ProcureTech Asia Summit -Pilot, Trial and Error: How to take advantage of the procurement te-2

All right, welcome to the ProcureTech Asia Summit. So my name is Max Henry. I'm going to be your host throughout the entire summit. So we're going to be talking all about procurement technology, software tools, disruptions happening in the space of procurement and sourcing and purchasing. So Very, very excited to have all of you joining us from, you know, different parts of Asia. We're gonna kickstart our event with our first speaker. I'd like to introduce Alexandre Liu, who is a procurement professional consultant, ex-Amazon as well. Alexandre is, you know, passionate about digitization and how to deploy it within organizations to create value and eliminate, eliminate busywork. He's been working for 5 years at Amazon as a procurement practitioner leading regional utility and telecom categories, EU, and also participating in the digital transformation of the function. He then transitioned to key account management, helping Fortune 500 and CAC 40 procurement teams, helping them to digitalize their tail spend with the Amazon Business Marketplace. So Alexandre has a lot of experience in procurement. He's going to talk today, the session is called Pilot, trial and error, how to take advantage of a procurement tech shift. So let's hear from Alexandre first, and he will join us for the Q&A afterwards.

Thanks, Max, for the kind introduction.

Welcome everyone. I'm super excited to kick off this ProcureTech Asia Summit with you.

So this is a prerecorded session. So if you have any questions, please feel free to write them in the chat and I will answer them right after that presentation. So after— so just a few words about myself. So after 4 years as procurement professional in the Amazon procurement team, where I worked as a senior category manager, I then moved to the other side and became a salesperson in the Amazon Business organization, where my role was basically to help Fortune 500 customers digitalize their tech spend through the adoption of the Amazon Business Marketplace, so the B2B marketplace. And so in that role, I really deploy the Amazon-like experience, you know, that one that everyone has said, once we have tools that reach the Amazon level, the Amazon user experience, then all of our problems will just go away and technology will be adopted just easily. And when deploying Amazon business, I still saw many of those deployments fail, and I really wondered why that was. And so that question occupied and kept me busy for quite some time, and essentially today I want to speak about all of those topics around technology. And so there would be 2 objectives for that presentation. The first one is to really understand the transformation happening in the tech industry and what they mean for procurement organization. And for those that are perhaps already aware of this notion of procurement ecosystem, I will share then a few insights on how to deploy technology effectively. And the most important part of it actually is get it adopted. So let's perhaps start this presentation by acknowledging how much the procurement technology has changed over the last years. So when before we were just having to choose between a few top vendors on the source-to-pay process like Coupa, SAP, Oracle, and so on, and perhaps there were a few other big name solutions like EcoVadis on sustainability or TradeShift on payments. Now There are a lot of different vendors. Since the technology of API has been developed and that the business model of SaaS has emerged, the number of vendors in procurement industry has reached over 4,000 vendors. And this number is really growing. So perhaps to give you a bit of understanding of the dynamic pace that the procurement tech industry is in, in 2020, the venture capital invested over $2 billion in those technologies, and that's double from the year before. So it's really that we have today 4,000 solutions available, but that number is really growing and it's being invested to make a lot of bigger startups and better products for us. And beyond just the sheer number of vendors is also that the procurement tech industry has seen quite a number of really big success stories. So for instance, we can think of Celonis, which is a German startup that is specialized on process mining and has just reached $11 billion valuation. So it's not too bad for, for a procurement company, and that makes it actually one of the most valuable unicorns in the world. Another example, of course, would be Coupa, who's just reached $20 billion valuation and is growing at a 40% rate a year on a yearly basis, making it one of the favorite of the stock exchange in the last few years. And Coupa is an interesting example because as we will be discussing about ecosystem, they're really pushing this recently with the apparition or the launch of a marketplace that enables an easier integration and management of those solutions. And they also launched an incubator so that they can help procurement startups grow.

Another example of good success story, perhaps I'm a little biased, but in Amazon Business.

