In viewing the release of our newest sourcing platform during a demo, I tried to discern all the pieces that I saw as unique or compelling. Looking past core features in the sourcing platform, such as RFx, auction and award management capabilities, I saw aspects of the new platform that are clearly distinguishable. Things like a slick and simple UI, collaborative reporting, in-app messaging and other social media, including capabilities for networking, made me think of the evolution of enterprise technology and the parallels to how sourcing and procurement platforms have dramatically changed over the past 15 years.
The rise of procurement metrics.
In March of 2014, Matthew Eatough, CEO of Proxima Group, wrote an article for Harvard Business Review discussing what he called ‘corporate virtualization‘. The concept is based on research that found that, on average, “69.9% of corporate revenue is directed toward externalized, supplier-driven costs.” The fact that such a large percentage of corporate revenue is spent with external business partners is surprising enough, but the study also uncovered that the percentage increased by 4% from 2011 to 2014, marking a clear trend towards more reliance on suppliers rather than less.
I had the opportunity to read “Strategic Sourcing: Lessons Learned” recently published by the Aberdeen Group. You can download it for free at the following link: http://www.aberdeen.com/research/9814/RR-strategic-sourcing-lessons.aspx/content.aspx
Just a couple of days ago, Gartner published its Magic Quadrant for Strategic Sourcing Suites, February 2015. We are proud to note that we have been recognized by Gartner as a visionary in the latest report moving from the leader’s quadrant into the top portion of the visionary quadrant, we take into account our adjustment from the previous report in July 2013. The elimination of many other vendors from the pool should also be noted.
According to Gallup, supplier relationships are among the most overlooked but most important connections a business can have. Being a “customer of choice” can help mitigate risk, lower costs, and spur innovation. Companies that are great customers benefit from a more reliable supply chain and receive “flexible, non-bureaucratic support” from suppliers during crisis situations. That means linking supplier management with contract management.
Recently I had the opportunity to sit down with Gartner Research Analyst Nigel Montgomery to discuss how Contract Lifecycle Management (CLM) has made a significant leap to Enterprise Contract Lifecycle Management (ECLM). Nigel is probably the industry’s most prolific author on topics pertaining to CLM or ECLM and has done a great deal of research over the years on the evolution of the technology. In fact, we had the opportunity to record the discussion, which can be viewed here.
How much value is your business gaining from your contracts?
If a procurement executive asked you what a given contract was worth, you would likely give an answer based on estimated spend value as a result of projected volume, negotiated costs, and term. While this is accurate, it is also a limiting perspective that places more emphasis on the transactional footprint of the contract than what it means to the company’s operations.