Software as a service means changing the way procurement partners with digital vendors

procurement technology
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Software as a service means changing the way procurement partners with digital vendors

 

An oft-cited quote by American internet entrepreneur Reid Hoffman is that “freedom from normal rules is what gives you competitive advantage”. This quote fits into a much broader stream of entrepreneurial observations about the importance of doing things differently, identifying opportunities that others do not perceive- a stream where technology forms an interesting distributary.

 

Technology is frequently posited as a key driver of competitive advantage, providing organisations with the data, or capabilities to outperform the wider market. Such positioning has contributed to digital initiatives often taking a very siloed approach; platforms being built around bespoke, optimised processes and innovative partnerships with vendors often taking place behind closed doors.

 

However, there is a second aspect of Hoffman’s legacy which perhaps sits in stark contrast to this narrative, his role as co-founder of LinkedIn; a platform which optimises the value of information exchange, networking and joint problem-solving.

 

It is this value proposition, which fits in far more closely with how software is evolving. The value of technology is increasingly associated with the expansion of the network, a consideration often classified as the ‘network effect’.

 

Network technologies, be that emerging areas such as blockchain or more established ones, such as radio-frequency identification (RFID) tagging, have opened up opportunities around supply chain traceability and data visibility. Leveraging these technologies requires a community of other companies, commonly suppliers to adopt them.

 

However, an even more fundamental shift is the market transition towards software as a service (SAAS) delivery models. Partly driven by reduced customisability; project teams are looking externally, and working with other organisations to remodel their processes to meet industry standards, to collectively influence vendor roadmaps and to identify best practice in making use of platforms.

 

Perhaps the most interesting aspect of this shift is vendor advocacy. Whilst faster update cycles have been a prominent feature in the case for cloud migration, customers are reliant on their requirements aligning with vendor roadmaps. These roadmaps are designed around the greatest needs of a vendor’s user-base, shaped around regional, industry and size requirements. This has led to customer organisations advocating on behalf of solution providers to companies with a similar profile, to influence developments accordingly.

 

Leading project teams are understanding what networking and connection opportunities exist around vendors and building their own communities from those foundations. At its most sophisticated such networks consist of an aligned ecosystem of stakeholders, suppliers and auxiliary solution providers driving opportunities for data exchange, best practice sharing and co-development opportunities.

 

Traditional approaches to competitive advantage are less applicable in an increasingly connected, SAAS ecosystem. Partnership models must evolve to reflect this. For, if we are to finish with another quote from Hoffman, we must “take intelligent and bold risks to accomplish something great. Build a network of alliances to help you with intelligence, resources, and collective action”.

 

Three tips to meet changing partnership requirements:

  • CREATE NETWORKS: Deepen your embeddedness with vendors by establishing communities around them, leveraging the best practice of this community.
  • WORK AS AN ADVOCATE: Advocate on behalf of solution providers to companies with a similar profile to yours to influence product roadmaps.
  • MAKE USE OF FEEDBACK MECHANISMS: Identify what opportunities are available for your organisation, as a customer, to become a more proactive contributor to shaping how platforms develop.

Further reading:

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Alex Johnston
Posted by Alex Johnston

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