Andrew Bartolini, Managing Partner and Chief Research Officer at Ardent Partners recently interviewed our CEO, Jack Mulloy as part of the CPO Rising Procurement Influencers series. The original, two part series appeared on the CPO Rising Website. Below is Part II
Editor’s Note: The following is a transcript of an interview by Andrew Bartolini with Jack Mulloy, CEO of BuyerQuest. Some of the questions have been edited for brevity and clarity.
Last week, we began our profile of BuyerQuest CEO, Jack Mulloy, and how over his more than 25 years in the B2B and procurement technology industry, he applied lessons learned at each phase of his career to ultimately join BuyerQuest and lead it forward in the eProcurement solutions market. We’re delighted to present Part II of this very informative interview in which Andrew and Jack consider the evolutionary arc that procurement has been on and where it will head next.
Andrew Bartolini: So, you’ve got a longstanding career in procurement services and on the solution side. How have you seen procurement organizations evolve during that time?
Jack Mulloy: I think procurement organizations are trying to be a lot more collaborative and prove value within their organizations. In my experience, I’ve seen that successful Chief Procurement Officers (CPO’s) have a fair amount of salesmanship. In the ‘carrot & stick’ analogy, many procurement organizations started by swinging a stick (or threatening to swing a stick). What we’ve found is that a ‘carrot approach’ proves to be much more successful for procurement to adopt. But in order for the carrot approach to work, procurement organizations must take a different mindset within their organization. Procurement must truly engage with the lines of business by being nimble, flexible, and valuable.
Historically, I think that procurement technology has greatly inhibited procurement’s ability to successfully sell their vision within the organization. Nearly all Procurement applications are so rigid and unusable that, as much as procurement wants to partner with the lines of business, they simply can’t because the technology has tied procurement’s hands. Let’s say that procurement wants to engage meaningfully with the Marketing department…. Procurement had better be sure that the eProcurement application can:
- Support the complexities associated with marketing related procurement
- Provide a super intuitive buying experience that greatly improves the current process
- Integrate easily with existing marketing related systems
- Prove value to marketing to allow for the Marketing team to rally around a successful initiative
I see procurement organizations trying to be better partners, to be more strategic, and to be viewed differently within the organization. It doesn’t happen overnight, so it’s been interesting to see procurement change technology, communication, and salesmanship to engage more meaningfully.
AB: What are some of the things that successful procurement teams do well?
JM: I think obviously a lot of it comes down to communication. Having the right message to get the buy-in from the lines of business, and being very clear about what the procurement mission is and why it’s good for the business. Oftentimes, these procurement organizations have tried unsuccessfully to engage with the business, so the LOB’s might have an unfavorable perception of procurement. So it’s also about shifting that perception of procurement from being a tactical “road-blocker” to a strategic value-added partner to the LOB. A lot of times we’ll see organizations try to re-brand themselves and weave the communication around this rebranding effort. Successful organizations have to be very measured, clear, consistent, and persistent with how they communicate procurement’s role within the business.
AB: What are some things that are likely to impact procurement in the near-term? And, over the next couple of years?
JM: A common problem we see with organizations is that they don’t clearly understand what their organization is buying, how they are buying, and how they can engage with the business to change behavior. So from an analytics perspective, we see a lot of innovation around Big Data and cognitive capabilities that will help organizations use spend data to solidify their approach, “move the needle” on key performance indicators, and achieve savings success.
At BuyerQuest, we are embracing the shift to cognitive procurement by leveraging our partnership with IBM Watson. Through integration with IBM Watson, BuyerQuest customers see the procurement application evolve (and become smarter) as more end-users engage with the application. Smart applications that evolve over time…that’s the future for procurement related technologies.
AB: Is the challenge that the technology hasn’t been as good enough, or is it more organizational? What changes this – what do you see as the catalyst to jump-start or drive it forward?
