“In 2020, legacy procurement applications will be scaled back, while cloud-based core applications, best-of-breed solutions, robotic process automation (RPA), and data visualization tools will see significant growth.” — The Hackett Group
A new complement to traditional procurement solutions is emerging— an interconnected network or best-of-breed ecosystem—which is opening the door to procurement’s future. The ecosystem is quickly gaining momentum fueled by transformational automation and emerging technologies, including AI, machine learning, advanced analytics, and RPA. According to a recent Hackett Group study, we can expect an 11% increase in best-of-breed solutions this year, and this is still a nascent opportunity.
In Part 1 of this three-part series, we discussed why a best-of-breed ecosystem is the future of procurement and why CPOs must be invested in delivering against elevated technology expectations. In this second post, we will further explore what a best-of-breed ecosystem entails and how it’s changing the role of traditional models for procurement technology.
What are the elements of the best-of-breed ecosystem architecture?
Procurement must deliver value to customers, with the business stakeholder at the center of the process. With its deep reach into every enterprise function and across the extended value chain, a best-of-breed ecosystem is critical for CPOs to immediately reduce complexity, increase speed and scalability, and ultimately manage costs and deliver value.
A best-of-breed ecosystem requires two elements:
- An open architecture hub that enables seamless integration and collaboration across platform boundaries
- Built-for-purpose solutions that are nimble and bold enough to meet end-user expectations
A best-of-breed ecosystem needs to include solutions that span the end-to-end procurement process, including service sourcing, contract management, market intelligence, spend management, risk, and compliance. These solutions need to address specific user requirements, with the hub bringing all of this together for greater speed, efficiency, and cost savings and better business outcomes.
In more advanced ecosystems, point solutions will collaborate or talk to each other via the hub technology solution, making the end-to-end user experience frictionless and fully transparent. Much like many app experiences consumers already enjoy on their smartphones, a single interface can intuitively bring users anything they need for the strategic sourcing of services without needing to know where one solution ends and another begins.
Why is the ecosystem approach better than traditional procurement models?
New innovations are being developed every day in the procurement realm powered by AI and other leading technologies. Traditional solutions cannot deliver the expected speed, efficiency, and results on their own without newer innovative platforms thus the two need to coexist and complement each other. There is room for many different procurement solutions, and this is something that business stakeholders expect and demand, as “one size doesn’t fit all.” Procurement teams need to deliver the best solution that will anticipate the requirements of the business and provide additional value extending far beyond the pure automation of the process.
The consumerization of enterprise procurement only makes this demand more pressing. Technology is slowly transforming the procurement experience with some of the more advanced point solutions leading the way and changing the expectations of procurement’s customers and business stakeholders. Improving the overall sourcing and procurement experience is what will effectively drive adoption, ensure process compliance, and—finally—deliver the value and outcomes that CPOs have been pursuing for years.
With the agility required from enterprise procurement teams today, it’s clear that end-to-end systems need to be complemented with best-of-breed solutions to solve the most meaningful business challenges. Only the best-of-breed ecosystem can deliver the depth and scale required by procurement’s varied stakeholder groups.
In the third and final post in this series, I will discuss how CPOs can successfully lead the transition to a best-of-breed ecosystem, initiating a unique and transformational journey in partnership with the executive team, functional stakeholders, and strategic suppliers.
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Keith Hausmann is Chief Revenue Officer at Globality.
Watch this introductory video showing how Globality helps companies select the best service suppliers at the right price, while at the same time prioritizing enterprise growth and supplier diversity.