Integrated suites to best-of-breed: The evolution of procurement tech

Exploring the practical lessons from the journey from an integrated suite to best of breed technology.

With Pedro Berrocoso, Senior Advisor, AccelerIQ

00:00:00 - The evolution of supply chain and procurement technology

00:11:00 - Tech at the emergence of the procurement function

00:17:20 - Is generative AI the next step-change in procurement technology?

00:22:55 - Addressing the needs of complex services in e-procurement

00:31:30 - Owning the complex services problem

00:37:00 - Pricing intangibles

00:42:10 - Understanding if you're getting the value you paid for

00:46:30 - The role of procurement excellence

00:51:50 - Do integrated suites make sense for all organisations?

00:59:00 - The temptation for best-of-breed solutions to becoming too broad

01:10:40 - Where can procurement best leverage generative AI and large language models

Episode Highlights

Transcript

Auto-generated. Please excuse any minor errors.

00;00;00;27 - 00;00;05;23
Jonny Dunning
So, Pedro, welcome to the podcast. Thank you very much for joining me. How you doing?

00;00;05;25 - 00;00;18;08
Pedro Berrocoso
I'm doing excellent. I'm actually up in the Swiss Alps right now, having a break and at the same time really indulging into some of the stuff which I'm really curious and interested about within the space of digital and procurement.

00;00;18;10 - 00;00;42;12
Jonny Dunning
Excellent stuff. So formal introduction. Pedro. Marco So you're a senior advisor at Accelerator. Q Which is, I believe, your your organization. So your expertise is very much in kind of more traditionally supply chain and procurement technology transformation. But also I know you've been doing some really cool stuff around automation, AI and some really cool technical stuff. More recently.

00;00;42;14 - 00;01;02;09
Jonny Dunning
So we'll get into that. And in fact, you know what? As a as a means of introduction to give a bit more further background on you and how you came in the industry and what you do. And one of the questions I really wanted to get into, which we can far into straightaway is around the evolution of supply chain technology.

00;01;02;09 - 00;01;23;25
Jonny Dunning
I was going to say procurement technology, but let's say supply chain technology to take it in that kind of broader context, I'll be really interested to hear your views on how it's changed in this journey from kind of very basic to where we are now with best of breed and our technologies coming out left, right and center in a very complex technology landscape.

00;01;23;28 - 00;01;34;09
Jonny Dunning
Would you be able to kind of give a bit of an opinion on how this kind of technology has evolved? Almost stepping us through how you've been involved in the industry at the same time?

00;01;34;11 - 00;02;07;01
Pedro Berrocoso
And that's, I think, a good start as well for our conversation, right? Going back to where all things started as well for me and my career and follow along the lines of the journey of how technology evolved, which I've been very much tapped into ever since I started obviously very early on in procurement as an operational buyer. So just moving back into these times, I think it's going to be interesting as well to observe how the procurement function evolves alongside bid suppliers in all procurement, there was an evolution happening coincidentally with the technology as well becoming more mature, right?

00;02;07;07 - 00;02;30;25
Pedro Berrocoso
So if I look back at my early start in procurement, I started in early nineties after studying business administration at a small, small to medium sized company here in Switzerland, which was actually producing plastic components. Right? And for me the start within the space of procurement was actually coincidence. There was at that time no procurement function in that organized fashion at all.

00;02;31;01 - 00;03;10;05
Pedro Berrocoso
There was an administration function which was actually starting to get that understanding that procurement was going to be an activity which needed to have a bit more knowledge, skills and as well dedicated folks which were taking activities into consideration, which were going beyond just importation activities, which was where supply chain was really quite strongly involved with getting suppliers to get goods in time at the right quality and in the right pricing levels into the production pipeline, right into a function which is really going to holistically approach the procurement activities as a total ride.

00;03;10;07 - 00;03;42;22
Pedro Berrocoso
And so looking back at that time, technology was there quite strong, I would say, for the supply chain. So from an integration perspective, right, So you had your terminals software, you had your SAP, our TOS, right. Which at that time was black screen, and there you'd had already understood that there was a good need for, you know, capturing the needs from a forecasting perspective down to getting the supply into the door and inventories in your system so that you could actually serve your customers in time as well with the stock available.

00;03;42;26 - 00;04;16;16
Pedro Berrocoso
So that understanding of having the supply chain organized had already grown at the end of the eighties, beginning of the nineties. There was already some Toyota activities around just in time, right? There was already. Mr. Lopez I don't know if you know Mr. Lopez, a superstar in the procurement space out of the nineties, who had already brought in these concepts of really getting the just in time effects, really working well within the supply chain activities but then as well getting suppliers as well to optimize their own chain so that there was a win win situation from a cost reduction perspective as well.

00;04;16;16 - 00;04;42;15
Pedro Berrocoso
So that understanding of supply chain very much started already at the times of the terminal software. But within the procurement space in particular, the indirect side, there was nothing like a software dedicated to that, right? So there was still this understanding that there were manual activities which just had to be reproduced in systems. And therefore what you were doing was just capturing needs from a requisitioning perspective so that you can maybe match an invoice against.

00;04;42;21 - 00;05;07;26
Pedro Berrocoso
But the dire need there was actually just to make sure that everyone was able to, you know, kind of instead of using the typewriter, digitalize some of these activities within the systems themselves. Right. Very nascent. Nothing much there. And this is kind of where the starting point as well was when businesses started to kind of get the grasp that command was much more than just getting these activities administered.

00;05;07;28 - 00;05;34;02
Pedro Berrocoso
It was more about professionalizing the way we were going, about supply relationships, the way there was value generated out of cost reduction and customer optimization activities. But then as well there was this well value on executing with excellence. Right? And you know, the next jump there logically after I joined the team was reorg analyzing how the organization was actually catering for the activities within procurement in the direct space.

00;05;34;02 - 00;05;55;02
Pedro Berrocoso
There was no question. Right. There was everything was clear, right? Everyone understood the importance of having goods in time and in quality at the right price. You know, coming into the into the production pipeline. On the indirect side, it was an educational effort within the organization to really make sure everyone understood there was value there. And I was very lucky at the time when I joined the procurement team.

00;05;55;02 - 00;06;15;08
Pedro Berrocoso
Right. I joined because I had this understanding that it was going to give me a lot of abilities in terms of capabilities, a lot of exposure as well, you know, to suppliers, to a lot of the departments, which I was working with. But at the same time as well, a growth path for me to, you know, building as well as some of my curiosity around processes and technology at that time.

00;06;15;08 - 00;06;50;15
Pedro Berrocoso
Right. And so with a manager, I had had a at the very, very early start of my career. And I think this is still one of the fundamental, you know, most critical things you need to have as a young, young starter, a good mentor, a good sponsor. I had the ability then to start actually working on some of the very early or actually one of the first sap implementations in Switzerland at the time, which was then getting me to bring in the knowledge, had gathered from the operational procurement activities, from the strategic activities I was undertaking with suppliers, with the production, but then as well with the rest of the teams into designing the new

00;06;50;15 - 00;07;03;17
Pedro Berrocoso
processes, which were then actually helping the organization to step up in terms of process maturity by bringing in now the indirect components and the direct components under one umbrella, but still in the ERP backbone at the time. Right?

00;07;03;19 - 00;07;10;26
Jonny Dunning
So the must have been fascinating for you to be in that early to be really kind of like architecting that from the start.

00;07;10;29 - 00;07;31;21
Pedro Berrocoso
I must say. I mean, for me it was a great opportunity offered by my managers at the time, and at the same time I'd be thinking that I had just moved into the right opportunity space within the right time frame. Right. And it was kind of the mid-nineties, I would say, just before you had this big boom actually happening around the dot.com.

00;07;31;21 - 00;08;05;22
Pedro Berrocoso
Right? It was at the verge of the dotcom bubble starting to rise up. Right. And so it was all about solidifying with the ERP backbone, the activities around procurement and supply chain first before then going into the next step, which was actually then starting off as well to leverage technologies which were actually available at the time, maybe not yet that mature, but they were actually already on the horizon as to changing and disrupting the way we actually executing activities within the supply chain, space and procurement right after when the dotcom boom really started to happen.

00;08;05;22 - 00;08;25;07
Pedro Berrocoso
Right. And so that early phase was for me. Yeah, I think it was a big window of opportunity. I say that at the time, but with a lot of support and confidence as well from my line managers and you know, designing these processes at that time was still kind of a model where you had to look at the software and then you had to kind of tell people then as well what was actually feasible, right?

00;08;25;11 - 00;08;45;12
Pedro Berrocoso
And so that was actually for me as well, an ability which I started to gather from a skill set perspective, which was I was having a dialog about ways of working now, but then as well, making sure that the technology could fit with it to the degree we could actually mend it. Right. And this wasn't necessarily always a good fit, right, as you can imagine and still is.

00;08;45;12 - 00;09;07;20
Pedro Berrocoso
And if you think about the whole totality of integrated suits and ERP side, there are always strengths and weaknesses in all of the configurations which you then need to choose and make best use of together with a process design, which is actually important for the organization then as well, right? So very early on at that time focused more on the space of consolidating things into the ERP.

00;09;07;21 - 00;09;28;05
Pedro Berrocoso
Right? And I think procurement followed very much the same track right after getting out of the understanding that it was just general administration. It followed into becoming an own function and with that getting as well an own petty meter of activities in an old school and an own mandate as well to start evolving from there forward as well.

