Jaggaer and Pool4Tool: A Merger that Highlights the Fracturing of Procurement

I had the opportunity to speak with representatives from both Jaggaer and Pool4Tool last week in anticipation of this week’s ‘official’ merger announcement. We talked about geography, market share, and functionality and customer overlap.

By far, the most interesting part of our conversation was about the plans for their new combined go-to-market strategy. And while it demonstrates how thoughtfully this new entity is approaching the market as a whole, it also provides an excellent opportunity for procurement to reflect upon the increasing granularity of spend management.

 

Roger Blumberg (P4T) and Raj Aggarwal (Jaggaer) shared the following:

While it did not come up during the conversation, I want to add to the above that category strategies offer more potential than isolated product or service-level projects over the long term, especially in categories where large suppliers have a wide range of capabilities.

When we combine all of this together, it becomes necessary to define the industry/vertical, geography, direct v. indirect spend, company size, and spend category before a procurement strategy can be developed. Procurement has matured to the point where I can absolutely appreciate the influence of all these factors. Each unique combination creates the opportunity for pin-point solutions executed by specialists trained in the intricacies of each set of circumstances.

On the other hand, over-specialization can lead to silos, and silos can stifle the very innovation and fresh perspectives most likely to lead to disruptive results. Nothing is less likely to lead to innovation than an industry closed to new entrants, and by allowing our spend (and our experts for that matter) to be similarly fractured, procurement prioritizes specificity over total upside potential.

Time will tell if a deliberate vertical-driven strategy will work for Jaggaer and P4T and what impact it will have on procurement as a function and a professional community. Perhaps the silver lining of increased fragmentation is that it will provide an opportunity for sub-groups who want to excel to compare their best practices with other sub-groups. When we combine greater fragmentation with increased use of social media and access to virtual communities the overall effect may not be stifling after all. Procurement just has to be ready to take advantage of them.