I see lots of congratulatory posts on social media about various procurement technology companies that have made the 50 To Know, the 50 To Watch and ProcureTech 100 lists. This is an annual occurrence.
First of all, my congratulations to all of the procurement tech companies out there that have made those lists. I don’t detract from the hard work necessary to achieve recognition in the industry.
However, I want to help senior procurement leaders to really understand what research sits behind these lists, specifically:
- How are they made up?
- What are the criteria that goes into the decision process behind what is published?
- And where are some of the pros and cons of how they’re put together?
Because, at the end of the day, you need to understand to what extent these lists are useful to you. Where are their flaws? Where can they fall short, in terms of enabling you to make a decision about what technology is best for you and your business?
How reliable are “best of” lists such as 50 To Know / Watch and ProcureTech 100?
There’s a lot of research that goes into producing these lists. So, this article will help guide you through:
- How the research is put together
- Who specifically the awards are aimed at
- What’s missing, or given scant consideration, in the analysis and evaluation?
Let’s start with Spend Matters. They are, of course, a very well-known name to anyone in the procurement space, and a part of a larger parent company Azul Partners. Founded by Jason Busch in 2004, they were the first of the major procurement and supply chain blogs.
Their focus on procurement software solutions began in earnest in 2014, when they first published the 50 To Know and 50 To Watch lists. Now in their eighth year, these lists have grown to be the “go to” research out there in terms of analysis and content in the digital procurement space.
The Spend Matters Almanac and Solution Map
So let’s have a look at what’s behind 50 To Know and 50 To Watch.
The Spend Matters Almanac is a wider directory of procurement software companies.
Feeding into that Almanac is what’s called the Spend Matters Solution Map. This is an interactive Solutions Finder, where the user can essentially select a comparison of different types of procurement software based on a bunch of different criteria and buying personas.
It then spits out a list of different solutions that may be suitable for that given user. Spend Matters understandably has a pretty big analyst team to crunch all of this data and they have a huge back catalogue of content and analysis to draw from in putting all of this together.
In their Almanac there are 23 different categories. Not all of them are focused on software itself. There are a few consulting training membership organisations included in there too. But ultimately, this is the source of which companies are on the radar for the lists.
If you don’t have an entry in the Almanac, you’re not going to be considered for the 50 To Know and 50 to Watch awards.
From over 500 Solutions Providers to 50 To Know and 50 To Watch
So how do they get from the Almanac – a large database of over 500 solutions – to the 50 To Know and the 50 To Watch lists? Well, if I take a quote directly from Spend Matters website:
“The annual 50 providers to know and 50 providers to watch lists are determined by the entire Spend Matters analyst team to represent the best of the commercial providers that serve enterprise level procurement organisations.”
I emphasise the words “enterprise level”, and I will come back to that later because I think that’s a very important distinction to be aware of. It goes on to say:
“We did not include brand new startups with only a few employees who are piloting some minimum viable products. We track over a dozen of them right now and are working on highlighting them in the near future.”
And indeed, this year they’ve published a new list, called The Future 5, which does include some new up and coming rapidly growing startups. I’ll revisit this a little bit later.
So there’s an acknowledgement from Spend Matters themselves that they’re very much focusing here on enterprise level solutions. Importantly, they also stipulate that it is not sponsored content.
They have an RFI process they call “participate to play”. So in other words, the providers that want to be part of the list have to go through a pretty rigorous process with Spend Matters to put this analysis and this research together. But they categorically state that none of this is sponsored content or “pay to play”. Credit to Spend Matters here on their transparency and making that clear on their website.
What that does mean, however, is that if a provider decides not to go through the participation criteria, then they won’t be included on either of the lists.
Spend Matters also acknowledges that there are solutions out there who may be worthy of making the lists but did not agree to the participation process and as such, won’t be considered.
As a starting point, Spend Matters takes the 50 To Know and the 50 To Watch lists from the previous year. Their analysts then review those lists to determine which providers no longer meet the criteria, as well as adding those providers who are in the frame to step up and be included in the current year’s analysis.
Just as in most areas of business, some previously great solutions tend to lose their way, and new companies enter the market to challenge them. So it’s a constantly evolving flow. That is reflective of the 50 To Watch list seeing quite a big turnover from year to year, in terms of the different solutions that make that list.
What’s the difference between 50 To Know and 50 To Watch?
Let’s start off with 50 To Know. These are the companies that Spend Matters recognises as “best in class in the procurement and supply chain technology market”.
They focus on key criteria such as:
- Market presence
- Tech competency
- Solution delivery
These are, in the opinion of Spend Matters, the 50 most established companies which form the cornerstone of technology that enterprise level procurement teams should be aware of.
However, a lot of these companies are not what I would consider to be pure play procurement tech companies. The 50 To Know list includes all of the major enterprise level suites that most of you will have heard of. But there are other well established software companies in there that touch on the procurement and supply chain space but don’t necessarily have it as their core focus. As an example, there are companies on the list whose main focus is cross border payments, financial risk, fraud detection and tax compliance.