Amazon Business is one of them since they just reached over $10 billion revenue in less than 5 years existence. So not too bad for a company that is focusing on tail spend alone. So what does that actually mean? I've been mentioning the procurement ecosystem a few times already. So what is it? So up until recently, buying technology was really just very simple. It amounted to buying a license from one of the Big 6, Oracle, SAP, Coupa, Evalua, etc., and perhaps a couple of other techs that may or may not integrate actually with your system, and then having the data living perhaps separately. Now everything is changing with the procurement ecosystem. And let's perhaps make a simple comparison to understand what the procurement ecosystem is and take the example of your smartphone. Smartphone. Let's say it would be the hub on that slide. So the hub is really that foundational technology that will do all the basic functions like calling, messaging on your phone. And then you will have an app store where you will find all these apps that will enhance and personalize your phone with those applications that will do a very specific job and doing that specific job very well. So just to give you an overview, this is the top solutions from Art of Procurement. There are a few other lists like that, but just to give you an idea of the sheer number of the top solutions and covering every single aspect of the procurement process. And if we go back here, the main difference perhaps to understand between the procurement ecosystem and your phone is that all of those apps that you are installing on your phone, on your hub here, they would be actually working together. So, on the phone, you would have an app that is simply installed on the phone. Here, you would install them, but actually each app would communicate with one another, delivering real insights so that procurement can really do its work and identify and create value, but also prevent value leakage, because those are the 2 objectives of technology. And you can really do that when everything works together. So, imagine really a world where an employee has to make a purchase. And to do that purchase, basically a lot of smart technology would be working together. So you would have some technology that would be scouting the market for vendors, then you would have sustainability and risk management apps that would evaluate and qualify those vendors. Then once they are qualified, perhaps a negotiation bot could come and negotiate the price and set, set it. And once those prices are negotiated, perhaps the AI of your P2P platform, the only tool so far that the user has actually been in contact with, would bring the choice to the user and say, you can buy A for the quickest delivery, you can buy product B for the most sustainable or diverse option, or the product C for the cheapest option. And really what's needed to be understood is that all of that happens in the background in seconds by connecting different apps together to deliver that insight. And so the whole notion of this procurement ecosystem is that the sum of the value delivered by your ecosystem is much greater than the ROI of each part individually. And then it's really important to understand that the best— that now is really the best time to start building your ecosystem, and this for a few reasons. First of all, as we've seen on the slide with that many solutions, there is a tech solution for whatever you need, whatever your objective is. Is it savings, productivity, increased sustainability, diversity, or what part of the procurement process? There will be a procurement solution for you. Then why it's also important to understand that technology has become a two-way door. So what is a two-way door? It's those decisions in business that you can easily reverse with low risk of low financial risk or reputational risk or anything. It's really those things that you can do, try. If they don't work, you just walk back. And so technology has really become this kind of thing since essentially it's become cheaper. You don't need to pay millions of euros upfront or in multi-year contracts. You end up just really buying a SaaS subscription fee, which is typically low, and some even are free. The deployment time also of the solution has shrunk considerably. So when before we needed months or even years sometimes to deploy solutions, now it can be done in weeks or even days if you have 2 teams that are super agile and reactive. And finally, it's also the relationship itself that has changed a lot. When before we were signing a contract for millions of euros and deal with it, the vendor was bearing no responsibilities in the success. Now it is really shared and the way contracts work is really based on success and adoption. And if it's not yet, then renegotiate your contract with your vendors. They should be aligned so that adoption is driven by you and is beneficial for everyone. And really, this ecosystem is the only way or the way for procurement to build a real competitive advantage. And the sooner you start it, the sooner you will have it, this ecosystem that is personalized for your company and make it unique. And can turn into a competitive advantage. And