The Procurement Software Podcast

Kicking off this week with the first of a number of interviews we'll be doing over the next couple of months with contract management platforms. This is a rapidly expanding area and it's gone from simply being repositories and authorisation / signature software into becoming a very diverse ecosystem over the past few years.

My guest today is Elena Mechik of Berlin-based startup Inhubber, which offers a blockchain-based solution for contract management and tracking.

Blockchain and its use in Contract Management for Procurement and Supply Chain

I have to admit that I was very ignorant about blockchain and its multitude of potential different uses and applications until I started digging into this topic. If you think "it's just something to do with Bitcoin", then think again!

End-to-end encryption of contracts: Why is it important?

Elena explains that the way you track and store contracts should be treated the same way as you store money. With increasing risk of phishing and cyberattacks, it's important you understand, track and trace your contract management activities.

Contracts are encrypted from user-to-user with Inhubber, whereas most other platforms tend to encrypt just on the cloud or on the server. There is no need to send documents via email or any other less secure method of communication.

What is blockchain and how is it relevant to contract management?

Blockchain technology can be used in various industries and use cases.

It works by saving certain information on various "nodes" (or "chains"). You don't save this information on your personal laptop, rather it's saved hundreds or thousands of times on a network of other, independent nodes. This gives the document (or information) immutability: the elimination of somebody being able to fraudulently change or doctor a document.

In simple terms, it eliminates fraud and tracks and records any changes or amendments for posterity. There is no need with blockchain to save different versions of contracts in MS Word with the latest version filename as a differentiator.

There is a complete audit trail stored in cyberspace. Nobody can falsify or overwrite changes to a document without it being flagged.

Which sectors are keenest to adopt this technology?

Elena answers that typically, companies that have experience of being hacked are usually keenest to bring this on board. Historically this was only very large companies, but this is now starting to change.

As cybersecurity becomes more and more central to companies' risk management strategies, the size of the companies responding favourably to investing in blockchain technology are becoming smaller. It's no longer an issue that only big organisations need to worry about.

From real estate, through to construction and most recently banks are all showing an interest in adopting this type of technology.

It's not just contracts which can be stored using blockchain

While they may be the most obvious example, contracts are just one type of document which can benefit from blockchain.

Purchase orders and receipts for example can also be stored in Inhubber, and access control to different documents within an organisation or within a network of core suppliers can also be regulated through the platform.

By taking advantage of encryption technology, confidential documents can also be transferred for example from a buyer to a supplier when collaborating on joint innovation projects.

Leveraging AI to extract key contract data

As with many competitor CLM solutions, Inhubber also has an intelligent contract monitoring function which can track some standard metrics such as:

• When is a contract due for renewal?
• Who are the contract partners?
• Which conditions have been negotiated?

This can also be programmed according to individual requirements of customers, to enable it to train the AI based on what to look for.

How does the AI differentiate between native contracts and third party documents?

It depends on the needs of the customer.

The AI is programmable and the contracts can be analysed based on a specific workflow. So, if a native contract requires fewer questions and interrogation than, for example, third party paper, this can be included as part of the process.

Can Inhubber be used for Sales too? And what else is in their roadmap?

Yes, it can also be used for sales. As part of the ongoing roadmap as the solution matures, they are also looking at:

• Historical contractual relationships, including a history of the different players who have come into contact with the contract over any given point in time
• Clause libraries
• Contract creation and negotiation wizard

Stay in touch!

• Inhubber website
• Connect with Elena on LinkedIn
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

On this week's show we're digging into the world of direct materials sourcing. It's a part of the digital procurement landscape that's been a bit neglected, except for e-sourcing tools, and my guest this week decided to do something about this.

Anne-Sophie Le Bloas, Founder and CEO of Ravacan, experienced in both her native Europe and also in the US, that there wasn't much innovation out there when it came to leveraging digital tools to manage direct materials spend, and set out to remedy this.

Creating visibility, analytics and clarity in the direct materials space

Part of a rare breed, Anne-Sophie is a fellow ex-Procurement Category Manager turned startup founder. She studied Procurement and Supply Chain in Bordeaux and then moved into the corporate world, starting out in the FMCG industry, moving then into aeronautics and then finally the automotive industry.

Against this backdrop, there is a lot of focus around specification and quality, while at the same time ensuring cost reduction. Engineering and technical decisions are key, but at the same time there is a lot of pressure on cost, especially in lower margin industries such as automotive.

Is it hard to get conversations with innovators and change agents?

Traditional manufacturing is an industry where change often happens very slowly and is difficult to drive innovation and different ways of doing things. I was therefore curious to understand whether Anne-Sophie had experienced challenges getting traction if she is selling software into these types of businesses.

She admits that there have been challenges, but also says that she tried to target the innovators and change agents within these businesses. The COVID-19 pandemic has definitely helped to accelerate the appetite for change and embracing potential new ideas, partly as a result of supply chain shortages, inflationary pressures and longer lead times.

The ability to be able to make decisions faster and to have the bigger picture at your fingertips has been a key factor in driving acceptance of using software. Moving to a remote working environment during COVID meant that previous interactions that would take place within a production plant no longer could, if white collar functions such as Procurement and R&D were working from home.

What's wrong with managing directs within an ERP?

Understanding knock-on effects and having predictive models to be able to evaluate this impact on the overall supply chain is key. This is something that's very hard to do from within an ERP system.

For example if a COVID lockdown closes down a factory in a certain part of the world, how can you model this from within your ERP or using a spreadsheet? Asynchronous ways of working are too slow. Data may have changed by the time you have tried to update and work collaboratively on an Excel and email-based project.

