Getting Started with Sourcing Technology

It is easy to think that every procurement function in the world is using procurement technology, or even the latest procurement technology the market can offer – perhaps end-to-end procurement suites, covering all the bases, or the “best of breed” products covering capabilities such as sourcing, purchase to pay, risk, spend analytics and so on. Everything it seems is now supported by AI of course, with machine learning, super-slick user interfaces, integrated master data management … the works.

It’s tempting to think that – but it would be wrong. Both from survey results and from our own conversations with practitioners at events, it is clear that many organisations are nowhere close to that nirvana. They’re still working manually (even in some key areas), or are restricted to ERP functionality, which is sub-optimal in the procurement space, or use home-grown tools in which MS Excel and other ubiquitous off-the shelf components play a major role.

How then should such organisations get started on that journey to professionalising in terms of their use of technology? If we look at sourcing capability, the providers and products range from very user-friendly options that focus on the core sourcing capabilities, through to the most powerful optimisation products that can handle huge complexity. There may be organisations that can jump straight into the most complex tools, but in most cases, starting with something easy for users to grasp is probably sensible.

There are similar issues around the commercial side of the equation. You might not want to invest hundreds of thousands or even more until you’ve proved the benefits internally. So, options such as using a managed services provider to run initial sourcing exercises or taking advantage of solution providers who offer a low-priced entry route (perhaps a “pay as you go” option on events) might be preferable. You also need to decide if you want your first electronic sourcing event to be an auction or a conventional RFP-type exercise. There are pros and cons in both cases – and actually a good solution provider will help you make that decision too.

Jason Busch wrote here about his fondness for the “deep” persona – one of the Spend Matters SolutionMap personas (Nimble, Deep, Turn-Key, Configurator, CIO Friendly, Optimizer for sourcing providers and Global for CWS vendors), which describe different types of organisation and enable SolutionMap readers and clients to select the right solution provider to meet their needs. And Spend Matters chief research officer, Pierre Mitchell, also chose his favourite ‘persona’ which he wrote about here. Of course, Jason and Pierre are deep – deeper than anyone, we suspect, in their grasp of procurement technology - but not everyone is an expert of their magnitude! It is a case of choosing what is right for you and your organisation, which is exactly what the “persona” concept aims to help you with.

Some of the points we’ve talked about were also highlighted in a new podcast we recently listened to from technology firm Market Dojo, which happened to be hosted by our own Spend Matters “alumnus,” Peter Smith. There’s an interesting discussion of the “where do you get started” issue in terms of sourcing technology between Peter and Alun Rafique, Market Dojo founder. Peter talks about how and why Volkswagen became unhealthily dependent on a particular supplier, and the lessons learned from that. You can check out the podcast here or download it from here.

There’s also much more SolutionMap insight into sourcing solution providers here, freely available, including Market Dojo as one of the providers  -  and even more data and information that you can access if you subscribe.

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