Following the supply chain turbulence of the past few years, are we seeing a shift in the type of digital that organizations are looking for? Are they now more aware of the need for tech around supply chain risk for example? Has the element of ESG become more sought after in tech. Does the user really care about the use of AI, or do they simply want the tech to deliver, regardless of how it is achieved? All of these questions we are putting to the market of vendors, users and consultants. The following is what Ian Nethercot, supply chain director at digital IT marketplace Probrand, has to tell us about the shifts he’s seeing in the world of IT buying – which of course applies to every organization.
What type of digital are customers asking for?
“What we are seeing,” he explains, “is more need for an integrated end-to-end solution. For example, if a firm has an ERP system, like SAP or Oracle, then they are looking for an all-encompassing system where they can integrate a procurement platform directly into that system. The advantage that gives them is staying within their own environment, but with a punch out to a separate catalog or a separate platform, which then pulls the information back into their ERP, and the requisition is raised from there.
“Customers prefer not to be required to double-key things. If they don't have that integration, then a double point of entry is one of the challenges. So even with their ERP system, within which they have to raise the purchase order because that’s company policy, they then have to switch to a separate, independent platform to procure through. Integrated solutions remove that; the purchase order will go out through a lock-in EDI connection to the supplier.
“Demand for this end-to-end integration is something we are hearing more and more. And because there's a whole mix of systems and ERP systems and ways in which they are used, customers need flexibility in terms of how that works too.”
Another big area of demand from tech buyers is approval systems and governance.
While a lot of organizations have a foothold in terms of what their IT spend is, they are trying to get as much control over it as possible. One of the ways they can do that is through an approval system. Having an approval system in place means a senior procurement manager, for example, can set approval levels within that system, and only once approved can they proceed.
“The problem,” says Ian, “is that approvals are currently being done manually, quite often, literally with pieces of paper. Obviously, there is a way to fix that quite easily. It’s simply just a workflow process: it's a set of rules that says if person A wants to buy something over value x, that needs to go to person B for approval. And that workflow can be done quite easily through a digital process making it a much more efficient and flexible — you can change the rules how and when you need. For example, should you decide to change the threshold on purchases, or the level of person who is an approver, it’s simple to do. Many systems will have a DOA (delegation of authority) policy, and that policy essentially sets out what those authorization levels are, whether that be a junior buyer authorized to buy at a certain amount or a senior buyer authorized for a higher amount. It essentially maps out the hierarchy within the procurement function and sets the acceptance levels against each one. So essentially, you're taking a DOA policy and simply turning it into a digital process. It’s something that we're seeing come to the surface a lot more.”
Another growing area of demand in IT buying is catalogue management. “It’s the control over the physical products being bought that is in demand. One of the big challenges for IT teams is the morass of different brands and technologies they have to manage on their estate; they want everyone to have the same laptops, the same monitors, the same docking stations, the same headsets, and so on. So they're trying to consolidate and aggregate what they physically buy and the best way to do that is through catalog management. Essentially, they have a pre-approved catalog of so many products, so for example if you wish to buy a laptop you have two choices, and so on. From within the system only that catalog is visible to buyers, which means it rules out buying from anywhere else. However, that approved list might contain a higher number of SKUs that you only want visible to, say, senior procurement people who can change what’s in the approval list. That’s the type of flexibility and control that customers want.”
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The benefits of marketplace buying
Depending on the process and the protocols that an organization follows from a policy perspective, marketplace buying has different benefits. Some organizations have a policy that asks for three quotes for everything you want to buy, that's the due diligence process they have to follow: pick three suppliers off the list, go to each supplier and get a quote. Invariably the cheapest provider gets the order.
“One of the benefits of a marketplace platform is that those three supplier groups are in one place, eliminating the need to go to three different suppliers. So the buyer is still conforming from a compliance perspective because they're still getting three quotes, but they're just getting them in one place. They don’t have to commit time to physically getting them individually.
“But it also depends on what certifications and accreditations a platform has to back that up. For example, Probrand is accredited by CIPS and the platform by the ICAW. So the Institute of Chartered Accountants gives it a rubber stamp to say that these providers do what they say they do. They also verify any applied margins, so from a financial and data perspective everything is audited. We also ensure all suppliers onboarded are backed up and certified by CIPS. So those accreditations are really important from a governance point of view and something a buyer should be sure of when it comes to using any marketplace platform.”
The process of turning digital already comprises so many considerations for the tech buyer, but today, more than ever, the question of ESG complicates the progression further. In our forthcoming series we’ll be exploring buyer attitudes towards ESG functionality.
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First published on www.spendmatters.com
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