so we can think of 2 companies that recently made the headlines in the procurement technology press. We can think of Merckx, who just recently announced that their technology stack of P2P platform, AI, RPA, a few other apps have just reached 150 full-time employee equivalent worth of low-value activities that were just eliminated. And 150 people, I mean, that's the kind of scale that starts to be really noticeable and impacting the bottom line of the company. The same way Schneider Electric has recently started to digitalize all their indirect spend, and, and so they did that with Coupa on the P2P, but they also put a lot of different apps on each of the ABC categories so that all of their spend becomes fully integrated and digitalized. And so that has let them really get a better grip on their direct spend, but also save millions of dollars and improve the user experience significantly. And so now that we've seen that the procurement tech industry is moving very dynamically and that we need to start now, well, how do we do that? First of all, I think it's really important, and I like that quote from Eloise Epstein saying that we need to be proactive. In my experience, I've seen too many organizations that were just passive about technology. They were waiting for vendors to pitch them, or they were just lacking the foundational data literacy that is very important to start building that ecosystem. And so today, we should really start to be proactive about it, and the same way sales works, start to build the pipeline of potential solutions and pilot them aggressively. So first of all, to pilot and create a pipeline, it's important to understand where the market goes. And so to do— to understand that complexity, basically there are 2 ways. The first one is perhaps more adapted if you have punctual needs, like you have an upcoming tender and you want to digitalize it. Then perhaps finding the best solution for that could be delegated to one of those tech matchmakers or a consultancy. But if you are considering building your digital ecosystem in in a real and serious way, then perhaps the best is to acquire that competency internally. And so perhaps hire or have something like a technology procurement manager within your organization. And so as I said, this procurement manager or procurement technology manager is here to help you build your pipeline. So from that 4,000+ available solutions, The idea is to start building a pool of high-potential solutions, perhaps 30, 40, 20, depends on your organization, but really a number of solutions that you know are going to be a good fit for your organization, that you have— it's a pool of vendors that you really understand deeply their solution and how it will work and with who you have engaged, so that anytime an opportunity arises, you have a specific need or you have the budget that was just unlocked, you can just pilot them. them very quickly. And in building that pipeline, perhaps an important advice is not to ignore the small vendors and startups. Those companies can be a real asset for your digitalization. First, let's just mention that the risk that procurement teams think they're bearing if they work with small companies is not like that. If they have a few customers already, you know that the technology is going to work. Then the upside is tremendous. If you are a big company and perhaps the first big company, then you will have a lot of leverage on them in terms of adapting the roadmap and working collaboratively. If you are able to create that collaboration with them, then they can really do a lot of good things for you. So don't ignore them while you are building your pipeline. And once you have built your pipeline, it's then all about managing your pipeline. And to do that, there are 2 important things that you need to develop within your organization. The first one is really to have a culture of trial and error. Too many organizations that I've seen were paralyzed by failure. They wanted everything to be absolutely perfect before taking a decision. But failure in digitalization should actually be accepted and embraced. It will happen. And And you should really think of deploying technology the way venture capital think about their investment. They would be invested on, say, 100 companies, expecting over 50 to just fail, 40 to perform averagely, and perhaps just a few that will just tenfold, 20-fold, and repay all of the investment and all the losses that would be made on the other companies. And that's really the same with technology. A few of those bets will improve your productivity by 150%, 100%. So, find them. And then, the second big change that we need to have and make happen in our organization is to have— is to pilot the pilots. I've seen a lot of organizations as well just launch a solution on day one and then check in 3 or 6 months later to see if the solution was adopted, And if it if it brought the benefits that it was supposed to, that is wrong. A pilot should be a time of extreme focus in the organization, as it will make or break your digital transformation. As I've said in the introduction, technology alone is not is not sufficient to make something work. You will need to spend