1Market Update October 2017Procurement & Spend ManagementInsiderSPRING 2018Andrew Daley, Simon Edbury, Peter Brophy and Sharmina August

2Market Update Spring 2018



Edbury Daley“NOT ALL PROFESSIONAL MARKETS IN THE UK AREENJOYING POSITIVE MARKET CONDITIONS”INTRODUCTIONOur previous edition of this report published in October 2017painted a mixed picture of recruitment market conditions forprocurement and spend management in Europe. In particular,the UK was in a period of political and economic transition.In this report we offer:Whilst such conditions still remain in many respects withthe rate of UK GDP growth slowing at a time when others areaccelerating, this latest edition of the Procurement and SpendManagement Insider reports stronger market conditions,increased demand for certain key skill sets and considers someopportunities for the evolution of the procurement profession. The impact on the evolution of the procurement skill set.Not all professional markets in the UK are enjoying positivemarket conditions, but with a number of global economicindicators available to encourage those of an optimisticoutlook, it’s pleasing for us to report increased activity in ourcore markets since the last report.GDP Growth 2017Germany2.5%Benelux2.4%United States2.3%France2.0%United Kingdom1.8%Source: A commentary on the developments in each of ourcore markets supported by our observations on the trends. The opportunities for procurement to move on further froma savings dominated focus and the skills required to do so. Contributions from senior industry professionals on thesesubjects.5


Edbury Daley“THERE HAVE ALSO BEEN SIGNIFICANT CHANGESIN OWNERSHIP IN THE SECTOR”ALL CHANGE AT SOME OF THE LEADINGPLAYERS AND WHAT’S HAPPENED RECENTLYLEADERSHIP CHANGE AT SAP ARIBA EMEAThe headline news in the sector is that Paul Devlin, EMEA GeneralManager of SAP Ariba left the business just before Easter. Devlinis a highly respected leader with a strong sales background andgreat passion for working closely with his customers. He was akey part of the growth of Ariba in Europe since the SAP acquisitionand will be a significant loss to the business.His move to Edenhouse keeps him firmly in the SAP Ecosystemand it will be interesting to see if they enter the Ariba marketunder his influence to supplement their strengths in SAP andspecifically Success Factors.However, the business has moved to restructure the salesfunction under new global leader Pat McCarthy who is highlyregarded, particularly in the US. McCarthy reports into thePresident Barry Padgett who took over after Alex Atberger’s moveto SAP Hybris at the end of 2017.The excellent commercial team assembled by Devlin is part of his legacyto the business, and in former Emptoris stalwart Justin SadlerSmith, the business has a very experienced leader in the UK. Hisbackground will make him the ideal person to leverage the hugepotential of their partnership with IBM on cognitive procurement.fiscal 2018 as the spend management firm turned in its first nonGAAP quarterly profit of 884,000, on revenues up 41% year-onyear to 53.8 million. Subscription revenues were 46.6 million, up38% year-over-year and comprised 87% of total revenue.”CEO Rob Bernshteyn commented: “From a financial perspective,just three short years ago, over 75% of our new subscriptionrevenues came from our core procurement applications. Buttoday, that figure is less than 50%, with more and more comingfrom expense management, invoice management, supplierinformation management, and a host of other key offerings.”Coupa lost an established, well respected European leader inAlex Kleiner last year. Their European Marketing Director CarinaHoogeveen also left, following Alex to Apptus. Both have sinceleft Apptus with Carina joining Icertis, the cloud based contractmanagement business who have been hiring aggressively in theUK in past six months.In our last report we covered the news that long time EuropeanGM Gerard Dahan had left Ivalua to join Determine last September.Ivalua moved to replace him with Franck Lehereux joining fromJDA Software early in 2018.ACQUISITIONS & MERGERSDean Pathak continues to lead Northern Europe with Patrick Hyatileading the southern half of the continent. Both have impressiveteams including a newly appointed Sales Director in France.There have also been significant changes in ownership in the sector,most notably Jaggaer’s acquisition of BravoSolution and what waseffectively a reverse takeover of Perfect Commerce by Proactis.In terms of consulting, implementation and customer success,there has been some senior level restructuring rewarding anumber of high performers with bigger roles.It’s still relatively early days for both newly formed organisations. Therewere a number of departures at BravoSolution in the US shortlyafter the deal was announced but the European businesses arelargely untouched so far in terms of headcount. Given Jaggaer’s relativelysmall presence in Europe prior to the deal, this seems sensible.In summary, SAP Ariba looks as well set to attract and retainboth enterprise and midmarket customers as ever despite thedeparture of Devlin.SHARES RISE AS COUPA HITS PROFITABILITYThere’s also a positive outlook at Coupa where they have reported afirst quarterly profit and a healthy share price which is buckingtrends in US markets weighed down by a potential trade war.Diginomica reported that “Coupa announced a strong end to theirIt will be interesting to observe if there is any further restructuring,redundancies or senior hires, and of course how they intend toalign the various technology offerings now available in bothnewly merged companies.More recently Advanced Solutions acquired Science Warehousefor 16m as part of their ambitions to grow its portfolio of cloudbased solutions. Science Warehouse has an established clientbase which is at its strongest in the UK public sector includingthe NHS and various universities.7


