All posts by Procurious HQ

Look After Your Data – Keep It Secret, Keep It Safe

Concerned about data protection? How can IT procurement ensure data security and reduce cyber risk for your organisation?

data secret safe

Procurious is at ProcureCon IT in Amsterdam this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

Day Two of ProcureCon IT is well underway and we’ve been privy to another morning of thought provoking discussion.

Procurious founder Tania Seary picked the brains of Kaushik Yathindra, Manager, Procurement Analytics, HSBC and Florian Schroeder, Head of IS Commodity & Contract Management, Bombardier Transportation to learn more about how to implement data security, the end of Safe Harbour, and the effects of Internet of Things (IoT). 

Where to Start?

Why is data security so important? As Florian Schroeder pointed out, you wouldn’t leave your most valuable possessions at the front door, you’d hide them away somewhere secretive. We should consider our data in the same way and not leave it exposed to hackers.

Data security is one of the fastest growing areas of IT spend. An estimated $1 trillion is going to be spent globally between 2017 and 2021. But how do you make sure your money is well spent, and your information secure?

Whilst data protection is a huge concern for organisations, it can be difficult to know where to start, particularly given the multiple types of data security on offer. Here are a few points to consider: 

  • To ensure the security of both yours and your suppliers’ data, it’s first important to understand the roles of everyone concerned. How will your procurement, legal, compliance and IT teams collaborate to ensure that contracts fulfil the level of service required in your organisation?
  • Consider data security in all of your organisation’s decision making whether it be Sales, Accounting or IT.
  • Take what you need and nothing more. There’s no point in collecting useless or excess information. The more you have, the more that can get stolen. Likewise, only store information as long as your organisation has a need for it. And when you do dispose of it, do it securely!
  • Ensure your service providers have adequate security measures in place. And don’t just take their word for it – get it in writing!
  • Use complex passwords. Make sure they’re stored securely, and keep the most sensitive information secure throughout its lifecycle by encrypting data when it is transferred.

As both panelists reminded us, you can never ensure 100 per cent security while there are hackers looking for it!

The End of Safe Harbour

Changing privacy regulations can make choosing where to store your data a complex process, particularly for global organisations.

In the EU, for example, privacy laws forbid any citizen’s data to be moved outside of the EU unless transferred somewhere with adequate privacy protections.

Safe Harbour was an agreement between the EU and the US in which the US government promised to protect the information of EU citizens if transferred to the US by American businesses.

This has been an extremely convenient agreement for companies such as Facebook. These companies were, up until now, able to store all of their EU data in US centres.

Last month, however, the European court of justice ruled the agreement invalid. This will mean a lot of paperwork and red tape for US businesses trying to move information out of the EU.

Perhaps the future is in establishing EU-based centres to handle data for EU citizens? Google, Facebook and Apple are already leading the way on this.

And it’s not just the end of Safe Harbour that will shake up Data Protection policies. The General Data Protection Regulation (GDPR) framework was formally adopted by European parliament in April this year to be implemented by May 2018.

If the UK has completed Brexit negotiations by this stage, they will face pressure to adhere to the GDPR framework in order to continue trade within the single market.

Digitisation and the Rise of the Internet of Things

Kaushik explained how banks are moving towards complete digitisation in order to accommodate the next generation of customer who expect to be able to do everything online. Whilst this is great in terms of customer convenience, it presents additional data security challenges.

The worldwide Internet of Things market is predicted to grow to $1.7 trillion by 2020. More than half of major new business processes and systems will incorporate some IoT elements. It won’t be long until every aspect of our daily lives is connected. We’ll have smart bridges, smart cars, smart houses, smart vending machines…we could go on!

Of course, with great tech developments comes greater data protection challenges. The Internet of things adds a significant threat layer in which physical devices can now be hacked, have their information stolen, and even be remotely controlled.

There are a number of ways that organisations can manage data security relating to the Internet of Things. These include:

  • Encrypting sensitive data as close to where it’s generated as possible, rendering it useless to attackers in the event of a breach.
  • Only sharing information on a need-to-know basis.
  • Applying end-to-end encryption to ensure that sensitive information captured by IoT devices is protected throughout its lifecycle.
  • Procurement teams can help move the market towards a world where security becomes a part of IoT products.

In the words of Gandalf, when it comes to protecting data, keep it secret keep it safe.

We Need You – To Vote Procurious in UK Blog Awards 2017

Here’s your chance to get the result you want in at least one vote this year. Vote Procurious in the UK Blog Awards 2017!

we need you to vote

Vote for Procurious here!

It’s been a year of surprise results in global elections. For many, the votes just haven’t gone the way they had expected, planned, or, for many, hoped. But here’s your chance to make sure the final vote of the year has a happy ending!

Procurious has entered the UK Blog Awards 2017, and now we need your support to get to the judges shortlist. If you enjoy the content we publish on the site, then this is your chance to put your mark against our name.

You can vote for Procurious from today, for the next 2 weeks. It would mean a lot to us – so thanks in advance!