time focused on it. And don't forget, if you fail your your pilot, there are very low chances that you're going to pilot the same solution again. So give it a a go, but a real go where you will have a structured pilot and where you will be really, well, trying things. And so, throughout my experience, I've seen about 5 rules that the most successful organizations were following when they were piloting technology in procurement. The first one is, of course, to set goals and KPIs. You cannot launch a pilot if you don't know why you are doing it and have clear performance indicator to know if you're going in the right direction. The second rule is, of course, to define a clear scope. Who, what, when, essentially what user for what type of spend, which case, etc. Then is also setting a timeline. As I said before, a pilot can be 3, 6 months, perhaps even a year, but it needs to be clearly defined with all the intermediary steps and midterm review, etc. It's very important to have that. Otherwise, you never know when you will go for rollout or not, and you will just indefinitely pilot things. Then is to define before the start the project team. And here I've seen a lot of organizations forget to actually include the supplier resources and clearly assign them tasks and tell them what is expected. Do that and it will help you a lot in your piloting. Then Then is obviously to review periodically and pilot. Review periodically means that you should be doing perhaps even weekly reviews and sending flashes to the rest of the business to let them know how the pilot is going and inform them of the corrective actions. But really, that pilot phase is the most important, and piloting it is really key. That's why the most successful organizations that I've seen also introduce that concept of the hypercare. The hypercare is really a period of time, usually starting from day 1 of the solution being available to the users to the end of the pilot, where you will provide— the entire team will provide an elevated level of support so that you really have complete visibility on the project. It's really about making sure that you have no blind spot left, that all the way down to the most operational levels, you know how it works and that your users are satisfied with the solution. If you don't know that or that your users are suffering bad experiences without you knowing, the problem with that is really the word of mouth that would start badly when actually you can influence that and have it start in your favor with positive experience. And whenever something goes wrong, solve it to the users and close the loop. Let them know it has been solved and will not happen again. That is one way. of the many ways to conduct change management and accompany your users. And then is also to review the KPI during that period, as I said before, on a weekly basis if need be. But beyond just reviewing and sharing KPI is to take corrective action and try new things during that period. Adoption in technology goes slow. And the sooner you are taking care of problems, the easier and cheaper it will be. Make sure that in those initial weeks, you are putting your entire focus on the launch and covering all aspects, because that's the cheapest and most efficient way of deploying tech at that point in time. And once we have followed all those rules and done the hypercare, then we will probably arrive at the end of the pilot period and arrive to the go or no-go call or meeting, perhaps a call these days. But anyway, the moment where we will decide whether we deploy to the rest of the user, and that should be done absolutely if the, if the solution has proven that it delivers value, or a no-go. And if it's a no-go, there are 2 solutions. One is perhaps we just think we need a couple more weeks and we extend it with a very specific end in mind. If it's not reached, then we will drop it. Or we drop it directly. But the most important really is that if you don't decide it will be rolled out, then kill the project. Otherwise, what happens is that you will be like those organizations that have never killed those projects and end up with dozens of zombie projects running around. A zombie project would essentially be one of those projects that is alive, but you don't really know, and it just fatigues your user. They don't know if they should continue using that or if they should move to another tool, and that creates really this organizational change management fatigue that you should avoid because it will impair— impede your future launches. And so it's really all about that, following those rules and making sure that if it adds value, we need to do more of it. Or if it's complicated, question it robustly, as Louise Epstein says. I would add to that, if it's not adding value or not hitting the objective, Then kill it. And now that I hope we have a better understanding of what the procurement ecosystem is, and that I hope you have understood that starting building it is the best thing you can do for your own organization, well, I think you can now start building your own ecosystem. Thank you for listening to me. And so I will just jump in and start reading all the questions you might have in the chat.