00;09;28;05 - 00;09;52;29
Pedro Berrocoso
The activities which were really about supply, the utility activities which were about relationship management and as well the support of business strategies, obviously through the cost, the cost aspects as well, which at the time were obviously the focus area of the function right now. This started to go to levels which I think everyone understands from history, right, which was basically the whole dotcom bubble coming up.

00;09;52;29 - 00;10;15;11
Pedro Berrocoso
And there were a lot of nascent organizations at the time and it almost feels a little bit to me. But it's quite different though, like right now with the whole availability of best in class or best of breed solutions. There was so much choice at the time, but back in the dotcom bubble, the bets which you made on the different technologies were still quite unclear, right?

00;10;15;11 - 00;10;53;29
Pedro Berrocoso
Because it was a very nascent field of technology and at the same time the organizations were still struggling to understand where procurement was going to go next. Right. So from that perspective, you know, a lot of what happened then around the 2000 was really connecting not just, let's say, your internal organization to the activities within procurement, but you started to involve now suppliers as well to get more advanced as well with the connectivity aspects as you started maybe with EDI, I was just in time, but then really leveraging the internet as well as a means to collaborate broader with the e-business aspect as well coming in and then as well, you know, a lot of

00;10;53;29 - 00;11;02;20
Pedro Berrocoso
the let's say catalog purchasing now taking off as well. At the very beginning of the 2000 as well. Right. So just since.

00;11;02;26 - 00;11;29;03
Jonny Dunning
So sorry, I was just to say so if you look at the time frame, you've got this early kind of the nascent side of the the ERP kind of moving in more in the direction of the more procurement specific suites. It sounds like it was there was I feel like procurement is a fairly young function anyway. Like when you joined that small to medium organization, they probably had a marketing department, though almost certainly they almost certainly had a sales department.

00;11;29;05 - 00;11;47;05
Jonny Dunning
You know, you were you were the start point for their for that procurement operation by the sounds of it. So when you when it was getting into that kind of dotcom takeoff scenario when when these new technologies were starting to come out and it sounds, you know, at the time it would have been quite high risk and you wouldn't have completely known where they were going.

00;11;47;11 - 00;12;03;04
Jonny Dunning
As you just said, people didn't really know where the procurement function was going. What would you say at that time? Would would have been classed as a sophisticated procurement set up in a large organization at that time? Would it have still been pretty basic compared to what we'd expect now?

00;12;03;07 - 00;12;34;29
Pedro Berrocoso
Yeah. And just to clarify a little bit where I was at that time, right, because I think I need to add as well a bit of context that along along the moves I was just describing after the implementation, my first implementation with SAP, I actually moved along into another organization, which at the time was IBM, right? So I, I then moved into the IBM organization with the needs with it, not with a need, with an idea to professionalize as well, the way I was actually learning about procurement and then enhanced my skill sets as well with new technologies coming forward right.

00;12;35;04 - 00;12;56;25
Pedro Berrocoso
So I actually stepped out of that, let's say, operational space within a small and medium sized company, moving to a big organization where procurement was already existing. But even there, procurement was still, I would say, quite nascent, right? It was it was a function which was still finding its feet. There was an organic reorganization happening when I joined the IBM organization in 96.

00;12;56;27 - 00;13;29;24
Pedro Berrocoso
Right. Which was at the time actually based out of audit findings, kind of getting to the point that they had to professionalize the way procurement was actually organized. And there what I what I did is actually take on a role as as a lead buyer for networking equipment, which was something completely new for me. But it gave me this understanding that there was a professionalism not just happening on the execution side, but as there was as well, a strategic component now being added, which is basically as well a domain specific procurement category of you.

00;13;30;01 - 00;13;48;07
Pedro Berrocoso
Right. Which you know, with skill sets which were then as well helping the organization to make the best choices, not just solely from a price perspective or commercial point of view, but then as well with a supply market view which was helping as well, you know, with an understanding as well on what could be making the best cut for for the organization itself.

00;13;48;07 - 00;14;12;01
Pedro Berrocoso
So the professionalizing of procurement at that time for me in that space where I was in started off actually a bit differently because there I had as well a big revelation, right? Basically because coming from a small to medium sized organization, a lot of things happen because you know people. Right? And somehow the integration between the functions is much easier in a big organization, such a such as a big tech organization.

00;14;12;01 - 00;14;50;21
Pedro Berrocoso
I joined at the time. Look, procurement in itself was not yet really regarded as a professional function. There were pockets of excellence right? But there was still a missing framework which was helping the organization really to step up. Right? And there it was much more about bringing consolidation of spend first into the organization itself, right? By providing, you know, clip level understanding with policies and guardrails and then bringing along people into the process and out of that, managing the process of the spent in totality and helping them with the compliance aspects than necessarily stepping up in terms of maturity and now bringing in the new tech itself.

00;14;50;21 - 00;15;28;24
Pedro Berrocoso
Right. So at that time, again, it was slightly different, but it led me then to take my next step just before that 2000 bubble in that sense, which was moving then into consulting, which was one of the areas I was evolving into. Right. So just after my procurement experience and having had my first B implementations being then as well with a big tech organization itself, I took then the leap to really move into business consulting and help people's organizations as well with process optimization activities within the procurement space, within supply chain, but then as well with the implementation of technology itself.

00;15;28;26 - 00;15;49;04
Pedro Berrocoso
And now coming back to your question from early on, I hope we haven't forgotten about the fatality. Right. You know, it was it was kind of an understanding that, you know, you have to be networked as a as a procurement function to really execute well. Right. And I think this is where the dotcom bubble really made the dotcom bubble.

00;15;49;04 - 00;16;08;01
Pedro Berrocoso
Let's not just talk about it as a bubble right? Because it was really a disruption on the ways of working, which was happening at the time. That connected business model. Right. Was actually really going to make a difference. And, you know, you saw that from, you know, the all these tools and new capabilities coming up where strategic procurement now suddenly had tools as well.

00;16;08;01 - 00;16;39;19
Pedro Berrocoso
Right? You started to have tools there in the space of auctions, e sourcing first contract tools, Right. Which were a little bit more than just a replacement of your word documents. Right. Because you now had an ability really to tender as well via the Internet. You had an ability as well to scenario, build your RFP and then be able as well to fast track as well as some of your activities when you were assessing and you were weighing and at the same time rewarding as well some of these contracts right?

00;16;39;22 - 00;17;02;29
Pedro Berrocoso
So I would say that it brought along this connectivity and it brought along as well this understanding that there's an ecosystem out there. You're not as siloed as an organization itself. You're actually part of a bigger picture. And what you need to leverage is that big NEC network to really make things work as well for the organization you're serving within the procurement space itself, right?

00;17;03;01 - 00;17;23;15
Jonny Dunning
So so when you when you talk about this change that occurred and I don't want to jump too far forward here, but what I find interesting, because I was working for a tech business, I joined the tech business in like 2000, 2000, I think it was, and they'd started in 95, literally tech tech boom, boom was just starting.

00;17;23;15 - 00;17;41;00
Jonny Dunning
All went crazy and it was brilliant. It's amazing company to work for. I had a great time. They grew really successfully, sold the business, you know, and it was on. I went on to do to use the things I'd learned within that business to do lots of other fun things. So I appreciate the impact that happened around the rapid growth of the Internet.

00;17;41;07 - 00;18;02;24
Jonny Dunning
I remember the CEO always used to say when we started this business there were 40,000 people on the Internet and now there's, you know, you know, 400,000 visitors a day or a week, whatever it is. And so so when you look at the the impact of that dotcom phase and the general growth of the Internet, that that precipitated a massive change.

00;18;02;26 - 00;18;24;24
Jonny Dunning
Do you do you look at what's happening now with, for example, the use of the growth of the use of generative AI models? Do you see that as potentially being a similar step change or is it maybe not quite going to be on the level of when that those first Internet businesses really built that connectivity and that network effect?

00;18;24;26 - 00;18;52;23
Pedro Berrocoso
Yeah, and this is an interesting question, which I think many of us are asking ourselves, Are we at the precipice as well now with the new technologies that are coming in with indigenous space, as we had at the time of the Internet bubble, at the time of mobile. Right, which was as well a timeframe where we saw a lot of model switching or as well at the times of the cloud computing faces, which were a few years back already, but you know, had some some leverage as well, which was much, much more than anticipated.

00;18;52;25 - 00;19;18;11
Pedro Berrocoso
And I've been thinking that the abilities or the capabilities which generative AI in particular is currently offering is something we've not seen before. Right before that, I think what we've seen is enabling of businesses which in the physical world you could always imagine could be there. But now that means as well to be connected with all of the digital means which were available, all of the connectivity and as well with the change of business models moving into virtual organizations as well.

00;19;18;11 - 00;19;41;00
Pedro Berrocoso
Right. In that sense, what you have now is an ability to actually mimic human intelligence with machines. Right. And this is very different, right? I think it's really touching now the heart of the worker rather than just necessarily an aspect of the business model. Right. And it's going to be changing fundamentally how organizations will be actually operating and strategizing as well moving forward.

00;19;41;00 - 00;20;05;15
Pedro Berrocoso
Right. From my perspective, what the generative AI and some of the new AI technologies are really offering up is an opportunity to rethink how we're going to go about businesses moving forward. Right. And that means, you know, if we think about procurement just now and this is one of the key areas, we now have an ability with in procurement, with not just generative but in general to really leverage data we have and really make out of that sense.

