By Duncan Jones, Scoutbee Advisory Board member
The suite versus best-of-breed debate is over. The future of technology for procurement professionals is not a single suite that does everything, nor is it a collection of niche products that you have to assemble yourself; it’s something in between.
Smart CPOs will have a strategy to combine a core platform that handles most of the processes and data related to suppliers – I call this Supplier Value Management (SVM) – with a handful of specialist products that extend and complement the SVM platform.
The platform provider’s ecosystem of product partners is crucial to this strategy, offering customers a broad portfolio of specialists that provide certified integrations, aligned development roadmaps, and close commercial cooperation.
It’s not only in procurement that this “platform plus ecosystem” model will dominate over the next few years. In every business area, smart executives have abandoned the doomed quest for a single-vendor solution and are embracing the MACH trend (microservices, API-driven, composable, and headless).
In 2023, I expect to see this medium-term trend lead to several changes that will benefit those CPOs who are willing and able to take advantage of them.
Leading SVM platforms will put long-term profitability ahead of top-line growth
The largest vendors in the market will focus more on their core SVM platforms, with fewer customers’ subscriptions diverted to expansionist acquisitions. Over the last ten years, a combination of CEOs’ egos and stock markets over-valuing revenue growth drove public software providers to buy companies outside their home turf in an effort to grow faster than their rivals. Very few of these acquisitions worked well for customers or investors. That expansionist period is over, so leading vendors will have to focus more on the core SVM category – which will be good news for their customers.
I expect Coupa’s new owner, Thoma Bravo, will persuade it to re-focus on its core platform and rein back expansion into new territories, such as the Llamasoft acquisition. SAP will try to reverse Ariba’s downward trajectory by getting it to focus on what it does well, instead of trying to make it part of a “finance plus procurement plus supply chain” omni-suite. Other SVM platforms, including Ivalua, Jaggaer, and Zycus, will thrive provided they continue to embrace MACH principles, keeping their portfolios modular so that each product works well as part of an eclectic, multi-vendor SVM portfolio.
2023 will see SVM market consolidation, with fewer new start-ups emerging
The last few years have seen an unprecedented wave of innovation across the SVM market, much of it from an exciting array of start-up ventures. However, many of the companies I saw at DPW last November will struggle to thrive in 2023.
Success in the software industry depends on being able to win deals; it’s not sufficient to have a great idea, especially if it’s more of a feature than a complete product. Increased focus by platforms on SVM over expansion will enable them to either replicate the start-up method of innovation or acquire them (since tighter financial markets have made these small companies much more affordable than they were two years ago).
The emerging vendors that will still be independent and growing at the end of 2023 will be those that have partnered best with one or more SVM platforms. Certified integrations are table stakes, as is being discoverable or even purchasable via the platform’s partner app store. They also need their partners’ marketing, sales, and implementation service teams to embrace the ecosystem as a vital contributor to customer value, rather than an unavoidable nuisance that takes a slice of their cake.
AI-driven user experience, not merely UI, will be vital
“Do more with less” is now a cliché, but procurement’s workload continues to increase faster than its operating budget. CPOs therefore need to invest in tools that will make their staff more productive and effective. Nowadays, that usually involves using AI to eliminate unnecessary tasks, alert users to issues that require action, and to help them make smart purchasing decisions.
This requires a deep understanding of the task involved and of where to get the necessary data to drive the AI algorithms. Suite buyers thought UI consistency was paramount, but the MACH trend acknowledges that today’s users can cope with a wide variety of UIs across the many apps they use, provided the software beneath the UI head works as they need it to.
Scoutbee’s Supplier Intelligence product is a great example of this. It aggregates and analyzes data from multiple headless, API-driven sources, to give users a holistic view of a specific supplier relationship. Scoutbee has designed its UI specifically for the purpose of analyzing new and existing suppliers, but it can also operate in a headless manner if the user wants to embed a holistic view in a sourcing tool, spreadsheet, or other business application.
The bottom line: CPOs can only address their many challenges if they ensure their teams have the best possible software. The “platform plus ecosystem” trend, accelerated by MACH architectures, gives CPOs unprecedented choice and opportunity to expand their SVM software investment in 2023.