Managing multiple tiers of supply and directed buys

Direct material supply chains often have added layers of complexity, where you need to understand relationships beyond your 1st tier suppliers. Anne-Sophie cites the example of the consumer electronics industry where contract manufacturing is normal and the Tier 1 supplier is really just a gatekeeper to a number of external manufacturers.

It's also quite common in some industries to have "directed buys", where the end customer dictates to a Tier 1 supplier where to buy certain components to buy from further down the supply chain.

Having the ability to track your BOM electronically, through one platform, gives a whole new level of transparency and visibility.

Leveraging AI to capitalise on savings and limit price impact

With constant price fluctuations in direct materials, there is also an AI element built into the software which allows for intelligent switching of suppliers in the case where components are dual-sourced.

Getting the mix right based on capacity, price, lead time and availability can certainly be managed manually but is very difficult to optimise due to lack of perfect knowledge. Ravacan can do this and intelligently switch the percentage split based on a number of different criteria.

Why go with an all-in-one solution rather than best-of-breed?

Ravacan offers modules that cover:

• "Should cost" analysis
• Demand planning
• Spend analytics

By incorporating all of these into one platform, the "if this, then that" analysis is much easier to calculate when all of this intelligence is within one platform.

So, while a best-of-breed solution for each of these may go into more granular detail and have more features, having three different platforms and getting them to communicate with one another for predictive analytics would almost certainly pose a challenge.

Vendor tooling management capability

Something close to my heart as an ex-automotive direct materials buyer, Ravacan offers the ability to have a digital tooling asset register within the platform.

Knowing where all of your tools are, and being able to stay on top of when a supplier moves them from one manufacturing facility to another, can be a nightmare. I remember having suppliers going into administration early in my career and us not having a clear picture of where all of our tools were.

Tooling can often be VERY expensive.

It's a bit like owning gold or bitcoin and not having any clue where it's stored. Being able to track this digitally is a huge administrative saving, and also has a big impact when it comes to increasing transparency and compliance.

It also has an impact on quality too, through being able to proactively track refurbishments and repairs to tools that you own that are under suppliers' responsibility for maintenance and link these back to any quality improvements or corrective actions.

How big do companies need to be to see ROI from this?

Surprisingly, you don't need to be a large enterprise to see the benefits of having all of this data in one space and be able to run predictive analytics.

Anne-Sophie describes the sweet spot as being mid-market through to enterprise clients, but especially those who are heavily into a contract manufacturing model with a complex supply chain, dual sourcing and lots of owned tooling on suppliers' premises.

Stay in touch!

• Connect with Anne-Sophie on LinkedIn
• Visit Ravacan's website here
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

Spend analytics is a pretty mature (and competitive) market. So, what does this hold for the future?

No better person to ask than the former CEO of Spendency, Arvid Fredin. They were recently acquired by German source-to-pay technology company Onventis. Arvid stayed on post-acquisition and is now Managing Director of Onventis' operations for the UK and Nordic countries, and joins me on this week's episode.

A recent acquisition, and how this may shape the future of spend analytics

A good place to start is actually to talk about the recent acquisition of Spendency. Is this part of a wider pattern that is emerging? Are we starting to see more consolidation in the market? And if so, why are we seeing it?

Will there be more consolidation and what is driving this?

Arvid suggests that the driver is often the desire to get more productivity from their sales force. Being best-of-breed and focusing on one specific solution often means that it's more difficult to get warm leads who are looking for exactly what you're offering.

But is the growth coming from customers who are switching away from some of the legacy suites, or is there still enough business to go after from companies who are still at the beginning of their digital transformation journey?

Greenfield customers are easier to win over because:

1. No existing solution in place as a benchmark to compare against
2. No switching costs to consider to phase out a legacy application

As soon as there are fewer opportunities out there in terms of greenfield customers, Arvid suspects there will be much more consolidation.

The difference between natively coded tech vs. Power BI or Tableau

Spendency is actually natively coded, whereas many spend analytics solutions out there, as well as anything natively developed in-house by organisations themselves, usually relies on third party technology.

The most common of these are Power BI and Tableau.

From a price perspective, this gives Spendency an advantage because they're not paying third party licensing fees. But it also allows them to be able to run queries much faster and more efficiently because their technology is specifically designed for procurement spend analytics reporting. Whereas third party technology on the other hand is built having to be something that can offer all things to all people.

This affects overall user experience as well as the cost of the solution.

To AI or not to AI: How far can automation get you?

Spendency currently doesn't utilise AI for their analytics solution, so the obvious question is do you actually need it?

Arvid looks at two ways that AI can be built into spend analytics:

1. For efficiency and to reduce manual, time consuming tasks to enable procurement teams to spend time on more value added activities. This is the type of AI that is typically being used these days in spend analytics software
2. The more exciting, sexy future where AI engine is able to pick up on smart signals and made recommendations.

We're not there yet with #2, but this is where the exciting future could be.

Using AI for categorisation of spend is definitely on their roadmap. But having AI working together with a Category Manager is likely to be the common model of deploying spend analytics solutions in the near future.

Enabling Category Managers to see the categorisation rules is key to this, to remove the "black magic" from the process and ensure that the tool has credibility.

Getting to 80-90% categorisation should be possible with technology, but getting to 100% is always going to be a challenge without any human interaction in the process.

Is there a difference between what Consultants need vs. Category Managers?

Arvid explains that Spendency evolved through Effso, a Swedish management consulting firm, and was eventually spun off as a separate business.

The needs of a Management Consultant are indeed different than the needs of a Category Manager or Procurement Excellence Manager.

Initial categorisation and a holistic view of the spend is important for a consultancy. Whereas maintaining and developing the right structures and having taxonomy at a PO line item level detail is key for Category Managers.