Edbury DaleyOUR ANALYSIS ON THE IMPACT ON RECRUITMENTTRENDS AND WHAT WE EXPECT TO SEE IN 2018This has been a period of significant change in the sector withthese acquisitions and changes in leadership, but the push for morecustomers driven by increasingly powerful software continues.That is resulting in some significant hiring activity.At their recent event, Ivalua Now, the business demonstrateddevelopments in their solution including a move into direct spend thatwill see them compete directly with Ariba. They have also made a numberof hires in sales and delivery roles in recent months in the UK andFrance in particular and the market expectation is for this to continue.Speaking at that event, a director of one high profile consultancy told theaudience that: “90% of implementations in procurement are now cloudbased and in many cases are on the back of finance transformations.”The leading consultancies are still competing hard for the bigprocurement cloud implementation projects as evidenced bytheir presence as sponsors and exhibitors at the Ivaula Nowevent and the likes of SAP Ariba Live and Coupa Inspire.They appear to be enjoying fertile market conditions for theirtransformation consultancy, although we believe they face amajor challenge identifying the people they need to executethese projects given the limited experience of major cloudimplementations available in the UK market.There has already been some aggressive hiring from SAP Aribain Q1 with particular emphasis on attracting some excellentpeople into consulting, implementation, customer success andvalue realisation roles. This offers real evidence of a big investmentfrom Ariba aimed at their hard won clients getting the very bestfrom the solutions. Expect their competitors to follow suit.We anticipate a small amount of hiring in the newly mergedorganisations mentioned above as they assess existing resources,restructure the newly formed organisations, align their respectivetechnology and develop their go to market strategy over thecourse of 2018.Further acquisitions and mergers in the sector are likely given theinformation we receive through our network. The consolidationis offering great career opportunities for some, and uncertaintyfor others.An interesting area where we are seeing an increase in demand forclassic cloud solutions skill sets (sales, account management,implementation and customer success) is from emerging andrelatively new entrants into the market. These are from varyingbackgrounds, most notably in Spend Analytics and Contract Discovery.Typically smaller organisations, these companies offer what theyconsider to be individual best of breed solutions to the broadercapabilities of established players. We’ve already mentioned thatIcertis has significantly increased headcount in the UK in the pastsix months and this is part of a wider trend in Contract Discoveryand Management with businesses like Seal and AnyData Solutionsexperiencing strong demand for their services.Such companies with strong niche offerings in this sector havehistorically been acquired once they reach critical mass on peopleand customers, so no doubt some of the larger platform providersare watching these companies carefully.At the moment they are stimulating demand for the aforementionedskills on the back of increasing sales of their solutions. All of thisincreased hiring is exacerbating the skills shortage in the sectoras the size of the talent pool struggles to keep pace with the growth ofthe technology market overall.It’s interesting to observe the relative sizes of some of the keyplayers in this market based on headcount. At the time ofpublication, here are the approximate headcount numbers inEurope with some breakdown by 818Germany3628151851Benelux36628790Source: LinkedInWe will monitor these figures in future reports as one measureof growth.Companies prioritising their talent attraction strategies and beingcreative with their approach to recruitment are gaining a clearcompetitive advantage, and will continue to do so at the expense ofthose who don’t adapt to these market conditions.This is a message we have made clear through our reports inthe past. It is only growing stronger over time as more andmore organisations become active customers to theprocurement solutions sectors. Our knowledge and experiencein the sector is proving to be of great value to our customerswho face the aforementioned challenges.There is more information to follow on the market forprocurement technology skills in end user organisations in thecorporate procurement section of this report.9


