IBM – The procurement people behind the Big Blue

Unless you’ve been to some of the procurement-focused events in recent years, you’d be forgiven for thinking IBM were keeping a relatively low profile, given their global reach. Those who go to Procurement World Congress and Digital Procurement World, amongst others, will know they are asserting a confident presence in thought leadership, technology and services in the procurement world. Bob Murphy, IBM CPO and Graham Wright, VP Global Procurement Finance & Ops at IBM, are sought-after speakers at events. Moray Reid, Global Leader, Source-to-Pay Offerings, Market Eminence & Strategic Alliances at IBM along with his colleagues Bob and Graham, can share the IBM Procurement Services story from the perspective of long tenure, with a sense of pride and passion that working with a company that has seen highs and lows and an amount of self-rediscovery brings about.

Being such a ubiquitous company has its weaknesses as well as its strengths. For IBM’s Procurement Services, on the one hand, you’ve got a significant, impressive and far-ranging base of existing clients, consuming some technology or service offered by IBM to which they can gain a foot in the door. But on the other hand, you may also be considered an expert in IT, not procurement, and you’re not necessarily plugged into the Procurement function which are much more familiar with the bespoke source-to-pay tech players and pure procurement services consulting firms.

I started spending more time getting to know IBM Procurement Services early last year. I didn’t quite know what IBM offered in terms of technology or services, what tech they had of their own, what other technology partners they may work with. I ended up learning a lot, demystifying the nebulous headline of IBM and Procurement Services. The commitment to delivering value and the enjoyment in what they do cannot be hidden in the discussions I shared with Graham and Moray recently. Creating the right structure, delivering value and enabling their customers through technology and expertise with a nuanced recipe tailored to each customer organisation is taken to heart by them and has never diminished since I’ve got to know them.

A couple of weeks ago I spent time with Graham and Moray, on a rare occasion that I found them both office-based for the day. I wanted to hear from them on how they position IBM in the procurement domain and I gained a real insight into how their procurement services truly come from within.

IBM is multi-faceted, to say the least. A huge transformation of the company is the legacy of CEO Ginni Rometty who steps down after eight years in April to make way for her replacement Arvind Krishna. Despite the company becoming leaner over those eight years, IBM still has significant global spend in its own right and as such, explains Moray Reid, “Procurement has a sizeable seat at the table within IBM as it is recognised that we deliver huge value. Our strategy is to develop an ecosystem within Source to Pay, nurture relationships and gain a meaningful, actionable understanding of the markets in which we operate.” Reid continues that through an Agile Transformation they have moved from a global, integrated model to a regionally focused, regional margin-driven business which aligned to a global strategy but delivers its value locally. This allows us to maximise client value through a simplified and streamlined organisation where agile cross-functional squads have end to end responsibility for driving value. Their procurement expertise is also regional and in looking at the value they can provide to their customers, they established a pretty unique model, turning their procurement organisation inside out; the internal experts who deliver value to IBM, also deliver to IBM’s clients.

What IBM Procurement Services does has been part of the ‘other hand’ story of IBM; such a behemoth of a company, communicating the nitty gritty of what one part of the organisation does is one of the challenges Moray and Graham are working to overcome.

In a nutshell, these services make up a large part of what they offer:

  • Source-to-Pay BPO Services, or part thereof - typically being Source to Contract, at which point IBM hand off to the client though, of course, the biggest bang for the buck comes from the full S2P BPO model.
  • Transformation Services - be it function-wide or on specific categories, which leads to …
  • Category Augmentation - providing expertise, tools, process to refine category strategy and execution. (Interestingly, IBM is the third-largest buyer of travel services globally, so they have a large degree of category expertise, and is a significant buyer of marketing, FM, Logistics, Professional, telecoms and technology services also).
  • Short-term consulting projects
  • Tech Implementations (advise, implement host, manage services) - IBM has relationships with most of the S2P tech provides out there. They announced a significant relationship with SAP two years ago (here) and are currently coding AI heavily into SAP as a major initiative.
  • Intelligent automation - enhancing technology with AI. This has been a highly successful offering for IBM, especially more recently as procurement functions see more and more benefit from the use of AI and integrating AI and RPA enablers is a sweet spot for IBM.

Moray and Graham talk about IBM procurement as an engine which they build for themselves and for their clients, as befits the need. “The S2P engine is a mix of technology and skills that works for IBM and its clients. We aim to automate as many S2P processes as suits us and our clients. However, each client needs its own design and we build the engine that is right for them,” explains Moray. “They’ll always be able to leverage our global IBM experience. For example, we have 80% of our spend on catalogue, higher than almost any other organisation, and we include professional and legal services in our catalogue spend.”

Naturally, there’s a healthy pipeline of accounts to position their services to. It’s not an exaggeration to assume that at least two-thirds of all organisations globally over a certain size will have something of IBM enabling them, but is there a typical client? “Not really. It depends on the region we’re working in,” replies Graham. “For BPO services, it starts to make sense with clients of $2billion turnover or above, with $200-$300m of addressable spend. On consulting projects, there is no typical minimum.” He continues “Once people realise what we can do, they get over the IBM name and want to work with us. Once they do, that can often be the tip of the spear in our partnership.” Commercials are no sticking point given IBM will operate on a T&M basis and often on a fully outcome-based arrangement.

So, what does IBM have which could give it a competitive edge? “Breadth and scale of what we can bring to our customers as a start; not many others can bring it all together,” Moray expounds. “As IBM innovates and because of the way we work with our clients in procurement, they will directly benefit from our innovations without delay. They will also have access not only to our global procurement teams, but also to our IBM heads of procurement and their expertise.”

IBM also has Watson, their ‘AI technology brand,’ which has already proved its worth in highlighting exposure to risk, in contracts for example, searching for contractual obligations, IP information, and so on, as well as in interacting with voice, text, its ability to learn, combined with the ability to reason. Watson has been a weapon in the IBM kit and continues to extend its potential. Additionally, IBM is working with their ecosystem of partners in bringing blockchain procurement solutions to bear - Trust Your Supplier (TYS) blockchain is a trusted source of information and digital identity that simplifies and accelerates supplier onboarding and lifecycle management which can be a problem area for every business. TYS allows users to identify, verify, and maintain supplier information in a secure, decentralized network.

But it’s the people I’ve met behind the brand who have left the biggest impression. Perhaps I anticipated ‘bland’ corporates regurgitating a well-played sales pitch but that’s anything but the case. Reid, Wright and Murphy are all colourful characters with ‘many’ years of combined procurement experience, without any egos. Though I can’t vouch for IBM’s procurement services (I haven’t spoken to their customers, and I’m waiting keenly to see how Watson impacts SAP Ariba’s technology eventually - as we all are at Spend Matters), I can buy into the Procurement Services business model and its leadership.

You can read more about IBM’s Procurement practice here.

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