Tag Archives: procurement technology

Are Procurement Professionals Stuck in the Stone Age? – Part III

If procurement technology is stuck in the stone age, what do we need to do to modernise? We take a look at some B2C examples for inspiration.

B2B & B2C

So far in this series, Market Dojo and Odesma have discussed whether procurement technology is stuck in the stone age, and why B2B software isn’t keeping up with its B2C counterparts. This article examines some B2C companies getting it right.

This article was originally published on Market Dojo.

Slowly but surely, not only do we see B2B companies adopting B2C ideologies, but some B2C companies are jumping in and filling the gap left by B2B providers. Granted, the complexity of B2B companies isn’t completely covered by the consumer oriented companies, so they are aiming more at the smaller companies. But all the same it still highlights a shift in the market.

By taking a couple of examples, we can see where these changes are happening and examples of B2C solutions doing it right.

Uber and Freight Brokering

MD - Uber

The transportation networking company Uber originally focussed on the B2C space by bringing together people looking to travel in the same direction, aggregating the demand and sharing out the cost of the journey to charge a lower price.

Targeting those traveling for personal reasons and commuters, they are paying special attention to the business sector with their latest development of business profiles.

More recently, focus has shifted to the freight industry where they hope to achieve similar by introducing mobile-based freight brokering technology. Not only will there be a reduction in number of ‘empty miles’ travelled, mobile-based freight brokering technology can help lower operating costs, improve fuel efficiency, boost asset utilisation and enhance resource productivity.

Benefits which Uber have been reaping since they formed in 2009.

Amazon Business

Amazon touch briefly on the B2B side with Amazon Business. With benefits like integration with purchasing systems and order approval workflows, they have adapted Amazon to create Amazon for business.

This could have extreme effects on the the current technology providers, should Amazon develop an eSourcing/eAuction aspect. It would not be that difficult for them to make the shift.

Another area in which Amazon has moved to a B2B focus is with their hosting options. This isn’t an adaptation of their B2C offering, but an entirely new market for them.

Software as a Service

MD - Airbnb

Airbnb, for example, provide a marketplace that allows one to search for and/or offer accommodation. Their sleek design, mobile-optimisation, carefully thought-out filters, and simple sign-in methods are something to be rivalled. Having relied heavily on investment, they have been able to afford the development costs and created a really neat SaaS product.

MD - ProcurifyProcurify is another such example of improved, B2C-esque usability. They aim to provide P2P technology without the presumed “boring” grey-scale colour scheme and clunky design that we have seen (and expected?) for so long. They have responsive design and mobile applications available. With their bright colours and simplistic design, they are very appealing.

Social Networks

But will this new technology, mainly adopted by new companies, only appeal to the millennials of today? Will previous generations appreciate this or seek their old faithful, familiar, providers.

Jive is also an interesting example. Marketed as “The Next Leap for Social Intranet Software“, their user interface is very similar to that of Facebook. Or, at least, Facebook 3 years ago.

MD - Jive

The concept is brilliant – provide companies with an internal social platform to share company news and collaborate. However the user interface still leaves something to be desired. Granted it’s one of the best on the market, and I am in no way criticising them specifically, but overall, there is still a lack of ease-of-use in B2B social platforms in comparison with B2C.

Is this because we expect it, because more complexity is required, or because the design needs to remain colourless and simple?

LinkedIn have recently redesigned their ‘groups’ making them more user-friendly and appealing, so increased usability is something which they pay attention to. But the creativity of design is definitely lacking in the B2B world. Why does business have to be so boring?!

The procurement community is lucky to benefit from the industry specific, social platform Procurious, which, with its bright colours and easy interface has a very B2C feel – which differs greatly from LinkedIn.

MD - LinkedIn and Procurious

In the picture on the left, you can see crowded text and pictures with no clear direction of what to look at next with a few small tabs at the top to interact with.

On the right the information on the profile page is broken down into tabs and the contact information on the left-hand side makes it easy to see details of an individual.

It seems that Procurious, being a more recent development, has taken learnings from other solutions (in its space) to create a more user friendly social media platform. Whilst LinkedIn (above left) is busy and cluttered, Procurious provides a more simplistic, clearer view. If you haven’t done so already, definitely recommend getting involved there and signing up to the tool.

Global Trading

MD - Alibaba

Alibaba provides an online platform for global wholesale trade. They launched in 1999 and attempt to make sourcing of goods and suppliers more simple for businesses, working with millions of suppliers across the globe.

Within the tool, they have a categorised search option for buyers with the ability to ‘get quotations’ from the approved supplier list within Alibaba (AliSource Suppliers).

So how will B2B software and technology evolve in the next decade? Make sure you read the final part of this series to see what we think.

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

Raise Your Glasses to the Cloud

Does being stuck in our ways, and doing things “the way they’ve always been done”, mean procurement misses out on the benefits of the Cloud?

