The average adult makes around 35,000 decisions each day, some conscious and others instinctive. Procurement professionals might feel this number is low, given all the factors they have to consider, such as quality, reliability, cost, speed, risk and sustainability. All of that stress and complexity have led many to digitize their business (albeit slowly), resulting in an over-reliance on a limited number of procurement software providers to help run their operations.
The problem is that procurement software was originally designed to track and manage transactions, not serve as a workplace solution or efficiency tool. Over time, as data exploded and the industry consolidated, specialty providers emerged to optimize procurement tasks such as intake, project triage, workplace approvals, project savings and providing data on supplier risk or diversity tracking.
The implementation of these specialty providers was done on a standalone and piecemeal basis. When procurement implemented leading digital procurement applications to manage their procure-to-pay processes, they were also forced to find multiple point solutions to fill process gaps. The result was a lot of individual functionality, without a lot of integration.
The Era of Middleware
SAP has conducted research into the current state of the procurement industry, surveying more than 1,000 procurement and supply chain executives in 23 countries and 14 industries. Two findings were that “many procurement functions continue to operate with a technology deficit,” and an alarming “53% purchase products from only one supplier.” Both increase procurement risk and result in poor visibility across an organization, especially during an expansion.
After a bruising pandemic, global supply chain shortages, and with talks of a global recession growing louder, chief procurement officers are prioritizing clarity and interoperability. When acquiring new applications, there’s an inherent requirement that they can be used in lockstep with existing enterprise technology.
Take data providers. It’s no longer enough to just provide data; the expectation is that it be made available to clients through existing systems. We very often see underutilized data systems due to practitioners needing to log into a separate system to obtain data to re-enter it into their process-management application.
The Great Unifier
Anyone who follows the tech industry knows the inevitable ebb and flow of innovation. A particular industry becomes ripe for disruption, which creates demand for new solutions, and ultimately an inflection point is reached uniting them. We’re at that point in procurement, hastened by a gloomy economic outlook that’s adding scrutiny to any IT spend. The name of the game now is streamlining, and strategic sourcing systems with middleware present distinct advantages that can futureproof any investments.
Following are four ways that middleware is unifying the procurement process and resulting in a greater return on investment.
As KPMG put it, “It’s no longer business as usual for procurement. There are more disrupters at work than ever before — and they’re moving fast and at scale. The key to success is to develop a blueprint for how your procurement team can turn these disrupters into opportunities to grow and gain competitive advantage.”
Often that competitive advantage comes from making tough decisions, and there will be challenges in convincing leadership teams that less can be more. Disruption aside, convergence seems inevitable. Soon the big procurement software providers will gobble up the middleware vendors as they look to further increase their market share. By that point, those who integrated early will be ahead of the game, while those who held out will be stuck unraveling a bunch of disparate relationships and technologies.
The choice is yours, and just another of the 35,000 decisions to make today.
Anders Lillivek is chief executive officer of Focal Point,
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