I’ve recently been studying what a customer-obsessed operating model means for Purchasing functions and the software they use. I've concluded that Purchasing needs to transform its approach to visibility and control, due to the tradical impact that Mobility has on procure-to-pay (P2P) processes. I've been warning ePurchasing software companies for years about the potential impact of Mobility, but while a few visionaries have heard and acted on the message, most are lagging behind. That may be OK while their customers – mostly Finance and Procurement professionals – are similarly behind the times, but they may be unable to catch up when the market finally starts to demand fully mobile solutions. And customer-obsessed organizations will demand mobile P2P solutions, because they need to enable employees to quickly and easily buy the goods and services they need, so that those employees can get on with their main job, which is winning and serving customers.
What the laggard vendors miss is that Mobility is not about a user interface that works on iOS and Android; its about making the software so smart that it works well in a mobile context. Many product managers tell me proudly “our software works the same on a mobile as it does on a PC”, but that completely misses the point; mobile apps needs to work completely differently from the way traditional PC-based software works.
Take requisition and invoice approval as an example. One leading P2P vendor claims that over 70% of approvals are either performed in its mobile app or via its email response feature. I would argue that few of these approvals are worth the paper on which they are rubber-stamped. A manager can check many aspects of a transaction on a PC because they can see a lot of information on their screen and can drill down to investigate potential problems. They can’t do that on a phone, because:
If you’re trying to use e-commerce in a B2B context, it is no longer safe to ignore the procurement role within your customers’ organization. At the moment you may be able to market and sell successfully direct to end-user customers, but not for long. The growing imperative for chief procurement officers (CPOs) to guarantee compliance with various external laws and internal policies is driving a much tougher stance on so-called rogue buying.
I’ve been studying the customer’s side of B2B e-commerce for a number of years. The clients I speak with work in procurement, finance, and the part of I.T. that supports those two functions. One of their most common questions is: “how can I prevent employees buying stuff directly from sell-side websites?” This used to be purely due to concerns about cost—they assumed that their e-procurement application would direct employees to approved suppliers who would, they believed, be the cheapest. Now, however, the bigger issue is supplier risk. Issues such as corporate social responsibility, conflict minerals, corrupt practices, data security, and so on, are forcing CPOs to be much tougher in preventing purchases from unapproved suppliers.
No, I’m not wasting Forrester’s blog space for yet more coverage of the royal engagement. I think Ariba’s proposed acquisition of Quadrem, that it announced today, is much more interesting. http://ht.ly/3bPei
Forrester has been predicting, and advocating, consolidation in the procure-to-pay market for a while:
While I’m unqualified to comment on whose investors do better from the $150m purchase price for a company with about $50m revenue, I do believe the merger is good news for both sets of customers and suppliers. Firstly, Ariba reinforces its place as one of the four or five large supplier networks that will eventually dominate the market. Its customers now get access to a wider stable of suppliers. Quadrem originated as a marketplace for mining companies, so it is particularly strong in MRO categories and in natural-resource-rich regions such as Africa and Latin America where Ariba is under-represented.
Technology innovation and business disruption are changing the software market today. Cloud computing is blurring the line between applications and services, and smart solutions are combining hardware with software into new, purpose-engineered solutions. We are happy to announce that we have launched our Forrester Forrsights Software Survey, Q4 2010, to predict and quantify the future of the software market and help IT vendors to tap into the insights from approximately 2,500 IT decision-makers across North America and Western Europe.
The survey will provide insights on the strategic direction and spending plans of enterprises from very small businesses to global enterprises, segmented by industry and country. In comparison with last year’s survey, we significantly boosted the sample size this year for the energy (oil and gas, utilities, and mining) and healthcare industries; we’ll be able to provide an in-depth analysis for these industries along with retail, financial services, high tech, and other industries.
Key themes for this year’s software survey include the following topics:
Cloud computing. Besides a 360-degree overview on current and future adoption rates of software-as-a-service (SaaS) for different software applications, we are going much deeper this year and have asked IT decision-makers about their cloud strategy for application replacement as well as for different data and transaction types.
Integrated information technology. Purpose-engineered solutions combining hardware with software are promising higher performance and faster implementation times. But do IT users really buy into single-vendor strategies?
In addition to my software pricing and licensing research, I also study use of technology to improve procure-to-pay (P2P) processes; so, I'm always interested in customer presentations at software company events, in case I can spot some new best practices or interesting trends. This week I’m at Ariba LIVE in Orlando, but last week I was at SAPPHIRE NOW in Frankfurt, where I attended a presentation by a project manager from a large German car manufacturer talking about his rollout of SAP’s SRM product. Given that it wasn’t in his first language, the presentation was very good, and quite humbling to an anglophone, even a relatively multi-lingual one. (I can say “two beers, please” in eight other languages, but wouldn’t dream of presenting in any of them).
However, the overall case study was disappointing. I won't name the company, but I’ll just say that the SRM implementation didn’t look to me like as good a “leap forward through technology” as I expect to see in a showcase presentation. In particular, I was disappointed to see that this company is: