Did you miss Ardent Partners’ recent webinar, Scale New Heights: Improve Performance by Optimizing Your Procurement Technology, that shed light on reaching the next level of procurement performance by building a plan to get the most out of your team and technology? Adding new technology, such as IM&PPO, can help drive more value from existing procurement solutions or get procurement leaders started with the right foundation.
Moderated by Ardent Partners’ Andrew Bartolini, the session featured industry experts, Magnus Bergfors, VP of Research at Ardent Partners, and Nick Heinzmann, Head of Research at Zip, who explored how ProcureTech is significantly improving the performance of procurement organizations.
In this two-part series, we provide some of the webcast highlights and this link to the full event.
Let’s begin with Part One and the key takeaways around how procurement technology has improved spend management, but traditional systems continue to struggle with modern, complex categories, leaving significant spend unmanaged. The emergence of Intake Management and Procurement Process Orchestration (IM&PPO) solutions addresses these challenges by integrating with existing systems, enhancing user accessibility, and improving procurement efficiency through automation and workflow-driven processes.
Limitations of Traditional Procurement Systems
Procurement technology, often referred to as ProcureTech, has significantly improved the performance of procurement organizations. Over the last two decades, Arden Partners has tracked key procurement metrics, with spend under management (SUM) being a crucial indicator of procurement success. However, SUM has plateaued at around 60%-65%, leaving a significant portion of spend unmanaged, resulting in lost savings opportunities, compliance issues, and increased risks.
While organizations have successfully managed easily catalogable and commoditized spend, challenges remain in controlling distributed categories like IT, professional services, and marketing. Traditional procurement systems, built in the early 2000s, are largely catalog-centric and struggle to accommodate modern procurement needs such as digital services and complex spend categories.
Procurement processes that are cumbersome or require users to relinquish control often lead to bypassing procurement entirely. To address this, organizations are turning to solutions that capture spend upstream, enabling procurement teams to better track and manage spending.
IM&PPO Addresses System Complexity and User Adoption
Technology has played a critical role in reaching the 60% SUM threshold, as manual processes alone would have resulted in even lower control levels. However, to push SUM to 90%-95%, further technological advancements are necessary. Automation is key, as it reduces manual workloads and allows procurement professionals to focus on strategic tasks like stakeholder engagement, category strategy development, and decision support.
One major obstacle to technology adoption is the complexity of procurement systems. Many existing solutions require specialized knowledge and involve cumbersome manual data transfers. Additionally, evolving regulations, new risks, and changing approval requirements make it difficult to adapt legacy tools quickly. Organizations often rely on solution providers for changes, leading to inefficiencies.
A new category of procurement technology, known as Intake Management and Procurement Process Orchestration (IM&PPO), has emerged to address these challenges. These solutions offer an intuitive user interface and workflow-driven guidance, making procurement processes more accessible to end-users. IM&PPO solutions also facilitate data synchronization across multiple systems, ensuring the right information is available at the right time.
Beyond procurement, PPO extends into IT, security, legal, and risk management functions. Many procurement activities intersect with these departments, but procurement teams often lack full visibility into the entire process. By providing a holistic view of procurement workflows, orchestration solutions drive better process adoption and spend management.
Evolution of IM&PPO into S2P
Procurement technology saw significant innovation during the dot-com era, with the introduction of eSourcing, marketplaces, and contract management solutions. However, progress stagnated for nearly two decades, focusing mostly on UI improvements and solution consolidation. The recent rise of IM&PPO solutions has reinvigorated innovation in the procurement technology space.
IM&PPO solutions integrate with existing procurement technologies rather than replacing them. Initially, they functioned as a wrapper around current investments, streamlining usage and increasing SUM. However, these solutions are now evolving in two directions: some are incorporating traditional source-to-pay (S2P) functions, while others are focusing solely on orchestration and intake management.
This shift challenges traditional S2P providers, many of whom are now integrating IM&PPO functions into their solutions. However, there are key differences between S2P suites that add IM&PPO functions and IM&PPO solutions that expand into S2P. Source-to-Pay suites are primarily built for procurement professionals, making them complex for end-users. They also function within their ecosystems, making integrations with external processes and systems challenging. Additionally, many S2P suites struggle with accommodating all spend categories, especially those with unique or specialized requirements.
Conversely, IM&PPO solutions serve as platforms that provide a unified user interface, enabling seamless integration with various procurement and non-procurement applications. This approach enhances process visibility, simplifies user interactions, and facilitates coordination across multiple departments. While IM&PPO solutions may not match the depth of traditional S2P suites in certain areas, they offer greater flexibility and adaptability, which are crucial for modern procurement organizations.
The evolution of IM&PPO solutions reflects a broader shift toward integrated, user-friendly, and adaptable procurement platforms. By serving as the infrastructure for procurement operations, these solutions help organizations streamline workflows, improve spend visibility, and achieve higher SUM levels. As procurement continues to evolve, adopting these next-generation technologies will be critical for organizations seeking to enhance efficiency, reduce risks, and optimize procurement performance.
Next week in Part Two, we’ll explore optimizing value with IM&PPO solutions, along with strategies and use-case examples.