00;20;05;22 - 00;20;29;22
Pedro Berrocoso
And and insights, right. Something which we in the past may have had through spend analysis tools, but not necessarily being able to tap into so many data sources as we had within the time frame which was available to crunch the information, really make sense out of that, Right. So now we can contextualize information rapidly. We can change as well the way we organize ourselves with a bit more agility.

00;20;29;25 - 00;20;57;22
Pedro Berrocoso
And at the same time, I believe that from a business model perspective, we will see as well much more, let's say much more things moving into the direction of human interactions where it matters and a lot less of activities in the space where, you know, transactional activities are there just to be complied with. Right? So I think it will liberate quite a lot of possibilities for us to tender and take care of activities where the value out from the procurement perspective is as well.

00;20;57;23 - 00;21;19;08
Pedro Berrocoso
You know, with a business partnering side with a supplier, relationship management activities with intercepting and innovating as well with your suppliers or as well with your internal organization piece, rather than just being there as a function, kind of orchestrating just activities, which is something we've seen maybe in the last 20 years, really becoming kind of the center point of the activities within the procurement space as well.

00;21;19;09 - 00;21;40;14
Pedro Berrocoso
Right? So yeah, I think there is there is a potential there. How big that potential really is something we I think we will all be seeing soon. Right. But well, soon in the next 2 to 5 years for sure. We see some teases of that with the means of computer vision data analytics, machine learning, some of these models which are now already making their ways into the best of breed solutions.

00;21;40;19 - 00;22;00;03
Pedro Berrocoso
Some of this well the so some of them as well into the autonomous procurement concepts which are coming up right so there's there's a lot of things going on now be a bit curious as well how this all pans out but if I compare that with the timeframe of the Internet bubble, in that sense, I think it has a big potential.

00;22;00;05 - 00;22;22;12
Pedro Berrocoso
Is it going to be as wide or wide touching, wide impacting is something we'll see. But I'll be thinking that, as I was just alluding to, what we are getting teased with right now is a is a big opportunity and a be thinking. It will be interesting to follow on and see how that takes us now to the next levels of how we would be organizing procurement as a seamless function within a bigger a bigger organization, right?

00;22;22;15 - 00;22;54;15
Jonny Dunning
Yeah, definitely. So. So we were talking about how the fact that the procurement is still a relatively young function. I think it's really interesting listening to that. You talk about that transition because it was a parallel, well, almost like a three way transition of your your career in developing in complexity and moving forward as the procurement function was maturing rapidly with the opportunities around this kind of new Internet connectivity and and the procurement technology moving in a similar direction.

00;22;54;18 - 00;23;20;04
Jonny Dunning
One of the things you mentioned was that at that point there was nothing really indirect. And so this is an area that I find quite interesting. If you look at the evolution from ERP to peer to peer in source to pay, then I feel like when that was happening, the priority was goods and materials. You know, it was it was it was a buying things.

00;23;20;07 - 00;23;40;18
Jonny Dunning
And it was quite a complex supply chain that was having to be addressed. So I feel like that was how most modern large procurement suites, that that's what their inception was and that's where the bulk of the work they were doing in the early days was when do you feel like the indirect side started to be more addressed?

00;23;40;20 - 00;23;57;25
Jonny Dunning
And I'm just to caveat that by saying I still feel like personally, I feel like there's still a long way to go on that side. But but when I break it down, when I when I class indirect as the more intangible things you buy, like complex services, when did you start to see indirect being addressed?

00;23;57;28 - 00;24;23;19
Pedro Berrocoso
And, you know, some of the bigger organizations already already started a bit earlier. Right. So just talking going back to that point, which I was mentioning before, being at a big tech, there was this understanding that indirect was something to take care of. Right. But the way it was taken care of, again, was very transactional. Right? This was a requisition process with a pool there and maybe a contract, but there was nothing connecting the activities, There was no thoughts about user experience.

00;24;23;26 - 00;24;45;02
Pedro Berrocoso
There was absolutely no no difference between goods and materials and services at that point in time. Right. It was much more of a recording of details so that you can kind of keep track, but nothing, nothing, nothing more sophisticated than that. Right. The point where I see where I saw this starting to change was really around again, the the the 2000 trade.

00;24;45;10 - 00;25;06;10
Pedro Berrocoso
This is where you had the first solutions coming up with procurement concepts right now. There was an understanding that connectivity with your suppliers was as important as well for the indirect space and that the use now started as well to kind of take a role within that process. Right before that, you know, you had acquisitions that were going up to a central team, the central team reviewing that were then placing pillows, etc..

00;25;06;10 - 00;25;32;24
Pedro Berrocoso
Right now you had the user defining and specifying what they wanted with the means of catalog software or with the means as well of Freeform. And with that having an ability to go into a bit more details within these solutions and be able to pick and choose or let you know what their preferences were, right? So suddenly the user was becoming a role, which was more than just a necessarily giving you all instructions for you to just execute.

00;25;33;01 - 00;25;57;27
Pedro Berrocoso
It was about proposing things. It was as well about specifying their own needs so that you could then help them to get through the activities with the best needs. Right? So I think around the early 2000 and that coincided as well with my my first P2P implementation at that time because I started one of the yeah, I think in Switzerland this was the third or fourth e-procurement solution implementation with one of the big vendors was still around.

00;25;57;29 - 00;26;26;04
Pedro Berrocoso
But at the time, you know, we started off there with within the financial services environment, setting up a completely new e-procurement solution which was going to help people to shop for all of their indirect, indirect needs. But again, there at the very early time, goods and services differentiation was not yet very sophisticated, right? It was more about giving choices for people via cuddling and non catalog activities and then giving then as well.

00;26;26;04 - 00;26;47;27
Pedro Berrocoso
The ability of, you know, choosing preferred suppliers, having datasets already prepared within the procurement space, which before that in the mid-nineties was not, is not necessarily a focus area for indirect. Right. There was no master data really other than maybe a vendor name, there was no goods related details. There was a receiving process which was very fundamentally simplistic.

00;26;47;27 - 00;27;17;10
Pedro Berrocoso
Right. And so in the early 2000, this started to really change with this understanding that you had to provide a better user interface quality. You had the technology and technological means as well to do so, and then you were rapidly as well, starting to look at integration abilities with your suppliers through networks, with the ability then as well to start communicate, adding and exchanging information, validating information, but then as well having a good understanding as well on how you would intake your receiving details and your invoices as well.

00;27;17;10 - 00;27;46;15
Pedro Berrocoso
Right? So that evolution around the early 2000 is what then started to, you know, from individual modules resourcing E auctions, E contracts, P2P right. Sort of then over the years to evolve into integrated suites because there was a good understanding that whilst we were catering now for different personas within the procurement space because you know, sourcing and auctions and contracts usually focus more on the procurement professionals, you having the P2P suites more on the end user side, right?

00;27;46;15 - 00;28;15;12
Pedro Berrocoso
And the operational procurement activities, you now had this understanding that this all had to be brought together to work in a much more seamless manner. And this led then to the evolution in the early 2000s or I was almost say like the 2000 antennas into the integrated suites which you all which we currently still are evidencing. If we look at a lot of what's happening in the market, right, it's still quite the backbone of many organizations when it comes to procurement activities, right?

00;28;15;15 - 00;28;42;04
Pedro Berrocoso
So they're looking at the services component parts. Early on there was nothing really big gathering for for for services and services. Procurement in itself has a very specific need. Right. And that need is not necessarily counting physical goods and in winterizing them as we have in the direct space, nor is it really about executing seamlessly as you do on the on the indirect side so that you don't almost notice that you've actually done something.

00;28;42;09 - 00;29;15;12
Pedro Berrocoso
But it's really about catering for business needs in the right manner with a specification which involves potentially the right with a network of suppliers which is contributing with their with their hours of services, their work efforts and as well there head so w which is backing usually the executional activities but then as well understanding how you receive how you accept and how you then govern as well that level of service confirmation which you need in order to then as well do the activities around the invoicing space.

00;29;15;13 - 00;29;44;11
Pedro Berrocoso
Right? That came much later, I would say as a general proposition to the market to almost say that it started to really take much more activities. If I look back into the years I've been in the business, probably at the late part of the zero years in the 2000, right, early 2000 antennas you could see now, you know, business is really wanting to take care of is that was really their sweet spot in the procurement space of the services components as well really well.

00;29;44;18 - 00;30;07;28
Pedro Berrocoso
So that they could actually not just build a contract and do a people really make sense out of what was actually in the contract. How do you manage your monitor milestones? How do you do vendor management activities, particularly when you're dealing with a lot of the I.T vendors, but then as well BPOs and how do you then award or honor the, the acceptance of the services in the right quality, the right time, etc..

00;30;07;28 - 00;30;35;03
Pedro Berrocoso
Right. So quite an evolution I would say, which I'd be thinking I would, I would, I would see starting off around the 2000 antennas for the services space and I'd be thinking this is still an area where a lot of focus is going into because I don't think that the solutions have been able to deal with it at the right level of details yet, so that you have really a seamless process which doesn't break at the invoicing side, although the receiving side or potentially at the specification side, right?

00;30;35;06 - 00;30;54;09
Jonny Dunning
Yeah, I think the specification side of it is a real a real key area that people are starting to address. I kind of always see if you if you just classify services as one huge area, defining the requirement is always going to be difficult because it's there, it is much more intangible and actually measuring what you got for your money.