JM: It’s a good question because you’d think after 20 years, we wouldn’t still be in the ‘first inning’ of the enterprise procurement game. Yet as I look around, most procurement organizations have lots of opportunities to drive more value, manage more spend, and raise procurement’s status within their companies.
As pressure builds on procurement to prove value and manage spend, they will be forced to find solutions that drive meaningful engagement with the end users. All business functions are moving to the cloud and moving to ‘self-service’ applications. Unfortunately, most of the solutions in our space look and feel very “ERP-ish” and require lots of end-user training.
The catalyst to drive forward with innovation will be the economy. As the economy slows and this enduring bull market comes to an end, companies will be forced to protect earnings by better managing spend. So, ironically, the procurement function becomes more visible (and seemingly important) during lean times.
AB: What do you recommend procurement organizations consider when they make their business cases for technology investment? What can they do to ensure they hit their targets?
JM: That’s a loaded question, but I’ll try to boil it down to three things:
- Stakeholder alignment – When you think of enterprise procurement and the different parties that must be involved to ensure success, there are a lot of different stakeholders who are impacted by procurement, including: accounts payable, treasury, audit, Tax, and IT. Stakeholder alignment is imperative at the start of the project and throughout the program. Successful companies identify these stakeholders and ensure that all parties are aligned with the program.
- Define Success – It’s imperative to understand how the success of the program will be measured and communicated. A successful procurement organization has a clear understanding of the KPI’s and a laser focus on achieving results.
- SELL, SELL, SELL – Procurement is oftentimes misunderstood within the organization. So, it’s important to form a clear message that spells out procurement’s goals, success metrics, and value to the organization. From there, I recommend that procurement organizations align the processes & technology to achieve measured success and continually elevate procurement’s role in the company.
AB: Where do you see the procurement technology market heading over the next couple of years?
JM: The path we’re on now to democratize the buying experience and enable self-service procurement will continue. There’s just no stopping it. As we look at all business functions, there’s a sustained push for self-service, cloud-based business applications.
Look at where enterprise procurement started. In the late 90’s, the ERP solutions offered the ability to load static catalogs into a very primitive purchasing module within the ERP. Companies hired hundreds of buyers and catalog managers in an attempt to operationalize thousands of contracts. While this was the initial foray into eProcurement, the process to load and then manage content was too cumbersome and the buying experience was miserable.
The idea of PunchOut Catalogs (or Roundtrip Catalogs) became hugely popular in the early 2000’s as the eProcurement buying experience could become consumer-like by integrating with existing consumer sites (i.e. Staples.com; Dell.com, Fastenal.com). PunchOut Catalogs made the eProcurement buying experience much better than buying within any of the ERP systems or eProcurement systems (i.e. Ariba, Coupa, Ivalua). Even to this day, enablement of contracted goods / services via punchout connections is the most popular way to enable content. (On average, 85%+ of all goods / services are enabled via PunchOut connections).
At BuyerQuest, we think that forcing end users to find and search within PunchOut Catalogs is disjointed and promotes low usability. Instead, we’ve taken a more ‘Amazon-like’ approach to eProcurement where we enable all goods / services within a SINGLE user interface. By taking this approach, we’ve enabled the ONLY self-service eProcurement solution that requires zero training.
The move to enable all contracts within a single marketplace required a completely different approach to building the BuyerQuest application. We actually had to think like Amazon / eBay and build an enterprise application that could handle massive scale, allow our customers to govern the marketplace, and satisfy all the eProcurement functionality of large organizations.
We feel strongly that cognitive procurement will become increasingly important to organizations. We also know that cognitive procurement capabilities can only be unlocked if organizations can monitor and track the buying behavior within the eProcurement application. I’m confident that BuyerQuest (partnered with IBM Watson) will continue to blaze the ‘cognitive trail’ for procurement.
AB: That gap has been pretty significant for some time. I think this has been great – thanks so much for your time.