Movers and Shakers

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Leadership change at SAP Ariba EMEA

The big news in the sector so far this year is that Paul Devlin, EMEA General Manager of SAP Ariba left the business just before Easter. Devlin was a highly respected leader with a strong sales background and great passion for working closely with his customers. He was a key part of the growth of Ariba in Europe since the SAP acquisition and will be a significant loss to the business.

His move to Edenhouse keeps him firmly in the SAP Ecosystem and it will be interesting to see if they enter the Ariba market under his influence to supplement their strengths in SAP and specifically Success Factors.

However, the business has moved to restructure the sales function under new global leader Pat McCarthy who is highly regarded, particularly in the US. McCarthy reports into the President Barry Padgett who took over after Alex Atberger’s move to SAP Hybris at the end of 2017.

The excellent commercial team assembled by Devlin is part of his legacy to the business, and in former Emptoris stalwart Justin Sadler-Smith, the business has a very experienced leader in the UK. His background will make him the ideal person to leverage the huge potential of their partnership with IBM on cognitive procurement.

Justin’s boss Dean Pathak continues to lead Northern Europe with Patrick Hyati leading the southern half of the continent. Both have impressive teams including a newly appointed Sales Director in France.

In terms of consulting, implementation and customer success, there has been some senior level restructuring rewarding a number of high performers with bigger roles.

In summary, SAP Ariba looks as well set to attract and retain both enterprise and midmarket customers as ever despite the departure of Devlin.

Shares rise as Coupa hits profitability

There’s also a positive outlook at Coupa where they have reported a first quarterly profit and a healthy share price which is bucking trends in US markets weighed down by a potential trade war.

Diginomica reported that “Coupa announced a strong end to their fiscal 2018 as the spend management firm turned in its first non-GAAP quarterly profit of $884,000, on revenues up 41% year-on-year to $53.8 million. Subscription revenues were 46.6 million, up38% year-over-year and comprised 87% of total revenue.”

CEO Rob Bernshteyn commented: “From a financial perspective, just three short years ago, over 75% of our new subscription revenues came from our core procurement applications. But today, that figure is less than 50%, with more and more coming from expense management, invoice management, supplier information management, and a host of other key offerings.”

Coupa lost an established, well respected European leader in Alex Kleiner last year. Their European Marketing Director Carina Hoogeveen also left, following Alex to Apptus. Both have since left Apptus with Carina joining Icertis, the cloud based contract management business who have been hiring aggressively in the UK in past six months.

In our last report we covered the news that long time European GM Gerard Dahan had left Ivalua to join Determine last September. Ivalua moved to replace him with Franck Lehereux joining from JDA Software early in 2018.

Acquisitions & Mergers

There have also been significant changes in ownership in the sector, most notably Jaggaer’s acquisition of BravoSolution and what was effectively a reverse takeover of Perfect Commerce by Proactis.

It’s still relatively early days for both newly formed organisations. There were a number of departures at BravoSolution in the US shortly after the deal was announced but the European businesses are largely untouched so far in terms of headcount. Given Jaggaer’s relatively small presence in Europe prior to the deal, this seems sensible.

It will be interesting to observe if there is any further restructuring, redundancies or senior hires, and of course how they intend to align the various technology offerings now available in both
newly merged companies.

More recently Advanced Solutions acquired Science Warehouse for £16m as part of their ambitions to grow its portfolio of cloud based solutions. Science Warehouse has an established client base which is at its strongest in the UK public sector including the NHS and various Universities.

This article was originally published as part of our Spring 2018 Procurement and Spend Management Insider Report. To read the full report click here.

The Future of Procurement Part 1

This article is an excerpt from our Spring 2018 edition of The Procurement & Spend Management Insider.

At the recent eWorld event a number of the presentations attended by our team made reference to the issue of the procurement profession fighting to move on from the savings dominated agenda to make a meaningful contribution in the other areas that procurement leaders covet. This has long been a discussion topic at many procurement events. Regular readers of this report will know that Edbury Daley is passionate about working with clients who are committed to recruitment best practice. Our clearly stated philosophy is: We recruit for companies that need the best talent in procurement technology and spend management, companies that take their recruitment seriously and invest in finding the right people.

However, if we look at our own experience of when procurement departments formally drive the selection process for recruitment suppliers, a high percentage of tender processes are still completely tactical in their orientation. We believe many were poorly thought out and were clearly savings focused to the exclusion of any real opportunity to add value. There is a lot of talk about talent attraction as a priority in all the CPO surveys from the leading consultancies, but the reality is often different. This contrasts with our positive experience of working with technology companies offering procurement solutions.

Vendor management is also typically poor. Recruitment processes are often lacking agility and are rarely designed around talent attraction. The golden rules defined from our research are consistently broken by many major organisations. The reality is that it’s all about the savings for most companies. So in this section we consider three of the opportunities that exist for procurement to prove its value beyond cost savings and the skills required to do it.

