Did you make your predictions for 2014?
Predicting events for the year is a common practice for many. You tend to think of yourself as a fortune teller. Some even look to industry-leading sources for predicting future trends, such as The Economist, Forbes or the WSJ, and the procurement community is no exception to these practices.
As we begin to predict what’s coming in 2014, there are observable trends that impact our industry in procurement. In my opinion, there are four trends that really stand out. In Part 1, I’ll share the first two trends to look for in Procurement in 2014:
1- Continued acquisitions in Procurement Technology: Bigger Fish eats Smaller Fish– In recent years the trend of acquisitions in the procurement technology space has been quite noteworthy. The acquisition of big procurement brands (Emptoris by IBM in Dec 2011 and Ariba by SAP May 2012) demonstrates acquiring well-known brands and consolidating them into their existing platforms for the purpose building the grand vision of a global commerce platform. The impact of integrating these platforms on shareholder value is likely inconclusive given the size of the acquired companies’ market caps to that of an IBM and SAP respectively.
However, from a customer perspective, consolidation has certainly put pressure on procurement departments running those acquired platforms. This raises the question: What does their future with the new parent look like due to the changes in executive management? The feedback we’ve heard from the field is that the relationship is often painful- understanding the future footprint is difficult and implementing and supporting solutions is challenging because of poor delivery and lack of investment or innovation in sourcing. These challenges are all likely due to distractions of integrating with the new entity. So, the real question we should ask is: Does bigger always mean better for the customer?
2- Ongoing hype of S2P – The supposed increased reach of Source to Pay as a solution is the latest hype that many platform providers like Coupa and iValua are noting as the best approach for managing the procurement enterprise. While some practitioners may be pushing for this functionality, the latest research from Gartner counters this approach. Gartner reports a full S2S suite can take at least five years to fully implement, leading to low adoption in organizations where procurement leaders try to implement the full suite at once. Furthermore, there are simply too few examples of organizations today that have fully adopted integrated S2S suites.
A one-size-fits-all approach is not necessarily the best strategy when choosing a platform. If you’re looking for value and better ROI, try researching a Best of Breed sourcing platform that focuses on the needs of upstream procurement (i.e. going deeper rather than wider) and openly allows for a more custom approach that meets the needs of business through increased options and competition. However, as we move into 2014, it is likely that upstream and downstream providers may be compelled to jump on the trend of S2P, and continue the approach of one-size-fits-all.
Stay tuned for Part 2! I’ll discuss the final two trends in Procurement I’m predicting for 2014. In the meantime, share your predictions and thoughts by commenting below or tweeting @iasta.