Globality Gets Into Gear – A Serious Attempt To Disrupt Global Services Buying?

There are many ways to start a new business. You can develop your idea on the kitchen table, rope in a few friends who will work for nothing to help you get going, live hand to mouth for a while, and gradually hope to build some awareness and revenue.

Or you can have a big idea, get some of the most senior business people in the world excited about it, raise £25 million or so, build a top management team that would grace any Fortune 500 firm, and create a sense of excitement and credibility about your operation pretty much from the start. Clearly, the second option requires cash, but if you can pull that off, it is possible to grow a significant business very quickly. If, of course, your idea is fundamentally a good one.

That second route is the one followed by Globality, a new firm providing a technology and service solution for the procurement of a number of complex service spend categories, including marketing and legal services. It describes itself as “a global B2B marketplace for premium business services that uses AI to match corporations with exceptional small and midsize service providers in a number of complex service spend categories”.  Its founders are serial entrepreneur Joel Hyatt and Lior Delgo, a technologist who sold two previous start-ups to Microsoft.

As Fortune reported in January 2017,

“Globality, based in Menlo Park, Calif., has raised more than $37 million from a group including former Vice President Gore, one-time Apple retail executive Ron Johnson, and former Yahoo CFO Ken Goldman. In addition to Dennis Nally from PricewaterhouseCoopers, Globality's board has several members with many years of experience in professional services, including Oracle co-CEO Mark Hurd, former IBM CFO John Joyce, and Andersen Tax CEO Mark Vorsatz”.

As well as a superstar Board, the senior management team is also impressive. We spoke to Daniel Kline, SVP of Global Sales and based in London (and an impressive chap himself) to find out more about the firm. While the HQ is in California, “it is important that we have a presence in London and indeed more widely”, he says. That is because the firm looks to help large corporate clients find the best service providers globally.

Indeed, one selling point for clients is that Globality will find great suppliers in countries where maybe the client has limited knowledge or expertise. So if you suddenly need a great law firm in Malaysia or Mozambique, and you have little experience or presence there, how do you find the best firm? Minimum assignment size is $50,000 by the way, so we aren’t talking tiny projects here.

Globality is building a global network of vetted and accredited solution providers, largely small and mid-sized firms, in five key service areas; Marketing, Legal, Energy, Environment and Social Impact, and we understand that Consulting Services will follow shortly. The concept is that Globality clients will use a combination of the firm’s technology (more on that later) and human expertise to source suppliers in those spend areas. Globality then take a cut of the fee.

The firm places a lot of emphasis on finding small and mid-sized firms as suppliers, and supporting that whole agenda – on the basis that large buyers often don’t look hard enough and miss the benefits of using such expert providers. There are apparently already over 1000 vetted small and midsized firms located in more than 60 countries in place as part of the network.

The Globality technology looks good based on our quick initial look. It helps clients develop a specification and project brief, using AI with templates, prompts and workflow so that a robust and accurate requirement can be developed. This can then be provided to a range of firms on the Globality “register”, who then respond via the platform, sparking a dialogue process between buyer and potential supplier which ends with a supplier selection decision.

So, it has elements of a “sourcing” platform there, although it is not a fully featured eSourcing system that you might use for competitions where many suppliers respond formally. But equally, that element of assisting the buyer to develop their requirement is something most sourcing solutions don’t have.

Our initial view is that Globality could certainly be of value for large firms who spend a lot of money globally in these areas. The firm will have to continue building its network of suppliers quickly, we would suggest, and get the balance right between the size of the supplier population and maintaining quality in that community. The other key issue in our opinion is cost.

The initial Globality position is that they take 15% of the assignment value, which in effect comes from the provider. While this is certainly a “value adding” service, that seems quite a high figure, particularly for larger projects. But if Globality can demonstrate the value they are bringing - in terms of lowering the cost of assignments or better outcomes than would be achieved without their involvement - then buyers will be content.

Dennis Nally, ex PwC chair, and a member of the Globality Board, says this on their website;

“Many companies today misguidedly attempt to reduce procurement costs by working with a small set of large service providers instead of allowing quality and value to drive their selection process. Globality’s disruptive technology will enable companies to reliably identify the best provider at the best price in a scalable way".

We would fully support that – indeed, we’ve written about that very issue many times. The trend to aggregate and consolidate supply over recent decades has had some negatives as well as positives, and buyers should always be looking for the best suppliers, not just the usual suspects. From that point of view, we applaud Globality’s intent, and will keep an eye on their progress over coming months.

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