The Cloud

You can download the latest GEP white paper on the impact of cyber security, and the benefits of a cloud-based procurement technology solution here.

You can buy flip-flops that have a bottle opener built in to the sole.  Notwithstanding the sartorial choice of sporting said footwear, the synthesis of the two household objects into one ‘solution’ was clearly something born of necessity, or desperation, or more likely both.

The crown cap on a beer bottle, the correct name for which is actually a misnomer – the ‘crown cork’ – is 124 years old and still going strong. The ubiquity of the particular type of stopper means that almost everyone can access a tool designed with the express purpose of removing one, but finding oneself on the beach without one can lead to some unusual inventions, or some risky and occasionally painful improvisations.

Bottle Opener Flip Flops

Necessity – the Mother of Innovation

What is surprising is that it took seventy years for someone to come up with the bright idea of combining the crown cap with a screw thread on the bottle – negating the need for a tool altogether, and even today bottles of beer that one can open with a simple twist are far from the norm.

Interestingly, that most useful combination is still limited to mass-production, mass-market brands, and rarely or never to be found on small-scale, independent, or craft brewery products.

The same, of course, applies to wine. There is unquestionably a huge resistance to screw caps on premium products from the industry, the consumer and the media alike.  Until, that is, you actually talk to the real experts.  Not the self-appointed armchair connoisseurs – I’m not being denigrating, I’m definitely guilty-as-charged – but those who really know their stuff.

I’ve met wine producers, merchants and critics all of whom are desperate for the screw cap to be considered as acceptable at the “high end”, as at the mass-market end, because the product is only better as a result.

Consider the labour-of-love winemaker who has to play Russian Roulette with their prized vintage every time a piece of possibly-contaminated tree bark gets stuffed in the neck of a bottle.

But, on the whole, we consumers feel it cheapens the product, and the lack of ritual and satisfying “pop” detracts from our enjoyment of the contents. The real experts say it’s just snobbery – and, of course, they’re right. But today there remains a relatively low ceiling on what a restaurant can charge for a bottle with a screw cap. Good wines simply don’t come in screw-capped bottles.

What finally convinced me of the ridiculousness of that position was finding myself with wine but without means of access. Today I find myself tutting in a very English manner if I find I need to go get a corkscrew to open a bottle.

Migrating to the Cloud

I find myself in the same mindset when thinking about the Cloud.  For a while I felt somehow discomfited by the idea of putting all my files, and music and images and books and data in the cloud, preferring instead to create my own personal cloud of NAS drives and IP sockets so that I could access what I wanted, wherever I was, but I would still ‘have’ all my data.

How daft is that? If my NAS drive goes down (which it has) who has to run around in a panic trying to fix it? If I move house or country (which I have) who has to handle the business of relocating and reconfiguring equipment to deal with the change?

You see the point, I’m sure. I was on a hiding to nothing. Insisting on a model of how data storage should be, because that’s how it’s always been, supported by some spurious mythology of physical location, is no different to saying screw-caps cheapen the experience of drinking wine. Nonsense.

Cutting away all the snobbery and enjoying wine starts and ends with glass to mouth. What happens up to that point might be interesting, but it’s not in the least relevant.

Now I find myself tutting in overly-dramatic fashion if the service or software I need is NOT available in the Cloud. Install? Oh, really!

Cloud computing is a loaded subject. There are genuine concerns, and genuine things to be concerned about, when considering moving business critical systems into a new environment.

But, let’s make no bones about it, you need to be thinking about those things anyway. The threats and risks won’t go away if you choose not to pay them any attention.  But the opportunities sure will.

We’ve applied a great deal of brainpower to design and build a cloud procurement platform that delivers a massive bang-to-buck ratio, in a secure and highly performant environment, and our two-part paper, ‘Securing Procurement in the Cloud of Tomorrow‘, is designed to help business and IT people alike start a meaningful dialogue on the subject. The Cloud is here, it’s huge, and growing.

But even now I catch myself out. Trying to improve performance of my video editing capability at work I spoke to our splendid and ever-cheerful head of IT about getting some kind of box dedicated for the purpose.

“Have you thought about a cloud video-edit-suite solution?” he said.

Well, d’uh!

Enterprises should be moving their procurement processes to the Cloud, say GEP. For more on this, download the latest white paper research.

For more information on high-performing procurement software, visit the Smart by GEP website.

Are Procurement Professionals Stuck in the Stone Age? – Part II

Is procurement losing ground by having antiquated, “stone-age” technology solutions? Why are B2B solutions struggling to keep up?

Stone Age Computers B2B

This article was originally published on Market Dojo.

In the second article in this series (you can read the first part here), Anya McKenna, of Market Dojo, and Ed Cross, of Odesma, ponder why B2B software remains stuck in the past, while B2C software is moving forwards in leaps and bounds, providing users with the experience they want.

