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We will be starting at 11 a.m. PST/2 p.m. EST sharp. First, though, there are two housekeeping notes:
First, please make a copy of your post before hitting the “post” button – just in case. If the system “eats” one of your carefully crafted thoughts, please hit “Ctrl-Z” to recover it
Second, if you have problems posting, we suggest trying a different browser. IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.
This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions. There are no dumb questions and we value everyone's point of view.
Our guest today is Richard Waugh, Vice President – Corporate Development, at Zycus, which makes source-to-pay solutions for purcashing. Here is his bio:
As Vice President – Corporate Development, Richard leads strategic initiatives in the areas of new product introduction, market development, thought leadership, analyst relations, and strategic partner development programs. Richard has an extensive background in B2B E-Commerce, going back to his early career at GE, where he helped launch GE'S Trading Process Network (TPN), the first on-line Marketplace for Sourcing and Procurement in the mid 1990's. He was Co-founder of B2eMarkets, one of the first SaaS (Software as a Service) Sourcing Suite providers and later covered the Supply Management market as an Industry Analyst for the Aberdeen Group. Prior to joining Zycus, he helped bring to market new innovations in P2P (Procure-to-Pay), helping global clients achieve world-class P2P system adoption and performance. Richard has a BA from Wake Forest University and is a graduate of GE's Financial Management Program (FMP) executive training.
Companies have begun a siginificant shift away from ERP or Homegrown/Legacy Procurement Systems towards specialized procurement platforms – incresingly favoring integrated S2P (Source-to-Pay) Suites
As a result, key procurement performance metrics are up siginificantly from the 2011 study – for instance, contract compliance rates have risen 11% over that time
That's a pretty astonishing rate. Where would you recommend organizations should start when looking at adopting or upgrading technology? WHo shold be in on the conversation? What should they be thinking about?
For top performers, 63% of procurement staff are utilizing the tools and just as importantly, these organizations have highest adoption by functional stakeholders, with alnost 50% ot the business users on-board – 2x higher than the rate of stakeholder adoption for lowest performers
Question aboout who are the top providers of S2P tools – Zycus is of course a leader in the most recent Gartner Magic Quadrant for providers of full S2P Suites
Bigger picture – the clear trend is away from ERP/Legacy systems for Procurement – whcih 2/3 of our Pulse reposndents have today, and toward an integrated S2P suite from a Best-of-Breed such as Zycus
So 2/3 have ERP or Legacy today – but when we asked about future investment plans – the same number 2/3 said they will move to Procurement-specific apps
@Richard, is it finally the death of the procurement spreadsheet? I'm amazed at how many organiations are doing things manually? What percentage of organizations do you think are still early on the adoption curve?
And among the Top Performers in our study – those with cumulative savings greater than 20% – 80% of them are already using s specialized, inetgrated Procurement Suite
Quesiton about how tools impact Supplier relationships – the Supplier Management area is actually the component that our survey says is prioritized for future investment
Many procurement organizations spend the last few years focused on cost reductions (there was a big recession after all) but are now more focused on managing the suppleir relationship and the long term supplier performance
Another thing that came through in our study – procurement groups don't want “point” solutions – they want one integrated view of all aspects of a supplier or a category, for example
Supplier management is a particular challenge when trying to do it with spreadhseets and word files – there are simply too many of them. Approximately 3-4K suppliers per $1B in spend
Supply chain management is growing at a good clip. Gartner says the worldwide supply chain management (SCM) software market grew 7.1 percent to $8.3 billion in 2012. The analyst there echoes Richard: “While IT budget scrutiny and global economic conditions are moving cost reduction back to a main business driver, supply chain remains a key source of competitive advantage in driving business growth objectives,” said Chad Eschinger, research vice president at Gartner. “North America and Western Europe continue to be the prime consumers of SCM software, with nearly 77 percent of market revenue. However, Western European growth slowed and Asia/Pacific continued to experience robust growth, reflecting a shift toward investment in technology in emerging-market manufacturing centers.”