00;30;54;09 - 00;31;16;18
Jonny Dunning
Measuring value, measuring performance is far more difficult because again, the process is not a linear process necessarily. It can change along the way in the delivery of those services. And that's where stuff is not really by most organizations getting measured. So I think services procurement is by its very nature is complicated in a different way to the complication around the supply chain of goods and materials.

00;31;16;25 - 00;31;51;08
Jonny Dunning
That's that's complicated as well. But that's very much a solved problem and it feels more linear, whereas yeah, the services is, is more, more intangible, as I said. But another thing about services, which I find quite interesting is, is the question of who owns it, who owns the problem, in the sense that most organizations don't think in terms of services procurement, they'll think in terms of categories, and although think in terms of direct versus indirect, depending on what sector that organization is, indirect could end up being mainly goods if they're right or they know.

00;31;51;08 - 00;32;11;00
Jonny Dunning
Construction consultancy could be good, good, good, not for resale, whereas that direct could all be services effectively if they're providing consulting, you know, in subcontracting that out vice versa in a lot of companies, a lot of organizations say the majority would be big manufacturing organization that direct spend is mainly goods materials. Their indirect is has a predominance towards services.

00;32;11;00 - 00;32;41;08
Jonny Dunning
So they very much depends. But so I would tend to look at it on a category basis. And I think about complex services categories like I.T, services, consulting, legal marketing, professional services like that. So it's one of those areas where it's quite often a question of who owns that problem because it's a complicated problem for organizations to solve, but who within that organization and this is where we can come on to the kind of procurement excellence, center of excellence, that sort of side of things.

00;32;41;10 - 00;33;02;17
Jonny Dunning
Because I think for organizations, it's one of those things that sometimes they'll look at it and think it's too complicated for us to solve, to go into that level of detail required where they've got a big source to pay platform for example, that will be handling it very well at the PO level in terms of being able to go below the O level effectively to the level of the statement of work is very challenging.

00;33;02;19 - 00;33;08;02
Jonny Dunning
How do you see that kind of ownership of that problem within within organizations?

00;33;08;04 - 00;33;39;25
Pedro Berrocoso
Well, this is an interesting one, to be honest, and, you know, looking back at some of the latest work I did at one of the large pharmaceuticals, this was one of the spots which kept us very busy. Right. Because you had a policy which was asking for contracting of services above a certain clip level. Right. Which would that which was then meaning that you had to really set up a WS for all of your service partners and you had to as well be thinking around records and as well as some of the, I'd say, details of how you would be actually pricing up together with your supplier some of the work.

00;33;39;25 - 00;34;03;16
Pedro Berrocoso
Right. And normally within the services space, what you'll find is that there is quite a collaborative aspect of work needed, right? So there's a collaboration between the teams which are owning, let's say, the end result of the services. If you want. For instance, if you're talking about marketing, you may have teams in there which understand totally well how agency work gets actually conducted, right?

00;34;03;22 - 00;34;35;25
Pedro Berrocoso
Not just how you tender and then actually award work to an agency, but as well how an agency works itself. And then you can construct with that as well better. SL WS Which would then help you then as well within the procurement space to, to, to execute, right? For from, from my perspective, it's almost like a good way to get hold of this problem is to make sure that you do have representatives within the category space almost embedded as part of these functions where services are becoming really a big need and where they are the sweet spots of the organizations.

00;34;35;25 - 00;35;03;05
Pedro Berrocoso
As I was just saying, in pharma, for instance, right, Marketing services, very, very important meeting and travels and events. Very, very important. Right. You have the necessity to almost build up your own center of excellence as well within that space, to not just necessarily design how you want to go about it for your external customers, but then as well how you organize for it internally as well, and how you procure services going with it in a way which is going to help you then as well to have an advantage, right?

00;35;03;07 - 00;35;26;08
Pedro Berrocoso
So from that perspective, building up the center of excellence views, right, either within these different functions, within marketing, with a meeting and travels with an implant, a procurement person, or bringing this into the center of excellence of procurement itself with both practices build up in there for your category buyers to better understand as well how to approach the stakeholders and how to go about that.

00;35;26;10 - 00;35;51;02
Pedro Berrocoso
The suppliers may be helpful as well. Right? So the way I saw that working in my last company was really having these almost implanted implanted organizations, right, where you could have a procurement representative being part of the meeting and travel activities quite embedded in there with with a reporting line into procurement, but with a strong with a strong focus as well on making sure that the services were, you know, organized.

00;35;51;10 - 00;36;10;21
Pedro Berrocoso
So you are contracted within the right structure and then as well being provided for execution as well with the right level of detail. So so that execution would really happen. Well, I think you can't really give it to one or the other. It is a collaborative effort between both functions and how you then. So that organization, it may depend on your organization.

00;36;10;21 - 00;36;13;26
Pedro Berrocoso
What I've seen working is the model I was just describing.

00;36;13;29 - 00;36;38;24
Jonny Dunning
Yeah. And that collaboration helps define the requirement from a technical perspective in the sense that if the the excellence is embedded within the specific categories or is these networked closely within those specific categories, dealing with those category managers to really understand that problem, then the people that are architecting the overall system set up, I'm looking at that side of it from procurement excellence point of view.

00;36;38;24 - 00;37;00;10
Jonny Dunning
You can spot the gaps and I think that's that's certainly something I've seen a lot of where within organizations procurement excellence will know that there's a gap in that area that just needs to be enough impetus from different categories to push towards saying, you know, there's an overarching problem here in marketing we've got loads of so that it's impossible to keep track of.

00;37;00;12 - 00;37;22;24
Jonny Dunning
One of the things you mentioned that I think is quite interesting is around pricing services. That is, I mean. It's a tricky area. It's an area to get into the analysis. Again, it's very intangible in two ways and the way that a lot of people try and solve that is exactly as you said, by putting kind of right codes around it or even just like theoretical rate based back pricing where they'll get a project cost and they'll just try and understand.

00;37;22;27 - 00;37;49;02
Jonny Dunning
But what does that break down to in terms of of a kind of a rate card equivalent, which I think is interesting, but I also think it's an area within, for example, consultancy where a lot of organizations can fall down at the moment because they'll be assessing bids based on rates, whereas in actuality, the ultimate delivery of that requirement may take three times longer than was proposed in the in the original bid extensions and overruns, etc..

00;37;49;02 - 00;38;05;02
Jonny Dunning
So so the supplier that's quoting you, the cheapest rate isn't necessarily going to give you the best value. And how do you how do you see organizations addressing those kind of pricing issues or or do they just kind of have to deal with some invisibility at the moment?

00;38;05;05 - 00;38;29;23
Pedro Berrocoso
This is a very good one, to be honest. The pricing dilemma, I would say within services is real, right? And I think this is something where a lot of organization have spend a lot of time building up their frameworks and rate cards. And and let's say the what do you call this, you know, all of these tables with roles and pricing indications for consultancy services, for instance, etc..

00;38;29;27 - 00;38;44;05
Pedro Berrocoso
And then I'm trying to match this up at the time of execution. Right. And I think that the way you should be about should go about it. Yes. You should be understanding what the price is made up of a piece of a deliverable. Right. Or a solution which you get by. You should measure much more the outcome. Right.

00;38;44;05 - 00;39;04;22
Pedro Berrocoso
And you should be so you should be pricing up the outcome, right, with maybe an understanding of what gets there, why you should be fixated more on what is the total value you're getting out right and is in line with the budget you have rather than is the individual line really corresponding now to that rate which you have actually been given at the very beginning of your RFP in the execution stage?

00;39;04;22 - 00;39;22;22
Pedro Berrocoso
Right. And this is where, you know, sometimes you get a lot of complexity as well, you know, to to really measure whether or not the service has been rendered or not. Yeah. Because, you know, in some organization you'll get them fixated on the fact that you have this rate cut, which you have agreed. But hey, there were not two junior resources working on that.

00;39;22;22 - 00;39;39;14
Pedro Berrocoso
There was a senior resource is working on that. And how do you not make this all equity in your system, which has already got all of these details in. Right. So that's in my from my point of view is a bit of a waste of time. Right. So you should be looking at, you know, total budget versus outcome, I would think.

00;39;39;16 - 00;40;08;19
Pedro Berrocoso
And then manage obviously with a bit more agility, the outcomes as they start occurring because they will be there's unexpected things happening all the time, but in the total picture they may not necessarily matter as long as you do have, you know, the right result with the right quality in the right time available to you. Right. So I don't think I have a silver bullet proposition here, but I would be thinking that you need to have the liberty to define, you know, your budget overall in a system which allows you then as well to actually evolve.

00;40;08;21 - 00;40;35;03
Pedro Berrocoso
You know, that understanding of how services get actually rendered. And that clarity which comes along the lines of tracking with the activities moving forward, right? So that you then have an ability then as well to just accept the deliverables rather than accepting, you know, specific price points which you have on rates given for a professional itself. Right? And that could be performance related milestones, It could be milestones relating to the delivery itself, right?

00;40;35;06 - 00;40;55;10
Pedro Berrocoso
That could as well be their KPIs, which you embed. That's a much better measure. From my perspective. You're being effective in your services purchasing than necessarily, you know, tracking a rate, for instance, is a an ability as well, which you would have but not necessarily a good use of your time potentially. If you think about that total picture which you want to be having, Right?

