How Best of Breed Technology Enables Strategic Transformation of Procurement

How Best of Breed Technology Enables Strategic Transformation of Procurement

Delivering Supplier Experience Management (SXM) through Best of Breed Technology

In the final installment of our series of webinars on ‘Delivering Supplier Experience Management (SXM) through Best of Breed Technology, our panelists discussed how best-of-breed technology enables the strategic transformation of Procurement. James Meads, who runs the Procurement Software Site, was the moderator for this session and was joined by Costas Xyloyiannis, CEO of HICX, and Pierre Laprée, CEO of Per Angusta, Procurement Performance Management experts.

  • Read and watch the full recording below to find out about:
  • The rapid growth of best-of-breed technology solutions
  • Challenges in adopting best-of-breed solutions
  • Elevating the role of Procurement
  • How to prepare for the changing market

The rapid growth of best-of-breed technology solutions

Pierre starts the discussion by giving his take on the factors which have led to the rapid growth of best-of-breed solutions in Procurement. He believes that changes within the IT space, specifically around cloud computing, have completely transformed the world of technology, which has in turn led to more investment in new, innovative solutions.

He recalls seven years ago when procurement professionals would tell him, ‘The future is in the suite. So, that’s a very nice product that you have, but you will never make it!’ However, it is increasingly clear that suite vendors have not been able to solve some of the biggest challenges procurement leaders face today. “As a result, we’ve seen more niche solutions that have been addressing very specific needs, very acute pains, on the market that were not properly filled or fulfilled by the suite vendors,” Pierre says.

He believes that founders of procurement start-ups have been successful because they were practitioners first and dealing with these challenges on a daily basis. Today, solutions are being built by buyers, for buyers.

“The fact is that among the big suites, within the legacy players, no-one has ever been really close to what Procurement is, and the result is that these things have been built by people with no real procurement experience, or second-hand procurement experience. So, they are brilliant pieces of technology, don’t get me wrong, but to me, as a former practitioner, they have always felt slightly disconnected from my day-to-day reality,” he adds. The market has additionally been helped by investment and lower barriers to entry.

Costas agrees, “I also think it’s down to the fact that practitioners are driving a lot of these new start-ups, the same way that we at HICX came about, as we have felt the pain of data.”

Supplier data is far more complex than customer data. If you think about it, particularly in B2B, very few people within organizations touch a customer. But if you think who touches a supplier, it can be absolutely everyone. From the CEO, to someone in the production facility, to the marketing function. So, that’s the difference and it’s why, as Pierre says, acute needs are coming up.”

Costas believes that the reasons for the success of best-of-breed technology solutions lies in the fact that they are especially good at supporting specific workflows, focused on a particular problem.

“What comes with that are a lot of ideas, a lot of innovation, and also focused investment. Our investment isn’t diluted by trying to be good at everything. We’ve all learned in our careers – and in our lives – that you can’t be good at everything. It’s almost natural that we all end up focusing on something. So that, for me, is super logical – the ability to focus, it enables you to become the best at something,” he states.

The reluctance and challenges with adopting best-of-breed solutions

One of the biggest problems procurement practitioners face today is data quality. “I don’t think there’s anyone within procurement who you talk to, where they don’t complain about their supplier data and information, and the challenge around it. So, it is definitely top of mind,” Costas continues. “You do need this data foundation in order for a best-of-breed ecosystem to work.”

During a live poll, we asked the audience: “Is your organization more ‘End-2-End Suite’ or more ‘Specialized Best-of-Breed’?”

Is your organization more ‘End-2-End Suite’ or more ‘Specialized Best-of-Breed’?
Is your organization more ‘End-2-End Suite’ or more ‘Specialized Best-of-Breed’?

According to Costas, if this question was asked five or six years ago, the results we see here would probably be very different. The maturity of Procurement within organizations, and their readiness for best-of-breed have risen. “People have probably used a number of suites – and there is a place for the suite. That’s why they’re there, I wouldn’t argue against that. […] It definitely isn’t a question of ‘one or the other’ because the suites themselves actually are best-of-breed at something.”

Costas adds that he is not surprised with the results that we see today. “What we have seen, at least with our customers which are in industries which, I would say, have very mature procurement functions, is that they have started to tend more and more towards best-of-breed. Because, if you think about it, as a procurement function matures, you have more acute needs, more specialized needs.”

In terms of the challenge of integration, he explains, “The reality is that integration is not a new thing. Technology to do that has been around for many, many years, it’s nothing new. The challenge has been that the data is just structured differently. So, the feedback here is: we need that data foundation.”

Elevating the role of Procurement

Elevating the role of Procurement has been a topic within procurement circles for some time now, which Pierre believes is synonymous with ‘getting a seat at the table.’ “The thing is, how can we ensure that we, as Procurement, leverage what we do best, which is understanding the needs of the organization and being the interface with the supply market who will be able to do that. So, the role of Procurement, for me, is ensuring that we can have this conversation with the market and with the business, and be at that interface that will drive the cost out and drive the value.”

In order to do this successfully, Pierre thinks that tough conversations with other business functions, especially Finance, are inevitable, as well as the need to decide on priorities. “So, the way to do that is to have transparency, alignment and collaboration. […] This is what will help us elevate the role of Procurement,” he adds.

Costas highlights the importance of technology and moving away from manual ways of handing data, such as spreadsheets. He stresses the impact that this has on transparency, and discusses how to ensure it is successfully established and maintained: “What I think best-of-breed technology has forced organizations to do is to lay this data foundation. Now, this inherently creates transparency, because oftentimes you don’t have the same definitions. So, the lack of transparency is because we’re not talking the same language.”

Costas believes that a focus here will allow Procurement to become enablers of facilitating supplier experiences, as a result of the whole organization being able to work together, collaboratively.

How to prepare for the changing market

The procurement market is, of course, rapidly changing and developing, with organizations needing to stay relevant and competitive. Pierre firmly believes that the first step is to set the foundation. “It’s really organizing the sourcing pipeline of the buyer and the relationship with Finance and the business. If you don’t reach alignment, you won’t get anywhere. Obviously I’m extremely biased here, but you can’t be doing that in a suite, and you can’t be doing that in an Excel spreadsheet.”

The second step is to establish the organization’s goals, which should include profitability and Environmental and Social Governance (ESG) ambitions and allow the procurement function to contribute to them and to bring solutions. “So, if you have this ability [as Procurement] to articulate your contribution, to explain what you are doing, you will have a completely different relationship – one of trust, one that will help you get more value and that is what I hope for Procurement, sooner rather than later, because that’s where we’ll be able to really demonstrate the potential for the company,” Pierre concludes.

Costas adds that Procurement has to, and has already started to, move away from purely transactional technologies, to ones that are supplier focused.

It requires a mindset shift, as Costas explains, “We need to think about the problem in a different way. […] If you’re looking at it from the supplier’s perspective you would immediately see ‘Oh wait, we’re onboarding them into 10 systems and they go into three different networks.’ So, for me it’s a change in thinking, to look at a problem in a different way, to help you solve issues in a more intelligent way sometimes. As an engineer, I think that you have to look at the problem in the right way in order to solve it, or even to understand you have a problem. I think the evolution will go more towards this, but it will also be supported by a more open ecosystem and more standardization, which will also lead to data being pervasive,” Costas concludes.

Our first installment in this series, features Sievo, experts in Procurement analytics and covers the topic ‘How Data-Led Procurement Solutions Create Value’. The second part in the series, ‘How Data Drives Supplier Experience, Digitization and Transformation’ features Creatives, a company specializing in data improvement and governance.

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