Increasingly, electronics OEMs are leveraging technology to transition older paper-based order processes to automated and digitized processes that can keep up with today's speed of business. As procurement grows into its potential as a key strategic business function, finding the right procurement solutions is only going to become more important.
This spring, Gartner reported that supply chain management (SCM) and procurement applications outpaced most software markets with 10.8% annual growth, reaching a total $9.9 billion in 2014. “Organizations modernizing supply chains drove opportunity for both large-suite and specialized providers to become more agile and drive innovation within their businesses during 2014,” said Chad Eschinger, research vice president at Gartner.
EBN sat down with Raja Hammoud, vice president of product marketing and management at Coupa, a vendor of procurement solutions, to find out more about the adoption of procurement technology.
EBN: What would you say is the maturity of procurement technology adoption today? How do electronics OEMs compare to others?
Hammoud: Procurement technology has been implemented in most large companies, but success as been poor at best. Many industry studies put spend under management at 40 to 65%. [Coupa] customers are averaging over 88% spend under management, which is the key indicator of adoption in our industry. Spend under management means that spend is being requested for goods and services through our system or through third party direct systems and then flows through Coupa to the suppliers for purchase order and invoicing purposes.
EBN: What are the biggest pain points/aspirational goals that get organizations moving in the direction of technology adoption?
Hammoud: Companies who adopt technologies are looking to streamline and automate processes, while eliminating paper, drive compliance, and achieve visibility. Companies are looking to reduce IT footprint and empower the business through flexible and agile solutions as well. Organizations also are trying to reduce costs, and increasing savings, to drive value that is measurable from their technology investment.
Depending on the industry and the business process, there are varying reasons for adoption of technology. Some overarching reasons are: manual and paper based processes, lack of compliance, poor visibility into a process/data to name a few. Specifically, SaaS based applications allow organizations to reduce their capex expenditures while reducing their internal IT footprint, which allows them to do more with less resources.
Organizations moving in the direction of technology adoption often are running alternate systems that do not deliver results. These systems are hard to use for end users and back office, do not support full mobile use and suppliers that are not participating electronically for numerous reasons ranging from complex enablements to fees the suppliers are charged. All of these things drive costs higher and result in a lack of visibility, control and compliance as end users and suppliers simply don't use the system.
EBN: What are the biggest benefits to be had around supplier relationship management?
Hammoud: Supplier relationship management allows you to reduce risk, and maximize value from your trading partners to drive more efficient collaboration as well as the ability to drive innovation from the partnership. The key to supplier relationship management is about increasing the electronic adoption of supplier collaboration.
EBN: What are the biggest misconceptions around procurement technology today?
Hammoud: That procurement technology is just covering the purchase of goods. The truth is that procurement technology can efficiently handle the processing of goods, services, and expense related spend in one unified system.
EBN: What is the competitive landscape and how do you see it evolving over time?
Hammoud: The competitive landscape has many legacy vendors that have attempted to morph into a cloud company, as well as many companies who are roll-ups, comprised from mergers and acquisitions. There are very few vendors that are driving innovation in the space. Over time, we see this space changing from a feature/function evaluated space to a space that is driven by savings and measurable results.
EBN: Can you talk about how mobility and mobile platforms are gaining importance in the procurement world today?
Hammoud: Mobility is becoming a critical part of the procurement world, just as it is becoming so in part of our everyday life. The key to success for mobility in the procurement space is understanding it is a work style, not an app. Mobility is the ability to do work in motion, so whether it is accessing from a mobile device on a browser using responsive design, approving from an email, scanning a barcode from an app or approving on an Apple Watch, you need to have the capability to let users define how they want to use mobility.
Let us know about how your organization is using procurement software. What have been your biggest challenge and your biggest boon in these efforts? Let us know in the comments section below.
— Hailey Lynne McKeefry, Editor in Chief, EBN