00;40;55;13 - 00;41;15;11
Jonny Dunning
Yeah, I think that's a really good point. What I like about what you just said there was focusing on that outcome value. And that's the critical that's the critical thing as far as I see. And you're absolutely right, a milestone could be a KPI, it could be a sprint in an agile process, it could be a pure delivery, it could be it could be a block of time in materials.

00;41;15;11 - 00;41;37;04
Jonny Dunning
It could be a block of consulting. That's part of an overarching delivery. I think the other thing that I always feel about this as well is that the supplier is taking some risk on the delivery that so that's the whole set up is and so trying to drill into how much money that supplier is making or how much they end up making through it, I look at it as more, you know, are you getting what you paid for?

00;41;37;05 - 00;41;57;12
Jonny Dunning
Are you getting value for what you actually paid, you know of? Clearly, you don't want the supplier to be it to be an unbalanced situation with ridiculous pricing. But if you're running a competitive bidding process, you should be getting you should be getting, you know, you're increasing the potential for it to be a fair price for the work you're getting.

00;41;57;15 - 00;42;15;27
Jonny Dunning
But the work can change along the way and you might end up with a different outcome due to changes along the way that ends up costing maybe more. But actually the outcome value is twice as much as you would have got in the first place. So I think if organizations can start to work towards trying to understand the outcomes in more detail, that's going to make a massive, massive difference.

00;42;16;03 - 00;42;49;23
Jonny Dunning
But I do think that is very, very difficult for most organizations if they're not capturing granular information and also if the requirements aren't defined effectively enough and if the changes aren't captured effectively enough. Because I think, you know, one of the things that I'm interested your opinion on is whether companies are willing to and ready to start really looking below that level yet, because for a lot of organizations, you know, they see that as it's too complicated to go below that whereas there are things happening in the market now, technologies available that do make that possible.

00;42;49;26 - 00;43;07;26
Jonny Dunning
But it does require a little bit of change management and the desire to really understand what it is that you're receiving and what it is your suppliers are actually doing for you. But do you think for most organizations they'll still be in a situation where they're happy at that that kind of level of information? Hmm.

00;43;07;28 - 00;43;37;24
Pedro Berrocoso
Well, and I probably depends on the maturity of your procurement organization, right. I think, you know, procurement organizations have been maturing in the meantime, a lot of good category managers, to be honest. Right. I've been working with excellent professionals in the space of I.T. procurement, for instance. Right. And, you know, they were relentless. Right. Wanting to understand all of the details which were underpinning a contract rates, which were underpinning the delivery, which were potentially then as well, comparing points with other vendors.

00;43;37;24 - 00;44;00;15
Pedro Berrocoso
Right. And seeing then as well if they could leverage as well out of their understanding as well with better ways to go about, you know, tenders they had in the market by for instance building these models, you know, from a cost plus perspective or from a milestone perspective, etc.. Right. So now is that any organization or is this going to be kind of something which every organization will have?

00;44;00;15 - 00;44;21;17
Pedro Berrocoso
Also, it probably depends a bit on how important, again, the emphasis on services is in that organization itself, what type of organization you're really dealing with, and therefore how much detail time you want to spend then as well in understanding the delivery of, let's say, these milestones with a I mean, let's just take another example instead of always going for it, right?

00;44;21;17 - 00;44;48;13
Pedro Berrocoso
The real estate BPO. Right, or the service provider which you have in your facility management organization, is he actually really, truly doing what you have in the contract or are we still having kind of activities where we would be, you know, requiring for us to monitor better the performance or monitor better the contractual adherence so that we can as well out of that, get a better value and a better development of that supplier to serve us better.

00;44;48;13 - 00;45;27;10
Pedro Berrocoso
Right? So from that perspective, I think that all organizations should have an understanding for their core services to really go a level down and have a better understanding of what is actually being delivered with the contract, which you have engaged with a supplier. Right. And if that's in accordance or can actually be optimized further with a better detailed understanding of what's going on via your spend, via your potential comparisons, you could maybe deal as well with AI around where you can maybe compare as well as some of the points between the contract and as well the execution side and some of the timing as well as well time looks you have as well in the

00;45;27;10 - 00;45;54;04
Pedro Berrocoso
system as well in case that is needed. Right. But you know, that really depends on the maturity. Right. So an organization which barely is convincing their stakeholders that they have to exist will probably have a different problems of status than an organization which is already mature. Right. But assuming now that in the 2020s, you know, we are facing most organizations within procurement already be kind of accepted and professionalized.

00;45;54;08 - 00;46;22;12
Pedro Berrocoso
I'd be thinking there should be a strong interest as well to manage that component of of spend much more in detail because there's a lot of loss of value possible if you don't have a good understanding, you know how the execution happens, how the adherence to contract happens and if there's potential as well as well for further improvement of the services, you're getting delivered with the insights of generating yourself on your acceptance, on your experience, and then as well on the customer feedback you're receiving, Right?

00;46;22;14 - 00;46;39;29
Jonny Dunning
Yeah, absolutely. Totally agree. I'm just coming back to the procurement excellence side of things. So we talked about how that can effectively be networked within the procurement function and having proper liaison with category expertise.

00;46;40;02 - 00;47;09;26
Jonny Dunning
But in a lot of cases, Procurement Excellence, Center of Excellence could be seen as kind of managing, controlling the process and kind of the the custodian of the process. I think I've heard you mentioned before, like stage gates and things like that. And where do you and obviously policy, but where do you see that kind of center of excellence capability moving in terms of enabling that organization to to push more innovation in?

00;47;09;26 - 00;47;39;02
Pedro Berrocoso
I think this is a this is an evolution as well. Right? Because I think the first step is to, you know, just be having that opportunity to create a procurement excellence team itself. Right. And most organization by now have adopted a model where they really want to take advantage of a team which understands best practices, understands ways of working, understands how to set up good guidelines, and maybe as well support activities with change management or project management expertise in order to move forward.

00;47;39;02 - 00;48;14;27
Pedro Berrocoso
Right. But you're absolutely right, I think there's been an emphasis really in these teams, and I don't want to generalize, but at least from what I've been observing, that there's a lot of focus on process, orchestration, process, custodianship, maybe, but there's less of a focus on supporting organizations to take advantage for, try to tie strategizing on the on the category side or potentially as well at enterprise level with an understanding of what's going on in the supply market and the innovations which potentially can as well be leveraged, if you will, bring them in to the focus as well.

00;48;14;27 - 00;48;31;21
Pedro Berrocoso
Right. So one area where a lot of innovation is currently happening and this is a process, a process excellence and procurement excellence teams really could as well play a pivotal role in my point of view is ESG, right? There's a lot of things going on within the environment. So. Well, environment, supply and and.

00;48;31;23 - 00;48;34;17
Jonny Dunning
ESG and social governance. Yeah.

00;48;34;19 - 00;48;52;13
Pedro Berrocoso
I think you absolutely need to look for that. Right. And if you don't have a dedicated team for that already, Right. I think usually you'll see that the procurement excellence team will first step in, right. And actually start as well uncovering of what are the the needs actually with regard to reporting first. Right. What is there from a process side.

00;48;52;20 - 00;49;15;26
Pedro Berrocoso
But now most importantly, what are potential innovations in the market which could be leveraged? So building out that view that procurement excellence is not just there for custodianship and insights and standardization of tools and methodologies, but can as well help beyond that go into innovation by scouting new technologies, by looking at ways of working with some of competitors maybe as well.

00;49;15;26 - 00;49;49;07
Pedro Berrocoso
Right. By benchmarking with Hackett and some of the other big names. Right. It is actually quite a powerful means as well to take advantage of that function. You know, building out innovation processes itself a portfolio of opportunities which then can be fitted together with the strategy the organization actually is following and then helping the category managers as well to, you know, find these opportunities and bring them into view for the activities they have around building out the category strategy specifically or the relationship with their suppliers, which they could as well be moving into.

00;49;49;07 - 00;50;12;02
Pedro Berrocoso
So innovation is becoming quite a big theme, particularly for procurement excellence team. It's a capability topic as well. Not not to forget, right, The procurement excellence teams usually have as well, capability building activity. So building innovation into the excellence team itself is a first starting point, but then disseminating and diffusing that innovation capability into the rest of the procurement excellence team as well.

00;50;12;02 - 00;50;34;27
Pedro Berrocoso
Quite important from a literacy perspective, from a learning point of view, and then bringing in these innovations from the market for me would be an a great extension of what a procurement excellence team can actually deliver. And this is where I think most organizations would need to evolve to, but not necessarily are yet on the journey. Right? I think there's still a lot of focus on the custodianship components, compliance potentially then as well.

00;50;35;03 - 00;50;52;07
Pedro Berrocoso
So having outs depending on the scope of your excellence team with data and analytics activities. Right. But bringing in that view of process innovation, technology, innovation, supply, innovation and then building that diffusion mechanism within within procurement, I think that would be a great use of the time.

00;50;52;09 - 00;51;15;28
Jonny Dunning
Yeah, Yeah. I think I tend to judge the maturity. See, I use it as a strong indicator of the maturity of procurement organization within a company is where that procurement excellence function is. For me, that's quite a clear indicator. If there is a well-developed procurement excellence capability and it's fairly sophisticated and forward looking, you say horizon planning and really, you know, holistic.

00;51;16;04 - 00;51;42;04
Jonny Dunning
I see that as that definitely indicates to me of a mature and advanced procurement set up. And obviously there are there are other indicators as well. But I personally find that to be quite a good one. I'm so, so bearing in mind the the opportunities out there for innovation, some of that sits within the technology that's available. You know, we all know within the industry there's so much more technology available now.