This is reflective of the fact that Spend Matters’ focus is on enterprise level procurement organisations. If you’re a CPO of a Fortune 500 company, then you’re going to be looking at solutions that are beyond pure play procurement technology. Your role requires you to satisfy the needs of the wider business for everything that touches procurement, payments, risk management, CSR and everything else out there that needs to be looked at from a digitisation perspective.
I would say that only around a fifth of the solutions in the 50 To Know list could be considered pure play procurement technology solutions. So, if you’re a procurement leader of a smaller company, starting from the beginning and trying to broaden your knowledge of what is out there as best-of-breed, pure play procurement SaaS, the 50 To Know list isn’t the best starting point for you.
This is a nice segue onto the 50 To Watch list. In comparison to the 50 To Know list, I personally see this ecosystem as much more aligned to best-of-breed procurement technology solutions. Indeed, some of the providers that appear on the 50 To Watch are actually previous guests I’ve interviewed on The Procuretech Podcast.
So, if you’re starting out on your digital journey as part of your procurement centre of excellence and are looking for a broad overview of companies offering cloud based procurement solutions, I would skip the 50 To Know list and go straight to the 50 To Watch. Here is where you’ll strike gold in terms of solutions that can help you, especially if you’re not seeking complex software aimed at Fortune 500 companies.
This list is where the key providers are listed that you should really be aware of, if your team is perhaps at the very beginning of a digital transformation journey.
For example, if you’re in charge of procurement or digital transformation for a €/$ 50 million up to €/$ 1 billion annual turnover company, in my opinion 50 To Watch is much more relevant. I would say around two-thirds of the list is made up of what I would consider to be best-of-breed, top procurement software tools that could be interesting to you. Depending, of course, on what the biggest challenges and pain points are that you’re looking to solve with digital transformation. But that’s another question entirely!
The Future 5
Since 2019, Spend Matters have also published what they call the Future 5. And this is really the part that gets me excited, as a bit of a procurement tech nerd, because this is where they feature up and coming startups that are really making a splash in this space. According to Spend Matters, the Future 5 is made up of:
“Companies that are less than five years old, with ideally less than two years in the market. Since official product launch, they have at least five customers. They’re an innovative, interesting application of technology, maintaining a clear momentum and sustainability, with less than $10 million in annual revenue.”
I’m very excited to see how this feature develops and how Spend Matters build this out over time. These companies are the ones to keep an eye on because they are high growth and are really gaining momentum. I really like that they’re starting to highlight these, because I think there’s a gap in the market (which I certainly try to fill on The Procuretech Podcast). Highlighting companies that are growing and have really interesting concepts with the solutions they’re building and developing is much welcomed.
Let’s now turn our attention to the new kid on the block: the ProcureTech 100. This is a new platform founded in 2020 by CEO Lance Younger, based in London. They’re a new business and are still developing and expanding their services. Nonetheless, they have a prominent collaboration announced with Kearney, and the ebook version of the ProcureTech 100 has been sponsored by IBM.
ProcureTech 100 was announced as a curated list of best procurement software companies for the very first time in October 2021. ProcureTech claims on their website that these 100 were selected from research of over 4,000 digital procurement solutions. Now, I’m personally not convinced that there are actually 4,000 procurement software vendors out there. For what it’s worth, I’d say there are 500 at most, depending on how you define them.
Anyhow, the shortlist was selected using what they call a statistical analysis of over 40 key data points, including:
- Customer, financial and employee data
This shortlist was then taken to a panel of over 60 experts. Who these experts are is prominently and transparently shown on their website. They appear to be a mixture of practitioners, consultants, former CEOs and venture capital firms, as well as procurement services providers. So there’s a pretty balanced mix in terms of who’s putting together the analysis and shortlist to come up with the final 100.
However, after this, the trail goes a little cold for me. It’s not really clear from their website how they’ve actually got this shortlist down to the 100 they’ve selected. Even the explanation on their FAQ page is a little vague. Have a read and make up your own mind up. Lance did personally answer me after I published the original podcast to confirm that it is not a “pay-to-play” business model.
So let’s have a look at who’s in the ProcureTech 100 list.
Well, first of all, it’s dominated by a large number of enterprise level suites. These are the kind of names that don’t exactly inspire enthusiasm when you talk to the average procurement professional actually using this software day in, day out. If user experience wasn’t considered as part of the selection criteria, that’s probably why.
Similar to the 50 To Know, there are also a lot of providers in here that I would not consider to be exclusively procurement technology companies.
From what I can gather so far, it seems to be a bit of a mish-mash between pure play digital procurement transformation solutions, enterprise level procurement software suites, as well as other solutions out there that are not pure play procuretech. This is especially the case for some solutions that have experienced rapid growth since early 2020.
I’m sure this list will evolve and grow over the years. As things stand now, I suspect ProcureTech’s business model is very much focused on enterprise procurement teams, similar to Spend Matters.
Just as is the case with 50 To Know, if you’re a procurement leader, CFO or digital transformation expert for a mid market company, I would perhaps question the usefulness of this list as a basis to commence RFI activities.