The question is why big B2B software solution providers have not changed and emulated B2C? We would postulate the following reasons:

  1. Customer demand or acceptance.
  2. Drive for consulting revenues by providers.
  3. Decision makers equate complicated to valuable.
  4. Industry  Research organisations are in the pocket of those who pay and report as such.
  5. Existing suppliers balance sheets stifle innovation or change due to the impact on profit of asset write downs.
  6. Big business inherently do not trust small innovative start ups / CIOs don’t get fired for selecting the old guard.
  7. B2C companies are not interested in selling to the B2B customer base.

In order to fully understand this, we need to look at each of these points in more detail:

  1. Customer demand or acceptance.

Interestingly there does not appear to be a huge clamour amongst B2B customers to secure simpler, easier systems.

Take SAP or Oracle for example. They continue to dominate their sector (SAP acquired Ariba for $4.3 billion), and continue to thrive, making little effort to simplify and re-invent with ease of use at the heart of their solutions.

Whereas, in the B2C arena, there is no choice for the providers. Millions of users’ voices are being heard, and all leading solutions, from Amazon to AirBnB, are simple and easy to use. Perhaps the imperative to change amongst B2B players is just not being voiced by action.

  1. Drive for consulting revenues by providers.

The prevailing model for providers is to maximise revenue (after all they answer to shareholders), and they have predominantly built models that support this goal. They do this by securing licence annuity, and augment this with implementation, training, consultancy and delivery services.

Take a leading and long established eSourcing provider for example. They provide a complicated and unintuitive, but effective, solution for e-Sourcing, which they support with a very large consultancy practice (600 professional staff delivering revenues of greater than €70 million).

Though figures are not available we might hypothesise that at least 50 per cent of the revenues are consulting and support related. Clearly it is not in any legacy B2B providers interests to simplify the user interface, due to the resulting loss of support revenues.

  1. Decision makers equate complicated to valuable.

Is it human nature in business to expect business solutions to be inherently complicated?

Look at Jive, a sort of Facebook for business. Whereas Facebook is really easy to navigate and personally manage intuitively, Jive is not.

Given Facebook came first, and Jive built a similar tool, albeit for a closed company environment, is it that those that selected it, measured its value in terms of its complexity?

  1. Industry Research organisations are in the pocket of those who pay and report as such.

A rather contentious point perhaps, but when looking at Gartner’s report on the e-Sourcing market a few years ago, they had only just added a 7th criteria to their analysis: Ease of Use.

Gartner had historically focused on functional components – i.e. spend analysis, contract management, etc. (making up 4 of 7 criteria) – alongside technology platform and business services.

Additionally the analysis of providers generally only lent itself to the bigger or more established players. The 2013 report included fewer than 30 suppliers, with the leaders in their opinion being the likes of IBM, BravoSolution, Ariba, GEP, and SAP.

Very few emerging and new players are included. This may be due to time constraints, but clearly is at the detriment of newer, and easier to use, solutions.

  1. Existing suppliers’ balance sheets stifle innovation, or change due to the impact on profit of asset write downs.

It is a fact of business that the balance sheet plays a large part in driving companies’ behaviour, especially if they have many millions of $/£ intangible asset value.

SAP had Intangible Assets of €25.6 billion on revenues of €17.6 billion in 2014. A write down in an asset, results in an equal write down in profits. Institutional shareholders typically take fright (and flight) at write-downs. Therefore re-inventing the hegemony of existing solutions, requires a potentially significant investment and potentially a write down in previous investments – this is not something the neither executive nor board will countenance.

Is it therefore a surprise that existing solutions lack innovation in the user interface, which may well require re-programming in a newer language?

  1. Big businesses inherently do not trust small, innovative start ups; CIOs don’t get fired for selecting the old guard.

When was the last time the CIO of a large corporate suggested taking a risk? Corporate behaviour is typically risk averse. It is much safer to select a proven provider such as IBM or SAP, than take an opportunity to shake the tree.

This therefore precludes newer, start-up technologies that will deliver often much more cost effective, easier to use solutions. Coupa are making real inroads here, but few others are.

  1. B2C companies are not interested in selling to the B2B customer base.

The question is why don’t Amazon, or Tesco for that matter, move into the B2B space? They provide a huge range of products that businesses use. Yet they generally haven’t, other than grudgingly, thought to move into the B2B market – it is not part of their strategy.

However, we understand this is changing at Amazon! They believe their market is the consumer, not business, possibly because they are much simpler to deal with, pay immediately and do not add massive administrative, process and management burdens (i.e. contracts, risk questionnaires, etc.), which corporates do add as a matter of process.

But will this change? We postulate it is slowly shifting, with B2C principles slowly coming into the B2B World. In our follow up we will discuss this shift in some detail.