00;51;42;04 - 00;52;03;09
Jonny Dunning
It's growing very rapidly. It's kind of not quite exploding, but it's growing very rapidly. The opportunities out there, I still feel like for organizations there was always this kind of thing of, you know, integrating everything. What integrated suites are going to really are going to be the way forward. And I still feel like a lot of companies are struggling with that.

00;52;03;11 - 00;52;15;15
Jonny Dunning
And where where do you see that kind of digital procurement set up as far as making everything come together? It makes sense. Where where do you see that In the market?

00;52;15;17 - 00;52;37;07
Pedro Berrocoso
Yeah, and this is a question which I think most of the CPAs and, you know, leadership teams in procurement are probably quite anxious to answer. And there's so much choices, right, that making sense of these choices and at the same time, the legacy they bring along is really where, you know, a lot of the questions are currently focused on.

00;52;37;07 - 00;53;00;16
Pedro Berrocoso
So really making sense that you can actually get and step up to the next level, which is digital procurement, not just from a technology point of view, but as well from a mindset perspective and the way you actually gathering and leveraging the data which you have in the organization as well. Right. And so maybe just reflecting first on the integrated suites, right, And then going into the next step, which is, you know, where does it lead us to and where does best of breed maybe as well fit in?

00;53;00;16 - 00;53;25;26
Pedro Berrocoso
Right. The integrated suites are the average of everything, right? I mean, let's be honest, they were created with the integration in mind, which I was talking about a few minutes ago. Right. This was about bringing modules together and kind of building a seamless process without really kind of focusing on flexibility to the businesses to design their best way of execution within the procurement space itself.

00;53;25;26 - 00;53;48;25
Pedro Berrocoso
Right. And again, with a lot of average as well in mind, the average category by the average, you know, goods and services activities and the average services for sure as well. Right. So, you know, this kind of the very big average which which has been there and has been obviously integrated to their, you know, legacy ERP systems, but it has been under an underwhelming experience.

00;53;48;25 - 00;54;07;10
Pedro Berrocoso
Right. And I've been working in this space now probably a decade, if not more, a fifth, maybe 15 years around on integrated end to end suites. Right. And the promises we had at the time of still benefits because of that integration have just never really come through because of the way these solutions are designed to average. They're not really integrated, right?

00;54;07;15 - 00;54;42;12
Pedro Berrocoso
There's that they're hard to deal with from a user experience point of view. And again, they're they're never really making anyone really happy because they have gaps all over. But one aspect, which definitely, you know, has always been at the forefront, is that they can integrate with your SAP system and you don't have to necessarily deal with multiple solution because you have, you know, an ability to have one vendor you deal with and out of that be able to tap into and, you know, individual modules within potentially, let's say, differing level of granularity of how it meets up with your needs.

00;54;42;13 - 00;55;08;27
Pedro Berrocoso
Right. So these solutions, from my perspective, have filled the backbone for many years. Again, underwhelming in terms of many factors. Right. The the aspect maybe they've been fulfilling really well is this integration to SAP, Right. Integration to JD Edwards or maybe now rather rather say, Oracle than JD Edwards itself? Right. So that aspect maybe. Yes. All of the other aspects.

00;55;08;29 - 00;55;30;06
Pedro Berrocoso
Yeah. Rather underwhelming, I would say. Right. And you know, where this is currently going is into an understanding that, you know, what's it legacy you now have. You have to take the next step. Right. And many organizations, particularly the ones who have been investing into into integrated suites or strongly into into now what is the next evolution of their ERP?

00;55;30;11 - 00;55;54;26
Pedro Berrocoso
They'll they'll be looking to get out of that legacy trap they're in and really take advantage of newest technologies where it makes sense. Right. And so what you'll see now is that organizations are going to reevaluate, let's say, the functionalities they have into in their individual suites, right. And then start to review whether or not there is actually potential to increase depending on where their biggest pain points are.

00;55;55;02 - 00;56;17;05
Pedro Berrocoso
Some of these activities with a technology which can support them or is they can actually reimagine the whole process they've actually designed with the means of, for instance, a dedicated service service service suite. Right. So service procurement solution. Right. And I think this is where you currently see a lot of efforts happening. So organizations are looking at, you know, where am I right now in that big picture?

00;56;17;08 - 00;56;36;13
Pedro Berrocoso
What is my natural next step so that I can actually take advantage of digital procurement solutions, right? I can take advantage of automation. I can take advantage of good user experience. I can take advantage of data and insights, right. With what I currently have or with a replacement or they currently have a best of breed solutions itself. Right.

00;56;36;16 - 00;56;58;21
Pedro Berrocoso
And again, this really depends a bit on where you are in your journey. So if you didn't invest much, you may leapfrog immediately. Right. And you know, buy solutions with which fit best with your business model, fit best with the maturity of your own procurement organization and your stakeholders. Because not to forget that as well, you know, your stakeholders, they're following a journey as well in the maturity curve when they adopt solutions together with you.

00;56;58;24 - 00;57;16;23
Pedro Berrocoso
And then you may have solutions which are very much invested. They may have legacy, legacy depth in that sense, right. Which they need to reconsider. And now that they're moving into, you know, next level ERP, I think SAP for HANA is a big thing. And many companies currently have them naming now a vendor, which I normally don't do.

00;57;16;23 - 00;57;46;00
Pedro Berrocoso
Right. You know, they they need to reevaluate these questions. Right. And I think a lot of organizations, they know that, you know, they have to on one hand, get the best out of the best of breed solutions that are currently there so they can leap into digital and at the same time that that they do that they still need a strong integration layer which needs everything together and make sure that you have an orchestration happening which in the past was what you were assuming the integrated suite to take care of.

00;57;46;00 - 00;58;05;05
Pedro Berrocoso
Right? Right. So you still need that orchestration layer, You need a data layer, right? And on top of that, maybe a mix of best of breed solutions which connect well to your architecture and your ERP system. And what's that give you the ability to pivot away from what is a classical procurement organization? You may have been it in the past, which was executing somehow, right?

00;58;05;09 - 00;58;34;01
Pedro Berrocoso
Potentially strategizing into a digital, digital savvy and digitally enabled organization which can take now care of the data which they have, can really leverage the value of the information available to them to build strategies to better serve their customers, to partner up with insights and be able as well with an automated, let's say, execution as well, to harness the value which you may have as well of having a seamless execution from an autonomous perspective build up.

00;58;34;01 - 00;58;52;00
Pedro Berrocoso
Right. But still, again, I think it's going to be moving into what I said very earlier on, you know, leaving that legacy of execution and moving much more into focus in procurement folks, into the activities where the value add sets now strategies, partnering and really being there with the stakeholders and suppliers to define the best way forward.

00;58;52;02 - 00;59;18;05
Jonny Dunning
And when you when you bring best of breed into that conversation and you know, for some for some procurement professionals, it could be quite confusing landscape, a lot of different solutions out there, a lot of new solutions coming onto the market. So so we look to the problems that organizations have had with with integrated suites where the great promises of every every problem being solved under one roof, maybe not realistic, but also the world has changed.

00;59;18;05 - 00;59;40;01
Jonny Dunning
The market has moved quickly to, you know, requirements for the new things and new services and new ways of working have moved them far more quickly than these legacy systems can possibly operate because they're carrying so much weight with them because they've been so successful in the first place. Well, do you are there any particular areas where you specifically see best of breed making sense?

00;59;40;01 - 01;00;01;18
Jonny Dunning
Because one of the one of the things I sometimes hear in the market is that some best of breed solutions are too broad. And it's one of those things where it's like you can best of breed can run into that crossover problem where they might be solving, of providing a very, very elegant solution for a particular problem. But they'll cross over with contract lifecycle management and that's handled over here.

01;00;01;18 - 01;00;14;08
Jonny Dunning
But it won't be the only thing they do. They'll cross over with maybe two or three areas. Do you do you see some best of breed solutions as being too broad or is that not really something that comes up.

01;00;14;10 - 01;00;34;26
Pedro Berrocoso
And there are these solutions, right, which are trying to satisfy needs which are outside of the remit where they're being invented, right, or where they really have sweet spot because, you know, their customers usually ask for a bit more extensions of functionalities and you know, that goes down a little bit beyond of what actually was the Incepted idea of what a best of breed solution is.

01;00;34;26 - 01;00;36;07
Pedro Berrocoso
Always the one, right? Yeah.

01;00;36;07 - 01;01;06;25
Jonny Dunning
Yeah. Your customers will definitely. Yeah, we see that. Absolutely. You customers can be incredibly valuable in helping to shape the most effective solution, especially in new and innovative areas where it's going to benefit them, it's going to benefit other customers. But absolutely, you have to have a really focused mindset within it, within a a step up scale up tech organization, especially as it's evolving so quickly to not get dragged down a path then becomes cumbersome and ineffective.

01;01;06;27 - 01;01;16;07
Jonny Dunning
I always like to think it's really drilling it down to getting the maximum value from the minimum amount of change in the simplest solution. But it's that is that is a hard thing to achieve.

01;01;16;10 - 01;01;35;17
Pedro Berrocoso
And to be honest, I have to. So there's a bit of an excuse now, Right. But maybe 15 years back, just to give you a quick example, is a very successful best of breed solution right now in the market. It's not a very recent one. It's already out there 15 years and at the time I started to work with them, they had fallen into exactly that trap.