So best practive is for a SIM (Supplier Information ManagementP Portal that gives suppliers self-service access to maintain their profile info and certificates (insurance etc.) on behalf of the buyong org
Most procurment groups don't have sufficient information about who is in their supplier network or what they are buying from them – spells potential risk and opportunity for increased savings
Security is a concern and the portal infrastructrue itself is highly secure – moreover, while suppleirs enter profile info self-service, approvall workflow ensures that all supplier entered data is vetted thru an approval process by the buying org and can also be supplemented with third party data verification
Richard, can you talk a little about how these solutions work? Do all of the suppliers have to adopt the solution or is the OEM committment enough? What are the concerns you hear from folks that are stopping them?
Top Performing Procurement groups that invest in best in class technology are getting an 11x ROI – not many investments a business can make to genreate those kind of returns
Both procurement users and suppliers need to adopt the tools to make them as effective as possible – so they need to be extremely easy-to-use; hence the move away from ERP type systems that are hard to use and not very “open”
@kdawson-great blog!great perspective. my point is unless.u train a new generation workforce to use portals instead of spreadsheets u won't go anywhere fast.
Good news about future adoption – millenials have grown up on web technology and expect that when they buy in a corporate enrionment it should be like buying on Amazon – hence the focus on ease-of-use
Electronics is among highest adopters and also has some of the most complexity – for example Zycus is enabling Electronics Mrfg. clients to source very large bid packages ((10K + line items and 100 suppliers) all on-line
I noted a knock at spreadsheets. Hate to be a heritic, but a new generation of collaborative tools make spreadsheets much more useful as interfaces to databases and as collaborative tools.
Sourcinf cycle times were cut ~1/3 for simple categores after introducing e-Sourcing tools, but only about 10% for complex categories like electronic parts
when we dug deeper, companies got automation benefit from spedning less time assembilng bid packages and gathering responses from suppliers, but actually chose to spend more time on the back-end using the analytics in the tools to perform multiple “what-if” anaylyses to optimize award decisions across thousands of line items
So , if you can harness the power of analytics to award thousands of line items to the lowest total cost suppliers – potentially at the individual line item level – why not do it? Big $$$ at stake
Richard, price isn't everything. Quality counts a lot, whether it is canned vegetables or computer parts. How do you balance that with price point in the analytics?
Also take a moment to weigh in on our latest poll. It's in the column to the right and pertains to the current conversation! Feel free to weigh in and make commetns there too/
Thanks, Richard, for taking time with us today. It's been great. I'd encourage readers to download the full study. There's some interesting information there.
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Hi everyone
choice!that's what it all boils down to finally.
Hi Tech4People and Jacob. Glad you stopped by! We'll be starting in a couple of hours.
Hi Hailey, hope i can attend
We will be starting at 11 a.m. PST/2 p.m. EST sharp. First, though, there are two housekeeping notes:
First, please make a copy of your post before hitting the “post” button – just in case. If the system “eats” one of your carefully crafted thoughts, please hit “Ctrl-Z” to recover it
Second, if you have problems posting, we suggest trying a different browser. IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.
This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions. There are no dumb questions and we value everyone's point of view.
Questions, theories, ideas, real world experiences and even friendly rants are welcome here.
Â
And always, please announce your arrival so we can give you a warm EBN welcome and offer you some virtual guacamole. 🙂
You can take a look at Zycus' Pulse of Procurement Research Report 2014 (registration required).
Our guest today is Richard Waugh, Vice President – Corporate Development, at Zycus, which makes source-to-pay solutions for purcashing. Here is his bio:
As Vice President – Corporate Development, Richard leads strategic initiatives in the areas of new product introduction, market development, thought leadership, analyst relations, and strategic partner development programs. Richard has an extensive background in B2B E-Commerce, going back to his early career at GE, where he helped launch GE'S Trading Process Network (TPN), the first on-line Marketplace for Sourcing and Procurement in the mid 1990's. He was Co-founder of B2eMarkets, one of the first SaaS (Software as a Service) Sourcing Suite providers and later covered the Supply Management market as an Industry Analyst for the Aberdeen Group. Prior to joining Zycus, he helped bring to market new innovations in P2P (Procure-to-Pay), helping global clients achieve world-class P2P system adoption and performance. Richard has a BA from Wake Forest University and is a graduate of GE's Financial Management Program (FMP) executive training.