Can Mid-Market Businesses run a Spend Analytics tool without extra support?

Not necessarily, but there IS definitely a requirement to have a strong internal implementation team and to ensure that users can be trained post implementation.

Due to Spendency's history with their roots as a management consulting firm, they have found that sometimes the two go hand-in-hand. But spend analytics tools should be able to be run and managed by in-house teams, without the need for an intensive period of hyper care or hand holding. It's not the same as complex source-to-pay software in that sense.

Has Spendency succeeded in attracting larger clients too?

Yes, they have seen over the past couple of years that they have

The product they had 5 years ago would not have been suitable for an international enterprise, whereas what they have now would be able to fulfil their needs.

Therefore, Arvid says it's difficult to segment from natural evolution of having a more advanced and mature product vs. changes to customer requirements.

What are Arvid's predictions for the future?

This was really interesting and so glad I asked the question. These are his thoughts and predictions:

1. Best-of-breed and suites will continue to co-exist.
2. There will be more consolidation in the industry as the number of greenfield customers in mature markets diminishes.
3. Spend analytics solutions specifically will be prime acquisition targets because the native solutions in this space that are offered as part of the suites are not so strong.

Stay in Touch

• Connect with Arvid on LinkedIn
• Spendency website
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

There are many great stories about how startups are created, but this one is particularly interesting. Take a procurement organisation that is often cited as best-in-class, and then challenge it with becoming even better.

My guest on today's show, Michael Pleuger, is a former Senior Executive at Vodafone Procurement who had the mandate to do just that. The result became akirolabs, and the journey of how this happened is our discussion today.

Making a Best-In-Class Procurement Team even Better: The story of akirolabs and the strive for excellence

Michael's journey with Vodafone started out with him being part of the team who designed and launched the Vodafone Procurement Company, headquarted in Luxembourg.

akirolabs is the first AI-enabled collaboration platform for strategic procurement, and was borne out of him being challenged by Vodafone Procurement Company's Founder and CEO (now akirolabs Co-Founder) Detlef Schultz, to take their already mature procurement digitisation to the next level.

Beyond category management: filling a white space in today's procurement technology landscape

To set the scene, Vodafone already had industry-leading digitisation and was performing as one of the best-in-class organisations when it comes to three KPIs of measuring the effectiveness of procurement:

• Value contribution
• Compliance
• Efficiency

Michael couldn't see at first anything missing from the existing set-up. How do you take that and improve on it.

All operational and tactical procurement was already digitised and automated to a high degree, so the question that Michael got to work on was: how can we make the more strategic side of procurement more digital?

Thinking outside the box and looking at other industries

Michael's proposal was working around replacing experience with vision, leadership and collaboration.

One of the first things the team did was to bring in McLaren Applied Technologies: the data and analytics spin-off of the McLaren F1 racing team. Just doing that in itself shows that bringing best practices from other industries or walks of life can have a huge impact. When you consider just how many data points a motor racing team has to measure to get one step ahead of their rivals, it's not surprising that the insights they could offer were hugely insightful.

Classic thinking outside the box. Not "what is our competitor doing?"

How did they arrive at Category Management as the focus area?

Procurement is in a unique position as the node between the business and the supply chain. No other function in the business works with such a diverse range of stakeholders within the business and at the same time looks outwards with the relationships that we manage with external suppliers.

So, what is needed to optimise and leverage this position?

1. Connectivity: being the spider at the centre of the web has limited usefulness if the communication channels between all of the interconnected parties are not smooth and accessible to all.
2. Prevent Silos and Fragmentation: the necessity to have some kind of "digital glue", as Michael describes it, to prevent this fragmentation between all of the different stakeholders we come into contact with, both internal and external.
3. AI to leverage both the Demand and Supply factors: Procurement essentially works with internal business partners to understand the demands of the business, and then communicates this to external suppliers to understand and secure the supply-related aspects of the puzzle.

With these three factors, the team then concluded that the Category Management process would be the best way to bring all of this together in some digital form.

But does this translate to the average procurement team?

It's one thing doing this for EUR 26 billion of spend in an extremely mature procurement organisation, but can it translate to the average mid-market business whose digital journey is way less mature?

Michael argues that even if a function is not mature now, having a category management tool such as akirolabs can help organisations to boost their maturity through the world class capabilities that are embedded into the platform.

That's great, but even when taking budget and organisational maturity aside, what about the people factor? Can this approach still work in a procurement team that isn't stacked with the best talent?

It's more a case of attitude rather than pure capability. The platform delivers a large part of the potential capability gap. The key is to be open-minded towards change, regardless of experience levels within any team.

Michael describes a quadrant of the need for collaboration vs. the degree of complexity of the task. The sweet spot for leveraging what they have developed with akirolabs is o have world class methodology embedded into an intuitive workflow, which is then enriched through business foresight with the help of artificial intelligence.

But will Category Management be dead in future?

The business doesn't think in categories. So, what is the relevance for this management model of procurement as we move forward?

Whereas on the one hand, driving savings will always be a priority for procurement, different businesses require different outcomes from procurement. Not all of these are modelled around managing a category of spend.

For example, gaining efficiencies and driving innovation, to name just two. Take the example of a rapidly scaling startup that needs a procurement function to help their growth while at the same time managing risk and ensuring compliance.

Or one of the Covid vaccine manufacturers who need to work cross-category to ensure there are the raw materials and third-party manufacturing supply chains in place, while at the same time ensuring distribution and logistics to get the product out to those who are expecting it in a timely manner.

A rigid, siloed procurement organisation who only works in category teams is poorly aligned to the business in these cases.

What industry sector or level of procurement maturity does this concept suit?

It theoretically fits into every industry with the "beyond category" concept. However, some industries, such as retail, could find it difficult to adopt.