UK Blog Awards

The UK Blog Awards were first launched in 2014, aimed at recognising “recognise true viral style and creative excellence across a variety of 16 UK industries. The awards celebrate the very best of British Blogs, from both companies and individuals, across a range of topics.

As well as creating great networking opportunities in the Blogging community, the Awards offer individuals and companies the chance to promote their business and content. The Awards cover a number of topics, including:

  • Digital & Technology
  • Education
  • Green & Eco
  • Vlogger and Podcast
  • PR, Marketing, Media and Communications; and
  • Travel.

You can find out everything you need to know about the Awards, the categories, and previous winners here.

Your Vote Counts

Procurious have entered the Blog Awards for the past 2 years, and have been ‘highly commended’ in the PR, Marketing, Media and Communications category both years. This is great for us, given the age of the company, and the niche area we write about.

However, we are really keen to go one better and actually win this year! And this is where you come in. We need your votes – as many votes as possible – in order to be considered for the final category shortlists. The more votes we get, the better our chance of consideration.

Voting is now open and runs until the 19th of December at 9pm.

It’s really easy to vote too. Go to the Procurious profile on the UK Blog Awards website, and click ‘Vote Now’ at the top of the page. We appreciate any and all votes we get!

And, if you’re really keen, you can share this with your colleagues, peers and friends across social media and get them to cast their votes too!

Why Vote for Us?

Procurious aims to deliver procurement and supply chain news, views, interviews, and hot topics to the global profession. In the past year, we’ve covered everything from the Brexit, to how to improve your personal effectiveness at work, and myriad topics in between.

We don’t just talk about procurement (though it’s one of our favourite topics), we deliver fresh, original content daily to our audience to keep them up to date with everything they need to know.

The recognition gained from the UK Blog Awards in the past 2 years is a big deal for us. As we build more awareness of our site, we attract more people to the community, which benefits all our members. Networking opportunities grow, we get richer discussions, and more engagement in raising the profile of procurement.

Plus is means we can continue to provide high-quality, relevant content for all our members, and all our followers on social media.

Details

If you need to refresh your memory of some of our, and our contributors’, best and most popular articles from the past 12 months, head over to the blog to check them out. Alternatively, here’s a small selection of our most read articles this year:

Every vote you cast really does count. To vote, go to the UK Blog Awards website and visit the Procurious profile. Thanks!

Carving Out a Niche in the Supply Market

Large organisations are no longer a closed shop for small, niche suppliers. In fact, they are now being actively sought out for their skills.

carving a niche

Procurious is at ProcureCon IT in Amsterdam this week. Stay up to date with what’s happening on Procurious, and by following us on Twitter.

The procurement profession has started to come to the conclusion that bigger isn’t always necessarily better. This is particularly the case when it comes to suppliers. Larger suppliers may be able to offer lower costs, and greater security but when it comes to agility and innovation,  niche suppliers are the ones for the job.

Traditionally, these smaller suppliers have been bunched into the ‘tail spend’ classification. However, procurement has realised that by allowing the tail to wag the dog, as it were, opportunities are being missed. Niche vendors have creative and unique methods of communicating and innovating that procurement should be tapping into.

Identifying and managing niche vendors was the topic of a very informative panel discussion at ProcureCon IT this afternoon. Chaired by Procurious founder, Tania Seary, the panel also included:

  • Soren Mølby Henriksen – Head of Procurement Innovation, Danske Bank
  • Claire Tapping, Head of Sourcing & Commercial – IT and Business Process Outsourcing, Rolls Royce
  • Samantha McCarthy, Global Procurement Manager IT, Reckitt Benckiser

Niche Suppliers a “Source of Innovation”

The question for procurement often isn’t finding smaller suppliers, but how to engage them. Traditional procurement processes are set up for larger suppliers, and it’s a much too onerous process for suppliers without similar resources.

But, as the panellists pointed out, large organisations are now turning an increasing amount of attention towards niche suppliers and adapting their contracts accordingly to be less risk averse.

Soren Mølby-Henriksen  noted that, within five years, banks won’t exist. The future of banking is digital, and it might take niche vendors to help this evolution.

Danske Bank recently stepped into the start-up market to source innovative suppliers. Mølby-Henriksen discussed why start-ups were such a big focus for Danske Bank’s procurement team. The set up in the procurement team is to address specific “pain points”. The bank has brought together a variety of suppliers, including start-ups, to conduct a dialogue on solving these issues.

Once solutions are found, they are documented, and then matured to see how they can be implemented. Although the process is relatively new, it’s found some solid support amongst Danske Bank’s suppliers.

Another positive for the procurement team is that it’s also helped to reduce negotiation time, as many discussions are happening up front.

Engagement a Mindset Shift

While Danske Bank appears to have found a way to engage niche suppliers, it’s still an issue for many organisations.

Claire Tapping discussed how there can be some initial pushback when it comes to engaging smaller companies over concerns that it might be too risky to do so.

But she believes it is often proven easier to negotiate with niche vendors who aren’t restricted by a hierarchy of governance and teams of lawyers trying to mitigate risks. Another benefit of niche vendors is that they have a smaller focus. As such, they tend to do what they do to a higher standard than a larger organisation.