Richard Waugh – Zycus has arrived
Â
Hi Richard, glad to have you with us! We'll get started in just a couple of minutes.
IN the meantime, why don't you tell us a little about the Pulse of Procurement report. How long have you been doing it? What shifts have you seen?
Glad to – we first did the “Pulse of Procurement” study in 2011 and have just released the 2014 update
Â
I'm sure a lot has changed in three years.
Companies have begun a siginificant shift away from ERP or Homegrown/Legacy Procurement Systems towards specialized procurement platforms – incresingly favoring integrated S2P (Source-to-Pay) Suites
Â
As a result, key procurement performance metrics are up siginificantly from the 2011 study – for instance, contract compliance rates have risen 11% over that time
Â
Did you track much about how that translates to savings?
We have been tracking savings peformance in terms of cumulative savings from the last Pulse study to this one
Â
Top performers report better than 20% cumulative savings and there is a clear correlation to their adoption of state-of-the art tools
For example, those with 20+% savnigs have the highest technology adoption rates overall
That's a pretty astonishing rate. Where would you recommend organizations should start when looking at adopting or upgrading technology? WHo shold be in on the conversation? What should they be thinking about?
Howdy folks. Who are the big suppliers of these new S2P tools and suites?
For top performers, 63% of procurement staff are utilizing the tools and just as importantly, these organizations have highest adoption by functional stakeholders, with alnost 50% ot the business users on-board – 2x higher than the rate of stakeholder adoption for lowest performers
@Rodney, welcome! Pull up a chair… can i offer you some virtual chips and guacamole? They are on the table to yoru right.
Question aboout who are the top providers of S2P tools – Zycus is of course a leader in the most recent Gartner Magic Quadrant for providers of full S2P Suites
Â
Here's a link to that study: http://campaign.zycus.com/Zycus-Gartner-Magic-Quadrant?source=WEBAR
Bigger picture – the clear trend is away from ERP/Legacy systems for Procurement – whcih 2/3 of our Pulse reposndents have today, and toward an integrated S2P suite from a Best-of-Breed such as Zycus
Just had lucnk, Hailey, but thanks. OK, maybe just a little bit…
So 2/3 have ERP or Legacy today – but when we asked about future investment plans – the same number 2/3 said they will move to Procurement-specific apps
Â
@Richard, is it finally the death of the procurement spreadsheet? I'm amazed at how many organiations are doing things manually? What percentage of organizations do you think are still early on the adoption curve?
Hi everyone.
And among the Top Performers in our study – those with cumulative savings greater than 20% – 80% of them are already using s specialized, inetgrated Procurement Suite
You beat me to it… that means there's a huge opportunity there.
@Richard, why the shift? What is it that S2P suites do (or do better) than ERP can?
@Kim, thanks for stopping by. Pull up a chair…and help yourself the guacamole.
Great question about death of spredsheets for Procurement – death notice may be premature, but clearly on life support
hi every one
Sounds like these tools are primarily cloud-based?
How does the implementation of this sort of technology change the OEM/procurement relationship with suppliers?
recognize of course, that our survey skew towards larger enterprises – of the 300+ repondents, more than 80% are from organizations of $500M revenue
Â
@Jacob… Glad you could make it back…It's pretty late for you right?
Hailey, yes. now the time is 11.42pm
@Richard, are there lessons that smaller organizations can take from these big enterprises even if they dont' have a huge budget?
Large enterprises ($500M+) can't afford to maintain manual, spreadsheet procurement tools
– good news is tes, cloud has made it easier to implement state-of-the art suites – and more affordable
@Jacob, midnight snack? Can I pass you the virtual guacamole?
@hailey, sure you can
What are some of the table stakes features in these apps? And what's on the horizon?
