Spend Matters opens the ‘TAP’ at SIG’s Procurement Technology Summit
This week at the Sourcing Industry Group’s Procurement Technology Summit, Spend Matters Chief Research Officer Pierre Mitchell and Founder Jason Busch led a session titled “Creating Your Procurement Technology Action Plan (TAP).”
The theme of the session was that procurement should have a “TAP” that focuses on the demand side (linking the TAP tightly to stakeholder requirements), the supply side (i.e., out to the procurement technology and services markets) and then bring those elements together to drive change and deliver value.
The session guided attendees on navigating the procurement technology landscape. Jason assured attendees that it was common if they were skeptical of procurement solution types and the buzzwords floating throughout the industry, and said that successfully navigating it with a team of analysts could still be difficult.
Jason and Pierre focused on the fact that most CPOs are not well prepared to deal with increasing external risk, a finding from the 2019 Deloitte Global CPO Survey, conducted by the consulting firm in collaboration with Spend Matters. Additionally, most CPOs expressed dissatisfaction with their fully implemented digital solutions, particularly in areas that weren’t standardized, such as supply risk management, supplier management and contract management. The amount of overlapping stakeholders and contracts can make finding a procurement solution more complicated than other areas.
Finding ways to deal with complexity upfront, rather than in quarterly or annual meetings with executives, can help. When firms do tech selection, Spend Matters urged attendees to investigate the solution landscape rigorously (just like any other critical spend category) and take time to understand what their peers think of procurement technologies (in addition to the analysts, of course), then build the business case and quantify it for stakeholders and map the company’s needs to the supply.
With so much information in the procurement technology field, attendees had questions of their own. Jason and Pierre’s answers have been edited for print:
Procurement Technology Q&A
I’m interested in your perspective of indirect procurement and POs. Are we spending too much time doing P2P instead of C2P (contract-to-pay)?
Pierre: There’s a lot of complexity on the indirect side, and a lot of complex categories here. Even so, on the indirect side, there is a huge push to extricate people out of the P2P process so we can focus on getting out of the labor efficiency game and move toward autonomous procurement. It’s about getting people to focus on the spend and the risk. And to do that, you’ve got to optimize P2P channels, which are driven heavily by category and multiple segmentations, and it’s going to draw heavily from the contract.
Jason: I’ll take the other side of the argument. There are some providers really foisting it on the market, and advanced companies are really eating it up on the buy side. But, I do think right now, especially in the time of coronavirus, unemployment and fraud, P2P and P2P controls are critical. I think from an internal compliance, supplier compliance and fraud prevention perspective, which can happen internally and externally, there’s a whole other argument for prioritizing P2P in the current environment. In other words, risk, not just reward.
What’s your perspective on best-of-breed vendors versus larger vendors, especially given the coronavirus? Will these smaller vendors survive?
Jason: I’ve been through, in the procurement tech industry, at least three different recessions. People are much more rigorous in their diligence of seed investing (than they used to be). And yes, there are going to be companies that fail, but I would not be overly worried based on the funding of smaller companies.
I don’t think we’re going to see a massive shakeout in this market. I think what’s going to happen is we’re going to see valuations take a hit. Beyond that, you’re going to see vendors that can’t survive on their own joining forces with others. That points to the need to do better contracting and really negotiate, even giving access to source code. But don’t throw out smaller vendors because of the current time. It’s a healthy market and there are still investment dollars going around.
Tools are fine, but how do you solve the dirty data problem, like supplier data?
Pierre: Rather than best-of-breed versus suite vendors, and this used to be ERP versus best-of-breed — it’s really a question for the ages — but it’s the wrong question. The biggest thing is having a good strategy. How you’re designing your digital procurement and digital supply chain strategy. How do you partition different pieces of the solution? I want consistent solutions, and for what I’m using to hook into my sharepoint infrastructure, I want really good master data management.
It’s a big topic, but focus on the “I” in “IT” (information), not just the “T.” If you focus on the data piece, that’s going to help you a lot. The big problem is data. Analytics is a great place to start, and it shines a light on how crappy your data is.
What are your thoughts on ConnXus being acquired by Coupa? Does it make sense to you?
Jason: Coupa is a serial acquirer. They’ve got the best corporate development function in procurement — really one of the only ones in this sector — which gives them a big advantage on deals. In terms of the transaction, ConnXus reported to us roughly 30 employees, some very large customer names and great guys running it. Not a very large provider, but very good diversity. I’m skeptical of diversity acquisitions.
I think Coupa is serious about giving diversity a chance as part of its core offering, and there’s more to ConnXus than diversity, for sure. But it’s not a very large transaction.
There’s a lot of vendor noise about AI, but what is ACTUALLY real and getting used?
Jason: There’s a lot of hype around AI and has been for years in this space. And there is confusion and often misleading claims around what is AI and what is a business-rule. A lot of spend analysis technology, for example, works perfectly well as rules-driven. It’s not AI-driven, and there are different types of AI. The promise of AI is starting to become real beyond just taking RPA to a next level in certain aspects.
You see some spend analysis tools which, if they’re trained in a certain sector, can in theory get better results faster. It’s there, but there are perfectly good technologies in the sector which are not AI-driven yet.
Pierre: It’s being used a lot in the “plumbing” in a good way. On the invoice side, taking a lot of those unstructured documents and being able to shred them and recognize them and train the system so you can get to the straight-through process. Same thing on the contract side — pulling all those key insights out of that huge set of data. Those are very valuable use cases.
But, it’s solving real-world problems right now, and there’s going to be cool stuff down the road. There’s a lot of different use cases, but nothing a practitioner should worry about. So much of it is going to be coming out through the providers themselves.
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