ProcureTech for SMEs: Unlocking Efficiency and Value with Smart Digital Tools.

For: Senior procurement professionals in medium & smaller businesses the Middle East looking for high impact procurement strategies.

Introduction

In the dynamic landscape of business technology, small and medium-sized enterprises (SMEs) often trail behind larger corporations in adopting digital tools for procurement, partly due to cost and complexity perceptions. However, the world of procurement technology, particularly in the realm of Source-to-Contract (S2C), presents untapped opportunities for SMEs. Solutions, tailored to the unique needs and budgets of smaller businesses, can unlock significant tangible (and intangible) benefits to step change your procurement team’s overall efficiency and effectiveness in unlocking hidden value.

This article explores the essential elements of S2C platforms, quantifies their benefits and provides practical tips for SMEs to make the right decisions for their business and maximize ROI. Read on if you have a procurement team and are interested in getting 70-80% of the functionality of the big players at less than 50% of the price…

First Principles: Understanding typical Source-to-Contract (S2C)

modules and their Benefits…

E-Sourcing

E-Sourcing refers to using online systems to efficiently & securely: collect and compare supplier commercial bids and technical submissions. Benefits include increased market reach, reduced admin tasks, enhanced competition among suppliers, and more efficient: evaluation, negotiation, and awarding processes. Benefits ranges vary wildly depending on the category and its economics, but savings of up to 30% or more can be achieved whilst the process effort and time can be reduced by around 50%.

E-Auctions

E-Auctions modules use electronic methods for competitive bidding for procurement contracts to pre-qualified suppliers (Reverse are for ‘buying’, Forward are for ‘Selling’). This approach offers real-time bidding, transparency in pricing, increase competition, faster cycle times and the potential for reduced procurement costs. Again, benefits vary, but time & effort productivity gains of 50% and savings of 30% or more are common.

Supplier Information Management (SIM)/Supplier Relationship Management (SRM)

These modules manage supplier data more efficiently and foster better relationships. Benefits include streamlined supplier data management, improved supplier performance, and stronger, more collaborative supplier relationships. Typical improvements include up to 26% increased supplier performance, cost reductions of up to 25% and a 4-6% increase in procurement contribution.

Contract Management (CM)/Contract Lifecycle Management (CLM)

This involves managing contracts from initiation through completion and renewal. Key benefits include reduced legal and supply risks, improved compliance, and more effective contract utilization. Research shows that companies can save an average of 9.2% of their total annual revenue by improving contract management processes, improve contract compliance and reduce risk by 25%.

10 Top Tips for SMEs considering Source-to-Contract (S2C) tech...

1.     Modularity and Expansion

Many larger players will only sell full Source to Pay suites (S2P), but SMEs need a specialist provider who allows them to start with essential modules (like Sourcing and Supplier Information Management), then add more as your needs grow (TechConnect:ME can help you with this). Once you have this foundation its relatively easy to start to add further options such as Spend Analytics, Contract Management, Supplier Relationship Management and then Purchase to Pay and even trade financing solutions.

2.     Investment Structure

Modular approaches can also help with the investment needed to deploy the solution, (though bear in mind if you choose the modular approach, you will forgo some economies of scale). Typical pricing structures of providers are based on an annual subscription and a one-time implementation fee. The fees will be based on 3 main factors a) the number of full & lite users, b) which modules you choose and c) the length of contract term in years (note most of the larger providers will only accept a minimum of 3 years), TechConnect:ME can help you optimise all 3 factors.

3.     Focus on Impactful Functionality

If you are considering a modular approach, we recommend you prioritize functionalities like E-Sourcing and E-Auctions that can drive immediate tangible results, especially in early phases, to prove the value and fund further investments in the technology.

4.     Leverage your providers knowledge and experience

Whilst the bulk of the tech is easily trained and adopted by users, some teams new to procurement technology might need some help, particularly with auctions which can sometimes be complicated, the decision whether to use a forward vs reverse, or Japanese vs Brazillian, or rank vs best price etc. can be daunting, but fear not, some providers will provide a managed service to optimize your events, and you can. Choose to run them yourself, have your provider manage them, or a combination of both ….we call this the Taxi vs Car Dilemma, you can see one of our articles on it here....

5.     Streamline Processes

Use the technology to improve and simplify existing processes while keeping workflows straightforward, avoid the temptation to over complicate or simply make your old inefficient processes digital. Move your team away from administrative tasks that can be automated and instead have them focus on more value-adding tasks like negotiation or identifying savings opportunities.

6.     User Adoption: The Key to Success

Ensure your providers user interface is intuitive. Provide basic training to buyers to enhance their confidence and competence. Don’t forget supporting suppliers, particularly in early stages, with help lines/guides (typically provided by your provider) and it also helps to a publish a communication from your Head of procurement to your suppliers outlining the benefits for both parties in deploying the new tech.

7.     Integration with Existing Systems

Keep integration simple unless significant resources are available.

8.     Identifying an Internal Champion

Find a dedicated internal advocate to collaborate with and learn from your provider, embedding best practices (e.g. templates, auctions specialisation etc.) into the processes for the benefit of your team.

9.     Identifying the value potential can be motivational

Look to identify the value potential (your provider can help with this) of a serious deployment across the whole business. Bear in mind the procurement multiplier effect when talking to a CEO or CFO about budgets, this effect means that because the cost of procurement savings drops to the bottom line the value of every dollar taken out of the business is worth circa 5 times that of revenue added to the top line. Even more importantly if you can take this cost out of the business permanently it will add to the earnings, and thus the valuation of the business many times over. You can read more about this effect in this short article here...

10.  Think big, Start small, Scale fast

If you identify the value potential, and maybe the valuation impact of a serious deployment you can begin with a focused, manageable implementation to pick the low hanging fruit, once the benefit is proven we suggest you scale fast to unlock the full value at pace.

Conclusion

Adopting ProcureTech, particularly S2C platforms, can be a game-changer for SMEs. It's not just about keeping up with technological trends; it's about harnessing these tools to solve problems, improve business outcomes, and discover hidden value. Whether you’re just starting or looking to expand your procurement capabilities, the right approach to S2C solutions can set your SME on a path to greater efficiency and success.

By focusing on practical, actionable advice tailored to the unique context of SMEs, this article aims to demystify the process of adopting and benefiting from S2C platforms, encouraging SMEs to embrace these technologies as a means to drive growth and competitiveness. If you are interested in deploying Source to Contract or other ProcureTech solutions lets talk, TechConnect:ME has a network of world-class partners that can meet the needs of organisations just like yours, and we can help you with support and advice at no cost. 

About Dan

Dan is a co-founder at TechConnect:ME, he has over 20 years' experience in the procurement and technology space, including leadership roles in some of the top tier technology providers. Dan has worked across the Middle East for 15+ years and is an MBA with further executive education in Digital Strategy/ Transformation (MIT), FinTech (Harvard), Leadership (Oxford) amongst others. You can catch Dan on his LinkedIn at: https://www.linkedin.com/in/dan-quinn-2604951 or his email: Dan.Quinn@techconnectme.com.