The Need for a Common ProcureTech Taxonomy

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Hi readers,

I was in Amsterdam this week meeting with Procurement professionals who were attending a Procurement Technology conference. It was great meeting some readers of this very newsletter. *tip of the cap*

But, here’s the thing… One thing kept coming up and I couldn’t shake it.

I want to fix it! Tonight! And I need your help....

Read tonight’s note and tell me what you think.

Onwards!

📰 In this week’s edition:

• 📋 5 procurement jobs that caught my eye

• 🏆 The Road to the ProcureTech Cup : Episode 7

• 🌙 The Need for a Common ProcureTech Taxonomy

Let me know what you thought in the poll at the bottom of this email.
Your feedback shapes the content of this newsletter.

ICYMI 👀: My best Linkedin post of the week:
Your Procurement team sucks at digital Procurement... That's not my opinion... That's what the data says.

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🏆 Road to the ProcureTech Cup

This Week’s Episode

Join me as Anvil Analytical comes on the show to demo their functionality-packed Spend Analytics platform.

Let’s do it!

Last Week’s Episode

Globality demoed their autonomous sourcing tool last Friday.

This tool helps make business users autonomous when running complex sourcing projects while respecting your policies and category strategies. All the while, it gives you visibility into what they are doing so you can best support them.

If you missed it and want to watch the replay, pick you poison:

🌙 Sunday Night Note

The Need for a Common ProcureTech Market Taxonomy

I was in Amsterdam this week meeting with Procurement professionals who were attending a Procurement Technology conference.

There were over 100 ProcureTech software vendors represented which underlines how our field has burgeoned over the past few years (there's a piece of software to support everything procurement could ever want to do!).

However, a common piece of feedback I received is that it is very hard to quickly understand what a solution does without asking a lot of questions.

“Everyone slapped “We do AI” on a poster and came to the party…”

This meant that folks on both sides of the equation could potentially spend lots of time on conversations where there isn't a fit (no client need for the capability proposed by the solution).

And come to think of it, I've heard this feedback about the ProcureTech market in general for a while now...

So yesterday, I sat down, collected data from a number of sources (SpendMatters categories, Dr. Epstein’s Spider Chart, my own work on this topic, etc.)

I then put together a draft ProcureTech market taxonomy. I tried to be as exhaustive as possible... The file below is my humble proposal to fix this problem.

The first level of the taxonomy is based on my procurement value chain, modeled after Michael Porter’s value chain concept but adapted for procurement.

• Procurement’s primary activities

  • Strategic Procurement

  • Operational Purchasing

• Procurement’s secondary activities

  • Procurement Process Management

  • Procurement Master Data Management

  • Procurement Technology Management

  • Procurement People Management

  • Procurement Governance

Procurement's responsibilities and the processes executed are fairly stable and standard across all industries and organizations, at least at the level of granularity used. I thought this would be a good place to start.

One of the difficulties is to determine where the boundary is between procurement and other business functions such as maintenance, Sales & Operations Planning, Warehousing, etc. but I believe I right-sized it…

The second level of the taxonomy is defined by exploding each of the above high-level process areas into procurement sub-processes. This is also fairly standard across the board but some organizations may not do everything in this list as part of their procurement responsibilities. That’s fine as long as I am not missing any…

It also mirrors the general structure of how ProcureTech solutions (or modules in S2P suites) have traditionally been cut up in the last decade.

The third level of the taxonomy is where I associated technological capabilities to each of the level 2 procurement sub-processes. This is probably the hardest part because some capabilities are shared by multiple Level 2 sub-processes. However, when that was the case, I chose the single, best home for the capability. No duplicates allowed!

So here it is… My proposed ProcureTech Solution Taxonomy for your perusal pleasure…

Here are a few examples of how buyers and sellers could use it:

Vendor Example 1:

Vendor Example 2:

Buyer Example 1:

Buyer Example 2:

Pretty easy to use, right?

Now, I turn things over to you.

Is this useful? Do you see any gaps or “mistakes”? Would you use other terms instead of the ones I used? Is anything confusing?

I would love feedback from both practitioners and vendors. If you reply to this email, I’ll read it!

Next step? Define all the terms once the structure is nailed down.

Have a great week in the ProcureTech jungle… 🌴

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