SMEs can indeed also use it, but there does need to be a certain degree of complexity in any organisation to really be able to leverage all that it can offer. A single-site manufacturing facility would probably not get much benefit from such a tool.

The "single source of truth" concept of having all of your data in one place and being able to maintain continuity when there are people changes in an organisation does, at the end of the day, deliver value to organisations of all sizes.

Stay in touch!

• Connect with Michael on LinkedIn
• akirolabs website
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

We look at something a little bit different on this week’s show and examine how one startup Founder decided to start his own community of procurement software startups to help to promote his own. 

To be able to learn from other procurement tech companies and jointly market each other’s solutions at the same time is a great, innovative way to increase attention to your own business. Andreas Zimmermann, CEO of MySupply and Supplytechs joins me to tell his story.

How one Founder created a community of startups to grow his Procuretech company

Andreas began his career as a Consultant and this led him to start his entrepreneur’s journey, at the time also in the consulting space.

MySupply evolved from this as he saw the need for an affordable e-Sourcing tool for non-enterprise businesses that can leverage AI to automate parts of the sourcing process, to point the buyer towards the right e-sourcing strategy for a specific project. 

Recognising the typical challenges that Startups have

Speeding up the process from minimum viable product (MVP) to having a reliable stream of revenue is the biggest challenge for every startup. 

Usually in the early stage, a startup will not have a big marketing team or a huge budget to spend on ads. So, finding ways to organically (or relatively affordably) get attention onto the product is going to be key. Even more so if a startup in the early stages is self-funded and not backed by VC money.

Enter Supplytechs as a potential solution

So, without a huge Sales & Marketing team or budget, being able to effectively and affordably start to bring in revenue is key.

Andreas explains how the usual route of doing a roadshow at conferences and at industry events was kind of dependent on the other parties being interested (and of course, it’s also not free). Meaning that ultimately, the ability to start generating sales was really outside of their control to a large extent.

They noticed that other startups in the space may be targeting the same customers but are not necessarily in direct competition with MySupply, and so the seed was planted that there was perhaps a smarter way to combine resources and to help one another in some way.

Why not just sponsor an event instead?

Startups just don’t have the budget to compete with the bigger boys when it comes to event sponsorship. Attending events is fantastic from a marketing perspective but the costs to be a sponsor are just too prohibitively expensive. This is also reflected when you see the types of companies that sponsor these conferences and events. Even well funded, later stage startups are rarely seen in the list of sponsors.

How to go about getting others on board with the idea?

Andreas explained that he used COVID as a catalyst to get some buzz around the idea to do a digital event. With all events and conferences being cancelled, this gave him the impetus to reach out to other startups and potential speakers and there was a lot of interest, for obvious reasons.

They recently in September just did their third Supplytechs Digital Conference which was a pitch event featuring some of the startups who are a part of Supplytechs.

Leveraging collaboration

While there may be some companies in the Supplytechs network who are theoretically competing with one another, it is rare that two startups are both going after and competing against one another for a sale with the exact same customer. 

And while it could happen at some point, the power of the network and the knowledge contained within each of the different startups is really a force of momentum that can help all of them grow and develop in the right direction. Especially when considering the real competition is either legacy software in organisations, or processes which use Excel and Sharepoint that could be digitised.

Discovering the full potential

Andreas acknowledges that Supplytechs is still in its early stages and there are numerous directions that the network could go in terms of servicing the needs of its participants.

Having mentors, consultants, pooled resources for things like advertising, sales and marketing can be a very powerful platform to serve the pain points of the network.

Leveraging i-Pass to handle customer objections around connecting Best-of-Breed solutions 

A common reluctance to go best-of-breed is often the perception or the concern that it will be technically difficult and problematic to integrate a number of different, independent software solutions and get them to talk to each other. Supplytechs is tackling this through offering support through the i-Pass solution. This is a smart way to easily connect numerous APIs and solutions together and get them to play nicely with one another, without the need for large consulting projects or IT resources.

Going international

Supplytechs has been a predominantly German network through its early stages, but they are keen to grow and have more global representation. They are already international with Scandinavian and British startups as part of the network, but are keen to expand this and gain a foothold in North America with some startups from the US and Canada.

Stay in Touch!

• Connect with Andreas on LinkedIn
• Supplytechs website
• MySupply website
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

We're back with another Pub episode, where we dive a little bit deeper into a topic than we do in our normal podcasts and really break down a hot topic in a more informal chat format.

My guest for this one is Prof. Dr. Florian Kleemann. He's a university professor, author of four German language procurement textbooks and also a former consultant. We dive into the topic of how people are a vital factor in change management. A digital transformation project, or orchestrating the changes to make a procurement team fit for the future, are both great examples in this regard.

Getting Your People Strategy Right for Change Management, Digital Transformation and Orchestrating the Procurement Organisation of the Future

We kick off the discussion by me asking Florian how he sees the skill set of procurement professionals evolving as we move forward.

While on the one hand, Procurement will definitely become more robot-driven for some tasks, he sees the function becoming more of a jack-of-all-trades as we expand our remit into other areas and become more versatile as professionals. By this, he doesn't mean tactical and strategic procurement being mixed, rather the increasing professionalisation and specialisation of procurement as a profession will result in procurement professionals being involved in different areas of the business.

Florian's 4 key areas for managing change

• Digitalisation
• Innovation
• Resilience
• Agility

Digitalisation should not be seen as the future of procurement in itself: it's more the enabler to help free up procurement resources to concentrate on more strategic topics.

When considering resilience, we also need to bring in the increasing importance of the sustainability discussion as part of this too.

