How Data-Led Procurement Solutions Create Value
Delivering Supplier Experience Management (SXM) through Best-of-Breed
In the first of our series of webinars on Delivering Supplier Experience Management (SXM) through Best-of-Breed, our panellists discussed Best-of-Breed technologies and how data driven procurement solutions create value. Robert Bonnar, Senior Global Procurement Director at BP and moderator for this session, was joined by Sammeli Sammalkorpi, Co-Founder and CEO of Sievo, a company focused on procurement analytics, and Costas Xyloyiannis, CEO of HICX.
This webinar covered:
- The rise of the Best-of-Breed landscape
- The data dilemma
- Analytics as the backbone for action
Data driven procurement solutions: The rise of the Best-of-Breed landscape
Sammeli starts off the discussion by giving his take on the rise of the Best-of-Breed landscape. He states how, twenty or so years ago, transactional procurement solutions were designed for raising purchase orders, invoicing, and automating the transactional procurement processes. Tactical sourcing solutions became more sought after in the late 90s, as they helped large organizations manage global, complex sourcing processes and e-auctions. They have since merged and evolved into the modern procurement suites widely used today.
According to Sammeli, the latest innovation in digital procurement is data-driven, cloud-based solutions that complement the traditional transactional systems. These new Best-of-Breed solutions enable companies to capture the business case in specific categories or domains, which allows them to focus solely on new initiatives, such as innovation, sustainability, Supplier Experience Management and other areas. As a result, “you can drive much better collaboration to bring something concrete to the table,” he adds.
As Best-of-Breed is an emerging approach, not many companies are ready to move away from traditional ERP suites. Costas states that their readiness is dependent on their maturity. Considering that legacy systems have been around since at least the 2000s, it may take time for some companies to adjust. Both Sammeli and Costas both agree that having a strategy for acquiring Best-of-Breed solutions is a must, as simply buying random software is not an effective approach.
“There has been a huge demand for and proliferation of new use cases, new regulations, new requirements, new mandates for procurement beyond just the traditional use cases. So, inherently, this has created a need for these new solutions because people want to digitize them. Customers therefore have found that they have to acquire solutions and, although they don’t necessarily want to change the traditional landscape, they do want to try and retrofit a strategy around this because they need a particular tool,” Costas Xyloyiannis, CEO of HICX, explains.
The data dilemma
According to Costas, in order for a Best-of-Breed strategy to yield results, an organization has to have a solid data foundation to support it, especially around master data, as this is what will be fuelling the Best-of-Breed systems. He emphasized the importance of treating master data and transactional data differently, as well as stopping so much focus on data cleansing, and to direct that effort on ensuring new data entered into the system is clean. Costas provides an analogy of ocean clean-up, in which environmental scientists advise that stopping the pollution in the first place is more effective than cleaning what is already there, and which can improve the overall success rate by up to 95%.
“The reality is, you have to focus on control first, rather than cleansing. What we mean by this is to stop polluting and establish a single-entry point. That’s why, for us, data quality and the onboarding of suppliers is very important, because that’s when supplier data quality is established – when that information is created and collected,” Costas explains.
Sammeli further highlights the difference between external and internal data, stating that, although organizations cannot control external data, that should not stop them from using internal data to their advantage. He points out that, aside from it being collected and combined, it should also be protected post-contract as well.
“If you miss that clause, then you end up with switching cost issues. You can get rid of the contract but the data stays behind,” Sammeli adds.
Analytics as the backbone for action
According to Costas, clear visibility into data and its governance allows for numerous returns on investment. He lists opportunities such as greater savings, risk management, compliance management, quality assurance, fraud prevention, sustainability initiatives, and so forth. “All these things have a component of data and information governance to make sure that you are compliant and information is up to date. This all adds up, so you can also build a complete business case around the efficiency which you can gain from it,” he adds.
Sammeli meanwhile highlights the extra depth that analytics can provide, namely the insights that would not otherwise be there. Analytics, powered by various tools and solutions, enable companies to streamline the supplier and Procurement experience, which is vital as organizations can create more value and usability than if they try doing it in-house.
The second part in the series, ‘How Data Drives Supplier Experience, Digitization and Transformation’ features Creatives, a company specializing in data improvement and governance.