Leveraging competencies, while keeping suppliers engaged can also be a challenging proposition.

The panellists agreed that the impact of disruptors, such as blockchain and bitcoin, on the Financial sector was driving a need for change. But, this change involved a serious mindset shift for many of the financial organisations.

Procurement needed to shift it’s business angle to fully understand what they were doing before they entered the market. The vendor space in IT and technology is a completely different beast, where suppliers might not work with you if your business isn’t trendy enough.

Agility & Responsiveness Key

The final tips for engaging niche suppliers was the key role that agility and responsiveness played for procurement. Claire Tapping highlighted the issues procurement faces in keeping pace with business changes.

Relationships and engagement with the suppliers would rely on procurement becoming a “customer of choice” for the smaller suppliers. Without staying more agile, procurement could face a situation where the supplier is brought in by the business. If this happened, procurement is left playing catch up, and its value is diminished.

For procurement in financial services, niche suppliers open up a whole host of possibilities. As Tapping reminded us today, many organisations bring in the smaller vendors because they don’t know what they want!  Once the suppliers are on board, there’s more new thinking in order to ensure great engagement.

How this plays out will be interesting to see, as procurement in other industries will need to do likewise, probably in the very near future.

Peak Oil – From Global Catastrophe to Global Opportunity

Modern economics is a matter of supply and demand. And when it comes to ‘peak oil’, it’s the difference between catastrophe and opportunity.

peak oil

Since the early 20th Century, scientists, experts, and economists have been predicting the manifestation of ‘peak oil’. For years, many people viewed ‘peak oil’ as a herald of global catastrophe, and the end of major economies.

However, in recent years, the supply and demand situation for oil has turned in favour of supply. It now appears that peak oil demand is what organisations and countries need to be aware of.

What’s more, some experts are predicting that this demand will happen sooner than expected. And global oil and gas organisations need to consider their next move in order to stay competitive.

What Do We Mean By ‘Peak Oil’?

Peak Oil‘ describes a situation where global oil production hits its peak, then is in perpetual decline. The first prediction of this was in 1919, and an expectation that peak would be reached by the mid-1920s.

Throughout the last century, a number of geoscientists have continued to make predictions. And these predictions have all been proved to be wrong. However, some experts believe this peak may already have happened without anyone really noticing.

Studies have shown that in North America, the volume of oil discovered has dropped consistently since the 1930s. In addition, production of oil in the region has dropped year on year since the 1970s. That’s not to say that overall fossil fuel production has dropped – we’ll come to that shortly.

What people have agreed upon is that the concerns over ‘peak oil’ have abated, or disappeared entirely. The expected global economic collapse is unlikely to take place (or at least be a result of running out of oil).

Supply Outstripping Demand

So what has changed? Well, there are three reasons that keep appearing in a lot of the articles written about ‘peak oil’. They are:

  1. A huge increase in the volume of shale oil being produced. The oil is produced differently, but can be a direct substitute for crude oil.
  2. The US-Iran deal signed in 2015 has lifted sanctions on the oil-rich Middle-Eastern country.
  3. OPEC, which accounts for 43 per cent of global oil production, has, until recently, refused to cut supply. This surplus of supply was the reason the price of a barrel of oil dropped dramatically earlier this year.

This has shifted the thinking on a surplus of demand for crude oil, to a surplus of global supply. Or from ‘peak oil’ to peak oil demand.

Simon Henry, the Chief Financial Officer at Royal Dutch Shell, has predicted that this could happen in as little as five years. Henry stated that, “peak may be somewhere between 5 and 15 years hence…driven by efficiency and substitution.”

This view is at odds with many of the other major global oil producers, however. Exxon Mobil is anticipating a 20 per cent rise to 2040, while Saudi Arabia, the world’s largest crude oil producer, has argued that demand will rise on the back of increased consumption in emerging markets.

But, as some experts point out, even these predictions are built of shifting sands. The global trade slowdown, combined with the events of 2016, could adversely impact demand in developing countries.

Consumers & Organisations Shifting Focus

Whether it’s five years, or fifty years, what is clear is that oil is still a finite resource. Production will eventually diminish, and consumer requirements will change alongside this. This is where the global opportunities come in, but only for organisations willing to keep pace with change.

Public interest in renewable energy is increasing rapidly, and consumer buying habits are changing too. Even industries traditionally driving oil consumption, like the automotive industry, are seeing massive change.

In the UK alone, sales of electric cars have increased by 48 per cent in the past year. Sales of hybrid cars during the same period have increased a whopping 133 per cent. There are large solar panel fields being built around the world, and Ikea is even selling them to consumers in the UK.

Shell and BP are just two of the organisations expanding their portfolios into renewable energy sources, such as biofuels and natural gas. Greater investment in the renewables industry by major organisations has also helped to reduce costs associated with it. And as costs fall, demand from organisations and individuals will inevitably rise.

It would be foolish to make predications given how difficult it is to predict correctly about oil and energy. It’s a topic that is unlikely to go away any time soon, and one that organisations and wider supply chains need to be keeping up to date with.