Edbury Daley“MANY ALSO REPORT THAT CLIENTS CURRENTLY VIEW BREXITAS AN INCONVENIENCE AND NOT A MAJOR HURDLE. ”PROCUREMENT CONSULTINGConsulting was generally positive overall in the final part of 2017with many surveys of the broader sector having a positive outlookwith some individual firms being positively bullish about 2018. Thishas continued into the first quarter of the year and whilst wearen’t seeing huge new wins many are doing good business.Often ongoing contract management has been ignored byprocurement teams too busy to manage the relationships dayto day with often significant impact on the commercial valuerealised. Hence the demand for projects of this nature and ofpeople with this skill set has risen.As reported previously procurement outsourcing appears tohave had its day, at least in the private sector where a numberof organisations have not renewed deals and whilst some stilloutsource transactional work, few now see this as a strategicoption. In the Public Sector there still seems to be good businessand a number of ongoing contracts are still in place. It will beinteresting to see how this changes in the future.Cost is increasingly becoming a driver in selecting procurementconsultancies and many clients are paying increasing attentionto what is delivered and by who. One recent example quoted wasthat one of the big four lost a contract due to the costs proposed- particularly where they were utilising junior staff. The potentialclient was not prepared to commit to this level of cost on an ongoing basis. A smaller consultancy was able to do the same workfor about half the price and so were appointed instead.Most consultancies are not overly concerned about Brexit anddo not expect projects to diminish or for clients to tighten theirbelts. In fact, most expect that whatever the final deal, there willbe changes of some kind which will drive business opportunitieswith both existing and new clients.Most do not yet know what opportunities will transpire as theywill most likely be across a range of services from short term helpto possibly major restructuring, dependent on the sector and theimpact created. Many also report that clients currently view Brexitas an inconvenience and not a major hurdle.Another major trend through the year has been that clients areincreasingly looking to get greater value from their existingsuppliers and their broader supply chain. Many more projects arenow linked to bringing fresh energy to SRM and ongoing contractmanagement. In fact many are helping clients to build a strategicSRM capability to ensure they maximise value and particularlywhere there are large outsourced contracts in place (often in IS).GDPR IMPACTGDPR is providing work for a number of consultancies whetherlarge or small. A number of consultancy contacts have mentionedthat they have significant work on short term projects linked toGDPR (not just within procurement).Clients struggling to meet a number of commitments are needingadvice ranging from contractual amendments through to auditingtheir existing contracts or suppliers and working with them toensure the necessary policies and processes are in place.Consultancies seem to be simply putting existing staff in theseprojects seeing it as just another type of project. However, theconsequence is that many are not happy and it is particularlycausing issues with many junior staff who are not enjoying thenature of the work and are beginning to look to move on morequickly than they usually would.11


