To kick off 2013, I’ve discussed trends and predictions (Big Data, Globalization, and Technology) and the Hot Button Issues for Chief Procurement Officers in 2013. To close out the series (and before we begin reviewing the key findings of our CPO Rising: Keeping Score report on Tuesday), I wanted to introduce a few of the hot topics that will capture the imagination of many Chief Procurement Officers in 2013 as these topics begin to shape strategy and impact performance in the near term while also looming as major factors/considerations in the years ahead.
Hot Topic #1: The Social Supply Chain
The technological advances in personal communication, interaction, and collaboration have started to slowly spill over into the business world and the potential impact is extraordinary. Within the enterprise, solutions from social business suite providers like Jive and Yammer are causing companies to rethink many traditional business processes and functions. Procurement and supply chain are not at the top of that list, but they belong on it. There are numerous potential uses for social/collaborative technology to drive specific supply management processes including a more collaborative sourcing process and more robust supplier performance management. Social/collaborative technology can also improve the general activities of managing a large department that are important for leaders like Chief Procurement Officers – especially areas that can improve and streamline training and knowledge management that can in turn improve staff capabilities (See Hot Button Issue #1).
There is a huge opportunity for supply management solution providers to offer “social” capabilities within their solutions – either through their own product development or just as likely, via a technology partnership or acquisition. Concur, a leader in travel and expense management, is one company that has been making bold strides in this area, ever since it acquired TripIt, a few years ago. CPOs should make sure that their teams are keeping abreast of these developments, who is bringing them to market and how other procurement departments are utilizing them (They can also visit CPO Rising since this is one “hot topic” we’ll be covering in 2013).
Hot Topic #2: Networks and the Network Effect
Network Effect, wikipedia entry:
In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it.[citation needed]
The classic example is the telephone. The more people own telephones, the more valuable the telephone is to each owner. This creates a positive externality because a user may purchase a telephone without intending to create value for other users, but does so in any case. Online social networks work in the same way, with sites like Twitter, Facebook, and Google+ becoming more useful as more users join.
The expression “network effect” is applied most commonly to positive network externalities as in the case of the telephone. Negative network externalities can also occur, where more users make a product less valuable, but are more commonly referred to as “congestion” (as in traffic congestion or network congestion). Over time, positive network effects can create a bandwagon effect as the network becomes more valuable and more people join, in a positive feedback loop.
Business networks have gained significant attention from a wide range of constituencies across the global supply chain – certainly more buyers than ever are leveraging business networks to find trading partners, then collaborate and trade with them. More and more suppliers are also leveraging business networks as a sales channel. Networks have had strong momentum for the past few years and this will only continue to accelerate. While some of the networks have begun to see a true network effect, business networks are not universally adopted – making the growth potential significant and the expansion potential of benefits from the network effect exponential. CPOs should make sure that their teams keep abreast of business networks to track and understand how they continue to grow and evolve.
Hot Topic #3 – Mobility
Cloud (or On-Demand or SaaS) technology has been around since well before the first eProcurement and eSourcing solutions hit the market in the 1990s. But, it took some time before it was able to gain real traction within procurement departments. Mobility solutions, which enable users to access and use enterprise solutions without concern for time or location, are beginning to remind me of the early cloud years, where at least some offerings were ahead of the market’s needs. When the next employee computing shift occurs and we move from laptops to some new platform, mobility will assuredly play a major role in driving value and ensuring that the new platform is a worthwhile investment. CPOs should make sure that their teams keep abreast of any shifts in their company’s computing strategy (and any accompanying change to software requirements) and the emergence of mobility within the supply management space.