01;01;35;17 - 01;01;54;21
Pedro Berrocoso
Right. They have been asked to do things which were not in their sweet spot and they were creating quite an satisfaction with the results they were providing. Right. Because the organization I was in at the time, you know, they were seeing this organization being subpar at delivering a functionality which was catering for their needs. And this was around savings tracking at the time.

01;01;54;21 - 01;02;12;21
Pedro Berrocoso
Right. And so that solution now is super, super successful. Right. But they have honed in to their sweet spot and they've not left that sweet spot ever since. So you can't really get them wrong any longer because if you're now asking or evaluating them, you know exactly what spot they fit in so you don't have to second guess.

01;02;12;21 - 01;02;37;25
Pedro Berrocoso
And at the same time they will be hard on giving in to any requirements you may have which are outside of the petty meet of what the solution is intended to do. Now, back to your question about, you know, where do I see pockets of areas where, you know, that may or may not take place? Right. You know, I think one area which I feel is now bubbling up as quite an interesting area is the whole demand intake part, right.

01;02;37;25 - 01;03;04;18
Pedro Berrocoso
And the collaboration around requisitioning. I feel this is a whole area of discussions right now which has been growing over the last few years. Right. And this is about the collaborative aspect on how you use and how you specify. It's not about just building a requisitioning system, right? But this is about, you know, providing a means for you to specify details out for a service contract, for instance, or a service engagement for a vendor with all level of details which you need.

01;03;04;18 - 01;03;28;25
Pedro Berrocoso
Right. And having that machine or that engine really being focused on the aspects on on the collaboration and and and building up the components which you need for a bill of material form from a services perspective, I feel is one of the areas I've seen lately taking a lot of focus right and where a lot of best of breed solutions are now really zooming in because they understand that this is a pain point which has not been solved by others yet.

01;03;28;25 - 01;03;46;05
Pedro Berrocoso
Well, right. So I'd say that this is an area where I see a lot of focus right now, and that could as well be there a good interest for people to look at If that is a pain point. They want to solve within their procurement stack. Right. And they want to be really making sure they evaluate as well the possibilities which are there.

01;03;46;08 - 01;04;04;03
Pedro Berrocoso
And again, there you may have now a mix, right? There are. Some companies who do that as part of their end to end suite. Right. So I, I know some of the more recent best of breed solutions they started that another involving up the chain right whereas I think what they should probably do is focus first on getting that really really to excellence, right.

01;04;04;11 - 01;04;26;02
Pedro Berrocoso
Doing that foundational work really well and then extrapolate from there what is an other problem they may potentially want to solve, which has a similar adjacent pain point which they can sort out. Right. And not necessarily mingle too much away into areas where others may have already been leaping forward with with other other type of technology support or potentially as well with other concepts.

01;04;26;02 - 01;04;28;18
Pedro Berrocoso
Right. Yeah. So sorry.

01;04;28;18 - 01;04;30;04
Jonny Dunning
We carry on.

01;04;30;06 - 01;04;49;16
Pedro Berrocoso
So that's one one LLP Yeah, I think I'd be probably thinking this is where you will. You want to take a look at Best of breed, but you want to be as well making sure that you don't leap away from that sweet spot, right? Other areas I'd say there is a lot of, there's a lot of buzz right now around ESG solutions again, So we were just talking about it.

01;04;49;17 - 01;04;55;03
Pedro Berrocoso
Maybe I get it right now it's environmental, social and the G is government right?

01;04;55;05 - 01;04;57;24
Jonny Dunning
Governance? Yeah, I believe. Yeah. Yeah.

01;04;57;26 - 01;05;19;06
Pedro Berrocoso
If we're going to get there. So I think there's a lot of solutions and now each are entailing they want to help you with as well. The reporting out of the carbon, the carbon impact and footprint. Yeah. Which you're creating the organization and how you actually hold out of that. All of the details which are scope three. Absolutely right.

01;05;19;12 - 01;05;39;16
Pedro Berrocoso
So I think that's an interesting space. It's evolving quite fast. Not necessarily yet sure where it's going to go from my perspective, but it's definitely a point of view you should take as well whether or not this serves a purpose. But you may have as well with your reporting reporting needs. And other than that, I'd be thinking that one space which I see always very convoluted is the contracting space.

01;05;39;16 - 01;06;07;14
Pedro Berrocoso
Right. Sorry to say that, you know, I've been going through phases of contracting integrated non, integrated. Right. And I think this is an area where, together with other teams in your organization, be it legal, beat, marketing, etc., you probably will need to rethink, you know, how is this best set up? Does it does it need to be a best of breed solution from a procurement perspective, or is a legal point of view needed which is going to give you then the leverage you need for managing contracts in a much better, much better way?

01;06;07;18 - 01;06;34;24
Pedro Berrocoso
So that is an area which I would be almost anticipating. You need to do a much more diligence because it may not necessarily be that you're the best of breed pod is where you are looking at it from a procurement angle. The best of breed part may be actually potentially somewhere else. Right? And this is just something which I'll be calling out as Yeah, And then I think, you know, the whole user experience discussions, right, is an area in itself and this is something which just coming back to integrated suites, right?

01;06;34;24 - 01;06;54;18
Pedro Berrocoso
Which is one of the selling points which have never really come to fruition. And you're absolutely right, you were absolutely right before the technology wasn't there either. I had to do all of the tricks which which people potentially were anticipating this Amazon great view, Right. Which everyone was raving about, was just not feasible, let's be honest. Right? It wasn't just there.

01;06;54;21 - 01;07;20;26
Pedro Berrocoso
And now it's becoming, again, center point of many conversations, right? Nowadays, people are less eager to accept any bad user experience. Right? You're designing processes nowadays for users. You're making sure that usability is at the center of your experience. You have in the technology side. But then as well, you have the right engagement with people in case problems arise, right?

01;07;21;01 - 01;07;41;27
Pedro Berrocoso
So designing a whole ecosystem of supporters well around which goes beyond just a simple user interface, right? So again, that user experience component is a is again coming up to or is actually surfacing up as probably one of the strongest points of conversations right now in the organizations I'm dealing with. Right. So in the in the teams I've been talking to recently and at the declines I've been supporting as well within the last five years.

01;07;41;27 - 01;08;00;12
Pedro Berrocoso
Right. So how you get that right is is something which a lot of people are currently scratching their heads on. Right. Because again, it's a combination of things. But, you know, the whole technology part is a very strong component. And this is this is probably where I think the whole digital procurement activities. Right. Which which which we all talk about.

01;08;00;12 - 01;08;25;27
Pedro Berrocoso
Right. Play a very strong role. Right. Because now with generative VR, you have a best an ability to build up engagement channels with the with your end customers in, in your organization where they can self-service themselves in a much more sophisticated manner than traditional chat bots will do. And at the same time, you have an ability then as well to provide insights to information for the user to have a much more personalized experience.

01;08;26;04 - 01;08;50;17
Pedro Berrocoso
Right? And for you then as well to be able to be engaged in case it matters. Right? So the whole the whole engagement of of your end and customers or stakeholders with the new means you have around generative AI and just generally with automation, it's just fantastic right. And I think this is again combined with the whole user experience, pain point and ideal area for for couples and the leadership teams to really put their fingers on.

01;08;50;24 - 01;09;10;03
Pedro Berrocoso
And it is to start to, if that is a point which potentially could elevate up their maturity but then as well the maturity of the rest of the organization, if they close out that massive pain, which leads to a lot of frustration in the engagements and probably as well a loss a little bit of the credibility or acceptance levels as well, Right?

01;09;10;05 - 01;09;30;15
Jonny Dunning
Yeah, I think the point you raise around user experience is a very interesting and very relevant one for for tech providers, it's basically table stakes. You know, you've got to have a fantastic user experience if you want to be able to succeed in any way. And I think we've seen some interesting stuff around the way that different technologies can be integrated to create a good user experience.

01;09;30;21 - 01;09;48;16
Jonny Dunning
And sometimes it's as simple as leveraging things like existing single sign on existing two factor authentication. You know, when a user first uses a system, they don't have to create an account, they're just coming straight into it. Maybe It's a white labeled experience. So they might be navigating through different systems, but it doesn't matter because it's just different screens.

01;09;48;19 - 01;09;59;28
Jonny Dunning
So so I think there are in some ways it's not as difficult to achieve us as organizations might think in the outset, but it needs to be planned properly.

01;10;00;00 - 01;10;24;19
Pedro Berrocoso
And I think that's a good point I think you have to anticipate that journey and you have to plan for it, right? I think that that is a that is a turning point, I think in many organizations as well to first accept that there is you know, there is a journey to look at which is an end user is a journey not just to professional procurement bias, which you need to cater for from a usability perspective, but then as well your stakeholders.

01;10;24;19 - 01;10;40;22
Pedro Berrocoso
Right? And you know, just having that understanding is already a good starting point to then get into the next level, which is unlocking simple, scalable factors first, right? And then giving a bit more delight over time as you evolve with your user experience journey right?

01;10;40;25 - 01;11;04;24
Jonny Dunning
Yeah, definitely. So just to kind of wrap things up, the last topic I'd really like to dive into in a little bit more detail is around Ion automation. I know you've been doing quite a bit more recently around that kind of automation and some of the new technologies coming into the market. It was interesting what you were saying about scoping intake requirements generation.