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

Cloud Computing – Don’t Get Stranded with Sharks

If you think that cloud computing is not for you, you may be left stranded…with sharks.

The Cloud - Sharks

You can download the latest GEP white paper on the impact of cyber security, and the benefits of a cloud-based procurement technology solution here.

“If you think you’ve seen this movie before, you are right.” So said David Linthicum, author of ‘Cloud Computing and SOA Convergence in Your Enterprise‘.

He went on to say, “Cloud computing is based on the time-sharing model we leveraged years ago before we could afford our own computers. The idea is to share computing power among many companies and people, thereby reducing the cost of that computing power to those who leverage it. The value of time share and the core value of cloud computing are pretty much the same, only the resources these days are much better and more cost effective.”

In biological science there is a concept called convergent evolution, which essentially describes how different organisms have independently evolved the same solution to a particular problem.  The similarity in body plan between sharks and dolphins is a perfect example. Despite one arising from a fish and the other from a land mammal, the particular circumstances of life in the pelagic ocean have resulted in the gradual adaptation through survival of both groups into superficially similar morphologies.

New Era Solutions

The cloud computing model of this era is indeed offering a similar solution to a similar problem that the shared computer access model used to. Indeed I recall having to book computer time in my university days, and that on a machine with a fraction of the computing power of my wristwatch!

In that case it was simply a matter of limited availability of the machines themselves and sharing the cost between groups was the only model that made sense. Today the equation is a different one.  Raw computing power and data storage are dirt cheap…

As an aside, a quick sketch calculation confirms that data storage twenty five years ago cost around seventy thousand times the equivalent cost today. (To check my working: I installed a 100MB hard drive in a business system in 1990. It weighed 120Kg and cost about £1100 Sterling. Last week, I put a 1TB card in my camera for just under £140.)

…but it isn’t the cost of the machine resources any more that are the limiting factor. It’s the overhead. The cost of management and operation, the risk of failure and consequential loss, and the inertia lumped on the enterprise in times of radical and accelerating change.

Putting Software to Work

What is driving business systems into an effective shared computing model in the cloud is not the need for more resources at lower cost (although this is undoubtedly an unplanned upside). No, it is the need to decouple the business processes from the technology.

Yes, of course, the technology – and by that we mean software of course – is central to the business process. I mean, do we really need to say e-this and e-that anymore? But in the past our business processes were determined BY the software. Today cloud software can give us the flexibility to conduct business how we think best and the software can be put to work for us.

Perhaps that’s sounds a bit too rosy-tinted for some.  But the fact remains, the risk and cost of making the wrong decision in selecting a cloud software provider, is the merest fraction of what it was in the old, customised-behind-the-firewall days.

A recent conversation I had with a consultant suggested one client of theirs was looking to migrate their systems as-is to an SaaS platform over the next five to seven years. In that same time, a more decisive CIO could make the wrong decision about a cloud provider twice(!), and still be further advanced in ROI by the time that migration is over.

Overcoming Intertia

So, the imperative to move into the cloud is compelling but the skepticism around security can apply the brakes in many organisations.

Because cloud computing evolved from a different ancestor to the shared computer model – out of the chaotic, anarchic, everyman’s internet, run by nobody-knows-who, instead of out of the traditional, conservative club of private supercomputers run by accredited Systems Analysts –, and because of a slew of high-profile hacking cases, there remains a core of uncertainty in the procurement industry.

To that end we work closely with our customers to help them understand where the security risks today really lie, and the greatest of these is inertia.

As I think about the case of the company taking upwards of five years to take what they have today and put it online, I can’t get the image out of my head of a diver coming up from a leisurely reef excursion only to see the dive boat heading for the horizon.  Of course, if he can’t tell whether that fin belongs to a dolphin or a shark, you now know why.

It will take a company with very deep pockets and very great resilience in a rapidly changing world to be able to ride out the cost of being left that far behind.

There do remain reasonable questions around technical security that should be asked and answered in any selection process, and our two-part paper Securing Procurement in the Cloud of Tomorrow is designed to help that conversation.

Vivek Kundra, former federal CIO of the United States said, “Cloud computing is often far more secure than traditional computing, because [cloud providers] can attract and retain cyber-security personnel of a higher quality than many governmental agencies.”

The question is not whether, or even when. It’s how.

Enterprises should be moving their procurement processes to the Cloud, say GEP. For more on this, download the latest white paper research.

For more help on avoiding the sharks in procurement software, visit the Smart by GEP website.

How can Procurement Work Smarter, Not Harder?

Time never seems to be on our side. It’s time for procurement spend its time more wisely, and work smarter, by leveraging new technology.

