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Five takeaways from the Digital Procurement World conference in Amsterdam

Five takeaways from the Digital Procurement World conference in Amsterdam September 2019

Spendency attended the Digital Procurement World conference in Amsterdam last week. We were selected as one of 20 start-ups in the purchasing technology space and was also one of ten companies that got to show our spend analysis solution to the audience of 400 senior purchasing officials.

Besides start-ups showing the latest and greatest technology there was about 35 lectures and workshops on the topic of digital procurement. Having digested all the great information, below you will find five key takeaways from the conference:

1. ROI on proven technology is in most cases superior to bets in disruptive solutions

Spend Matters founder Jason Busch suggested that the key success factor was for organisations to get going now rather than waiting for a big solve it all ERP upgrade. Also when you do get going, treat your technology purchases like a financial investment portfolio where 90+ per cent of focus should be on safe “pedestrian” technology and less than 10 per cent focus on “exciting” technology. His experience was that in all likelihood close to 100 per cent of the short and midterm gains will come from the “pedestrian” bets rather than the “exciting” ones. So all of you thinking that the next new ERP system upgrade or a fancy new technology like AI or Blockchain will disrupt the way you work in the near future, think again, start moving and start improving.

2. There is a lot of talk of AI, but there are limited examples of AI as a true value add in purchasing applications

A number of sourcing applications is currently working to develop automated intelligent solutions, but few can currently show any significant value add. It is hard not to take a slightly conservative view that AI in purchasing today is more of a marketing buzz word than a breakthrough technology. Hopefully that will all change in 2020 when innovative companies, including Spendency, launch their version of an AI application.

3. Partnership between specialist will dominate big generalists

The partnership trend will most likely accelerate going forward, and as opening speaker Dr Didier Bonnet proclaimed that “No single company operates the full value chain as defined by Porter, you cannot be competitive everywhere” so the future belongs to those who are part of a partnership formed between specialists. This is particularly prominent amongst the new digital solutions. They are always built as in the cloud based Software as a Service making it easy to build integrations . Another version of the partnership trend is the long established trend that leading procurement organisations are increasingly pursuing a best of breed strategy when it comes to technology solutions. Interestingly enough a lot of the companies with the world’s most recognisable brands were not only represented at the conference but very eager and willing to learn more about the start-ups and how they could contribute to their purchasing function.

4. Leading purchasing organisations are increasingly separating analytics for direct and indirect material

Many organisations, particularly those who invested heavily in increased data quality through a central data warehouse 3-5 years ago, is starting to separate indirect spend and handle it separately. Despite spending «millions of dollars» the in-house solutions just is not flexible enough to manage the diversity of indirect spend. If this trend continues we will likely see an increase of organisations having an in-house BI for direct material and an external SaaS provider for indirect material spend data.

5. Digitalisation is not a way to reduce a perceived skill gap instead it increases it

A presentation by Jan Wüllenweber from McKinsey showed a strong correlation between digitalisation and perceived skill mismatch. The further along the digitalisation journey an organisation is, the bigger the perceived skill mismatch is. Since purchasing is currently an average function as far as adopting digital goes, expect skill gaps to expand for key roles going forward. So in order for procurement organisations to become successful in adopting digital solutions they must also ensure they either master talent management or established long term vested partnership with service providers that can provide the talent.

McKinsey & Co Senior Partner Jan Wüllenweber talking about the skills needed to successfully adopting digital

 

Overall the conference was great with an excellent mix of thought leadership, practitioner examples and new technology. We highly anticipate next years DPW and hope to see some of you there.

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