[Editor’s note: Ardent Partners’ Procurement Influencer Series continues today with a conversation between Andrew Bartolini, Chief Research Officer of Ardent, and Patrick Stakenas, President and CEO of Selectica. Together, the two industry veterans have more than 40 years of combined experience in procurement and supply management, and we’re pleased to present this Q&A from a conversation that they had earlier this spring, before Patrick assumed his new title and duties. We congratulate Patrick, and are very pleased to have him share his story with Andrew in today’s Procurement Influencer article. Enjoy!]
Andrew Bartolini: Could you give a background of yourself, your role at Selectica and what you’re focused on?
Patrick Stakenas: I have been in technology for 25-plus years. Prior to that, I spent a number of years in manufacturing on the sales and operations side—a company called Moore that probably nobody remembers. I grew up in the business, always around change and using technology to facilitate processes within the businesses. In 2005, I founded a software company called ForceLogix that we ended up taking public on the Canadian stock exchange in 2011 and ultimately selling to Callidus in 2012.
From there, I joined Gartner as a research analyst covering the CRM space. There’s a big overlap with technology as it relates to the connection between customer and the supplier. So I spent a lot of time working on the sell-side contract aspects of doing research on CRM, and the linkages between customer and supplier management.
Late 2013, I was approached by the chairman of Selectica to join the company. He had ideas of where he wanted to take the business at the time. If you recall, they were heavy in guided selling and CPQ. As I considered the offer, I saw an opportunity to help them shift gears. When I was asked in January of 2014 to join Selectica as Chief Strategy Officer with the key role of understanding the markets, I was challenged to create a strategy and go after what we thought was a space that would be opened up by the current gaps in the marketplace.
In mid-June of 2015, the Board of Directors asked me to take over the helm at Selectica. I am appreciative for this opportunity to lead the company. We’ve drawn out a solid business plan, and I intend to focus on our vision to build out a full suite of Supply Management and Enterprise Contract Lifecycle Management. The recent announcement to acquire b-pack, a visionary in the Gartner Magic Quadrant Procure-to-Pay Suites for Indirect Procurement, is another step towards fulfilling our strategy. It will round out our approach on the downstream side of supply management as driven by opportunity and customer demand in the marketplace.
I saw an opportunity to fill the gap between Selectica’s current CLM technology with the procurement side for both upstream and downstream.
There’s a huge gap between upstream supply management and overall technology to support the linkage between “sell-side and buy-side” contracts. Acquiring Iasta and b-pack was the perfect solution for us to fill that gap. Today we’re continuing to look at partners and potential future acquisitions to round out our offering, building linkages in contract management.
AB: Got it—a great diverse background coming in at the CRM side, but pivoting and seeing some of the opportunities that exist on the supply management side. Could you share your perspective on the changes that have occurred in procurement? Maybe reference your time in manufacturing, but from our perspective, how it has evolved and continues to advance forward. So maybe talk a little bit about what some of those changes are and how you’ve seen the procurement function emerge in 2015.
PS: Sure, so, I need to go back to the mid-90s when I was part of a broad-scale rollout of SAP at the manufacturing company. We were doing everything—from the finance piece to the sales and distribution piece and across the board. Everything, from the 1990s to the 2000s, if you had SAP, it was going to be SAP. And I mean you were going to force everything you could into that technology because you spent millions of dollars on it.
The same thing happened with Oracle and IBM. But as companies come together, what we’re seeing and what I’ve been watching very closely for the last few years, is that there are huge gaps in process and functionality around managing suppliers, linkages between what I’m buying there from a customer perspective, and what I’m including in my products and selling. And contracts are very close-linked to that.
As we look at the marketplace say in the last five, six, seven years, it just seems that organizations are getting tired and fed up. They’ve gotten more autonomy with SaaS since it became widely available and accepted in the marketplace, so now they don’t have to rely on the IT world to provide them solutions. Just like sales did five, ten years ago, procurement’s now realizing that, “We don’t have to be stuck with these systems that are hard to use, inflexible, unconfigurable and just don’t do the job for us.” There are more flexible technologies out there that will integrate with existing technologies—whether it be SAP, Oracle, or whatever—that will allow procurement to manage spend, link to contracts, and then drive user adoption and data across the board from a product perspective.
Trying to take the big, clunky products and make them work is just too expensive; it just takes too long and they’re stuck in an on-premise world that is being left behind with the innovations happening in SaaS today.
So they’re now looking at smaller vendors, not necessarily boutique vendors, but vendors that can offer full functionality across the board to manage suppliers, to manage both the sell- and buy-side of the contract across the organization. As we look at this, it’s amazing to me to see organizations that are finally waking up to the fact that there’s new technology available that can help them do their jobs better, faster, and save them a lot of money in the process. I think that shift in power has gone from IT to the lines of business like procurement, just as it moved from IT to sales in CRM. It’s a very similar dynamic that’s occurring, and I think it’s going to continue to happen as the years move forward.