Z Hotels Work Smarter

Procurement, finance and operations have forever been working on ways to integrate simply and effectively. While it is reasonably simple to coordinate small teams in one office, hospitality is one industry faced with the tough task of managing spend and suppliers across multiple locations, multiple businesses within a business and a seasonal spend pattern.

Traditionally, these three departments have been engaged in a never ending paper chase between numerous locations and head office. Not to mention the arduous task of managing budgets across a multitude of locations, geographies and currencies. Until now, managing this extensive workload has meant the headcount in the back office goes through the roof and the time staff should be spent in front of the guest/client, is instead spent on pushing paper and placing orders.

Breaking with Tradition

So how do you fix this expensive problem, and work smarter?

Breaking decades’ old business patterns and cleverly using technology to simplify buyer – supplier interactions and location management. However, Z Hotels have cut administrative tasks by up to 90 per cent through simplifying and digitising many of their previously time devouring tasks.

Frontline hotel staff would spend up to five hours a week on purely administrative duties like placing orders, chasing paper invoices and pushing items through the approval process back to head office. Meanwhile, head office staff lacked the transparency and real time control on departmental spend and relied solely on location staff to be their eyes and ears.

Since bringing in a new, cloud-based procurement platform, they have cut admin duties for location staff time down by 90 per cent.

Bev King, CEO at Z Hotels, commented on the benefits of the new solution. “Customer service is at the forefront of everything we do, InstaSupply gives us the opportunity to have a much more automated solution that allows our staff to have time to focus on the service to the customers rather than try to fill the administrative gaps. The process has become very easy to use. We’re on the right track,” King said.

Supported Growth Ambitions

The platform now pulls together all orders, delivery reconciliation, stock, invoice processing, location management and budget tracking as well as a host of other functions still being refined within the portal. All this with full integration with the business’ accounting software.

When Z Hotels first brought in InstaSupply, at the end of 2014, they had big ambitions to grow. A year later, they have just opened their 10th site and are on course for another five by the end of this year.

Under the traditional model, a flurry of staff would have been brought in to handle the additional workload that growing nearly 300 per cent would have created. In fact, the head office team that deals with finance and procurement has stayed the same as it was in the beginning.

It is this ease of use that makes it a great solution for Z’s predominantly Millennial operational staff. Implementing a fully responsive, one click, cloud solution is in tune with the emergence of a dominant Millennial workforce who will no longer just get by with archaic systems and countless spreadsheets.

With a wealth of new technology available to procurement and finance teams, isn’t it time for your organisation to look at ways you could work smarter?

Watch a video on this case below:

Instasupply employs advanced cloud technology and a user-friendly web application to give users control of their time and their spend. Find out more about Instasupply’s purchase-to-pay ordering system, and supplier invoice management and consolidation functionality, at their website.

For Spend Management Success, Don’t Say the P Words!

Thinking differently about procurement starts with talking differently. If growth companies want to succeed then they need to change their vocabulary, starting by introducing the term ‘Spend Management’.

Spend Management Success

Read Tyler’s thoughts on when to buy your first ERP system here.

When should a growing company start building its procurement infrastructure? When you reach about 100 employees, or when you buy your first ERP system, whichever comes first. Not many companies have the foresight to do this. The common wisdom is that you bring in procurement at about 700-900 people. That’s too late.

In my experience one thing that keeps companies from starting as early as they should are the “P” words: Procurement; Purchasing; Process; Policy. Not only do these words define the function too narrowly, they’ve also become synonyms for bureaucracy and red tape.

People at small, entrepreneurial companies recoil when they hear these words. We need to rethink how procurement is positioned so companies can embrace it early on, and in a positive spirit, well before chaos ensues. That starts with changing the way we talk about it.

Call it Spend Management

Don’t get me wrong. I’m in procurement and I love the field. But this vocabulary is not just off putting, it’s inadequate for what the profession does today. The classical understanding of procurement is contract negotiations – leveraging a company’s size and buying power to get discounts and save money.

That’s not a bad thing to be known for, but it’s understandable why somebody with that classical understanding working at company of a couple hundred people would say, “We don’t need procurement yet.” They can’t yet buy on a massive scale, and at that stage revenue is far more important than savings.

What people outside the profession don’t realise is the extent to which the function has been growing in responsibility and strategic importance over the past few decades. However, we still haven’t communicated clearly about the nature of the role, its importance and how it fits in the organisation.

Procurement should really be joined at the hip with finance, but ask five different finance professionals what encompasses procurement, and you’ll get five different answers. If our closest ally in the organisation doesn’t fully understand the role, we clearly need to do a better job communicating what it is we do.

Procurement today should ideally encompass five or six functions: strategic sourcing, contract negotiation and management, workflows for buying, supplier information management, and the handoff to accounts payable and the ERP system. Continuing to call all of that procurement really doesn’t do it justice. Spend Management is a much better term. 

