How to Use Procurement Software Analyst Reports

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🎣 The Catch Up

Hi there,

Hope you had a great week!

2 Things before we jump into the content:

1/ Gartner recently came out with it’s first ever “Source-to-Pay Suite Magic Quadrant” (a report ranking some of the best procurement software solutions on the market). I could not stay silent on this so tonight’s newsletter covers the results.

2/ Last week, I launched the Pure Procurement referral program. A few of you had trouble with the button provided so I wanted to make things easier…

If you share your personal link to this newsletter with 1 person and they subscribe, you’ll get access to my database of the best procurement white papers (136+ links).

Easy.

Here’s your “copy pastable” personal referral link: https://newsletter.pureprocurement.ca/subscribe?ref=PLACEHOLDER

What’s your take on the new Gartner S2P Magic Quadrant?

Reply to this email after reading with your thoughts (I read every reply).

Have a great week ahead.

Best,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
How to measure user adoption of your new Procurement system

🌙 Sunday Night Note

Gartner’s New S2P Magic Quadrant

This week Gartner, a prominent technology research firm, came out with their first ever “Magic Quadrant” report for Source-to-Pay Suites. Essentially, these reports exist to help customers navigate a given software market when looking to purchase a solution.

In the past, Gartner has put out Procurement-focused Magic Quadrants for Sourcing, Contract Lifecycle Management (CLM) and Procure-to-Pay (P2P) software categories. However, this was the first time the end-to-end Source-to-Pay Suite category was featured.

Source-to-Pay (S2P) suites have been around for over a decade so it’s great to finally see the category recognized as a distinctive one by the likes of Gartner. Gartner defines the S2P category as integrated solutions that can be used to support, at a minimum, sourcing, contracting, requesting (requisitioning), purchasing, receipt and payment of goods and services across a company.

You’ll have noticed that this definition includes the sourcing, CLM and P2P processes covered in previous, smaller scope Magic Quadrants. However, the main difference is that to be included in the S2P Magic Quadrant, you have to cover ALL included processes (vs. covering only one subprocess with your best-of-breed solution, for example).

Data for Gartner Magic Quadrants is gathered in 3 ways:

• Customers surveys and discussions

• Vendor surveys, briefings and solution demos

• Publicly available financial data (when available) and/or financial data provided directly by the software vendors

What Do the Results Mean?

Here are the summary results of Gartner’s 2024 Gartner Magic Quadrant:

Personally, I don’t think this particular Magic Quadrant changes much with regards to the dynamic of the procurement software market. The Top 7 are always part of the S2P Suite conversation (Although Oracle less so given it hasn’t really made any headway in companies that don’t already have an Oracle ERP).

The most positive consequence of this report is that procurement now has an additional tool to support the procurement tooling discussion with IT. This is great IF they want to implement a S2P suite. The Gartner brand is generally well respected in the CIO’s office.

But… That’s a big “IF”…

Here’s why.

How to Use Procurement Software Analyst Reports

First off, let me tell you how not to use analyst reports… If you’re looking to get tooling to make your Procurement function more efficient, don’t simply go out and buy one of the top rated procurement solutions in one of these reports 😅

Why?

Two main reasons:

• These reports only cover a small portion of the procurement application market

• As highlighted above, the information in these reports is an aggregation of highly subjective opinions from multiple different sources.

While Source-to-Pay suites are a very important portion of the procurement application market, there are at least a dozen other software categories that may be more tailored to your objectives. As with most complex endeavors (and yes, the selection and implementation of procurement software is a complex endeavor), your context is king. Things like:

• Company size

• Spend profile (what your company spends it money on)

• Industry

• Procurement strategy and business capabilities required to enable it

• Existing technology landscape (possibilities and constraints)

• Company culture around data, processes and technology

… all influence the type of Procurement software that will be right for your company.

So, how should you use procurement software analyst reports like the new Gartner S2P Magic Quadrant?

It’s only a piece of the puzzle needed to develop your perspective on the ‘art of the possible’ at your company… For the best results:

• Determine your objectives and the business capabilities required to achieve them

• Seek out software that will enable these capabilities while optimizing for your constraints (budget, existing tech stack, workforce, etc.)

Developing your general knowledge around the ‘art of the possible’ and constantly meeting software vendors will help you achieve both these steps iteratively.