Quesiton about how tools impact Supplier relationships – the Supplier Management area is actually the component that our survey says is prioritized for future investment
Many procurement organizations spend the last few years focused on cost reductions (there was a big recession after all) but are now more focused on managing the suppleir relationship and the long term supplier performance
@Richard, does that mean that large enteprises will get the most value from S2P tools and suites, or can it be a good deal for SMBs as well?
Table stakes – investments usually start at 6 – not 7 figures – and implementation time measured in weeks or months – not years
@Rodney, its useful for all companies.
So these solutions are more accessible to mid-size companies as well as large enterprises
Simple question from an outsider: How does one manage supplier relationships? Are there tools, or is it all Word files & spreadsheets emailed around?
@Richard, with that sort of investment, it certainly is becoming more mainstream.
Â
Another thing that came through in our study – procurement groups don't want “point” solutions – they want one integrated view of all aspects of a supplier or a category, for example
@KDawson, glad you could make it. The virtual guacamole can be found on your right.
kdawson, certain tools are availabile
Supplier management is a particular challenge when trying to do it with spreadhseets and word files – there are simply too many of them. Approximately 3-4K suppliers per $1B in spend
Supply chain management is growing at a good clip. Gartner says the worldwide supply chain management (SCM) software market grew 7.1 percent to $8.3 billion in 2012. The analyst there echoes Richard: “While IT budget scrutiny and global economic conditions are moving cost reduction back to a main business driver, supply chain remains a key source of competitive advantage in driving business growth objectives,” said Chad Eschinger, research vice president at Gartner. “North America and Western Europe continue to be the prime consumers of SCM software, with nearly 77 percent of market revenue. However, Western European growth slowed and Asia/Pacific continued to experience robust growth, reflecting a shift toward investment in technology in emerging-market manufacturing centers.”
@Hailey, no, that's my left.
Hi, all
So best practive is for a SIM (Supplier Information ManagementP Portal that gives suppliers self-service access to maintain their profile info and certificates (insurance etc.) on behalf of the buyong org
@Kdawson, I always make that mistake!
@JimC, glad you could stop by. Pull up a chair and join the conversation.
Richard, If procurement teams want an integrated solution, do they have enough options to choose from?
@Richard, what do you see on the horizon for this category? And what in your study did you find surprising?
@rwaugh-i m constant ly amazed at the amount of work still done on just spreadsheets!
Any security concerns with SIM portals? Seems to me mischief could be done by hacking into a competitor's portal.
Most procurment groups don't have sufficient information about who is in their supplier network or what they are buying from them – spells potential risk and opportunity for increased savings
@kdawson, great question! the supply chain tends to be a little behind the curve on security. We just did an e-mag around that topic: Navigating Cybersecurity on the Big Data Highway
@jimc-absolutely!such solutions do work well u just need to integrate it with erp and sales to get best effects.
Security is a concern and the portal infrastructrue itself is highly secure – moreover, while suppleirs enter profile info self-service, approvall workflow ensures that all supplier entered data is vetted thru an approval process by the buying org and can also be supplemented with third party data verification
@jacob-dont u sleep??? lol!
Question about what was a surprise in our study – there were a few
rwwwaugh, security is a major concern with networks, especially your senstive dats are communicated through network
Richard, can you talk a little about how these solutions work? Do all of the suppliers have to adopt the solution or is the OEM committment enough? What are the concerns you hear from folks that are stopping them?
One suriprise -adotpion of hard dollar ROI apps like e-Sourcing and P2P only about 50% currently
asish, in a sleepy mood,
@tech4people, spreadsheet abuse has been rampant for decades:Â http://quickbase.intuit.com/blog/2014/03/24/its-time-to-end-spreadsheet-abuse/
@rwaugh-what portals r most popular here? sharepoint?
@Tech4People, welcome to the conversational fray! Glad you are here.
@rwaaugh, that extra level of vetting is comforting, actually.