Do you have a view on ‘peak oil demand’? Do you think it’s time to focus more on renewable energies? Let us know what you think in the comments below.

Like a treat behind each door of your advent calendar, we’ve found the tastiest procurement headlines this week.

Robotic Exoskeleton Gives Workers Super-Strength

  • SuitX, a Californian robotics company, has unveiled a new Modular Agile Exoskeleton for manual workers.
  • The suit is expected to greatly improve worker productivity and limit exposure to long-term health risks such as back injuries.
  • The exoskeleton is comprised of three modules – backX, shoulderX, and legX – which can be worn separately or as a single system.
  • The exoskeleton supports the body, reducing the amount of effort required to perform tasks such as lifting heavy weights.

Watch the video on THOMASNET

U.S. CEOs Face Consumer Backlash over Trump Victory Response

  • US Corporate CEOs have not hesitated to make their political views known in light of Donald Trump’s election victory.
  • Responses have ranged from congratulatory, to calls for unity, and commitments to company diversity policies.
  • Statements in support or against President-elect Trump have put brands at risk of consumer backlash.
  • Some CEOs who have spoken out have seen calls for boycotts of their brands on social media. Other CEOs have experienced backlash from their own employees on the other side of the political spectrum.

Read more at the Washington Post

Bank of England Seeking £5 Note Solutions

  • The supplier for the new £5 is looking for solutions to the make-up of the note’s base polymer following a backlash this week.
  • It was revealed that the note’s polymer contains animal fat in the form of beef tallow.
  • A petition on behalf of groups including vegetarians, vegans, and religious groups garnered more than 100,000 signatures in two days.
  • The Bank of England has said that their supplier, Innovia, is working with its supply chain to come up with a resolution.

Read more on Supply Management

Maersk Line Acquires Hamburg Sud

  • A.P. Moller-Maersk has agreed a deal to acquire German shipping line Hamburg Sud from the Oetker Group.
  • It’s estimated that the deal is worth over $4 billion, after Maersk won out in the bidding process.
  • The deal brings Maersk’s share of the global container market to 18 per cent, and it hopes to use the deal to return to profitability.
  • It’s the latest in a long line of mergers and acquisitions in the shipping industry, thanks to a huge downturn in 2016.

Read more on Supply Chain Dive

Could Direct Bookings Help Drive Value for Procurement?

Travel procurement tends to get people hot under the collar. But should procurement be more open to direct bookings to drive greater value?

Hotels direct booking

This article is based on a study conducted by Software Advice, available to read here.

In the hotel room booking wars, online travel agencies (OTAs) seem to be giving up a little ground. This represents a great opportunity for small, boutique and independent hotels.

Hotels that sell rooms through OTAs must pay a commission, so direct bookings mean higher profit margins. For many years, hotels gave up that extra profit in order to reach a wider audience.

However, new data shows that many rates are now cheaper when booking directly through the hotel website.

What Is Causing Cheaper Direct Bookings?

The true cause of this shift is hard to nail down, though some experts think a combination of a couple key factors may be leading to cheaper direct bookings:

  • Effective regulation against rate parity clauses. Regulations against rate parity clauses – contract language that forces hotels to maintain the same rates on all distribution channels – may be having an effect. This means some hotels could offer lower rates on their own website.
  • OTAs are willingly easing up on commissions. OTAs often charge hotels an average of 15 to 25 per cent per booking, so it’s easy to see why hotels would want travellers to book direct. It’s possible the OTAs believe reducing commission rates won’t matter, since their volume of business is so high.

This shift is an opportunity for small and independent hotels to educate potential guests, and market these cheaper direct booking rates to them.

Taylor Short, Hotel Market Researcher for the hotel information systems reviews companySoftware Advice, believes that incentives could be the key to attracting customers.

“Hotels and resorts want to attract organisations and groups for the revenue and sales potential when the group is on property. Because of this, hotels will often use software to manage incentives offered to guests, such as free wifi or rate discounts, for those who book in groups,” says Short.

“To compel group over individual bookings, hotels will try to tailor packages to the groups they see most often. For a business networking group, for example, they may offer free transportation from the airport, discount on drinks, or a round of golf. There are things to offer that can help deliver a better, more personalised experience.”

Driving Direct Bookings

Shifting consumer habits to looking at a wider range of options presents an opportunity for small hotels to educate travellers that booking directly can be cheaper and more valuable.

There are a number of tactics smaller hotels can use to help drive customers to websites, and boost brand loyalty. These include:

  1. Compel website visitors to book direct with pop-ups or calls-to-action (CTAs).
  2. Offer incentives on the website.
  3. Arrange OTA widgets so that rates capture visitor attention.
  4. Focus on what they can offer vs. bigger brands.
  5. Prepare for the long game.

Changing Habits and Procurement

So if consumer habits are changing, it’s probably fair to say business travellers are looking for similar options. But where does this leave procurement?

Travel procurement is one of the ‘hot buttons’ for organisations. Procurement need to find the right balance between value for money, and ensuring that their staff are getting a good experience.