Touching also on soft skills - selling, influence, persuasion - the type of skills that are often more associated with Sales & Marketing teams, are becoming ever more important to procurement professionals too.

Procurement, as Florian argues, should be seen as a service, but not as servants to our internal stakeholders.

Taking your team on the change journey from process-driven or compliance-driven to a more agile, strategic function will require a change in the skill set but also a change in the mindset. If you're having to control and beat down your stakeholders to a large extent to keep them in check, then Florian argues that as a procurement team, you have failed to provide a viable strategy and with it, the means of easily and efficiently procuring goods and services.

Start with the most eager or most engaged stakeholders to get some quick wins, and then move on from there.

Can Greenfield Procurement organisations outperform Mature Procurement functions?

I make the example of how many African countries have gone from having no functioning fixed line telecommunications network to jumping a technological generation and rapidly adopting mobile phones. Indeed in Kenya, for example, mobile payments technology is more advanced and more widely adopted than in most European countries.

Could the same apply to Procurement in organisations who are starting a centrally managed procurement team from scratch?

Florian does see some opportunity here, but also argues that if the pace of change is too quick, then it is usually not aligned to the overall corporate goals.

"Strategy following structure, or structure following strategy? In the end, culture eats it all for breakfast".

What about soft skills and self awareness as part of formal Procurement training?

Florian disappointingly shares that the major professional bodies are not really moving with the times yet and adopting these skills into their training syllabuses.

He also shares the story of how he wrote an article in Germany's most well-known Procurement and Supply Chain publication about these skills and how they are covered in his syllabus for the course he teaches.

Despite this being published in a popular industry magazine, it didn't result in many enquiries from the corporate world for their procurement teams to take these courses (even though the program was free-to-access!).

Is it really worth sending Procurement to their 10th negotiation training course, or would it be better to up-skill buyers on soft skills, or trading knowledge with their Sales & Marketing colleagues?

What can corporate organisations learn from elite football teams?

Do we need to move away from seniority-driven salary structures, and the tight bands of salaries which don't differentiate much between A-players and the rest?

Should we follow football's example of breaking the bank to hire the superstars?

Procurement professionals who are twice as productive earn should earn twice as much? Probably not, but more performance-oriented formulas should play a bigger role in terms of being able to hire and retain the best talent.

When companies complain about not being able to find the best talent, it's often due to them not willing to pay the market rate to attract the best people.

What about academies? We discuss whether the "war for talent" will result in corporates adopting an academy structure, or perhaps working with academic institutions to encourage students to take internships with them. Both of these paths can enable companies to screen, nurture and attract talented individuals into their organisation in a more methodical and strategic manner.

How does the desire for purposeful work and personal growth impact this?

We move on from the salary discussion to the non-monetary aspects of career development and finding the right fit.

Whether this is working somewhere that offers more personal growth e.g. for a startup to get more hands-on experience across multiple different areas, or the desire to work in an organisation where you find their mission more impactful or that has a strong focus on values that are close to your heart e.g. sustainability.

Florian shares his own personal example of how he gave up a successful consulting career to go back and do his PhD and then ultimately move into an academic role.

Advice for new graduates in the era of entry-level roles being automated?

In summary, the focus on training procurement professionals of the future will be more conceptual work and less clerical work.

How to raise a requisition or order is no longer relevant to the modern procurement professional. Instead, they need to understand how to formulate a category strategy.

Training and courses such as Florian's curriculum reflect the reality of the modern day and future procurement function. As time goes on, new entrants to the workforce will reflect that with the skills or educational background they have when they begin their career.

Stay in touch!

• Connect with Florian on LinkedIn
• Download our Tech Map for Enterprise
• Download our Tech Map for Mid-Market
• Download our Tech Map for SMEs
• Find your perfect procurement tech solution in our Software Finder app
• Sign up for the Procurement Software Newsletter
• Book an Intro Call and let’s talk all things Digital Procurement!
• Connect with James on LinkedIn

On this week’s episode I get to talk to a well-known industry expert and dive into a subject many of you may be confused and excited about in equal measure.

Melissa Drew, Associate Partner at IBM is my guest to dive into the topic of use cases for AI in procurement applications. We tackle where we are, where we’re headed and what some of the opportunities and limitations could be for this technology in this space.

Use cases, opportunities and limitations of AI in Procurement

Melissa starts off by giving a quick whistle-stop tour of her career so far, which includes 27 years in the procurement space in one form or another.

I then begin by asking the question of whether AI and robots are about to take over our lives.

Are robots about to take over our jobs?

Melissa gives a very important definition that AI and cognitive technologies are actually different things, and that what we commonly refer to as AI in digital procurement terms is in fact what she would define as cognitive technologies.

The difference being, in the example she gives, that AI in driverless cars is constantly evolving and developing its behaviour as it learns from different scenarios that it is being exposed to. Whereas on the other hand, cognitive technology that’s often used in digital procurement technology is highly reliant on the human that is programming the algorithm telling the machine what it should actually do.

AI is only as intelligent as the human programming it

In order for outcomes to be representative, a human has to “teach” the models. Teaching the models can only be done by collecting data. But HOW we collect the data and from which sources obviously impacts the programming that is written around how the machine interprets this.

Melissa gives the example of Amazon’s CV screening algorithm that was unknowingly biased towards male candidates because of the way that it had been programmed based on the data it had been fed. Inadvertently, it had been shown more male applicants during its programming and as such had developed a bias towards male candidates.

What has contributed to improvements to AI over the past 20 years?

AI was originally used to augment human behaviour; to take things that we tactically need to do repetitively as a process and just do them faster and more accurately.

Synthesizing, cleaning and categorising complex procurement spend data used to take Melissa about 9 long weeks. Back in 2004, when she started applying AI to be leveraged for repetitive tasks in spend analysis and categorisation, it reduced this task from 9 weeks down to several hours. That’s the potential that AI has.