Think More Broadly

It’s not the sexiest term, but it does imply a broader function that’s squarely aligned with finance. Even employees at a small company will recognise the need to manage spending. Maybe if it’s presented that way, we can start sooner, and with greater focus and intention.

A small company may not be ready to negotiate big contracts, but they do need to buy things and pay bills, so they set up an AP department and processes for paying people. Whether they realise it or not, they’re already laying down the foundation for their Spend Management infrastructure.

At about 100 people, someone needs to start planning how that’s going to scale and start laying the groundwork. If you walk in at 100 people and start using the ‘p’ words, it would actually create a barrier to starting. But if you wait much longer than that, the first job is to jump in and stop a fast moving train.  When that’s a company’s first introduction to procurement, it only serves to reinforce any negative impressions they may already have.

Don’t Wait to Build

Once those impressions get culturally ingrained, it’s an uphill battle to change that perception. Yet that’s what happens all the time. The vocabulary and, by extension, the whole profession has become synonymous with bureaucracy, and no small company wants anything to do with bureaucracy.

This is holding companies back from proactively building out spend management as part of an efficient, effective corporate finance infrastructure. You’re going to build infrastructure around marketing, sales and delivering your product or service.

There’s a one hundred percent chance you’ll also need to build infrastructure to support spending money as the company as it grows. Yet most companies wait until things are really broken and people are complaining, and then the whole thing is really painful. If you start early you have a chance to set up a system that works smoothly from the get go.

Be the Change

Change has to start with those of us in the profession. We can talk more broadly about what we do. We can talk about ‘buying guidelines’ instead of ‘purchasing policies’ and ‘simple steps to getting what you need to do your job’ instead of talking about the ‘procurement process.’ Neutralising these defensive barriers helps people realise, “Oh, okay, these are ways that I can get what I need to do my job in an easier way.”

Small companies may not be ready for concepts like category management and contract negotiations, but they need help buying things, designing workflows and finding automated tools. They may be able to do some simple sourcing for volume discounts, and there are usually all sorts of unmet needs. It’s at that point you need to bring someone in to address them with an eye to the bigger picture of building a scalable spend management program that’s integrated into the corporate finance system.

There are lots of ways to approach it, and lots of conversations we could be having, if we don’t let the ‘P’ words get in the way.

Coupa are one of the sponsors of the Big Ideas Summit, to be held in London on April 21st. If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Are Procurement Professionals Stuck in the Stone Age?

Ed Cross, co-founder at Odesma, and Anya McKenna (of Market Dojo) ponder the neanderthalic and stone age ways of B2B software…

Stone Age Procurement Technology

The peculiar thing about business technology is that generally it is not very easy to use. I might exclude here email, but the rest of it seems to need a training course and some sort of super user, or a training provider (or even worse a consulting firm) to come and show you how or work it for you. Whereas the most used technology that we interact with outside of work generally does not require any support.

The irony here is that business technology came first, and the use of technology first appeared in the office, long before we all had tech at home or on our person. Yet, it remains unintuitive, expensive, and, as a result, does not get utilised fully or at all by a lot of people at work.

Compare this to B2C technology, how hard is it to work? ebay for instance. Or Facebook. Or even Candy Crush. The simple answer is they are intuitive, straightforward and certainly do not need any training or consulting support to get the benefit of them. In fact even Generation X (us older types) can work them on any number of portable or fixed lumps of technology. And a lot of them are free to the user.

Where Did it all Go Wrong?

So what’s gone wrong? For this, we’ll let Ed share an anecdote from 1999. While working for PwC, I presented to a local CIPS event in Staffordshire on e-commerce. This topic was perceived as very much the new kid on the block, and a whole host of new tech start ups were receiving incredible valuations.

At this session I laid out the view of the future described by the firm, ignorant to the nay sayers. In fact there were quite a few in the audience, most notably those with a few more years under their belts than me. One or two challenged my hypothesis on the topic.

I later left PwC to set up a Private Equity backed branch of a US e-Sourcing firm Sharemax.  A year or two later the dot.com bubble had burst and I was back in Consultancy, and the nay sayers were proven right.

So, what was, or still is, the problem? From an historic perspective the leading market insight companies and so forth, focused heavily on functionality, as did many buyers of solutions. And ignored the user experience, the maturity or demographic of the population expected to use the technology.

Many people in senior or middle management positions did not grow up with computing technology, and when making selection decisions, focused on elements outside of ease of use, and considered technology against an historic understanding – one where tech is always hard to use.

They therefore condoned supplier behaviour where training and consulting support were deemed acceptable costs of enablement. And this thinking has not much changed, given the demographics of leadership.

Of course, the existing providers have not been driven to step up, because the customer has not demanded it of them. Whilst in the B2C arena the demographic is younger. The expectation is of instant gratification, solutions that are compelling, easy to use and free or very low cost. With Generation Y coming through in business we expect the current issues are about to change.

