Innovations in procurement: A Vendr fireside chat
[Video Recording] Hear what procurement leaders at Datadog, CommerceHub, and ActiveCampaign have to say about the current state of procurement and automation, predictions for 2023, memorable procurement and negotiation wins, and more.
The past few years have been transformative for procurement teams.
Procurement programs once built on the sole premise of “cost savings” have evolved into fully integrated, strategic, and valuable players in driving revenue and savings. Innovative leaders have helped organizations emerge from the bottom line mindset into a dynamic and relationship-based approach to sourcing and saving.
To highlight these changes, Vendr CEO Ryan Neu talked shop with three cutting-edge procurement leaders:
- Michelle Vita is the Senior Director of Procurement for Datadog. She’s been with the company for years after joining as their first Procurement hire. In addition to building Datadog’s procurement systems and processes from the ground up, she’s grown the procurement organization to six members focused on operations and strategic initiatives.
- Sören Petsch brings a mix of Procurement and Finance experience to his role as Head of Procurement for CommerceHub. Petsch has focused his 18-month tenure with the company on fostering an enablement approach within CommerceHub’s procurement program.
- Wayne Williams serves as Director of Procurement for ActiveCampaign. In his 18 months with the company, Williams has led the two-person Procurement team to bring a customer service mindset to internal stakeholders, helping them through non-traditional services like project management support, purchasing guidance, and other unique value-adds.
In one informative hour, they shared some of their biggest procurement wins, discussed the current state of procurement and automation, and gave us insight into what they see coming in 2023.
Prefer to watch instead? Check out the video below!
What is your most memorable “ big win” or negotiating experience?
As any Procurement professional knows, the most rewarding part of the job comes from experiencing big wins for your organization. Modern procurement has allowed professionals to stretch their legs, bring more value to their stakeholders, and learn valuable skills along the way.
Our panelists were excited to share those big moments:
- For Wayne, a large-scale Business Process Outsourcing (BPO) contract delivered an important lesson about maintaining your rights at the negotiating table. The project, which he described as “pretty hairy,” was both important and complex. The win at the table— and valuable learning for future projects— was the concept of maintaining step-in rights. This is especially important within the technology arena. “Preserve your ability to take it back over if things don't go well.”
Wayne suggests that organizations stepping into any outsourced solution ask themselves, “How would we end this if we take a different strategic direction?” Just as important as selecting a good partner is ensuring you can take hold of the rudder when necessary.
- Soren helped his organization select a new email service provider (ESP) to modernize its marketing and communications with customers. The project involved moving the company’s 100m per day mailing volume from a legacy product to a best-in-class service provider. During the project, Soren got deep insight into the IT function, their business needs and what they care about. It exposed him to complex negotiations involving business risk, data privacy, security, etc. “That experience is when I became a full-fledged procurement practitioner.”
- For Michelle, a trade show procurement project paved the way for better opportunities to shape procurement policy. Negotiation for the show came way over budget, leaving Procurement to create a better plan and solve for the variance. With a strategic procurement approach, the team could “adjust scope and budget to make best decisions versus biggest and best.” By scaling back strategically, the team was able to uphold the integrity of the event and “save a ton of money.” It made for a memorable and cost-effective experience.
In each of these instances, the takeaway was the opportunity for Procurement to move into a more strategic and facilitative role. As Michelle put it, “Procurement gets a bad reputation of being here to say ‘no.’” Through these experiences, leaders can move away from just saving a couple of dollars on a contract and become strategic partners for the entire process.
How have you handled the economic downturn over the past 6 months?
Every procurement professional can relate to the particular challenges of 2022. Inflation and supply chain disruptions have defined the year, with some downward pressures only now easing. Our panelists offered valuable insight on helping their organizations thrive through economic uncertainty.
As in most industries and departments, the overriding approach has been to do more with less. Soren explained, “We’ve focused efforts on creating more visibility and transparency.” One big move was to put departmental and finance approval before approval flow. This effort helped align decisions early in the process.
