I see lots of congratulatory posts on social media about various procurement technology companies that have made the Spend Matters 50 To Know, 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?
Spend Matters
Let’s start with Spend Matters. They are, of course, a very well-known name to anyone in the procurement space. They belong to the 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. Here, the user can select a comparison of different types of procurement software based on a bunch of different criteria and buying personas.
It then suggests 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. Plus, 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 your company doesn’t have an entry in the Almanac, you’re not going to be considered for the 50 To Know and 50 to Watch awards.
How do they get from 500 providers down to the respective 50?
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”. Meaning 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 a provider won’t be included on either of the lists if they decide not to go through the participation criteria.
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.
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. Then they add those providers who have made the step up to be included in this 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 fluctuation from year to year.
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:
- Innovation
- 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.
Great!
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. For example, there are companies 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.
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, then the 50 To Know list isn’t the best starting point for you.
So, is 50 To Watch the best yardstick?
This is a nice segue onto the 50 To Watch list. In comparison to the 50 To Know list, I view this ecosystem as much more aligned to best-of-breed procurement technology. Indeed, some of the providers that appear on the 50 To Watch are actually previous guests I’ve interviewed on The Procuretech Podcast.
So, what 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? Then, 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 so, if you’re not seeking complex software aimed at Fortune 500 companies.
This is the list is where the key providers are listed that you should really be aware of. If your team is at the very beginning of a digital transformation journey, start here.
I would say this is even more relevant for mid-market businesses. 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. 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!
What is Spend Matters “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. Being a bit of a procurement tech nerd, 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. This is essentially what we cover on The Procuretech Podcast and on this website. Highlighting companies that are growing and have really interesting concepts is a welcome development.
ProcureTech 100
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:
- Growth
- Security
- 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 clear from their website how they’ve actually got this shortlist down to the 100 they 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 who actually uses this software. I doubt very much that user experience was considered as part of the selection criteria!
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. There are pure play digital procurement transformation solutions, enterprise level procurement software suites, as well as other solutions out there that are not pure play procuretech.
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 like 50 To Know, if you’re a procurement leader or CFO in a mid market company, this list may not be super helpful.
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 you feel you need to consider in addition to the lists?
- What are your organisation’s key objectives of the digital transformation? How does this impact your strategy and selection process?
- What do you feel are the most important features that you want to get from the latest technology in procurement management?
- And where do you feel the missing pieces are from a lot of this analysis?
I’m a pretty simple guy and 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. They also 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 level of complexity 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. If there are more sceptical or technophobic stakeholders within a business, this is even more critical.
A very feature rich and complex piece of software can take months, or even years of planning to implement. 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. Consider who they are aimed at.
Large teams in enterprise level organisations have the budget, resources and IT consulting to go in and perform a complete end-to-end transformation. That’s great, but does your organisation have 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?
- Will it 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 be clear on what the biggest challenge is that digitalisation of procurement could solve for you.
Done is better than perfect?
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?
- If you want a tool that’s easy to use, implement, and that drives operational efficiency, then give your team and your stakeholders simple and agile software. Find a solution that can easily be implemented within days and weeks rather than months and years.
Or do you want features and complexity to solve a wide range of issues and challenges?
- Are you planning a complex digital transformation and seeking a solution that will completely digitise your end to end process? Be aware, however, that this is a rapidly changing market. The market now is going to be vastly different from what’s out there on by the time you actually implement.
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. These are affordable, agile, easy to implement within your existing IT ecosystem. Thanks to APIs, many of them 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 featured in 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? Maybe they won’t fix every single issue, but then neither will one of the large, legacy brand suites.
This approach will ensure your digitalisation strategy is executed a lot faster. You’ll have much 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 us. It’s our buisness to understand what solutions exist, as well as interviewing procurement software founders and CEOs for our podcast.
We can help you navigate through the sea of complexity, without any biases.
