Digital Procurement Landscape

Digital Procurement Landscape: Procurement’s future looks increasingly best-of-breed

Alex Johnston

Alex Johnston

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Digital project teams are revisiting their systems selection approach, in favour of best-of-breed

Attentive followers of Procurement Leaders’ digital research will know that we have been tracking attitudes towards best-of-breed and single suite for a number of years now. This tracking exercise has historically pointed to large enterprises strongly aspiring towards single-suite approaches. However, this year findings from our Digital Procurement Landscape report suggest that digital transformation leads have fundamentally revisited their approach.

Interest in best-of-breed approaches has increased markedly over the past two years;

Digital Procurement Landscape: Best-of-breed system adoption among procurement teams

Notably, part of this growth has been generated by procurement functions that had previously committed to a single-suite approach. 48% of respondents who currently operate with a “single-suite” model aspired towards a “best-of-breed” approach (19% of total respondents).

Digital Procurement Landscape: Current and future systems strategy

So why is this?

A number of developments have taken place on the vendor-side, particularly around approaches to integration. However, this evolution only reflects one driver for this transition with broader trends in both technology and procurement driving the appeal of best of breed. This blog explores two of them:

Procurement’s diversifying value proposition is broadening systems strategies

Procurement leadership teams are targeting a more aspirational value proposition, leveraging the efficiency gains already seen through digital transformation. This emerging value proposition has a far more strategic vision for how procurement can contribute to areas such as corporate social responsibility, product/service enhancement and risk management.

With many these objectives sitting outside of procurement’s traditional purview, and largely the confines of procurement technology, digital project leads are exploring a wider spread of specialist solutions.

Elevating procurement to contribute more proactively to the wider strategic objectives of the business means that the scope of procurement’s data strategy must expand beyond spend data. It also means that the specific nature of digital requirements will vary substantially between functions depending on the objectives they are aligning to. For many the capabilities they need are not only not served by traditional procurement technology providers, but they are not logical extensions for these platforms either.

It is worth noting that this shift does not necessarily mean that suite providers will not remain a key part of the ecosystem within organisations. For one thing, it is likely these providers will establish stronger capabilities in these emerging areas. Additionally, this transition to “best of breed” may be in part a reflection of what is accounted for under the umbrella of a systems strategy. For procurement project teams building their digital roadmap, a systems strategy no longer just refers to core S2P technologies and it may be that core procurement processes continue to be underpinned by suite providers, with “best of breed” reflected in the diverse toolset required to meet broader organisational objectives.

“The vendor market in this space is evolving rapidly and there is a broad spectrum of options that range from high comprehensiveness and low flexibility on the one end to really niche solutions. There are also emerging solutions mid-way, able to interface best of breed technologies in a ‘plug & play’ approach as the business requires while offering a single consistent front-end experience to users” Andrea Sordi – ex Head of strategy at Mondelez and now Clinical Professor Supply Chain Management, Department of Supply Chain Management, Haslam College of Business, University of Tennessee

 

Software-as-a-service is driving interest in smaller solution providers with more malleable roadmaps

Procurement is facing a challenge in transitioning from highly bespoke processes and customised solutions to more standardised workflows better suited to software as a service delivery models. For procurement leadership teams who believe they have distinct requirements that cannot be easily met by off-the-shelf solutions, but still want to take advantage of SAAS delivery models, working with smaller vendors offers greater opportunities for co-development or influencing product roadmaps.

As procurement becomes increasingly reliant on third-party providers to build out capabilities closely aligned with their needs, a best-of-breed approach offers a wider spectrum of prospective partners. Whilst configurability is a key focus area for even the largest suite providers, a more flexible ecosystem can easily be presented as a better fit for this challenge.

The market is seeing a big disruption from start-ups looking to provide solutions to the procurement activity that current suite providers do not cover. Because they’re still starting out it’s not always clear what they are offering so inviting them to pitch and explore in more detail what they have to offer is important” Peter Hagenow, CPO at KWS

Our upcoming report ‘The Digital Procurement Landscape’ will be a “buyer’s guide” for digital procurement strategy leads, highlighting the most important vendor and system selection criteria and more. In preparation for the report launch, we discussed what is “The next phase of procurement’s digitalisation”.

Are you interested to learn even more? Download “The next stage of procurement digital transformation” infographic.

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