They are:
1. Brexit
2. Procurement CSR
3. Technology & The Procurement Skill Set

BREXIT

At the recent eWorld event Andrew Daley chaired a discussion workshop entitled “Preparing for Brexit – Changing demands, skills and supply chains.” The session was fully subscribed with delegates from a wide variety of sectors. We expected a lively discussion about Brexit contingency planning across the audience. What we actually found was that most delegates worked for organisations who had done little or no planning, and were attending to find out what everyone else was doing. Their reasoning was perhaps best summarised by this: “We are taking our lead from politicians so we’re not sure what to plan for. We are likely to get a transition period, so we’ll deal with it then.” Thankfully there were some interesting contributions from those that have engaged in some meaningful contingency planning.

Labour mobility was the area that had received the most attention so far in this particular audience. One delegate from the biotechnology sector mentioned that 70% of his organisation’s labour are EU nationals. They are understandably concerned about this. His organisation is exploring what that will mean for their ability to manufacture and distribute post-Brexit. He also talked about EU funding post 2020 – that’s their other big concern as well as losing top scientific talent to EU member states. But not that there’s much the procurement and supply chain can do about that.

Another delegate from the FMCG sector made reference to a high percentage of semi-skilled EU labour in their operations being a major concern for them. A delegate from a major financial services company talked about them working to engage EU employees to promote greater loyalty in key parts of their customer services operation. The most comprehensive planning had been done by the aforementioned FMCG company and we were fortunate to have their procurement leader in the audience. He offered the following insights into their planning.

They had analysed the various different potential post-Brexit scenarios, weighing and ranking the options in terms of the likelihood. The options ranged from a U-turn seeing the UK stay in the EU, through to a hard, no deal Brexit where we crash out onto WTO regulations. They have ranked a free trade agreement after a transition period as the most likely option giving it a 50% likelihood. Their worst case scenario was a diamond hard Brexit which they ranked at 10% likelihood. It is that particular potential outcome that has been driving much of their contingency planning. Interestingly the procurement leader in question has been attending a number of supply chain conferences to research and assess the approach by companies facing similar challenges. He concluded that those with goods coming in from the EU to be sold in the UK are doing the most planning. One notable FMCG company supply chain leader had confided in him that their planning for a hard Brexit included moving their operations out of the UK. A common view from others went something like “it’s not a problem, we’ll just hold more stock,” but it was pointed out that if you haven’t done any planning how are you going to find that situation in 2019/20. The problem with waiting for the transition period is that you’ll be at the back of the queue for things like extra storage space and it will undoubtedly cost more given rising demand.

This is an opinion backed by commentary in recent articles in the CIPS magazine Supply Management which focuses on the likelihood of suppliers raising prices in response to the crippling cost of Brexit. One survey said that 32% of firms have already increased prices whilst another survey shows that 41% of respondents plan to increase their prices “to offset the potential costs of Brexit.” In another article entitled Analysis and preparation key to tackling Brexit Supply Management observes that Mark Chadwick, director of business services for consultants Fusion 21 said: “Although uncertainty caused by Brexit had made it harder for teams to control costs, early stage analysis would help businesses prepare for any circumstances.” He is quoted as saying: “Putting a lot of effort now into understanding the wider environment your suppliers are working in and what’s affecting them and what pressures they are facing will best prepare you for what you might be asked in the future.” “We found that if you don’t do that analysis and preparation you’re often going to find that you’re on the back foot and that you’re really starting to react to situations as they emerge rather than being proactive and trying to manage those situations.”

There is a different view of course. At eWorld Andrew Daley asked one experienced procurement practitioner in the audience, who has an established consulting business, what his clients were doing to prepare. He offered the view that many aren’t sure what they are planning for so why devote resources to it? For some, they view the transition period as an opportunity to make the necessary changes and many view the whole scenario as “Y2K again” as he put it. It was fascinating to hear the views of people working for companies taking a view at either end of the spectrum on this subject and it’s something we’ll continue to monitor through conversations across our network and by attending industry events. Our view is that Brexit offers a unique, once in a generation change which is likely to have huge impacts on international supply chains. It, therefore, offers both procurement and supply chain professionals an opportunity to have real influence in areas that go beyond savings. Why not take that opportunity to move procurement and supply chain up the boardroom agenda? We also asked the audience at eWorld if procurement professionals need to develop any new skills to deal with these changes, but we struggled to generate any meaningful contributions on the subject. We have been asking ourselves at what point in time will we start to see roles that focus on Brexit contingency planning.

If or when it does happen what skills will they require? The approach of our FMCG leader mentioned above is perhaps the most interesting example so far that of modelling the various scenarios, allocating resources accordingly and then researching and preparing to act. It should also be noted that this particular leader is attending as many professional events as he can to learn as much as possible from his peers and then passing this learning onto his team.

Is it time to get yourself to the next procurement or supply chain professional conference?

In Part 2 of our Future of Procurement series of articles we’ll review Procurement CSR and whether procurement can be a force for good. And if you’d like to read the full Insider report you can download it here.