How To Choose Modern, Smart Supplier Value Management Software
Table of Contents
Supplier Experience Live 2023
During this year’s Supplier Experience Live Conference, Duncan Jones former Vice President and Principal Analyst at Forrester Research, delivered a session on ‘How to choose supplier value management (SVM) software.’
The article will cover:
- Why modern AI-powered software should replace IT’s failed database-centric approach
- How to choose the best supplier value management (SVM) software for your organization
- 5 key reasons for buying specialist solutions instead of building your own
- How to use AI to improve suppliers’ approval experience
- Top 4 recommendations on how to choose your supplier value management (SVM) software
Why modern AI-powered software should replace the database-centric approach
The unified data model has not worked well in practice for many reasons.
First, the monolithic architecture creates huge dependencies, which are difficult to navigate. Next, slower release cycles prevent us from fixing critical problems fast and improving our systems. Finally, it’s hard to find people who want to work on these systems, to name just a few.
Omnisuite strategies have failed in every software category
According to Duncan, there are many reasons why omnisuite strategies have failed:
- First, customer needs evolve too fast. No one vendor can service them all.
- Second, the best engineering talent prefers to work for specialists due to start-up culture or having equity incentives.
- Third, the VC model fuels faster innovation. There is a willingness to place bets, meaning VCs are more persistent.
- Finally, the centralized model fails in complex organizations. Autonomous business leaders want to buy the tools they need, and the processes vary across different departments, requiring different solutions.
“The future,” as Duncan puts it therefore, “looks more like a multi-planetary system, a solar system if you like.” Elaborating, he introduces ‘MACH,’ namely ‘microservices, APIs first, cloud-native, headless’ architecture.
This enables easy integrations between core platforms and specialist products. It allows everyone to benefit from best-of-breed products, while maintaining a unified experience.
How to choose the best supplier value management (SVM) software for your organization
Duncan explains that the best supplier value management (SVM) choices depend on your organization’s culture and maturity from a procurement point of view. In the session, he shares a graph explaining how the different choices are driven by two key aspects: how advanced you are as a procurement organization, versus how federated and heterogeneous you are.
An advanced, federated and heterogeneous procurement organization would benefit most from looking at specialist products, as they would like solutions to fit their way of working. Meanwhile, a less mature organization could benefit from implementing solutions that require them to gradually harmonize their processes from a procurement perspective.
On the other hand, mature centralized and homogenous procurement organizations should focus on supplier value management (SVM) platforms and their ecosystem, in contrast to a less advanced procurement organization, which should find an enterprise-wide supplier value management (SVM) suite.
5 key reasons for buying specialist solutions instead of building your own
Duncan explains that while building custom workflows can be incredibly tempting, there are a host of reasons why you should consider finding a specialist product that works for your business.
Building your own allows some flexibility that off-the-shelf products cannot. However, what the specialist products offer are:
- A domain-specific vision
- AI-enabled automation out-of-the-box
- Community best practices
- Integration with leading supplier value management (SVM) platforms
- Productized solutions for new requirements
How to use AI to improve supplier’s approval experience
Duncan shares some examples of using AI to improve the supplier’s approval experience:
- The first concept is ‘tell me once’. This means using a single portal that updates every supplier value management (SVM) system around your enterprise.
- Second, tell everyone at once. Managed communities publish changes to all buyer members, as LinkedIn does.
- Third, collect publicly available data and ask the supplier to confirm its validity.
- Fourth, automate the scoring of responses to ensure suppliers get fast approval.
- Last, integrate with other sourcing and procurement processes to steer colleagues to existing approved suppliers.
Watch the Live Session at Supplier Experience Live 2023
Top 4 recommendations on how to choose your supplier value management (SVM) software
Duncan concludes by giving his top recommendations on how to choose a modern and smart supplier value management (SVM) solution:
- Create a roadmap to comprehensive supplier value management (SVM) that combines core platforms with specialist applications.
- Choose products appropriate to your culture and maturity level.
- Implement a few enterprise-wide solutions and stop waiting for the perfect “single global platform”.
- Help your procurement teams around the organization by trying out innovative niche solutions.
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