Surviving Natural Selection in the Procurement ‘Wild’
On Tuesday, we ran a guest post from keelvar’s founder and CEO Alan Holland. In the post, he challenges many of the traditional notions procurement practitioners have about the solutions they use, what to expect from those solutions, and how to select which solutions to implement.
It is natural to follow the developments at the larger solutions providers in the procurement space. Acquisitions, especially notable ones, always result in an interesting news cycle before dying back down to become part of the new status quo. But there have been equally interesting changes and developments taking place at smaller solution providers. We owe it to ourselves to be as aware of those changes as we are of the big shifts.
In my view, there are several niche companies deserving of attention, and they represent not only a new or alternative take on what we currently have available to us, but also a new way of looking at the solutions that support procurement. As long as there are visionary entrepreneurs who are willing to apply themselves to the procurement space, we should encourage them and do everything we can to support them in their efforts – because in the end, we are the ones who benefit.
keelvar: Vision for Optimization
I’ll start with keelvar because it is Alan’s post that gives me the reason for this line of thought. When he and I spoke, I was most struck by was the fact that he was looking at procurement’s relationship with optimization in the context of analytical decision making. He didn’t limit himself to the context of sourcing, where he might have articulated keelvar’s value proposition based on the scope and scale of the data points his solution can handle. Instead, he looked at the decisions procurement is faced with either making or enabling – all of them – and focused on any that could be improved with automation. While we consider ourselves a fact-based organization, we still make a lot of ‘manual’ choices. I think about it like playing a game against the computer. If it is possible to capture inputs and weight decision factors, optimization can be applied for better results. The computer will always be faster, more accurate, and more objective than a person. Only a company like keelvar, with a complete focus on optimization, can see procurement’s needs from that perspective.
Deem: Vision for Efficiency
The other company that has demonstrated a penchant for vision is Deem. In a recent Blog Talk Radio interview with Jon Hansen, Deem’s CEO Patrick Grady talked about the range of complexity and opportunity in today’s business climate and the requirements that sets out for the solutions that presume to support it. Grady has a background in what some people might characterize as finance, but which he prefers to describe as inefficiency. When you reposition the mission of procurement in the context of driving out inefficiency, you quickly find that procurement’s needs and objectives are not all that different from the companies we buy from. If a solution is to equally support both the buy and sell sides, it must balance the needs of both parties equally. Put a different way, the solution needs to be interest neutral. So not a buyer in a supplier’s system, and not a supplier in a buyer’s system. Everyone meeting up in a commerce system designed to meet the needs of both without favoring the desires of either.
Market Dojo: Vision for Innovation
Although Market Dojo has been around for a while, they have always managed to set themselves apart. Many of their business decisions provide evidence of a different view of the market. They actively pursued and won three grants to invest in R&D that allowed them to address both private and public sector requirements. Their blog and writing always have an air of quirkiness about them (see the picture of ‘Cactus’ above for evidence of that), and they have a series of marketing videos that include everything from Market Dojo branded toilet paper to a zombie. They made the unexpected jump from auction functionality (usually considered to be on the tactical end of the spectrum) to an innovation platform and a category management enabling solution I would describe as opportunity assessment. I would characterize them this way: you don’t want someone with the mindset of an accountant to artfully decorate your house, and you don’t want someone with the free spirited mindset of an artist to accurately do your taxes. If you want to accomplish something truly different with a procurement solution, you probably want to hire the guys that put a bearded dragon in their promotional videos. It all just depends on what you are looking for.
I think the core take away from all this is the need for procurement decision makers to keep an open mind to the solutions that become available, and to actively pursue new options that offer a different benefit. Becoming overly reliant on known players does offer some stability but at the cost of capped potential for differentiation. All companies start small and have to survive the process of natural selection. Kudos to the ones who have already made it to the top of the food chain. But in order to keep them on their toes, let’s make sure that in the procurement wild, we at least give the new ones a fighting chance.
Great article Kelly and many thanks for the mention. We certainly try to differentiate ourselves from the larger more traditional players on the market by focusing on user adoption and bringing benefits to the end user, not just a manager. We also wrote a blog on this shift in the software market. [http://blog.marketdojo.com/2012/03/new-breed-of-software-providers.html]