What should you be considering that these lists don’t consider?
Now, let’s try to draw some conclusions and take a look at the limitations of this research and the 3 lists.
- What do I feel you need to consider in addition to the lists, as you put together a strategy and get clarity of what your organisation needs to solve the specific challenges that you want to resolve through a digital procurement transformation program?
- What do I feel are the most important features I want to get from the latest technology in procurement management?
- And where do I feel the missing pieces are from a lot of this analysis?
I’m a pretty simple guy. I hate complexity for the sake of it.
For me, the overarching objective is to ensure that any software implemented into an organisation to drive procurement excellence is well adopted by the stakeholders who need to regularly use it. And this is where I see flaws in all of these different analyses and lists. There is very little focus on user experience or user interface, and they don’t really seem to touch on ease of implementation.
There doesn’t seem to be any analysis around implementation time or cost. This is a huge factor, especially in non-enterprise level organisations. The difference between a 1 or 2 day implementation versus complex technology that requires over a year to plan, implement and execute is huge, both in terms of resources as well as consultancy costs and estimated payback time for the project.
Using a tech stack that can be very quickly implemented and up and running can give you payback and results almost immediately. This is a huge competitive advantage that simply cannot and should not be ignored.
These lists also don’t touch on how much training is required for stakeholders and practitioners to proficiently use the software. Indeed, it doesn’t really seem to analyse the level of complexity of the software versus the ease of use at all. I’m firmly in the camp of sacrificing features to create something easier and more intuitive to use. It facilitates easier adoption and acceptance of new tools within an organisation, especially amongst more sceptical or technophobic stakeholders within a business.
A very feature rich and complex piece of software can take months, or even years of planning to implement. And let’s face it, if you’re a relatively small procurement organisation in the mid-market, you’re simply not going to have the resources to be able to make that type of digital transformation a success.
What does your business ACTUALLY need?
I would therefore encourage you to take a step back when you’re reviewing these lists and consider who they are aimed at.
Large teams in enterprise level organisations have the budget, resources and IT consulting to be able to go in and perform a complete end-to-end transformation. That’s great, but what if you’re a mid-market company with a limited amount of IT infrastructure and a lean procurement team?
Then I would really advise you to start asking these questions:
- What is it that we actually need to solve our current challenges? e.g. an easy-to-use requisitioning process to stop stakeholders using personal expenses to buy stuff
- Where do we start?
- What is the end goal that we want to achieve? e.g. reduce maverick spend, simplify vendor lifecycle management?
- What level of complexity can my organisation handle to be able to successfully implement the best procurement software that can solve the most essential and the most painful challenges of the business?
Because every business is by its nature and specific challenges different. For example, if 80% of your spend is on direct materials from a handful of suppliers, then you probably don’t need an end-to-end Contract Lifecycle Management suite. Likewise, if you’re spending a lot of time and resources on tail spend, you may not need a complex e-sourcing tool with lots of features.
My advice to you would therefore be to look holistically at your business. Try to ascertain what the biggest challenge is that digitalisation of procurement could potentially solve for you.
What’s the itch that you urgently need to scratch? Do you want something simple that can be digitised within a few days? Or are you willing to spend more time on the planning phase, implementation and the IT infrastructure? It may take much longer to execute end-to-end, but then you’ll have a much more holistic vision of your complete digital journey.
Do you want agility and simplicity?
Or do you want features and complexity to solve a wide range of issues and challenges?
If it’s the former, and you want something that’s easy to use, implement, and maintain in the interests of operational efficiency, then give your team and your stakeholders software that’s simple and agile. Find a solution that can easily be implemented within days and weeks rather than months and years.
If you’re planning a digital transformation two years out, and are looking at having a very complex solution that will completely digitise your end to end process, that’s fine. Be aware, however, that this is a rapidly changing market. What you’re planning to put in place now is going to be vastly different from what’s out there on the marketplace by the time you actually come to implement it.
I genuinely believe that unless you’re a multi billion $/€ corporation, investing in an enterprise level suite is unnecessary and is not the best solution for your business.
You can solve the vast majority of your problems and challenges by using best-of-breed solutions that are affordable, agile, easy to implement within your existing IT ecosystem. Thanks to APIs, they can communicate with other best-of-breed solutions. Of course, there is a limit to how many different applications you can have. 20 of them likely won’t all work together.
Go back to basics, and let us help you!
The point I’m making here is this: are the solutions put on a pedestal by these “best of” lists really best suited to your business? Or do you need something designed with simplicity in mind, that can solve a large portion of your challenges but admittedly maybe not every single issue?
This approach will ensure your digitalisation strategy is executed a lot faster, with less complexity in the planning phase, less external consultancy requirements, and certainly with less budget.
If you’re struggling to understand what’s out there in the digital procurement marketplace, do reach out to me. I would love to have a conversation. I’ve spent a lot of time researching and investigating to understand what solutions exist, as well as interviewing procurement software founders and CEOs for my podcast. I can help you navigate through the sea of complexity.