For example, looking into the potential of Procurement Process Orchestration technology and Best-of-Breed solutions in each vertical (Spend analysis, category management, sourcing, contract lifecycle management, procure-to-pay, supplier relationship management, etc.) will make you realize what is and isn’t possible and how that compares with S2P suites.

In turn, this will influence your procurement software sourcing approach based on who in the market can provide your desired capabilities (this might be a combination of ERP, S2P suite and/or best-of-breed providers depending on your mix of desired capabilities).

A traditional RFP will rarely fit the bill…

So what are my takeaways from the Gartner 2024 S2P Suite Magic Quadrant?

• If I want to learn more about S2P Suites, I should talk to the Top 7 to get a sense of the ‘art of the possible’ in the category (or the Top 6 if I don’t have an Oracle system).

• I should ask questions about the strengths and weaknesses identified by Gartner to validate them for myself.

• I can’t stop there if I really want to understand the procurement software market, its possibilities and the best combination for my company (i.e. if I want to be a leading procurement organization).

The 2 ‘Shortcuts’ and the Long Game

I’ve probably just erected a huge wall between you and new procurement software haven’t it? I’m sorry about that… I know you’re already swamped.

The good news is there are 2 shortcuts.

1/ Solution Directories

The first shortcut is tapping into the 4 existing resources I’ve found most useful in breaking down the full scope of the procurement software market. There are a dozen of more procurement software categories out there (in addition to S2P Suites). These four tools have done a great job at outlining most if not all of these categories:

• Procurementsoftware.site (Free but summary information)

• Spendmatters.com (Paid but very detailed information)

• Dr. Elouise Epstein’s Procurement Software Spider Chart (LinkedIn Post)

• DPW 2020 Procurement Technology Landscape Map (LinkedIn Post)

The two last ones are a bit dated but still very useful for the category frameworks they provide.

2/ Leverage Subject Matter Experts

The second shortcut is to leverage SMEs

If you don’t care to study this market and craft a contextual system architecture yourself (you do have Procurement operations to run after all!), there are a few of us out there worldwide (at least that I would recommend 😅) that can help leapfrog you to the best answer for your context.

I always describe a software market experts as “an optimization tool” (bear with me…).

A good SME won’t provide an answer to the “what procurement software should we buy” question without asking a bunch of questions first to determine your current state and objectives/constraints.

They should aim to:

• Understand your objectives

• Capture required business capabilities to make these happen (which consider the ‘art of the possible’ on the procurement software market)

• Understand your existing IT architecture (ERPs, other systems, etc.)

• Craft a technology-agnostic roadmap for your Procurement function

• Determine the best software procurement strategy given your objectives/constraints

• Help you execute

• Educate you on the ‘why’ every step of the way

If you’re leveraging a SME’s help (whether a consulting firm or solo consultant) and they are not going through a close variation of the process above, be very weary of the answers provided…

Pro Tip: Get two opinions. Get an independent second SME to validate the first SME’s work to ‘poke holes’ in the recommendations. This insurance policy is much less costly than executing on the wrong roadmap.

The Long Game

The truth is there is tremendous movement in the procurement software market these days. The last time I checked Procurementsoftware.site, there were 430 solutions listed. That’s crazy! It’s impossible to get all the information you need to make good decisions from a single analyst report.

Don’t get me wrong, it’s great to see procurement software legitimized with tools like the Gartner Magic Quadrants. But it’s not enough.

If your goal is to be a top-tier Procurement function, you must build ProcureTech expertise internally. You can use the shortcuts above to give you a head start, but someone on your team needs the formal responsibility of keeping up with the market, keeping the team briefed and updating the roadmap (even if only part-time).

This person should constantly be meeting with vendors to build digital procurement literacy that is contextual to your organization (even when you’re not in a buying cycle).

Both the procurement software market and your overall company objectives will keep evolving over time (arguably at an increasing pace). Creating a dedicated role helps minimize the gap between your current state and the ever-evolving ‘optimal state’.

Trying to cram all of this analysis into your next procurement software buying cycle is a bad idea…

If you’re not following the procurement software market like you do your company’s direct commodities, you’ll never leverage technology like leading Procurement organizations do.

💭 Quote of the Week

📊 How Did I Do This Week?

Best comment from last week:

When I asked if you were planning on attending any conferences, Francis said:

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