Every year, millions of pounds are spent outside of travel management systems. This maverick spend, which can be up to 20 per cent more expensive than through authorised sources, further hinders procurement’s position. Maverick spend comes in all shapes and sizes, and organisations need to be aware of why it is happening so they can combat it.

However, as travel options, in particular accommodation, open up with businesses such as Airbnb, procurement needs to stay in step with changes. This doesn’t mean allowing staff to book directly themselves, but not staying with preferred suppliers because they happen to be on a list.

The difficulty for procurement lies in how organisational travel is booked. Large organisations tend to use a travel management system, or agency, to collate bookings.  Smaller organisations might be more flexible. However, if processes are in place, then it’s likely to be more difficult to justify a change.

However, it doesn’t stop procurement looking at smaller hotels who may offer added extras that employees will enjoy. If direct bookings could offer greater value, then it’s worth considering working with these suppliers in the future.

Big Ideas Summit 2016: Big Idea #25 – Collaboration is King

Collaboration is king, particularly when it comes to procurement. And it can also help drive huge benefits across the board.

At the Big Ideas Summit 2016, we challenged our thought leaders to share their Big Ideas for the future of procurement.

From ideas that have the potential to change the very nature of the procurement profession, to ones that got the assembled minds thinking about the profession’s impact outside of the organisation, the response we received was amazing.

Building Cross-Sector Collaboration

Kavita Cooper, founder at Novo-K, argues that it’s time for procurement to become more active in collaboration, particularly between the private sector and the charity sector.

Kavita says there are huge benefits in building this collaborative environment. Procurement professionals can build their skills, while charities can tap into tools and best practice from the private sector. Additionally, there are benefits for society, with charities being able to focus on their beneficiaries and purpose.

Catch up with all the delegates’ Big Ideas from the 2016 Summit at the Procurious Learning Hub.

Want to find out more about Big Ideas 2016? And maybe what we have planned for 2017? You can visit our dedicated website!

If you like this (and you haven’t done so already) join Procurious for free today. Get connected with over 18,500 like-minded procurement professionals from across the world.

Tania Seary Named ‘Influencer of the Year’ 2016

Procurement’s influence is driven by its leaders. And having a great influencer at the top can make a world of difference.

hello influencer

This week the procurement community made a dint in the universe when Procurious’ Founder, Tania Seary, was named Influencer of the Year by Supply Chain Dive, a leading industry news publisher.

Congratulations to our 18,000 Procurious community members, as well as the 32,000 other procurement professionals who follow us on LinkedIn, Twitter and Facebook! This award recognises your commitment to sharing, connecting and collaborating within the world’s first online community for procurement & supply chain professionals.

The Dive Awards

Supply Chain Dive solicited its 6,000 readers to identify the industry’s top disruptors and innovators. Procurious was selected as an award winner along with other leading companies including Amazon, Patagonia, and J.C. Penney.

Fellow nominees for ‘Influencer of the Year’ included supply chain luminaries including Bill McDermott, Chief Executive Officer, SAP, Bob Ferrari of Supply Chain Matters, and Lora Cecere of Supply Chain Insights.

Commenting on Tania’s award, Edwin Lopez, associate editor of Supply Chain Dive, said, “The supply chain is incredibly fast moving, and the influencer award seeks to recognise those who through their actions or words are helping supply chain managers do their jobs better.

“Tania Seary did both as the founder of Procurious, a social network designed exclusively for peer-to-peer education, where supply chain managers can go to ask questions, share tips, or learn from others’ experiences on a daily basis.”

Learning, Sharing, Collaborating – Growing

At our Big Ideas Summit this year, Tania put forward her big, simple idea: the procurement profession needs to share.

In many ways, by putting her Big Ideas out to the universe and now being announced “Influencer of the Year”, her wish has come true.

“We’ve got to remember that Influencers are just normal people. They are not marketers, but generous communicators who can drive powerful industry shifts before they happen,” says Seary.

“In the end, influencers are probably a type of evangelist. At Procurious, we want you all to be evangelists for procurement.  You all have a role to play.

“We all have the ability to influence. It doesn’t matter which country, industry, age or stage you are – we all have a unique perspective. If we share this unique view, we can give others in our profession insights they may never have otherwise had.

“Your personal influence can make a world of difference.”

Share, share, SHARE!

Tania believes that procurement needs to share – share learnings, stories, experiences, and questions – in order to change the face of the profession.

And on Procurious, it’s clear to see that professionals are rising to the sharing challenge. The Discussion Forum is one of the most popular areas of the site, with nearly 1,000 visits per week. Nearly 1,000 questions have been posed, with members sharing their knowledge in over 4,500 answers.

Want to know the difference between a supplier and contractor? Or what’s the best route for professional accreditation? Or how about how to detect procurement fraud in your organisation? The Discussion board has all these topics are more for you to get your teeth into.

And as Tania speaks at conferences and events around the world, “share, share, share” is a message that she gets to deliver face-to-face too. This will be especially true during the Procurious Big Ideas 2017 series, being held across the year in 5 countries.