So why have B2B software providers not followed the B2C route, and provided better, more compelling solutions to pull procurement out of the stone age? You’ll have to wait for the next part of our series to find out.

Market Dojo and Odesma have partnered to combine their intuitive eSourcing software and expertise in offering business advisory services to offer clients a winning procurement solution.

Leading with Value – The Uber-ization of Procurement

Disruption in industries, heading towards major disruption in procurement too. Gabe Perez talks about the uber-ization of procurement.

Uber-ization of Procurement

We’re off to a flying start after lunch here at the Big Ideas Summit 2016. Sometimes a graveyard slot at conferences, Gabe Perez, Vice President, Strategy & Market Development at Coupa Software, got the audience energised discussing the disruption heading our way in procurement.

Gabe challenged our audience to start with the outcome, changing the way we traditionally look at going to the market as procurement professionals. The Uber-ization of procurement starts here, with a focus on value, rather than features.

Just What us ‘Uber-ization’?

Put simply, ‘Uber-ization’ is about being able to access value in real-time. In our personal lives, everything we need, we can get in real time – products within the hour from Amazon, cars from Uber, even setting up a site to sell our product on Etsy.

According to Gabe, you don’t have to do the same legacy tasks now in order to sell things. From selling or buying products, to driving a car for Uber, you just need to have a pulse! There is a new type of workforce, making money in ways that have never been imagined before.

In the real world, there’s little enablement. It’s totally the opposite in the business world, where we’re really just at the beginning in terms of this real-time penetration.

Issues in Procurement Technology

The biggest issue in procurement technology is that it is was originally developed and evaluated in a legacy way. That means is was evaluated on the features and functions, built for the organisational ‘power users’ years ago, and not with the best practice and innovation that is available in today’s economy in mind.

Gabe told the delegates that an RFP isn’t the best way to start. A better approach might be an RFV – a Request for Value. Procurement needs to start with the value proposition, and then work backwards, starting with who the best partner to achieve this outcome will be.

The issue for organisations is they are trying to do the same things over and over, not making any changes, and not making any difference. Features and functions shouldn’t be the focus, but the tools that allow procurement to get to value.

Organisations need to frame evaluations of procurement technology on the value delivered based on the business outcomes your organisation is looking to achieve.

Power of Networks

Gabe went on to talk about business networks, and involving more suppliers. The more companies, or “suppliers” procurement are connecting with, the more opportunities they have to leverage knowledge and expertise for innovation.

A lot of this innovation is coming from the suppliers in the ‘tail’, ones who are traditionally consolidated or ignored.

These smaller organisations don’t always have the opportunity to work with larger companies, thanks to traditional processes, protocols and business portals. All of this adds up to a higher business cost for small companies, making doing this work unprofitable.

There are so many processes and boxes to tick in most companies processes and evaluation, that small companies are out of the work at the beginning either because they did not get an opportunity, or did not see the value because of the cost of doing business.

Failing Networks

Business networks have historically failed in the supply chain, as they have been designed by the software vendor, with the vendor’s priorities and strategies in mind. They are not designed to be open networks, and because of this, they don’t drive value on both sides of the equation.

The other problem is that they only cover a fraction of the total number of suppliers worldwide. There are close to 200 million suppliers in the world. Traditional procurement methods and business networks only enable access to approximately 1 to 2 million, which is a dismal result.

An open network turns this on its head completely. What suppliers need is the simplest way to connect with buyers, other suppliers and collaborate with them. This is the key to unlocking innovation and value creation in the supply chain.

In a perfect world, there would be no user interface at all, but we need to open up the networks before we can get to that stage. And then we will have found the path to the Uber-ization of procurement.

Why Predictive Analytics is Changing Procurement’s Future

The opportunity for predictive analytics and Big Data in procurement goes well beyond spend.

Predictive Analytics in Procurement

Hackett’s 2016 Procurement Key Issues Study shows that increasing agility is a critical development area for organisations. It also shows that predictive analytics and forecasting tools are identified as having the greatest transformational impact on procurement in the future.

A confluence of high volatility, technology-led innovation, and hyper-competitive market conditions, has accelerated the rate of change in business to unprecedented levels. Agility is the key to success in this environment. In a procurement context this has four attributes:

  • Proactive Decision Making: Leveraging information and predictive analytics to improve the quality and timeliness of decision-making.
  • Value Chain: Industry leadership in digitising their value chain, including supply and demand chains, as well as internal operations.
  • Planning: Customer-centric planning processes and day-to-day business decisions.
  • Operational responsiveness: Permitting swift response to changes in the supply chain, customer preferences, the competitive landscape, and business strategy.

Overcoming Obstacles

However, accessing this data, information and market intelligence is a significant obstacle that must be overcome.

