Watch out, ERPs: emerging technologies are taking over
We recently held a webinar featuring Hugo Evans, Vice President at A.T. Kearney, Vikas Shah, our SVP of Growth & Business Development, and Marisa Pierron, our Customer Success Manager, in which they discussed the impact that emerging technologies are having on procurement.
Watch the full webinar to learn more, but for a sneak peek, check out this short clip or read the transcript below!
VIKAS: How do you see emerging technology changing the landscape of procurement organizations today?
HUGO: I think to understand that, we’ve got to look backward. If you look at procurement technology over the last two decades, its largely been a failure. By “failure,” I mean it failed to live up to the hype, and the demos, and the promises. I think I’ve yet to find a client in the last 20 years that received the benefits that were promised to them in the sales cycle. So, what you have is a very immature procurement technology market, a lot of gaps, a lot of frustration, and a lot of people that aren’t able to actually do their jobs.
There are a lot of opportunities because most of the procurement problems have not been solved to date. These emerging technologies are coming about specifically to solve particular problems, whether it be in sourcing, contracting, or even in payments.
VIKAS: Would it be fair to say that a lot of emerging technologies are “born digital” – that they are created differently, and have a very unique way of approaching the market? What about the legacy ERP systems? Aren’t they already doing this, or adapting to the changing landscape?
HUGO: I’ll start with the ERP systems, and then get to the “born digital” folks. The ERP systems started in the 90s and have largely remain unchanged. They’ve advanced, but the core functionality is there and remains the same. And there’s still plenty of problems. Most enterprises have complexity problems with the number of ERPs. They can have anywhere from 4 to 8 to 120 ERP systems, and I don’t think that was the original intent behind ERP system design. And so, what you have are a lot of entrenched systems.
Procurement systems were an outgrowth of the ERP systems in the late 90s and early 2000s and they’ve grown since. I think procurement technologies have been sort of stuck in that legacy mindset of building off the ERP system largely focused on goods, and that’s turned out marginally ok. But indirect is a totally wide open and discombobulated space, primarily because a large piece of indirect is services or hard-to-specify items, and so what you end up getting is that the old ERP systems are not the way to source services, or to procure services.
Emerging technologies are coming about specifically to solve particular problems, whether it be in sourcing, contracting, or even in payments.
So, if you flip it and look at the born digital companies, I use 2014 as sort of my arbitrary timeline as to when these emerging technologies started hitting the market. If you look at that from 2014, these companies were built with new architecture underneath, with micro-services, and to integrate. They’re built to automate increasingly – especially the ones that have come about very recently, including Xeeva. So, it’s this idea that integration, automation, and analytics are just native, without having to do some downstream plumbing or put in a lot of difficult effort.
I’ll conclude by saying the problem with most ERP and legacy procurement systems is that the user experience is terrible. You have some procurement systems today that are using their user interfaces since the mid-2000s, so they are really bad. And like I said, the integration and the analytics… you can tell the failure of ERP and procurement systems when, if you want to do the advanced analysis, you have to get an Excel export. To me, when I hear Excel export – no matter where it is – it’s telling me technology is failing somewhere.