At Spend Matters, we focus quite deeply on helping procurement practitioners make the right decisions about the technology they invest in to improve their processes, efficiency and value proposition. As any procurement person knows, it’s all about Value for Money, where value relates not just to price but to fit, size, ROI, ease of use (and hence uptake), scalability and so many more factors – see How to Best Buy Procurement Tech further down.
To help Procurement cut through the minefield of vendors in the market and get straight to a shortlist of relevant solution providers, our analysts need to discover and get to know as many vendors as possible across a multitude of categories, from sourcing through to payments, from established players through to emerging ones. Once we discover an interesting vendor, we conduct a pretty granular examination of the solution’s capabilities, market presence and roadmap (a subscription service) and offer insights into its value proposition, both in our free-to-access tech directory and procurement solution mapping engine.
eWorld Procurement and Supply is a great forum to meet new vendors, reconnect with existing ones and find out about emerging technologies (aside from hearing from industry leaders on topical challenges and trends). It was a bit of a (welcome) surprise last Tuesday to learn that this year of the 26 vendors exhibiting 13 were new to eWorld. That’s unusual. A 50/50 split in established vendors versus newcomers raises a few questions: where were the 13 vendors that exhibited previously? (We didn’t see Jaggaer, SAP Ariba or Oracle, for example.) And what does this influx of young, more best-of-breed players tell us about the market? Does it foretell market saturation, or does it just reflect the pure innovation in a burgeoning market? Let’s hope it’s the latter, as procurement embraces tech more and more.
We listened in on some of the presentations and met with a few vendors we hadn’t come across before (read part 2 for a synopsis), but getting back to Procurement’s enduring search for tech solutions to make their lives easier, here’s a run-down of some considerations to think seriously about when choosing tools, as offered up by our analyst Bertrand Maltaverne in his presentation on:
How to best buy procurement tech in 2023
There were at least four concurrent sessions to choose from; happily Bertrand’s session was full — I spotted only two empty chairs. Hopefully that indicates a growing interest from practitioners in getting the right information with which to make choices they won’t end up regretting.
In fact, it panned out to be so. When asked, half of the audience confirmed they are looking to buy procurement tech in the next 12 months (great news for the vendors present).
Having previously been a practitioner and a buyer, Bertrand has a two-sided view of the procurement tech world. But, he explained: “nothing has given him a better view of the market than being an analyst at Spend Matters.” The market is, in his own words, “pretty messed up right now,” by which he’s referring to the challenges faced by procurement: supply disruptions, inflation, legal requirements and so on that are making the market more complex and more volatile than it has ever been. It’s no wonder buyers struggle to make sense of it.
The market, he explains, is in a constant state of flux, citing data, stakeholder management, legal requirements and the evolution of the profession as the usual suspects effecting change. Given all the requirements one must meet when making tech choices, it’s hard to know which vendor is strong and where its strengths lie. And then there are categories of spend management that are no longer a “should be doing” but a “must be doing,” such as risk management and sustainability. There is also a general move from “suite dominance to the Alt suite.” The considerations seem endless, and to top that, it’s now essential to understand not only your suppliers but what’s hidden past the tier 1s. This need for multi-tier visibility is driving much of what the tech marketplace is serving up today (maybe that explains the ‘space invasion’ by so many new providers); FRDM, Circulor and Interos come to mind. And buyers are looking to invest in systems that help them get value from other systems, such as Arkestro, Zip and Aera. Of course payments automation remains a hot area, and more providers exist beyond the big well-knowns, such as Stampli, Teampay and Yooz.
So, how do we make choices we won’t regret?
“It’s like a treasure hunt,” he says. But if you put the ‘horse before the cart’ — i.e., start with tech not the problem — then you’ll end up with the wrong solution. In his diamond strategy, Bertrand lays out three important areas to address:
- Vision/strategy — reminding us that your organization “doesn’t need a digital strategy,” it needs a “strategy enabled by digital” … “technology’s value comes from doing business differently because tech makes it possible.”*
- Exploration — identifying enabling technologies, understanding requirements (readiness) and incremental possibilities.
- Selection — try and test, and think about the partner as well as the solution.
The crux is to always start with the problem, asking: what do I need? Is the organization ready for it? What are the possibilities after go-live? Do I have the data, budget, innovation, IS landscape to support it? What’s the risk?
“The future is volatility, uncertainty, complexity and ambiguity (VUCA) and it needs anti-fragility and agility to combat it. Remember that data beats algorithms. So, the possibility for data, insights and knowledge are the key to selecting software that will help navigate the future.”
Thinking about the ‘new’ type of value that Procurement can bring — revenue up, risk down, innovation, the 3Ps of sustainability — then tech is the vehicle to make that happen, predominantly by developing new insights and fostering collaboration. The real value of tech is ‘augmentation,’ people and machine combining strengths and working together in a new type of collaboration.
It’s also good to keep in mind, he says, “that any buying decision you make is going to shape the world of tomorrow.” So, enhancing your organization’s ESG-awareness of your investment is also important, and, in this, Procurement has the opportunity to make the organization “the best for the world.”
While there are elements of selecting tech that are important — configurability, flexibility (to allow for adaptation to process change), ease of use, scalability, openness (ability to integrate with other systems), collaboration (bringing value to internal stakeholders and suppliers) — you also need to create an appetite for digital in the organization. “Many technologies act as a first step,” he says, “freeing up resources, digitizing new information, streamlining processes, etc. and increasing the ‘digital quotient’ of the organization, making it potentially more receptive to the next wave of implementation.” So selecting technology also means considering and enabling the next step: what you want to do with all the new insights that all the new data will bring. When selecting tech, start with outcomes.
As always, if you’d like to know more please reach out.
In part 2, we meet and greet a couple of new vendors to keep your eye on, and we cover a few of the presentations we were able to attend.
*George Westerman, principal research scientist at MIT initiative on the digital economy and author of Leading Digital: Turning technology into business transformation.