Language Matters

As the amount of procurement-related content grows exponentially around the world, we need to keep in mind that the language we use matters.

We know that the procurement and supply chain profession has struggled to overcome outdated stereotypes. Positive words and imagery can make a huge impact on how the people who make decisions in business see procurement.

Through Procurious and other social media channels, we can change the face of the profession from the inside out.

Ensuring your profile is picture perfect (and we have some great tips on Procurious) makes a big difference. It will also help to ensure that when you come to face-to-face meeting with peers, colleagues, and stakeholders, they are seeing the best of you.

So don’t just wait for things to happen! Take a leaf out of Tania’s book – get out there and connect with fellow professionals and share your stories. You never know where it will lead you!

What Tech Start-Ups Need to Know About M&A Deals

While M&A deals have decreased in 2016, broken deals are on the rise. So what do tech start-ups need to know before getting involved?

M&A rules

Christina Wojcik, vice president of legal services at Seal Software, breaks down the steps to consider throughout the M&A process.

With over $5 trillion in deals signed in 2015, it was a record breaking year for M&A activity. However, 2016 does not appear to be following suit.

Over the first eight months of this year global M&A dropped to $2.2 trillion with 28,720 deals. This is compared to $2.9 trillion with 30,894 deals at the same time last year.

In fact, 2016 appears to be a record year for broken deals instead. Between Brexit concerns and US anti-trust regulations, an increasing number of deals are breaking down before they become official.

The Unknown 

M&A deals are complex events that require overcoming a hefty number of obstacles. These include corporate governance, forms of payment, legal concerns, contractual issues, regulatory approval and tax issues.

It’s very challenging to fully assess and understand the kinds of contractual risks, restrictions, obligations, and exposure companies will take on after the deal is closed.

Uncovering this information requires many hours of manual contract review work from either a law firm or lower-cost legal service provider. Before they can even begin reviewing the documents, organisations first must find and centralise all the relevant contracts.

This may sound simple, but tracking down thousands of contracts, which have been created in varying formats, across different departments, and stored in various locations over the years, is an arduous and sometimes overwhelming undertaking.

The Real Work

Once all contractual documents are collected, the real workof extracting contract data begins. It’s vital that the data be useful before closing a deal. Legal teams must review a host of provisions, and not fully understanding assignment or change of control provisions can be especially detrimental to the dynamic of the acquisition.

If your contracts cannot be assigned, or if change of control triggers automatic termination for cause, the strategic value of the acquisition may be called into question. This can, in turn, lead to many hours of renegotiation.

In addition to assignment and change of control, here are a few more to consider:

  • Be aware: Auto-renewal

Many sales organisations work to negotiate auto-renewals and every procurement department dreads tracking auto-renewal provisions. If the goal is to terminate a contract within the specific notification period, you must know which contracts contain the provision and the window for cancellation.

A missed auto-renewal can result in hidden costs that most companies will not have considered. One of our customers, a large energy company, discovered they were auto-renewing a lease costing $400,000 per year on property they didn’t use, three years after a takeover.

  • No nonsense: Non-competes & non-solicits

Monetary damages can also occur if a company breaks a non-compete or non-solicit clause. It’s important to know whether contracts include these provisions, as a non-compete is a promise from both the buyer and seller to refrain from engaging in activities with competitors.

A non-solicit clause prohibits a company from trying to lure or hire the other company’s customers or employees. This is particularly relevant when two companies in the same industry merge, as many of each company’s existing customers or partners are likely competitors.

  • Identify: Indemnity

The acquiring company should clearly understand what the target company has agreed to indemnify. These limitations of liability can be very complex and should be heavily negotiated prior to closing an M&A deal.

These are often the most negotiated provisions and typically have cross-references which makes them especially difficult to fully comprehend.

Careful review of the indemnification provisions of each contract is needed to ensure that these provisions align with the combined entity’s indemnification standards and practices.

  • Limit: Unlimited liability

When startups are motivated to close a new deal, especially with big, recognisable brands, they will often accept potentially unacceptable provisions. This is commonly seen with limitation of liabilities. Accepting unlimited liability does not necessarily pose a large risk to a startup, because they have much less to lose.

However, it can pose a significant risk to established organisations with much higher exposure if they accept that unlimited liability. It becomes very important for the acquiring company to quickly identify contracts containing unlimited liability. They can then look to renegotiate, amend, or possibly terminate, the contract.

We worked with a software giant which bought a startup and discovered it had inherited numerous unlimited liability provisions. A small problem for the $1.5 million startup, but a much bigger problem for the $1 billion company.

The Silver Lining

As M&A activity increases, especially within the startup world, knowing what’s in contracts is more important than ever. Having easy access to and visibility into contracts data is essential.

Due to the time sensitivity on many M&A deals, and the manual labour often required to analyse contracts, most companies resort to sampling just a small portion of the target company’s contracts. They assume that if the sample passes the test, the rest will as well.

But, countless cases prove that this approach exposes the acquiring company with risk they had not anticipated. Luckily, current contract technology offers machine learning and natural language processing solutions.