Thank you everyone.

Okay, thank you very much, Alex. Good presentation, a good way to start the event. It was very interesting. I want to remind everybody that you guys can ask a question using the Q&A tab located on the right side of your screen. Go ahead, ask a question now. Be specific as well, you know, with what you want to get from Alexandre. Also, if you would like to ask a question directly, you can click on the raise hand button located on the bottom of the screen, and this way we can bring you on screen and you can interact directly with the speaker. Okay, let me see some other questions already popping up, but I would like to just to start by asking you maybe a rather provocative question, Alex. And my first question would be, do you actually, after all, do you need a procurement tool in your organization? Because a lot of companies will tell you, oh, we have an ERP system, We know, and that's enough. So why should companies actually look into procurement software as an add-on to their current ERP?

Well, I'm not sure if it's that provocative because in a way digitalization, I think, has proven its benefits so far. But yeah, you can do procurement without any tools. Of course, and that has been done for many years. And technology is really a way to simply improve the way decisions are made and make any task and low-value activities disappear and make your organization essentially a whole lot more efficient. And that's really the point. You can do procurement without tech. It's just a lot easier, a lot more efficient. And if you want to bring the kind of scale that I mentioned with Merck and Schneider Electric, You cannot do it with Excel and Outlook. That is not gonna work well.

Okay, then my next question would be, okay, so companies are using those big ERP packages, you know, from SAP, from Oracle, and so on. You know, what is your take on those companies? So obviously those ERPs are also offering their own set of procurement software and What is better, to go best of breed, to look at more independent packages, or should you just use and try to upgrade what you have from your current ERP?

Well, I think it all comes down to specialization, right?

Those solutions, S/2P solutions, they will for sure do everything for you to some extent, and you will— and that will work. But the idea of the procurement ecosystem is really to specialize and take a lot of different pieces together that are going to do one job extremely well and make them work together. And once we are there, I think actually those big players, that stuff, S2P solution, they should be quite afraid of that. And I think that's one of the reasons as well Coupa is launching that marketplace and that incubator, is that they understand that they will not be able to do the entire sourcing-to-pay process extremely well, or as well as 10 different actors working together. And that's, I think, the direction it's going to. And I think the big players that you mentioned are taking the wave and are adapting to that.

For those who are just starting with procurement technology, so they haven't really much implemented anything You know, which area of procurement do you think they should start in? I mean, you know, should they look into, you know, the sourcing step, procure-to-pay, or, you know, what is your recommendation? Where should they get started?

They should get started by having a vision about digitalization. That I think is the most important. Then which area of the sourcing-to-pay process, it does not necessarily matter, or I cannot say you should start with this one because it's really depending on your organization. Some organizations will tender their contracts every year and perhaps a sourcing solution makes more sense for them. Some others have a 5-year-long contract and perhaps will need a performance management solution. Some others will have a big issue with finance and invoice ingestion. In that case, it's gonna be an AP app. It really depends on the organization, but where to get started is have that vision and start having this data literacy as well, because without that you cannot understand, you cannot build your vision, and you cannot start building that ecosystem.

And yeah, so let me turn my question in a different way, because, you know, if for companies where procurement is still very much, you know, traditional paper-based or email-based, you know, and they have so many functions that they want transform or digitize. And so based on your own experience, which area of procurement will offer the quickest win for the procurement team, based on what you've seen?

So if we're starting really from scratch, in that case, my take would be to start with the foundational procure-to-pay process because that's how you are going to drive all your user adoption, your operating model, as a procurement team, who is raising the PR to POs, etc. So in my view, that is foundational. However, some organizations, as I said before, might actually have a better ROI because eventually it's all down to ROI, what is going to bring the highest when you start from scratch. So some others will see something differently and perhaps a sourcing solution would be a good way to start with. But my view, if we want to build long-lasting and large-scale transformation, then P2P is the first step really.

Can you define for those who are watching which might not be familiar with this, what is procure-to-pay exactly? What does that mean?

Sure.

So the procure-to-pay software solutions are those essentially that are going to let you place POs essentially as a purchase order, let you make buy, comply, and for an organization. So that's what a P2P process is. And then you have a few examples of those companies, as I mentioned throughout the conference, like Coupa, SAP, Oracle. All of those do that P2P part where the users are going to place the orders. And why is it foundational? It's because all the users, it's how they will interact with procurement, and that's how people will associate buying in your organization.

So if you want them to follow a process that is compliant, efficient, etc., you need to make that work for them in the P2P platform directly. And then you start optimizing, etc. But yeah.

Okay, all right, we have some questions. Let me take some of them. Let me start with maybe this one. This is from RC, who is based in Bangkok as well. So you're saying that you should be ready to fail with procurement tech, but how do you justify the budget to finance if again this doesn't work?

Yeah, sure, and it's a great question. And of course I said that we should expect the project to fail, but it's not a mandate to actually just fail and lose and waste the money and resources of your organization. I'm saying it should be a byproduct of your digitalization journey and that you should be be okay with some of them failing.