Edbury Daley“THIS IS IMPACTING ON RECRUITMENT AND AT SENIOR LEVELSTHE SKILLS REQUIREMENT IS CHANGING SIGNIFICANTLY. ”CORPORATE PROCUREMENTPROCUREMENT LEADERSHIPWe have seen a significant rise in the number of senior roles in Q4 2017and Q1 2018 ranging from Procurement and Commercial Directorpositions to Supply Chain Directors and ‘Heads of’ roles. These roleshave been across the UK. The sector where we have seen most of thiswork has been engineering and specialised manufacturingorganisations and some in the FS sector also.The core requirement, whilst still often involving change andtransformation, is a specific focus needed on actual delivery. Acommon theme has been an emphasis on getting the ‘day job done’.Maybe this is the current economic uncertainty but one CFO told us:“Procurement needs to stop transforming and get on and deliver.” Toomuch change maybe?A key focus for Procurement Leaders right now is around value andassurance. Brexit could mean one of two extremes - ‘no change andbusiness as usual’ or ‘a very different economic landscape’. Until thechanges driven by Brexit are clear leaders need to plan for bothpossible outcomes.Procurement needs to show what the art of the possible is and takean intellectual lead where it can. Leaders need to develop aprocurement strategy that anticipates and enables the businessstrategy while also protecting it from supply chain risks in anincreasingly uncertain and more highly regulated environment.Risk and assurance is becoming increasingly important, whethercontractual and pricing risk in the supply chain or reputational andbrand risk in areas such as CSR. Procurement has a critical role inareas like modern slavery, criminal finance and GDPR. This is not costsaving but ‘value’ that is difficult to measure.If we take ethical sourcing / modern slavery as an example, is justhaving a catch all contractual clause (which in effect passes the buckto suppliers) going to protect a brand name? Many senior people willadmit off record that they do not have the time or the resources tomonitor or enforce penalties (if they have any).Business leaders need to have a plan to back the policy - i.e. what arethe consequences and how does the organisation deal with a supplierfailure in this area? Is there an audit plan in place? How will theycollect the data to ensure compliance?This is impacting on recruitment and at senior levels the skillsrequirement is changing significantly. Can this individual deliver whatwe have in place and ensure the broader value in terms of risk andassurance?The people making the biggest impact and securing the best rolesright now are those who can create a message and a compelling caseabout this ‘value’ to the business and how it is quantified bothsubjectively and objectively.The other key need is communication and frankly persistence ingetting stakeholders to fall in line. Reading between the lines mostorganisations still have major issues with compliance to majoragreements. All our senior level roles this year have had significantchallenges around re-engaging a disengaged stakeholder communitywho have their own key priorities where typically procurement isn’tof interest to them at all unless they are about to buy.DIRECTS V INDIRECTS?We are also seeing a switch in focus. Over the last few years manyorganisations were focused on indirects and services as majoropportunities for savings. However, many have now moved pastthe quick win stage.Increasingly the senior roles we have seen have a significantdirects or supply chain bias and the role focus is to improveefficiency and reduce costs based on better analysis of data. Thisis seen as critical going forward.As noted elsewhere in this report understanding data is critical supply chain analytics can now give insights that were notpreviously available and to help to predict disruptive events ormajor changes in consumer behaviour. Few seem to really knowhow to maximise their data.13