AB: Yeah, I definitely agree with you there. As we look out at 2015, what are the strategies, processes, the technologies, the drivers that are going to get procurement to that next level of performance?
PS: Sure, so I think the old concept of purchasing, or the procurement function, is evolving at an exponential rate. The whole concept around supplier management is focused on the next level of functionality. What businesses want to look at, and it’s all tied to spend actually, is what they’re spending and how they’re spending and the impact the supplier is having as part of managing costs combined with risk as part of cost avoidance. You can now take that to the next level, and where it is managed. What kind of discounts should I be getting? Are we applying the obligations that were set forth by supplier and the customers?
That’s where the real contract lifecycle management piece comes in—being able to manage inside a living document. For years and years—and I’ve talked to many, many large customers of Selectica as well as prospects about this—contracts literally are just signed and thrown into a file cabinet, never to be seen again, even today. There’s an assumption that someone is tracking that spend, but who asks, “Are we getting that true value of the relationship that we’re supposed to be getting?” The fact is that they’re not and no one is asking.
With the technology we have at Selectica, understanding the components of a contract is built into the DNA of our solution through metadata—we know contracts are living things and they are not done at point of execution. For example, one client told us that other CLM solutions treat contracts like documents, whereas we look at a contract as the sum of its parts—from workflow to clauses/terms to fields to templates. In fact, he mentioned we are the only vendor who treats contracts this way, and he told us it’s a significant advantage because we can report on redlines by clause and clause usage.
Also applying technology to the process and linking it specifically to supplier spend is an absolutely huge concept for people. I mean, there are millions and millions of dollars that can be captured as a result of this. In fact, there was a story in Forbes not too long ago about a large, big box retail chain, where the CPO literally was forecasting a big spend on a certain product and was off by a billion dollars because of a contract change at a very low level. He went by units versus by the actual spend, and it ended up costing him his job because it was such a mess.
That’s a grand example, but it happens every single day at the lower level—whether you’re buying widgets or products to go into direct spend, or office supplies through catalogs, and all those things. So again, the total linkage between CLM, or now what’s being referred to as ECLM across the enterprise, is more important than having five or six disparate small contract management systems or none at all. In an ideal world, we need one system that has that linkage between suppliers and customers across the board.
AB: Yeah, that’s great. Do you have any final thoughts?
PS: When you look at supplier segmentation, engagement, governance, compliance and risk—all of this comes into play right now.
I think before, procurement was purely looked at as an organization whose mission was, “How can I beat up this vendor to get the most out of it?” Then there was a time for a while where strategic sourcing came in, and then people said, “Let’s just go with one vendor and we’ll buy lots of products from that one vendor.”
That was a key thing, looking at it more strategically. But the fact of the matter is, when you look at the whole engagement with the supplier, you need to ask if they are up to spend, if there is risk, if there are things that we’re not considering. I think the whole risk aspect of this, often times, is not covered on the procurement side, where in fact they are just looking at pure spend—the amount of dollars that are coming in to and going out of the organization. But in fact, they’re now going to take on the function and opportunity to bring in technology to help manage this; they’re also taking on that risk, as well.
Also, with suppliers being more diverse—if you look across where we buy things, we need to know what’s in that thing that we’re buying—if Conflict Minerals for instance, are bought from Congo or bordering countries that are unacceptable or have quality issues (e.g., RoHs v. Reach), or that are from questionable dealings with suppliers (e.g., Foreign Corrupt Practices, UK anti-bribery), or whatever the case may be. We have to be aware of all that. Tools are available now to help manage that whole process of the suppliers. We’re not just buying some products or services to go into ours, we have to know where they came from and what happened to them, all the way to how they end up. So there are cost and risk opportunities that can be mitigated.
Again, across the whole board, the main theme of this strategic approach to where companies are headed is being able to have a handle on what we’re buying, where we’re buying it from, and how we’re buying it. So, there really is opportunity from a cost savings standpoint; there’s revenue opportunity if we’re buying the right products; and of course, the risk and compliance aspect plays into this, as well.
So, where before, maybe just the General Counsel or Chief Compliance Officer might be worried about risk, everybody’s now worried about risk including the procurement level, especially when you’re buying directly. So, again, the whole world is changing in procurement—it’s becoming strategic, but strategic in a different way. The good news is that technology can be deployed to help manage that process.
AB: Yeah, great—that’s a great exclamation point on the discussion here. Thanks so much for your time today!
PS: It was my pleasure, Andrew.