This allows organisations going through the M&A process to streamline the due diligence process, to consolidate contracts, pinpoint and understand risk, and uncover vendor consolidation opportunities.

Contract Intelligence Can Reduce M&A Concerns

Contract intelligence solutions can also help to alleviate some of the M&A concerns companies have when it comes to Brexit. By gaining full insight into the terms impacted by the separation from the EU, such as governing law, currencies, and other commercial terms, companies may find that the merger, acquisition, spin-off, etc. will actually give them a competitive advantage or provide for growth.

By extracting metadata and clauses through a sophisticated search and analytics, businesses can quickly understand the risk and opportunities in those contracts and determine if there is still value to the deal. This will help facilitate closures with the added security of fully knowing what is being acquired.

So put away the extra water or paracetamol. By understanding contract terms, you’ll prevent the post-deal hangover that so many rushed deals result in.

Christina Wojcik leads the Legal Service Channels division, globally, at Seal Software. As VP of Legal Services, Christina engages with legal industry partners to create best-in-class solutions to meet the complex contractual needs of Fortune 1000 organisations.

Seal Software is a leading provider of contract discovery. It uses artificial intelligence and natural language processing to help companies efficiently uncover what’s in their contracts.

Is Your Technology Serving Up Greater Procurement Performance?

To what extent is your organisation using technology to improve the performance of procurement?

serving up procurement technology

Procurement’s adoption of technology has been surging in recent years, and it’s showing no signs of slowing down.

But what is the best way to transform the processes and performance of your Procurement organisation, while facing up to the need to restrict budgets and generally tighten up on spending?

Next week, Procurement professionals from all over Europe will gather in Amsterdam at ProcureCon IT Europe to discuss exactly that, as well as a host of other transformational topics.

In advance of the event, we asked 100 IT Procurement executives from some of the world’s largest organisations what they are doing to drive performance using technology. Here’s a preview of the results.

Procurement on Cloud 9

ProcureCon IT technology improvement

Technology is serving up Procurement teams with a wealth of tools with which to enhance their ability to add value to their business.  From social media to the cloud, automation and the Internet of Things, the list is growing ever longer.

Our research identified the cloud as one of the biggest areas of adoption today. Almost half of surveyed procurement organisations are already heavily invested, and a further 30 per cent are currently experimenting.

However, Procurement organisations will have to learn on their feet to get the most out of this new technology. Poorly implemented systems can end up being little more than expensive white elephants.

In addition, procurement professionals need to evaluate how to best implement transformational systems and processes, while reducing costs. One solution is to avoid hiring permanent new staff with the requisite skills, but instead to find strategic external technology partners who can manage the supply chain cloud on their behalf.

Adapting to these kinds of tectonic shifts in the procurement landscape is done best by the nimble. And to the victor will go the spoils.

The Future’s Bright, The Future’s Digital

Cloud technology is just one element of the digital transformation of procurement. Another important area of investment and focus for procurement teams is harnessing the power of big data.

More than 35 per cent of respondents to our survey are already heavily invested in big data, and more than half are currently experimenting. Going hand-in-hand with big data is spend analytics, another huge investment area for procurement organisations according to our research.

However, big data means different things to different people. Procurement’s approach needs to be moderated by a focus on desired outcomes.

Without a set of clear objectives, the insights offered by analytics will be limited and difficult to put into action. Once you have decided your goal, you’ll be better placed to select the ranges of data which are most appropriate.

Join Us at ProcureCon IT

ProcureCon IT is all about finding practical solutions to the challenges which IT procurement pros face on a daily basis. It’s the only truly peer-led conference of its kind in Europe.

Not only will you meet hundreds of people who are successfully taking their IT procurement technology strategy to the next level, but it’s also a superb opportunity to meet with some of the most innovative solution providers in the market place today.

To get industry-leading insight on the issues mentioned here, as well as lots more, join us on the 5th and 6th of December at the Mövenpick Hotel Amsterdam for ProcureCon IT.

Take a look at the full event agenda and download the research on procurement technology here.

Are Supply Chains Already Feeling the Trump Effect?

President-elect Trump doesn’t take office until January 20th 2017, but his impact is already being felt in global supply chains.

Trump trade deals

Yes, it’s been a little over two weeks since Donald Trump won the US Presidential election. And it’s still nearly two months until he officially takes office. Yet, it’s hard to get away from media reports on what will happen during Trump’s first 100 days in office.

NAFTA, the Trans-Pacific Partnership (TTP), and import tariffs have all been in the news. And if global supply chains weren’t already watching with interest, they certainly should be now.

NAFTA – Overhaul on Cards

During the election campaign, Donald Trump made much of the movement of US manufacturing jobs to Mexico. One solution was to end US involvement in NAFTA, pushing companies to move jobs back to US heartlands.

The North Atlantic Free Trade Agreement was signed in 1994, effectively eliminating tariffs between the USA, Canada and Mexico. The agreement has allowed for seamless movement of goods across borders. It also means that the US currently has more trade with Canada and Mexico, than Europe and China.

An estimated $1.4 billion worth of goods cross the US-Mexico border every day. However, it’s not all been positive, with many organisations moving production to Mexico, where costs are lower.