Top Performing Procurement groups that invest in best in class technology are getting an 11x ROI – not many investments a business can make to genreate those kind of returns
Most effective portals are actually part of an integrated procurement suite
@hailey-i would nt miss it for the world!I wrapped up my mums birthday party early so I wouldn't miss the ebn chat session .lol!
11x roi? Really! Can you cite some companies
Â
The compliance piece of this is of interest to me…that's going to get more important, and until now has been kind of neglected.
Tell your mum happy birthday from the EBN crew!
Hi Screen Writer…welcome to the chat. We're glad to have you with us!
Both procurement users and suppliers need to adopt the tools to make them as effective as possible – so they need to be extremely easy-to-use; hence the move away from ERP type systems that are hard to use and not very “open”
@kdawson-great blog!great perspective. my point is unless.u train a new generation workforce to use portals instead of spreadsheets u won't go anywhere fast.
@hailey-Thanks!
The ROI figure is based on Top Perfomers in benchmarks from Hackett Group – an example would be AMD in the High Tech Industry
How do you think the electronics industry rates in terms of technology adoption compared to other sectors?
Good news about future adoption – millenials have grown up on web technology and expect that when they buy in a corporate enrionment it should be like buying on Amazon – hence the focus on ease-of-use
any others in hi tech besides AMD?
Â
hailey, in elctronic industry i feel that technology adoption is slow when compare with IT industry
@Jacob…i'm betting the same thing.
who are the major performers from the hackett Study  that supply this service to Hi Tech
@Richard, those millenials really are chaning stuff.
Electronics is among highest adopters and also has some of the most complexity – for example Zycus is enabling Electronics Mrfg. clients to source very large bid packages ((10K + line items and 100 suppliers) all on-line
Hailey, betting means, agreeing or not
I agreed, but it sounds like we're both wrong! 🙂
I noted a knock at spreadsheets. Hate to be a heritic, but a new generation of collaborative tools make spreadsheets much more useful as interfaces to databases and as collaborative tools.
More complexity simply means greater pain with manual process and therefore more urgency to adopt leading edge tools
Â
On the topic of sourcing complexity – this was an area we found an anomaly in the study data
Sourcinf cycle times were cut ~1/3 for simple categores after introducing e-Sourcing tools, but only about 10% for complex categories like electronic parts
@Jim O'reilly, glad you could make it! We always love throwing a heretic into the mix.
that didn't make sense – both simple and complex categories should both see cycle time compression moving from manual to on-line sourcing
As long as it's the mix and not the flames!
@Richard, what do you think that gap was about?
@Jim O, as you know, we have a strong policy and culture of respect. 🙂
when we dug deeper, companies got automation benefit from spedning less time assembilng bid packages and gathering responses from suppliers, but actually chose to spend more time on the back-end using the analytics in the tools to perform multiple “what-if” anaylyses to optimize award decisions across thousands of line items
So , if you can harness the power of analytics to award thousands of line items to the lowest total cost suppliers – potentially at the individual line item level – why not do it? Big $$$ at stake
Any questions i missed?
Richard, price isn't everything. Quality counts a lot, whether it is canned vegetables or computer parts. How do you balance that with price point in the analytics?
@Richard, you've done a great job of keeping up…You didn't miss a thing.
Great Question – these tools optimize on lowest total cost which factors in quality, delivery, service along with purchase price
Folks, we are at the 45 minute mark so queue up any last questions and comments.
Also take a moment to weigh in on our latest poll. It's in the column to the right and pertains to the current conversation! Feel free to weigh in and make commetns there too/
best practice is to get muliple stakeholders involved to weight and score supplier responses on these non-price factors
It sounds like the bottom line is that organizations can take time on strategy rather than grunt work.
right – less time gathering data and more information to make decisions
Thanks, Richard, for taking time with us today. It's been great. I'd encourage readers to download the full study. There's some interesting information there.
And thanks everyone for the great questions and commments! We've got our next chat on the calendar so i hope you all will come back.
Thank you Hailey – and thanks to all for participating
We look forward to seeing more of you on the site, Richard! Have a great week.