Edbury Daley“WE ARE SEEING MORE EVIDENCEOF DEDICATED ROLES IN THIS AREA ”CORPORATE PROCUREMENT CONT.SAVINGS SUSTAINABILITY?IN-HOUSE PROCUREMENT TECHNOLOGYIncreasingly leaders are being challenged over the sustainability ofthe work their teams do. Many cost reduction programs fail to meetexpectations, often due to poor planning, management and executionwhich involves the business more broadly. Leaders must ensure thatany program considers all the levers across demand, source, fulfil andmanage using an approach where ownership and accountability forachieving savings are aligned with the business.Our observation is that most organisations continue to largely rely onthe software providers or their partner consultancies to achieve theirobjectives with technology. Specialist in house implementation andbest practice roles, whether they be on an interim or full time basis,remain relatively rare.This issue is a major factor in many leaders being under the spotlightand some losing their jobs.KEY SKILL SETS AND KNOWLEDGE In the last quarter we have found that clients are looking forsome specific skills sets and experiences even at senior levels: Ongoing SRM - ensuring value from an existing supply base (andgetting supply right) Outsourcing - extracting full performance and value IS / IT - increasingly requiring expertise of this area Hands on - someone who can roll their sleeves upOverall the recruitment market has seen a significant rise indemand as reported by the Office for National Statistics with56,000 more jobs advertised December 17 to February 18 than thesame period a year ago (source: ONS Vacancies).This is having an impact with good candidates in short supply atall levels and we have seen a number of candidates move to theorganisation that moved quickest. A number of companies thathave quite lengthy recruitment processes have lost out.Those companies that are adopting solutions effectively are preferringto train existing staff rather than hire specialists, so the anticipatedgrowth in in-house technology orientated roles has yet to materialise.One area that has started to buck this trend and may lead to growthin in-house procurement technology roles is Spend Analytics.We are seeing more evidence of dedicated roles in this area havingworked some interesting projects ourselves and heard about othersthat have been advertised or made through internal appointments.A typical example would be that of an organisation already using oneor more elements of a broad platform, for example, S2C, P2P, contractmanagement etc. and therefore capturing plenty of potentiallyvaluable data but not using it effectively.By appointing a specialist to review the existing landscape, assessthe available data and formulate a strategy to implement an effectiveSpend Analytics strategy, procurement leaders are starting to realisethe value available in the data.In making these appointments we are considering people from boththe procurement profession and from much broader data sciencebackgrounds depending on the preferences of the hiring managers.However, we are still at the stage where we have more conversationswith leaders who are planning in this area than those who are able toinstruct us to start the hiring process.We’ll make some further comments on this subject later in the report.15

16Market Update Spring 2018THE FUTURE OF PROCUREMENTAt the recent eWorld event a number of the presentationsattended by our team made reference to the issue of theprocurement profession fighting to move on from the savingsdominated agenda to make a meaningful contribution in theother areas that procurement leaders covet. This has longbeen a discussion topic at many procurement events.Regular readers of this report will know that Edbury Daley ispassionate about working with clients who are committedto recruitment best practice. Our clearly stated philosophy is:We recruit for companies that need the best talentin procurement technology and spend management,companies that take their recruitment seriously andinvest in finding the right people.However, if we look at our own experience of whenprocurement departments formally drive the selectionprocess for recruitment suppliers, a high percentage of tenderprocesses are still completely tactical in their orientation.We believe many were poorly thought out and were clearlysavings focused to the exclusion of any real opportunity toadd value.There is a lot of talk about talent attraction as a priority inall the CPO surveys from the leading consultancies, but thereality is often different. This contrasts with our positiveexperience of working with technology companies offeringprocurement solutions.Vendor management is also typically poor. Recruitmentprocesses are often lacking agility and are rarely designedaround talent attraction. The golden rules defined fromour research are consistently broken by many majororganisations. The reality is that it’s all about the savings formost companies.So in this section we consider three of the opportunities thatexist for procurement to prove its value beyond cost savingsand the skills required to do it.They are:1. Brexit2. Procurement CSR3. Technology & The Procurement Skill SetBREXITAt the recent eWorld event Andrew Daley chaired a discussionworkshop entitled “Preparing for Brexit - Changing demands,skills and supply chains.”The session was fully subscribed with delegates from awide variety of sectors. We expected a lively discussionabout Brexit contingency planning across the audience.What we actually found was that most delegates worked fororganisations who had done little or no planning, and wereattending to find out what everyone else was doing. Theirreasoning was perhaps best summarised by this:“We are taking our lead from politicians so we’re not surewhat to plan for. We are likely to get a transition period, sowe’ll deal with it then.”Thankfully there were some interesting contributions fromthose that have engaged in some meaningful contingencyplanning.Labour mobility was the area that had received the mostattention so far in this particular audience. One delegatefrom the biotechnology sector mentioned that 70% ofhis organisation’s labour are EU nationals. They areunderstandably concerned about this. His organisationis exploring what that will mean for their ability tomanufacture and distribute post-Brexit.