As Melissa explains, what has changed over the past few years is the infrastructure that organisations have to house the data, as well as the improved ability to be able to collect and process it all.

Why we still need humans to interpret and assess AI’s work

How do we ensure that we are collecting all of the right data? Are we using the right breadth of data. Why is AI making the decision or recommendation?

Humans still need to test the data and even then, there is the risk that they will potentially have biases because of their own preconceptions. It’s the same parallel we can draw to how reliable we as individuals perceive certain news and media outlets to be, when we consider our own political views and the assumptions we make around the media’s bias towards a certain political party or social issue, for example.

What questions should buyers be asking procurement software suppliers to determine their AI capabilities?

Seemingly every software company is using some kind of AI, regardless of the solution they are offering. 

The AI is being used in multiple ways: so what EXACTLY is the software vendor using AI for and to what extent is this going to enable your procurement team to spend more time and focus on the activities that drive value?

Melissa highlights some of the key ways to determine whether the vendor is leveraging real AI to mimic how a human thinks and acts, versus whether it is just using a complex string of formulas to enable increased efficiency in performing repetitive or predictable tasks. Also the importance of where the data mapping is coming from and whether there are gaps to be able to supplement some of the gaps.

Melissa then explains the difference between machine learning and deep learning, and expands on this by saying it takes time to build, test, feed data into and validate that AI actually works. It doesn’t just happen overnight. Ultimately, a brand new startup that claims to have world class AI should be viewed with scepticism.

To best understand your negotiating potential and your importance to a software company in relation to their solution maturity, it’s important to get a grasp of to what extent they need your organisation’s data more than you need their solution. Asking the right questions around where they have gathered their data and to what extent it’s been tested is key to understand this relationship. 

How will the procurement teams of the future work?

So, depending on to what extent you want to leverage AI, this may not result in it taking everyone’s jobs, but it could certainly end up with a scenario where more junior level, repetitive task roles are eliminated. Which then begs the question of how will future procurement organisations be made up?

Melissa and I both agree that we are at an important crossroads right now as we start to move away from being seen as a pure play cost savings function, and more of a versatile business partner.

Building relationships with fairly new functions such as Chief Data Officer and Chief Analytics Officer will be a key to ensure that procurement data is part of their roadmap and solutions enterprise-wide.

Also, the way we audit, evaluate and onboarding suppliers must become more agile if procurement teams are going to leverage the benefits of working with growth startups who are at the cutting edge of this technology, as opposed to a less innovative but “safe” established vendor.

We also touch on the future of category management and to what extent it will still maintain its relevance within a modern procurement department, and how one would go about building a greenfield strategic procurement team from scratch in today’s world.

Stay in Touch!

Connect with Melissa on LinkedIn

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I’m joined today on the Procuretech Podcast by Sammeli Sammalkorpi, CEO of Sievo, one of the stalwarts of the spend analytics space. The well-known Finnish company were actually founded almost 19 years ago! 

During this time, what started out as a simple spend analysis tool has grown to be a comprehensive best-of-breed solution for spend analytics. We discuss how this niche has matured over the years and what direction it’s headed in the future.

Spend Analytics: Maintaining relevance and continuously improving in a crowded market

Sammeli starts off by explaining how being from Lapland, his parents’ wish was always that he would become a reindeer farmer! 

Instead, he landed into software development rather than staying in his hometown. This came about through starting out as a junior analyst in a procurement consulting firm and realising quickly that there weren’t any tools out there to efficiently analyse and report on what a client’s business is spending its money on.

In a crowded marketplace, Sammeli puts Sievo’s success down to staying on top of the latest technological trends as well as listening to and striving to satisfy their global, enterprise level client base.

Machine learning and AI is developing and evolving quickly. New technologies and more and more data is available. They have seen many well-funded competitors enter the market, and some of them fail. Even though Sievo have never received any VC money, they have gradually grown to 220 employees in their two bases in Helsinki and Chicago. 

How has Sievo grown despite the onslaught of competitors?

There are 3 factors Sammeli gives as the main drivers behind their continued success:

Procurement leaders who change companies and then lobby to introduce Sievo’s software in their new company because they have seen the value first hand.

The data they have been able to gather and, with their clients’ permission, use it to provide benefits and insights to their whole client base to improve analytics and predictive trends. Big data enables the classification process to be more efficient and accurate, due to the learnings and previous spend which has been analysed and classified through the system. The most obvious example of this is the ability to recognise duplicate vendors e.g. IBM, I.B.M. and International Business Machines as being the same organisation

Scale: being able to invest more into software development and marketing & sales as they have become a bigger company than most of their competitors.

Leveraging their data assets to add to the CX

Drilling down on this piece, Sammeli mentions three areas where they have been ableto improve customer experience through aggregating data:

Incorporating client modification or customisation requests into the general product offering to bolster the capabilities of the tool.

The aggregate intelligence gained from each spend classification / normalisation of supplier data to be able to have an ever-growing database of parent and child companies in the supply base.

The ability to use this data lake to drive benefits across their whole client base through upgrades, feedback, insights and market intelligence.

Are new acquisitions coming from customers ditching the suites or greenfield digitisation projects?

Most of their clients typically have had some kind of approach to spend analytics in the past. There doesn’t seem to be a distinct split of whether that’s from an underwhelming experience with one of the major suites, or having tried to natively use a tool such as BI or Tableau in-house without seeing the anticipated success.

