Looking at any of the digital procurement ‘spider charts’ suggests that procurement is an incubator for a vast array of startups. But how many of these companies reach their full potential, and who are the innovative CPOs giving them a try?
As exciting as the startup environment appears, there are many challenges as well. Some are related to ‘same old’ problems, like data quality or issues in the supply chain, and others just can’t seem to get traction because the market isn’t ready for what they offer.
Jack Freeman is a Partner at PeakSpan Capital and a regular speaker at Art of Procurement events. He joined me for a session at AOP Digital Outcomes in February to talk about the health of the overall procurement startup ecosystem as opposed to the benefits of any particular digital strategy.
Jack’s perspective on the procurement startup scene – the investor’s perspective – reveals as much about procurement’s ability to implement and adopt new technologies as it does the disruptive thinkers and procurement startup founders that bring them to market.
In the session, he touched on the challenges faced by procurement tech startups aiming to sell to large enterprises, especially for procurement’s own use. There are very few truly innovative CPOs, and this creates a challenge for early-stage companies who are willing to alter their solution in order to gain traction, but may end up creating a product that the market as a whole can not (or will not) adopt.
As Jack explained, there are two primary types of procurement tech founders, and companies are likely to notice a difference in what their solutions offer. There are serial procurement tech founders who are trying to elevate the space from within, and there are innovators who experienced the pain of poorly-functioning procurement platforms as users and believe there must be a better way.
Jack sees plenty of opportunity for startups, despite the high level of fragmentation shown in most spider charts. In his opinion, future innovation may be in areas of functionality that have not received as much attention in the past – supplier payments for instance – but which are now a higher priority given the macro environment and procurement’s maturing relationship with the business.
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