Becoming information-driven should be a primary focus area for procurement. The function must develop the tools and skills that will allow staff to apply market data and intelligence to decisions on spending and sourcing strategies. Creating deep, consultative working relationships with business leaders, demands that procurement bring this valuable expertise to the table.

This level of insight requires high-quality, real-time market intelligence. However, over half of the Key Issues Study respondents lack a formal market intelligence program or are in the very earliest stages of adoption. At the same time, establishing data governance and building a continuous improvement culture for data management and quality, are also tactics increasingly adopted by organisations.

Access to market intelligence, and ensuring that sourcing and supplier relationship management teams are using high-quality category and supplier intelligence, are prerequisites for agility.

Transformative Impact of Predictive Analytics

As procurement’s role matures from transactional facilitator to trusted business advisor, proficiency with the next generation of analytics – a.k.a. “big data” – will be a key enabler. Big data has been a game changer when it comes to customer analytics, offering an unprecedented ability to quickly model massive volumes of structured and unstructured data from multiple sources.

Good examples from the digital world include Google’s insight into customer behaviours and preferences, and Amazon’s ability to anticipate orders and ensure on hand stock to meet demand.

Source: The Hackett Group Key Issues Study 2016
Source: The Hackett Group Key Issues Study 2016

Predictive analytics refers to the use of statistical and mathematical techniques to predict the probability of future events occurring.

The predictive analytics and forecasting use case for procurement can be an increased focus on business outcomes, through greatly enhanced forward looking decision support capability; and automated and real-time information and analysis availability. Both of these are underpinned by greatly improved data quality.

Combining predictive analytics with cognitive tools will allow, for example, upgraded end-user buying experiences and automated sourcing actions to anticipate supplier and market events. It will also allow for forecasting of and acting to mitigate the impact of supply chain disruptions, and reduction of the severity of supplier risk events.

How do we respond?

As procurement leaders this situation poses challenging questions:

  1. What are the business outcomes and specific use cases for predictive analytics?
  2. How can we accelerate the organisation towards a single view of data and segmentation?
  3. Do we need to access new sources of meta and domain data?
  4. What is the value from faster, more frequent and higher quality information and insight?

Taking advantage of advanced analytical tools and methods requires appropriate staff with the skills to use them, as well as new technology roles, aligning business agendas, and elevating the overall level of technology knowledge. Future talent management plans should reflect the importance of training and hiring staff to handle the sophisticated analytical tools and methods, to deliver the full potential of Big Data.

Analytical projects are not without challenges. Procurement leaders who have not already started down this path should use the high-stakes competitive environment of 2016 as a burning platform.

About Hackett’s Procurement Key Issues Study

The results of this annual study are gathered from executives from over 180 large and global companies operating in the US, Europe and rest of the world, with annual revenue of $1 billion or greater. Find out more at the Hackett Group website.

Chris Sawchuk will discuss why procurement needs to be more agile during his keynote address at the Big Ideas Summit on April 21st.

If you’re interested in finding out more, visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.

Showcasing Your Big Ideas – Procurement-as-a-Service

Ahead of the Big Ideas Summit 2016 on April 21st, we’re on the hunt for your Big Ideas. Philip Ideson discusses his Big Idea of procurement-as-a-service models.

At the Big Ideas Summit 2016, which takes place on 21st April,  we will be asking our speakers and attendees to record their ‘Big Ideas’ live on camera for the whole of our Procurious community to see.

But we also believe that every single procurement and supply chain professional has a unique vantage point in the industries, communities and businesses they work in. You have been submitting your Big Ideas to us, and so far, we think they have been great!

Philip Ideson, Host, The Art of Procurement

Philip believes that procurement-as-a-service delivery models will transform the procurement value proposition. Companies will be able to access procurement talent and technology “on-demand”. This means the cost of accessing procurement expertise becomes a variable cost rather than a fixed cost.  

The result? Organisations of all sizes can now access specialist domain expertise which allows us to pull value levers that over and above cost savings that elevate our role and transform our value proposition. 

Philip elaborates on this big idea further here. You can connect with Philip on the Art of Procurement website, or on Twitter at @aopshow or @pideson.

How to Submit Your Big Idea

We don’t mind if you film your submission on your phone, tablet, laptop or PC. However, to help you out we’ve compiled a list of some of our recommended methods for reaching out.

Once you’ve completed your film, you can reach us by email (Procurious@Procurious.com); on Twitter (@procurious_) or via Google Drive or Dropbox (using Procurious@Procurious.com).

You can find all the information you need on recording and submitting your Big Idea here.

Want to know more about Big Ideas 2016? Then visit www.bigideassummit.com, join our Procurious group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

Don’t miss out on this truly excellent event and the chance to participate in discussions that will shape the future of the procurement profession. Get Involved, register today.