There is a growing acceptance that even those companies who are running suites still need to aggregate their data in one place for a single source of truth, at least for large, enterprise level companies. The assumption of a few years ago that a suite could fulfill all of a corporation’s digital procurement needs is now pretty much acknowledged to simply not be accurate. This will become even more pronounced as the technology ecosystem, capabilities and reach of procuretech grows and expands.

Going from descriptive to predictive analytics

The world is becoming more complex and volatile, as we have seen from COVID and the Suez Canal supply chain crisis. A procurement function will never be able to predict ALL of these events, but being prepared for them and being able to figure out the consequences from such an event quickly and efficiently is key. 

Predictive analytics enables a procurement professional to be able to enact and implement a plan B much faster than an organisation that doesn’t have this capability.

We discuss the “if-this-then-that” ability to take spend analytics data in tandem with any other best-of-breed risk management technology to be able to visualise potential scenarios and solutions to them before they actually happen.

Procurement’s journey from savings delivery to value driver

We discuss the trend of how procurement is shifting from a cost reduction department, to be seen as a function that can drive wider value. This is also affecting relationships with Finance, with the acknowledgement that value and cost avoidance can’t be measured as objectively as P&L-visible hard savings. Sammeli describes it as being “unhealthy” that there is only one rule from Finance around how savings are reported.

Transitioning from “talk” to “action” on ESG topics

Building on existing collaborations with risk management, supplier diversity and sustainability providers, Sievo has also just launched a new solution based on CO2 analytics. This acknowledges that companies who are seeking to become CO2 neutral must spend time and resources into understanding the carbon footprint of their supply chain because that’s where most of their opportunity is hidden.

Stay in Touch!

Connect with Sammeli on LinkedIn

Download Sievo’s Procurement Loves Data ebook

Download our Tech Map for Enterprise

Download our Tech Map for Mid-Market

Download our Tech Map for SMEs

Find your perfect procurement tech solution in our Software Finder app

Sign up for the Procurement Software Newsletter

Book an Intro Call and let’s talk all things Digital Procurement!

Connect with James on LinkedIn

This week on the podcast I’m joined by two guests, because we’re actually going to be talking about a customer success story on the show.

Børge Langedal, Co-Founder and CRO of Norwegian spend analytics, vendor and category management tool Ignite Procurement joins me together with Arndt Romer from their German customer SEG Automotive.

We dive into how and why SEG Automotive chose Ignite as their digital solution and how they’ve seen benefits since its implementation.

Building a digital strategy with the right partner after a divestiture

SEG Automotive is best described as a large medium-sized business focusing predominantly on automotive products.

With 7,000 employees across 14 locations and annual turnover of €1.5 billion (approx. $1.9 billion). Based in Stuttgart, Germany, they were spun off from Bosch in early 2018 and therefore had to develop their own in-house systems as part of the divestment.

Ignite Procurement is based in Oslo, founded in 2016 by an ex-BCG team and has since grown to 50 employees. It’s a spend management solution to make strategic procurement easy, with data management and procurement analytics as the core offering.

Bosch had a well developed system landscape which essentially SEG would no longer have had access to after the carve-out and them becoming an independent company.

This led to the need to find and develop their own digital procurement and spend management strategy to enable them to have access to good, clean data without being dependent on an ERP system and Excel spreadsheets.

Bosch had a central procurement team and a lot of the main team at Bosch remained there, which resulted in the need to hire and onboard a lot of new team members when SEG was carved out from Bosch. The transition from following the processes and internal controls of a global corporation to becoming a leaner and more agile mid-market business necessitated the need to improve their reporting and decision-making landscape.

How did SEG arrive at the decision to select Ignite Procurement?

Arndt mentions that it was a three-prong strategy.

They were aware of some of the more well-known tools and approached them to understand what they could offer. They also considered out-of-the-box solutions such as Power BI, as well as exploring the possibility to develop some in-house solutions. On top of this, they had a digitalisation team internally who was out there going to different trade fairs, researching niche / best-of-breed solutions on the internet to discover tools that were not already known to the business. It was at one of these trade fairs shortly before COVID hit that they were introduced to Ignite.

Bringing these three approached together required a scorecard to allow different stakeholders to evaluate the capabilities of each of the different solutions. This enabled them to move forward to pilot phase with shortlisted vendors, at which point, Arndt says it became obvious that Ignite was clearly the best solution for what they were looking for.

How did Ignite Procurement go about assessing and evaluating SEG Automotive’s needs vs. their offering?

First and foremost is understanding whether they can indeed solve their challenges and meet their requirements. Trying to be everything to everyone ultimately is a road to disaster!

Ignite’s team quickly realised that making data more accessible was a key customer requirement and also a key feature of their software, and as such they determined that SEG would be a very good match in terms of system capabilities vs. what they saw as must-haves from a customer perspective.

Børge also says that they were quickly impressed with the SEG Automotive procurement and digitalisation team’s rigorous structures and processes, which went alongside the desire to digitise and improve their operations.

Why didn’t SEG Automotive choose to go with an established Suite?

As a EUR 1.5 billion company, SEG would definitely have been within the orbit of the major, established suite providers. I ask Arndt why they didn’t take the easy / lazy option of just choosing whatever enterprise procurement suite Bosch had been using and instead opted to go through this process.

He mentions that having a divestiture is a catalyst for driving change and striving to make things leaner, faster and better. Lots of new employees, a fresh breath of life into the company and also starting with a blank slate. It was not a foregone conclusion at the beginning that they would go with a best-of-breed solution. This decision came over time as they started to understand the market better, with the capabilities and limitations of other solutions that are out there.

Flexibility to develop and add / customise features, as well as the speed of implementation were also cited as being contributing factors around the final decision to go with Ignite rather than an enterprise procurement suite. Ultimately, agility and the ability to grow and expand as partners was a key factor.