01;11;04;24 - 01;11;25;11
Jonny Dunning
I mean, I think what I was going to ask you was where do you see where do you think companies can most leverage? AI It depends what type of air you're utilizing for utilizing machine learning. Then the kind of quantitative analysis, there's a massive amount you can do with that, which is really, really interesting. But the large language models have changed the game completely.

01;11;25;17 - 01;11;48;16
Jonny Dunning
And the crazy thing is it's only really within the last nine months that it's really come out into the market. And I was listening to a podcast the other day, fairly technical podcast, which was kind of going a bit beyond my capabilities in terms of the AI conversation. But it was really interesting to understand how these current large language models, they came from stuff that people didn't really expect to work in the way that they do it.

01;11;48;20 - 01;12;10;14
Jonny Dunning
Almost a surprise for the organizations that were really at the tip of the spear with this as to how effective they've been. So it's like people have been building up and building and building up to this for 20 plus years and then suddenly it's there's a really effective opportunity. Um, but one of the so, so scoping is brilliant for using those large language models where you've got this massive amount of information.

01;12;10;14 - 01;12;32;06
Jonny Dunning
And if you can, if you can guide those tools in the right way, if you can interface with them the right way to, to explain the context by which you need that information, they're actually very good at providing that. But another area that I think is quite interesting is things around qualitative feedback. So for example, you look at the way that Bing is using Bing Chat or whatever it's called.

01;12;32;06 - 01;12;57;29
Jonny Dunning
Now those are the top of the search results on Bing, where they've got the chat interface in the background. That kind of summarization has some real potential within, for example, qualitative feedback. You get lots of different feedback from lots of different people. How a supplier's performed well you actually want is a summary of that somebody can read. Where do you see the opportunities for for organizations to really leverage AI At the moment?

01;12;58;01 - 01;13;20;09
Pedro Berrocoso
Yeah. And I think you're, you're, you're spot on with regards to generative AI Right. And it is almost a landslide, right, for a lot of organizations which have been working on this, these large language models to realize how, how powerful they've actually become as well to enable organizations now with capabilities which are cognitive right and to many to many ends as well, create it to some degree.

01;13;20;09 - 01;13;42;10
Pedro Berrocoso
Right. I think it almost begs the question then, will creativity really then than is Right. But these these new capabilities are actually opening up a lot of opportunities besides the fact that you can maybe specify your your needs a bit better because you have an interaction dialog with with with an agent if you want, or the copilots or the techy bits of the world.

01;13;42;10 - 01;14;09;09
Pedro Berrocoso
Right. You have a bit an ability maybe as well to support your tendering activities, building up tender tenders for your suppliers in a much more rapid way. But then as well evaluate the results around criterias which you ask the machine. Then to summarize for or to watch out for and then bring back into evaluation. Right. So what I see is that these these solutions will have an ability on one hand to help you with a lot of consolidation of data and with that making sense out of the data which is out there.

01;14;09;12 - 01;14;35;09
Pedro Berrocoso
And that could be very extensive amounts and volumes of data. Right. One of the organizations have recently been working with is actually looking at consolidating details out of audit reports which they need for compliance. And these audit reports, they are 80 to 90 PDF pages, right? And so doing a summarization these activities to get to the grain of what is actually included in there and therefore relevant for me to then take next actions with my suppliers is super extensive work right?

01;14;35;09 - 01;14;55;05
Pedro Berrocoso
And it takes you almost 2 hours to do that for one single report. And nowadays with the capabilities you have around generative the AI, this is taking them 5 minutes because the only thing they need to do is revise what has been summarized and it makes sense or whether there may be something missing, which is basically a validation point rather than a summarization activity.

01;14;55;05 - 01;15;20;25
Pedro Berrocoso
Right. So just taking that as an example, in that particular case with more than 2000 of these reports crossing the table of individual people in the supply of quality function every year, you can imagine that 2002 hours, right? That gives you already quite an amount of savings with regards to productivity. Right. And it gives you an ability tap into details which you potentially would oversee because this is the good thing as well about the generative, the AI solutions.

01;15;20;27 - 01;15;46;09
Pedro Berrocoso
You know, they may actually come up with details, which you may not emphasize because you're focused on trying to identify the data points which you've always been looking at. Right. So again, one big area consolidation of details, sentiment analysis or understanding what is actually underneath that detailed level of text images, videos, depending on on the media you're actually looking at and reading between the lines and helping you understand the emotional aspects as well.

01;15;46;09 - 01;16;10;03
Pedro Berrocoso
Right. Which come along as well. And this is something very powerful I've seen as well being executed on some pilots, which I've actually run in the past, ride around sentiment analysis for investors where, you know, you're trying as well to predict what's what's actually the emotion. You see there and at the same time then be able to react with the right level of empathy as well to some of your stakeholders.

01;16;10;10 - 01;16;48;24
Pedro Berrocoso
And that leads me then to the second area, which is basically the whole customer engagement part, right? Where if you think about procurement and chat services, right, there is a lot of operational procurement activities there which are connected to as well to the to help helpdesk. They're connected to your support teams. So better understanding the feedbacks coming from your internal customers and then be able to offer a reaction because you've studied their sentiment, because you've studied their problems, because you can better predict what the next solution is in a much faster time and in a much more adequate way is actually as well going to be quite, quite, quite a fundamental change, I would say,

01;16;48;29 - 01;17;11;01
Pedro Berrocoso
in the way you can elevate as well your your customer experience. Well, right. So we talked about content consolidation. We talked briefly about customer customer support in that sense. Right. And then you have as well a lot of creativity, which you can go about as well when it comes to, you know, building out frameworks and solutions potentially as well, simulating scenarios on your category side, right?

01;17;11;02 - 01;17;33;07
Pedro Berrocoso
So providing a identify solution, different scenarios, and then make sure that with that solution you can then cross-check and validate and maybe then as well differentiate out the scenarios according to criterias I find to be super powerful as well. And then as well, you know, building out your negotiation strategy. Right. And this is something which I'm hearing now a lot of organizations talking about.

01;17;33;07 - 01;18;03;14
Pedro Berrocoso
You know, they talked about procurement excellence, centers of excellence in the past. Right. Nowadays, I'm hearing as well organizations talking about negotiation center of excellence. Right. I think there's this realization that these new new technologies, they may actually help you as well to gain advantage by being better positioned to negotiate with your suppliers based on, for instance, the data you have based on, for instance, the generative A.I. capabilities, which could support you as well with the strategies you can build as well for negotiations.

01;18;03;16 - 01;18;25;07
Pedro Berrocoso
And then as well the scenarios you can play across in order to make sure you get the best leverage right. So I think these are just three key key I see immediately coming up. And then there's the traditional aspects you were already talking about before, right? The machine learning, predictive analytics aspects, which, you know, I've been reading lately as well, is probably one of the biggest leverage points.

01;18;25;07 - 01;18;45;27
Pedro Berrocoso
Which organizations are still looking at when they think about digital procurement. They're still thinking first about digital in the sense of data analytics, because that's where you've seen most of the progress. Second, maybe process automation, and then thirdly, then artificial intelligence. Right? But again, that landslide we're seeing is is again, as I said earlier, it's easier from my point of view.

01;18;46;04 - 01;19;11;20
Pedro Berrocoso
So I think there's a lot of opportunities and a lot of, you know, shifts which with which we could see procurement taking. Now it's just a matter of getting started. And I think this is where, you know, I'd be hoping that every CPO currently at that table has got a big question mark, which is how kind of best how can I take advantage of all of these new solutions to elevate up the capabilities of my procurement function and as well my people?

01;19;11;21 - 01;19;20;06
Pedro Berrocoso
Right. And I think that should be kind of that question number one, which people should go after after their business as usual. Activities obviously are closed out.

01;19;20;08 - 01;19;24;20
Jonny Dunning
I like it. I what a great time to be involved in digital procurement.

01;19;24;22 - 01;19;43;18
Pedro Berrocoso
Absolutely. I think it's it's the it's a pinnacle time, right. I think it's it's it's kind of that I was just I think you talked about before about precipitous, right. Yeah. And I think it's a turning point right. As well for procurement and all of the folks who are involved in technology at this stage.

01;19;43;20 - 01;19;59;11
Jonny Dunning
Yeah. When I said I think that's a great point to to end very nicely summarized it there. How long are you going to be in the app for? You're going to be there for a little while longer before have to get back to the business as usual. I'm very jealous of you being in the Swiss Alps, by the way.

01;19;59;11 - 01;20;01;15
Jonny Dunning
It sounds sounds lovely.

01;20;01;17 - 01;20;28;25
Pedro Berrocoso
Well, it's a bit chilly, but it's actually it's. Yeah, it's very pleasant to be up here. I'll be here for another few days, and then I'm going back slowly into my into my business as usual right. I have a client projects and so therefore my vacation is going to close off soon. But here I'm taking away as well a lot of inspiration from not just the Alps and kind of refreshing and relaxing, but as well from some of the conversations I'm having like this one here.

01;20;28;26 - 01;20;29;03
Pedro Berrocoso
Right.

01;20;29;08 - 01;20;40;19
Jonny Dunning
Well, listen, I really appreciate you taking the time while you're on a break to join me for this conversation. I really enjoyed that. Some great points there. And yeah, I hope you enjoy the rest of your break. Thank you very much.

01;20;40;21 - 01;20;43;09
Pedro Berrocoso
Thank you very much, Joni.