We’ve written about intake management and procurement process orchestration (IM&PPO) a couple of times previously. It’s certainly a topic and solution set that is gathering a lot of interest from procurement organizations, investors, and consultants alike. In this week’s article, we will take a look at one of the key players in this space — Zip.
Company Background
Zip was founded in 2020 by Rujul Zaparde (CEO) and Lu Cheng (CTO). The duo met at Airbnb, where they were working in product management and engineering, respectively. The company is founded on the premise that existing enterprise procurement solutions don’t adequately address the complexity of procurement processes in enterprises. Zip aims to address this growing complexity by simplifying how requesters and stakeholders collaborate with procurement teams, as well as streamlining procurement operations via its no-code orchestration platform. The idea is to ensure that employees don’t need to navigate complex purchasing processes on their own, reducing the likelihood of rogue buying (buying outside of policy).
Zip has already achieved unicorn status with a valuation of $1.5 billion and has raised $181 million. Combined with winning substantial business (now over 350 customers), it enabled rapid growth — Zip now has over 250 employees with offices in San Francisco, Dallas, and Toronto. Although the majority of its clients are in the U.S. and Canada, Zip is starting to expand into EMEA and has won a sizable number of deals in the region as well as establishing U.K.-based sales and support teams to serve those customers.
Solution Offering
Zip offers its intake and procurement process orchestration platform as a modular solution. Companies access the underlying orchestration platform (e.g., workflows, integrations, analytics, Zip AI) and apply different use cases depending on their needs. For complex environments, many companies opt to begin with intake management (intake-to-procure) to orchestrate requests, vendor onboarding, and approvals across their current tech stack. Depending on their needs, however, Zip can extend to other S2P areas with natively built modules for vendor management (inclusive of some basic contract management), procure-to-pay, AP automation, and sourcing.
If we start with intake management (intake-to-procure), this is basically what you need if you already have a P2P system or an ERP that can handle the PO and AP processes. The intake step is the entry point for any type of request. The user chooses from a predefined type of request (request a purchase, onboard supplier, request NDA, and so on) with associated workflows that ensure that the right information is captured. The approval workflows are configurable and can be conditional, providing transparency into the progress of the request. To complete the process orchestration is needed. This means the ability to integrate and transfer the necessary data and instructions to the systems needed for execution of the final steps in the P2P process., To facilitate this, Zip offers an extensive set of pre-built connectors but also supports open API and flat file integration alongside a more recently released proprietary integration-platform-as-a-service (iPaaS) solution. Zip has also developed several complementary S2P capabilities that support the IM&PPO process and improve the user experience.
While not a full substitute for more advanced specialist solutions, Zip offers:
- Vendor management capabilities that can provide a single source of supplier data and associated documents (e.g., contracts, SOC II reports).
- Renewal management capabilities to keep track of contracts and agreements that are about to expire and, if necessary, kick off a renewal or offboarding request.
- Spend insight and reporting capabilities to support basic spend visibility. It allows for reporting on existing data, and if the IM forms are set up in a way to capture spend categories, it can serve as a basic spend analytics tool — although it lacks, for example, spend classification capabilities.
If a company doesn’t have a P2P system or ERP system with P2P capabilities, Zip offers PO management, AP automation, and global payments within its own P2P solution. The PO management supports punch-out catalogs and marketplaces (e.g., Amazon Business) but currently lacks support for hosted catalogs. While Ardent Partners has not yet analyzed the AP and global payments offerings, they seem fairly robust. However, at this time, are not suitable for more complex environments and invoices that are not related to requests and POs raised in Zip.
In the fall of 2023, Zip continued to build out complementary S2P capabilities and released a sourcing module. Ardent Partners has only seen a recorded demo, but it appears to be a fairly comprehensive, albeit basic, sourcing solution that emphasizes ease of use and collaboration. A clear strength is the integration into the request process that enables an audit trail and transparency for the requestor. E-auctions, while not currently supported, are on the roadmap.
Zip’s initial customer base, like many upstarts in procurement tech, centered on the SMB market. But its IM&PPO offering makes just as much, if not more, sense for larger organizations that often end up with a complex system landscape that is hard for end users to make sense of. These types of companies are starting to realize this, and Zip is increasingly moving upmarket and is more than capable of supporting Fortune 500 businesses as it does with Discover and Northwestern Mutual.
But, larger, and especially more regulated, companies have higher requirements when it comes to auditability and user management. Zip Premier, the company’s latest release, is its offering for these more complex and/or regulated businesses, featuring more granular permission and user controls, more comprehensive audit trails, and improved integration control and monitoring functionality.
Challenges and Opportunities
The opportunity is clear for Zip: P2P and S2P solutions have been around for quite some time, and while there are examples of successful implementations with good adoption, there are many more examples of only partly successful or even completely unsuccessful implementations. Zip’s IM&PPO capabilities can breathe new life into these solutions and improve overall adoption (and ROI) drastically. Improving the user experience and making life easier for the end user should always be top of mind for the CPO.
But Zip (and in fairness, any other IM&PPO provider) at some point must decide if it will build out full S2P capabilities on its own, focus on IM&PPO, or find some sort of hybrid approach. Historically we’ve seen many solution providers expand their solution sets to target a larger addressable market to defend or justify higher valuations by investors. The risk is that resources are spread too thin and the competitive differentiators are lost. However, Zip’s growth and funding gives it room to continue investing in R&D resources to hopefully avoid this.
Another challenge that could arise is that of indirect usage. A couple of years back, as standalone P2P and S2P providers had great success, the ERP providers started charging clients using these standalone P2P/S2P solutions on top of the ERPs with indirect charges. The logic was (is) that the ERP customers were using third-party systems that interacted with the ERP system without having appropriate licenses (i.e., not everyone in an organization that uses the P2P solution has an ERP license). If the IM&PPO market grows, we could see similar arguments arise again. But if that happens, and Zip continues to deepen its S2P capabilities, it could also be an opportunity as clients are incentivized to pick one or the other solution in this type of scenario.
Summary
Zip is addressing a very real problem. Many organizations struggle with rogue buying and buyers going outside of approved processes and policies just because they either don’t know how to buy or they are frustrated with existing solutions. This problem is squarely addressed by presenting end users with one entry point regardless of what they need and then building in compliance and correct approvals in the process automatically.
Any organization, small to multinational, struggling with the adoption of existing procurement tools should definitely check out Zip. The same goes for smaller or midsized companies starting their S2P digitalization journeys. And based on Zip’s trajectory, the existing S2P vendors need to start looking over their shoulders even in enterprise S2P deals.
As always, if you want to know more about Zip or any other IM&PPO vendor, Ardent Partners is here to help. Don’t hesitate to reach out.
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