Straddling the gap between best-of-breed and suite capabilities

I ask Børge about Ignite’s solution kind of sitting between a classic best-of-breed application but not being as comprehensive (or expensive!) as a suite. Is this the direction of travel and will we see this as a trend going forward? His answer is that they see themselves as a best-of-breed solution around data analytics and spend management, but with additional features where they have the expertise to complement what procurement teams typically need to go hand-in-hand with these requirements e.g. contact management, supplier management and assessments alongside. Asking themselves where do they have synergies to complement their existing functionality is a key building block of their development strategy.

Utilising modern APIs to connect different best-of-breed solutions together is becoming more commonplace and is enabling companies to not just have one solution but to connect multiple best-of-breed providers together to accomplish everything they need to do. Børge does see more of a trend towards mini-suites and best-of-breed solutions expanding their offering to be more versatile and offer more than just one single solution. Nonetheless, at the same time, there is always a limit to just how many solutions can be joined together.

How has Ignite helped SEG with regards to business planning and forecasting?

There are fewer requests to run special, customised reports which has freed up controlling resources.

Global meetings within the procurement community are possible without lots of slide preparation and reworking of data. If nobody trusts the figures, then nobody will use a digital spend analytics solution. Getting to this point has been key with building trust among users when it comes to using the application.

Lessons learned by Ignite from the implementation with SEG

An implementation with a big, strategic client has been hugely beneficial to Ignite in terms of identifying numerous future joing initiatives and a strong continuous improvement culture.

The input from SEG has been a huge asset in helping with their product development.

Automatic integration of commodity prices with their spend data

Negotiation strategy

Stay in Touch!

Ignite Procurement website

Connect with Børge on LinkedIn

Connect with Arndt on LinkedIn

Download our Tech Map for Enterprise

Download our Tech Map for Mid-Market

Download our Tech Map for SMEs

Find your perfect procurement tech solution in our Software Finder app

Sign up for the Procurement Software Newsletter

Book an Intro Call and let’s talk all things Digital Procurement!

Connect with James on LinkedIn

How big does a business need to be before they can afford procurement software? And how many features does the software need to have to still enable it to deliver value?

My guest today is Adam Thomas from a small but growing startup oboloo. Based in London, the company is focused on delivering a practical source-to-contract software solution to small and medium-sized businesses (SMEs).

The first question we tackle is what is their definition of an SME, because everyone defines the term somewhat differently.

Oboloo sees their typical customer base as being companies with an annual turnover between £5 million and £100 million. They identified this space because typically none of the established procuretechs who do what oboloo does are very active in this segment of the market.

The software itself is essentially a simple source-to-contract (S2C) platform and has 4 core modules:

E-sourcing

Contract Management

Supplier Management

Savings Reporting

Adam explains that they are seeking to tackle the more strategic aspects of sourcing and procurement rather than the transactional P2P space. The value proposition being through time saved as a result of digitisation, as well as the value identified through the e-sourcing module and being able to store this data centrally for future reference.

Leveraging the data - i.e. performing a spend analysis - from their P2P transactions (which could be integrated with oboloo) can then drive the initiatives that can be conducted through the oboloo platform.

What about SMEs and startups without a dedicated procurement team?

Adam explains the importance of consistency when managing external vendor spend, whether that is on spreadsheets or shared drives. As a company grows, these processes should grow with it.

So, regardless of whether a company has a dedicated buyer, the procurement process itself requires a more robust solution to be able to store data in a single, easy-to-use repository. Sending out simple RFQs and uploading a contract into a database isn’t rocket science at the end of the day, and employees can still use the system even if they’re not procurement professionals.

Where is oboloo seeing the most interest in the market?

It tends to be less about traditional, established SMEs vs. growing startups and more about the modules themselves. Adam mentions that there is a lot of demand and interest for their contract management module right now, whereas the e-sourcing and supplier management functions are not as sought after.

If they just want contract management, why not buy a specialist tool?

Simplicity is the easy answer.

A lot of businesses at their core just want to have a simple database. While oboloo does have additional functionality, the objective is to ensure that the customer can upload a contract into their system with the least amount of hassle.

This increases adoption and reduces the “desk drawer” problem in many organisations, where contracts actually registered in the database are just the tip of the iceberg.

How did they find the sweet spot between price and features?

Having all of the core functions and features that an SME requires to run their business was the goal. Does it have auction functionality, for example? No, but then practically speaking, an SME customer can go out and find a separate solution for this. The likelihood is that this would be a very infrequent requirement.

Ultimately, going back to basics, the objectives Adam states are:

Process & outcome

Budget

People

If the employees don’t accept, adopt and use the software, then as an end goal of digitally transforming your business, you have failed to a large extent.

It’s more difficult from a design concept to make things simple, than it is to make something complicated. Enabling everyone to use the system without necessarily realising that they are “doing procurement” is their goal!

Adam’s 3 main advantages to SMEs to use a procurement platform

I couldn’t have said it any better!

You spend a lot of money on marketing, so protect that revenue and don’t let it seep out through not managing your purchases

Help promote your values and work with suppliers who share those same values

Increasing the number of touch points you have with your suppliers can help drive broader collaboration on things like innovation

*Small correction requested by oboloo

oboloo’s Charities programme offers charities and non-profit organisations a discount off the Standard oboloo software subscription price. The discount may vary between countries.

Stay in touch!

Connect with Adam on LinkedIn

Link to the oboloo website

Download our Tech Map for Enterprise

Download our Tech Map for Mid-Market

Download our Tech Map for SMEs

Find your perfect procurement tech solution in our Software Finder app

Sign up for the Procurement Software Newsletter

Book an Intro Call and let’s talk all things Digital Procurement!

Connect with James on LinkedIn