The Merger – A Procurement Short Story (part 2)

(In part 1 of this short story, written by Peter Smith and  Steve Cobley of Ivalua, the procurement software provider, CPOs Jim and Gabrielle agree to share spend and procurement information as their two firms prepare to merge).

The Problem

“So you’re telling me we don’t have a spend analysis report we can share with Gabrielle”?

Louise, Jim's Head of Procurement Strategy  shook her head. “Well, not one I would want to, really. The latest spend analysis that we have got is almost 9 months out of date – it covers the 2013 to 2014 financial year, which finished last November.”

“Really? So what's the problem?”

“There's no problem Jim - you know, I have spoken to you before about this. We just don’t have a good spend analytics process or platform.” Louise had looked nervous when they first returned from the call with Gabrielle, but now she was looking at Jim in a manner that made him uncomfortable.

“OK, OK, I know I'm not always as interested in technology as I should be. But I hadn't thought it was quite as bad as that.”

“We’ve got a number of different purchase-to-pay systems, and by the time our spend analytics provider has pulled the data together, cleansed it and so on - it takes time. And it’s not cheap, so we decided – well, you decided - to just do an annual exercise. Even then it takes 3 months to get the final reports.”

“Alright. So we’ll provide Gabrielle with that, I’ll just have to explain our situation. Now what about the list of the top contracts”?

“ Well, I can pull something together, I reckon we have maybe 50% of our top contracts in our system. But I can chase around and add some more I'm aware of - but I can’t guarantee how accurate it will be.”

“I thought we had a contracts database? I'm sure I remember signing something off a couple of years ago for a system of some sort?”

“But the sourcing and category managers don't always keep it up to date. There is no automatic feed from the sourcing platform through to the contract management system so it depends on someone actually updating it. They have to enter a lot of manual data whenever they let a contract and you know what it’s like, they forget, something else comes up ...”

“But we can show Gabrielle something?

“Yes, but just to warn you, I suspect she will have very good records. I know the software they use, it’s way ahead of ours. It’s a cloud-based suite – a set of modules that really are integrated. She’s likely to have the spend analysis, to be sure, but also good performance data on each supplier and contract, triggers and alerts built in to tell them when contracts are coming up for renewal, perhaps even some SRM-type information in there too.”

“Why is it so much better?”

“Well, we chose our contract management solution about four years ago – things are moving fast, it just isn’t one of the best now. I wasn’t here then either.”

Jim frowned. “But Gabrielle mentioned project management, activity tracking as well – we don’t have anything like that.” Louise shook her head. Jim thought for a moment.

“It sounds like a lot of our problems come from systems not being joined up – too many interfaces, manual processes to get things to work. But I thought we had the same supplier for a lot of our procurement software – purchase-to-pay, sourcing, auctions, the whole lot?"

“We use some sourcing tools from our main ERP provider as well as the purchase-to-pay capabilities. our IT department likes us to do that, it makes their lives easier. But different business units use alternative sourcing platforms too because they find them more user-friendly. And some of our countries use a different ERP system anyway – hence the spend analysis problems you know about."

“It sounds like a real mess!” Jim has a feeling that Louise was trying to make things simple for him, and felt both grateful and embarrassed by her approach. This was more complicated than he had realised.

“Well, the good news is we do have a systems strategy – but you haven’t signed it off yet,” Louise added pointedly.

“So should we just standardise with the main ERP provider – is that what you recommend?”

“Actually, no. Firstly, their product is not strong in all the areas we want. And they’ve acquired various firms themselves over the years so their own set of products aren’t all joined up anyway! What you find is that many large software firms offer a range of products that has grown up both from internal development and from acquisitions. Now unless they acquire firms that only develop on the same platform, or they acquire very young firms and re-write the software onto their current platform, then the products don’t necessarily fit together very well. Certainly if you acquire a mature firm, the amount of work needed to truly integrate is considerable.”

“So what does that mean”?

“Well, it might mean that the analytics engine really sits outside the purchase-to-pay system. Or the sourcing software does not automatically take data about the successful suppliers into the contract management database in the way that Gabrielle’s does. It’s all a bit ... clunky, you might say.”

Jim shook his head.

“So has Gabrielle got the edge on us there then”?

“Well, she seems to have a genuinely integrated platform, so she’s looking at common data. If she wants to know about a supplier, she has that single view of everything from basic supplier information, to orders, right through to contract and SRM data. Even savings tracking and project management.”

Jim lent back in his chair. Oh well, he thought, the interim market was pretty buoyant at the moment. He could probably find another job there pretty quickly once Gabrielle got the new CPO role - which she surely would!

First Voice

  1. Bitter and twisted:

    Poor jim…

    Jim was doomed from the start. A merger based on supply synergy but not involving the CPO is either a) deluded, b) predicated on firing your incompetent ass or c) both.

    Louise is a Machiavellian genius, right?

    The only ray of hope is that Gabrielle is a very special type of hypercompetent idiot who has managed to use her data and power to screw things up far more than a normal idiot could ever achieve.

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