most respected figures, you've come to the right place — look no further than this video discussion between Dr. Rob Handfield and Pierre Mitchell, tackling the question: What's on the mind of chief procurement officers in 2019?

Q&A with new Jaggaer CEO (Part 2): Merging its history and making a mark on the future

“Jaggaer has a wealth of information,” said new Jaggaer CEO Jim Bureau. “Over the past 25 years, we’ve gathered more and more data to build intelligence upon, and it’s incumbent upon us to be able to tap into that information in a meaningful way so that we securely provide appropriate instructions to our customers to enable them to be proactive with it.”

In a two-part Q&A with Spend Matters Founder Jason Busch, Bureau outlined the suite provider’s plans after three big changes this year: all of its solutions are now on a single platform called Jaggaer One, it got a new owner over the summer and the change in leadership a few weeks ago that elevated Bureau.

Today, Bureau discusses Jaggaer’s partner network and looks further into the company’s future to discuss what its products will look like and what the company hopes to accomplish.

Medius to buy Wax Digital, giving the AP automation expert full source-to-pay prowess

AP automation provider Medius today announced that it is buying Wax Digital, the UK-based suite provider of source-to-pay capabilities.

Medius, which is based in Sweden, sees the deal as a chance to allow its "current and future customers to generate increased automation, visibility and control across the entire purchasing process.”

Read more about the deal and how it reshapes the procurement technology market.

Q&A with new Jaggaer CEO: ‘Our vision and passion … it’s around the customer experience’

The global suite provider Jaggaer has been undergoing a lot of changes this year — converging its solutions on a single platform called Jaggaer One, getting a new owner this summer and seeing a change in leadership a few weeks ago.

To learn more about these changes, Spend Matters Founder Jason Busch talked with Jaggaer’s new CEO, Jim Bureau, who has been with the company a little over two years and most recently was executive vice president.