Edbury Daley“WE ARE TAKING OUR LEAD FROM POLITICIANS SOWE’RE NOT SURE WHAT TO PLAN FOR. WE ARE LIKELY TO GETA TRANSITION PERIOD, SO WE’LL DEAL WITH IT THEN.”He also talked about EU funding post 2020 - that’s theirother big concern as well as losing top scientific talent to EUmember states. But not that there’s much the procurementand supply chain can do about that.Another delegate from the FMCG sector made reference to ahigh percentage of semi-skilled EU labour in their operationsbeing a major concern for them. A delegate from a majorfinancial services company talked about them working toengage EU employees to promote greater loyalty in keyparts of their customer services operation.The most comprehensive planning had been done by theaforementioned FMCG company and we were fortunate tohave their procurement leader in the audience. He offeredthe following insights into their planning.They had analysed the various different potential post-Brexitscenarios, weighing and ranking the options in terms of thelikelihood. The options ranged from a Uturn seeing the UKstay in the EU, through to a hard, no deal Brexit where wecrash out onto WTO regulations. They have ranked a freetrade agreement after a transition period as the most likelyoption giving it a 50% likelihood. Their worst case scenariowas a diamond hard Brexit which they ranked at 10%likelihood. It is that particular potential outcome that hasbeen driving much of their contingency planning.Interestingly the procurement leader in question has beenattending a number of supply chain conferences to researchand assess the approach by companies facing similarchallenges. He concluded that those with goods comingin from the EU to be sold in the UK are doing the mostplanning. One notable FMCG company supply chain leaderhad confided in him that their planning for a hard Brexitincluded moving their operations out of the UK.A common view from others went something like “it’s nota problem, we’ll just hold more stock,” but it was pointedout that if you haven’t done any planning how are yougoing to find that situation in 2019/20. The problem withwaiting for the transition period is that you’ll be at the backof the queue for things like extra storage space and it willundoubtedly cost more given rising demand.This is an opinion backed by commentary in recent articlesin the CIPS magazine Supply Management which focuses onthe likelihood of suppliers raising prices in response to thecrippling cost of Brexit. One survey said that 32% of firmshave already increased prices whilst another survey showsthat 41% of respondents plan to increase their prices “tooffset the potential costs of Brexit.”In another article entitled Analysis and preparation key totackling Brexit Supply Management observes that MarkChadwick, director of business services for consultantsFusion 21 said: “Although uncertainty caused by Brexithad made it harder for teams to control costs, earlystage analysis would help businesses prepare for anycircumstances.”He is quoted as saying: “Putting a lot of effort now intounderstanding the wider environment your suppliers areworking in and what’s affecting them and what pressuresthey are facing will best prepare you for what you might beasked in the future.”“We found that if you don’t do that analysis and preparationyou’re often going to find that you’re on the back foot andthat you’re really starting to react to situations as theyemerge rather than being proactive and trying to managethose situations.”There is a different view of course. At eWorld Andrew Daleyasked one experienced procurement practitioner in theaudience, who has an established consulting business,17

18Market Update Spring 2018THE FUTURE OF PROCUREMENT CONT.what his clients were doing to prepare. He offered the viewthat many aren’t sure what they are plannin

Management Insider reports stronger market conditions, . and in former Emptoris stalwart Justin Sadler-Smith, the business has a very experienced leader in the UK. His . six months and this is part of a wider trend in Contract Discovery and Management