Sievo and the big question; do you really want to understand your procurement savings?

During the recent visit by Jason Busch to London, we caught up with Sammeli Sammalkorpi to get an update on the progress of Sievo and their software, the best we know for really helping organisations to measure procurement savings as accurately as possible.

For new readers, the Sievo product takes detailed spend data and then analyses it to strip out a whole range of cost drivers, in order to isolate the real effect of procurement activities. So it can for example identify and quantify currency effects, volume effects or specification changes that may not be considered “true” procurement savings. (What would the Cabinet Office procurement savings look like if they applied that discipline, I wonder)?

Sammalkorpi is one of the founders and VP Sales & Marketing of the firm, and he was in town with Nora Huovila, their Business Development Manager. Fabrice Saporito, the previous CEO, has recently left so Matti Sillanpää, another founder, has stepped back into that top role. Sievo has grown steadily over the last few years, “double digit growth”, mainly outside Finland in countries such as France, Sweden and Germany. Whilst core operations will remain in Finland, the wider sales team is expanding and the firm is looking to partner to enter some other markets.

Given the nature of the product, really “it should be the CFO who drives the use of the product” says Sammalkorpi, as it gives an independent verification of procurement - “procurement performance management is the focus”.

But sometimes “the CPO gets it”. Too often however, procurement is producing savings or other metrics that frankly the CFO doesn’t believe or doesn’t care about – which is not good for procurement or CPO credibility. Hence smart (and confident) CPOs are switching on to the need for better measurement. However, talking to Sammeli it is clear that they are now approaching the market from two angles.

When you think about it, in order to carry out the savings assessment at this level of granularity, the Sievo technology is in effect running a type of spend analytics process. So increasingly, the firm is winning business that is primarily in that area, with the savings element perhaps coming in later with the client. That spend analysis can not only identify opportunities for procurement action, as we might expect, but the approach Sievo uses means that it is particularly strong in the forecasting area – looking at likely future prices and costs for instance.

That in itself can feed into helping firms with future sales and pricing strategy. So having a good understanding of price trends, product mix effects, inflation and currency factors and so on really helps drive an end to end, supply and value chain approach, linking the sales side of the business with procurement actions and efforts.

Now I’ve always seen Sievo as primarily useful for direct materials and goods, but increasingly Sammalkorpi says indirects are key to their clients' needs, and he believes the product can address those items as well. So that is something we want to take a closer look at – we’ll report back when we’ve had the demo! In the meantime, and particularly if you are interested in performance measurement, take a look at Sievo.

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