Working more efficiently inside the Procurement function has helped Michelle’s team focus their efforts on creating value. She realized her team was spending considerable time guiding internal stakeholders on processes that could be self-serve.
To alleviate this, her team worked to make processes more user-friendly. One such initiative was to implement user guides within the purchasing system. Micelle explained the system as “Sort of like Clippy,” the popular Microsoft process assistant. The automated guide within the procurement system assisted users by highlighting the path they need to click through to complete everyday tasks. This self-service guidance created more time for procurement to work through higher-value activities.
Wayne and the ActiveCampaign team focused on the value of partnership and transparency in keeping up with the changing economic climate. “One of the first things we turn to is our partnership,” explained Wayne. Citing the need for more knowledge and more hands with SaaS decision-making and beyond, the team engaged external contacts across all spaces. They reached out to those resources to see what others could share about what was occurring in the marketplace.
Like Michelle, creating transparency was another key to riding out the economic flux. With the high-powered spending of late 2021 coming to an end in January 2022, the team took time to scrutinize the tech stack and resources in play and make decisions to streamline going forward. “After such fast growth, we need[ed] to have conversations focusing and spending in the right places.”
How have you automated procurement at your organization?
Digital transformation has played a significant role in smoothing the path through the recent challenging times. While the journey looks different for each organization, the panelists shared the projects that created the most value and efficiency for their teams.
For Soren, standardizing processes and increasing visibility through an automated workflow tool provided a strong foundation for future automation. The tool allows the teams easy access to approval workflows, internal communication, and files such as redlined documents. Bringing together these functions in a workflow tool speeds up the process. “It eliminates conversations and looking for files.” The team can spend more time focusing on outcomes versus research and follow-ups.
The foundation allows procurement to add more functionality over time. As Soren points out, “The workflow tool is a backbone. If my process works, I can add pieces and make it executable.” The CommerceHub team is already planning future expansion capabilities such as license utilization that will drive cost and operational efficiency automatically. The team also has plans to digitize all its contracts for use in a software management tool, giving them more time and leverage through a proactive renewal process.
For Wayne and ActiveCampaign, building automation into the organization started with stepping back and looking at existing processes. Wayne said they accomplished this survey by “putting a lean, SixSigma lens on everything.” This process allowed the team to assess where they had bottlenecks, waste, etc. They also assessed how the players were interconnected through the automation process. “If you have disparate teams working on automation inside and outside of Procurement, it can get a little crazy.”
Using this careful approach, the team could automate major business processes such as contract lifecycle management, AP automation, and centralized spend request management. The focus during these cutovers was to preserve team functionality as they adopted better processes.
“We want to deploy them in a way that we don't impair agility. It’s a really measured change management routine we go through.”
The team eases the path further by soliciting informal feedback from its stakeholders and proactively asking during and after implementation to inform the change management process.
For Michelle, the road to automation begins with the human element. Her team began its process by surveying internal stakeholders to gain insight. This gave procurement a view into what was working and not. It shed light on places “procurement needed to be more hands-on with certain things, and less with others.” This way, they could step away from processes that weren’t adding value.
One such process was sending contracts for legal review. There were too many steps to maintain efficiency. They automated this process through a Jira board, reducing the human touchpoints needed to keep the contract process flowing.
Establishing the workflow in this area will inform other automation efforts. Next on the list: vendor onboarding. By using automation, Procurement will be able to collect documents from vendors, get sign-off on boilerplate items, and set up accounts quickly and accurately. This currently human-driven process will enable a holistic approach to the vendor onboarding process.
Looking for more trends in SaaS and procurement?
We recently released our second annual 2022 SaaS Buying Trend Report, and yours for the taking.
Read what we’ve learned from saving our customers over $240M in SaaS spend — and what we anticipate 2023 will bring (hint: more SaaS due diligence, tighter budgets, and upward price trends are among us).