However, in the past week, the stance from the Trump camp appears to be one of overhaul, rather than withdrawal. The President-elect wants to ensure a “better deal” for America, as well as reduce America’s $76 billion trade deficit.

This could include tariffs of up to 35 per cent on Mexican imports, and penalising companies moving production there. Other changes could include issue to do with currency manipulation, as well as labelling of meat products, and lumber production.

However, experts have warned that any or all of these measures could hurt the USA too. Increased meat prices in US supermarkets, higher house prices, and Mexican tariffs on US goods could all be on the cards. And that’s without the guarantee that jobs would come back to the US.

Relocating Supply Chains

One company subject to plenty of Donald Trump’s ire during the election was Apple. The President-elect singled out Apple several times as an example of a company that should re-shore its production.

To emphasise his point, Trump has threatened to put a 45 per cent import tariff on all Chinese-made goods. At present, Apple devices are assembled in China, with key components sourced from specialised suppliers throughout Asia. In spite of this, however, re-shoring is not that simple for Apple.

Experts have warned that moving production would be challenging, citing a lack of skilled workers and a steep hike in costs. There is also the matter of the highly complex supply chain Apple has established in Asia.

Analysis carried out by the MIT Technology Review stated that higher labour costs, and logistics costs of transporting components to the US, would add between $30 and $40 to the cost of producing each iPhone.

However, the Nikkei Asian Review has reported  that Apple is actually looking at moving some elements of production. It would not be unprecedented either. In 2012, key Apple supplier Foxconn set up an iMac assembly line in Texas. And in 2013, Apple supported Flextronics, another contractor, in building a Mac Pro production line in Texas too.

The media this week reported a call between Donald Trump and Apple CEO, Tim Cook, leading many to suspect that discussions are already taking place. However this ultimately plays out, global supply chain movement and disruption could happen. And if Apple were to move first, it seems like that others would follow suit.

‘Made in China’ Great Again?

One country not looking favourably on President Trump’s policies and tariffs is China. It has been reported that China is unhappy with potential import tariffs, as well as being labelled as a currency manipulator by the future President.

Reports from state media have stated that any tariffs would be met with tariffs of China’s own. There was also a thinly veiled threat against raising tariffs above agreed WTO levels, and starting a trade war.

However, at the same time, China could be a major beneficiary of Trump’s plans to pull the US out of the TPP on his first day in office.

The aim of the TPP was to create a common market, similar to the EU, between its members – the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. As these countries make up 40 per cent of the world’s economy, it was seen as a great opportunity for many.

However, critics argue that it favours big business, and Donald Trump looks set to abandon it in favour of freshly negotiated trade deals. The belief is that, without the USA, the TPP would be dead in the water. But that would open up markets to greater deals and trade with China.

Australia was one country that signalled it would be interested in a China-led trade deal. Deals such as the Regional Comprehensive Economic Partnership (RCEP) could see China increase its power in Asia, leaving America in the cold.

What do you make of the policies announced by President-elect Trump in the past week? Could the US suffer by going down a protectionist route? Tell us your thoughts below.

So you’ve got more time to bargain hunt this Cyber Monday, we’ve tracked down the top news headlines this week…

Samsung and Panasonic Investigate Labour Abuses

  • A Guardian investigation has revealed exploitation of migrant workers in Malaysian factories producing goods for leading electronic brands Samsung and Panasonic.
  • The group of Nepalese migrant workers claim they have been deceived about pay, as well as having to pay large sums of money to secure the jobs.
  • Working conditions are reported to include 14 hours on their feet without adequate rest and with restricted toilet breaks.
  • Samsung and Panasonic have opened investigations into the conduct of their suppliers following the claims.

Read more at The Guardian

BMW Logistics Using Autonomous Robots

  • The first fleet of autonomous transport robots to be used in everyday operation has been launched by BMW.
  • The first fleet of ten robots has been put into operation at the car maker’s Wackersdorf plant.
  • The robots will transport components around the facility, and are capable of carrying loads up to 500kg.
  • The move comes as the company aims to remove as much CO2 emission from its manufacturing processes.

Read more at Supply Chain 24/7

Shell May Face UK Trial Over Nigeria Spills

  • A High Court is to make a decision on whether two Nigerian communities can bring cases against Shell.
  • The communities claim that pollution from repeated spills has caused lasting damage to their environment.
  • Lawyers representing the communities argue that Shell controls and directs its Nigerian subsidiary, and is therefore responsible.
  • However, Shell have also lodged applications to challenge the jurisdiction of the English courts in the matter.

Read more on Supply Management

Canada Energy Decisions to Impact Freight Carriers

  • Canada has announced a plan to phase out all coal power by the year 2030.
  • Four affected coal power plants will will have the option of switching to lower-emitting resources or using carbon-capture and storage technology.
  • The move will have a knock-on effect on the country’s freight carriers, particularly the railroads.
  • Volumes of coal carried by railroads have fallen by 12 per cent this year, and are likely to get smaller still in the next decade.

Read more at the Wall Street Journal