But you still need to minimize all those wastes, of course.

And to do that, you need to, well, as I said before, build a pipeline of really qualified vendors. And in that way, you can also already make sure that you are not deploying just for deploying, but something that fits your organization. And also, as I said before, it's all about cutting the losses as well. When something is not gonna work, then just stop it, drop the project, because eventually it's just sunk cost and it's not gonna work for us. And then how we justify that to finance? Well, I think we should start actually acting like all the other departments and convince finance of a business case, talking ROI with them. We're doing it for all our stakeholders, so why don't we do it for us? Essentially, I think we we need to do that. And then, yeah, as I said, there's a risk in that digitalization. But again, with a SaaS business model, you will be ending up paying a few hundred or a few thousand euros a month. So the costs are not like that big. And the outcome of a good procurement tech Slack could be again 150 people equivalent. So that's really something that that is noticeable. And yeah, and then it's not always about the business case either. And I know we're working with finance, but sometimes— I mentioned Celonis before, and Celonis is a company that does process mining. So essentially something that will give you visibility on all your processes, how they vary, etc. And that's a very powerful tool. However, the business case is really not clear. So it's also about procurement, like again the other businesses and departments, having their own budgets from which they can manage really. When the marketing department launches a new product, they don't know if it's gonna work and yet they're launching it and they see, they pilot, etc. And I think procurement should start looking at doing that if we want to stop being just a support function anyway. I think we need to start like business owners and budget owners and do it like Okay, let me take another question here.

So Muhammad is asking, he's based in Vietnam, so how is SAP Ariba helping in the procure-to-pay process?

Yeah, so well, it's a procure-to-pay solution, isn't it? So Ariba itself is more of a marketplace connecting vendors, so that will more help— Ariba per se will help with managing that database of suppliers. But then SAP or Ariba usually goes with SAP HANA, which is really the PR, so purchase requisition, to purchase order process. And so that will deliver the experience for the users. So that's how SAP Ariba will help.

Okay, let's take the next one. This is from Isaac in Singapore. He's asking, all right, since you're talking about pilot trial and error, what is the advisable number Number of pilots, timeframe for each pilot, and how many pilots would you recommend to do maybe at the same time?

Yeah, so it will depend on your organization, obviously. So what I've seen in my experience is a procurement team piloting around 3 to 5 solutions at a given time, and that was done with essentially 2 project managers that were allocated to that. So if you have less than that in terms of internal resources, do less obviously, because you still need, as I said, a lot of focus on those pilots. It really shouldn't be launching a pilot and just waiting 6 months and seeing the result.

It should be really piloted.

So if you have the resources to pilot 10 pilots, do it. It will mean, it means that you will reach your procurement ecosystem, the perfect one for you sooner. So as much as you can, But you really need to make sure that you are not— that it's not detrimental to the quality of that project management.

Do you recommend those pilots, when you are looking at competitive solutions, to run them at the same time, or do you do one pilot and then move to another solution? Do you do comparison in real time between the solutions?

So that could be an interesting approach.

I haven't seen organizations do that personally.

I'm sure there has been, but I think most companies actually are differentiated in a way.

And so it should be the job of the procurement team to understand how they are differentiated and which one is going to, in their opinion, work best. Then if it doesn't, drop it and try the next best one that you've identified. But I think it's perhaps best to go one by one if you are able to build that pipeline Okay.

All right. With that, thank you very much, Alex. So if any of you are interested to, you know, evaluate and probably trial some solution, Alex can also be of help. So don't hesitate to contact him directly through the platform. You will be with us for our day. You can find him— yeah, I think Alex just put a link in the Q&A, so don't hesitate to get in touch with Alexandre for any of your needs on procurement technology. Thank you very much, Alex, for sharing your insight. That was a good way to start. Our next speaker is on standby, ready to go, so don't go anywhere. Stay with us. We'll get started shortly, within 1 or 2 minutes. Thank you.

Thank you, everyone.

Bye-bye.