Author Archives: Pierre Mitchell



About Pierre Mitchell

Pierre leads Spend Matters procurement research activities and has broader solution development responsibilities for intellectual property creation and firm strategy as Managing Director of Azul Partners. This includes spearheading efforts to build new types of interactive and social communities of interest within the procurement profession including overseeing the evolution of spendmattersnet.com, Spend Matters PRO, MetalMiner, and other digital assets within Azul Partner’s umbrella. Pierre has 25 years of procurement and supply chain industry and consulting experience, and is a recognized procurement expert specializing in supply processes, practices, metrics, and enabling tools and services. He is a regular contributor to business publications, a frequent presenter at industry events around the world, and counts himself fortunate to have served and interacted with so many CPOs and future CPOs. Prior to his positions in research and advisory, he led numerous operations and systems transformations at Fortune 500 organizations. Industry positions include manufacturing project manager at The Timberland Company, materials manager at Krupp Companies and engineer at EG&G Torque Systems. He holds an engineering degree from Southern Methodist University and an MBA from the University of Chicago. In the early 2000's, Pierre was the first supply chain practitioner to become a procurement "industry analyst" as the VP of supply management research at AMR Research (now part of the Gartner Group) where he provided trusted counsel to procurement executives, business leadership, IT, and the solution providers who serve them. Most recently, he was the head of procurement research and adjunct business advisor at The Hackett Group, where he helped expand Hackett's procurement benchmarks and research studies while growing the Procurement Executive Advisory Program into a gold standard membership-based procurement advisory service in the market today.


Icertis becomes first true CLM unicorn, with $115M funding round — and it sits atop a market that’s red hot and ripe for M&A

Global Risk Management Solutions (GRMS)

Icertis announced today that its latest funding round raised $115 million and that the provider of contract lifecycle management (CLM) is now valued at more than a billion dollars, reaching proverbial “unicorn” status.

The funding round was led by two groups, Greycroft and PremjiInvest, with participation from B Capital Group, Cross Creek Advisors, Eight Roads, Ignition Partners, Meritech Capital Partners and PSP Growth, according to a press release. The latest round brings total funding to date to $211 million, the release said.

Mark Terbeek, a partner at Greycroft, said in the release: “We’ve seen (Icertis) become the undisputed CLM leader, acquiring a huge stable of blue-chip customers and generating a return on capital that is among the best we’ve ever seen. We have no doubt they will become the next giant in the enterprise SaaS market.”

The release also noted that “the AI-infused Icertis Contract Management (ICM) platform is used by companies like 3M, Airbus, Cognizant, Daimler, Microsoft and Sanofi to manage 5.7 million contracts in 40+ languages across 90+ countries.”

Icertis is private and doesn’t disclose revenues, but it has been growing extremely quickly (claiming 125% CAGR over the last four years), and with over 800 employees, a forward-looking revenue run rate approaching $200 million seems reasonable, and only requires a 5X multiple to get to a $1 billion valuation (we believe the revenue multiple to be higher than this).

Also, Icertis is a clear market leader in the CLM space based on our latest Q2 2019 SolutionMap deep-dive competitive assessment (available here for free). And, Icertis competitor Exari was recently acquired at roughly a 10X multiple, so there should be little doubt about Icertis’ favorable prospects.

Icertis announced that its new $115 million in funding will be used for continued product development in adjacent product areas (and geographies), verticalization, possible acquisitions, blockchain development and, of course, AI — which is red hot in CLM.

Spend Matters has covered Icertis for years, and while the firm’s stated mission to “become the contract management platform of the world” may seem a bit audacious, the firm has executed historically well due in part to its strong management team and focused strategy as a true CLM pure play that doesn’t focus on any one particular business process area (e.g, within the sell-side for customer contracts).

The firm is also buoyed by the fact that the CLM market is throwing off its shackles as a place for glorified document management systems set up by legal departments to transfer commercial risk to counterparties. Rather, contracts are becoming the ultimate system-of-record for B2B commerce, not just from a legal department standpoint, but a financial one (e.g., where contracts become the new ledgers that augment the G/L), a regulatory/risk standpoint, and an operational one relevant to any place where internal/external stakeholders make commitments to each other.

We call this concept “commercial value management” (CVM), and we discussed its framework in a recent Spend Matters PRO research paper titled “Commercial Value Management: Making Contracts the Commercial Core of Enterprise Value (Part 1).” In it, we stated:

“There is a subtle shift happening within the scope of contract and commercial management (CCM), and a not-so-subtle shift that is also happening within the digital realm (e.g., namely artificial intelligence, low-code platforms, open source, “XaaS”). What’s happening is that as contracts get digitized and more deeply modeled, they are becoming the single most important piece of master data within the enterprise that touches virtually every single stakeholder within these core processes and also within corporate functions such as R&D, risk management, strategic planning, treasury, audit, sustainability, digital/innovation and others.”

In the rest of this Spend Matters PRO / Nexus brief, we’ll examine the following topics:

* Icertis’ prospects relative to multiple CLM market segments and competitors
* How CLM’s evolution to “CVM” impacts Icertis. (Think of CVM as “extended CLM” on steroids.)
* M&A, exit and other considerations for Icertis — including potential acquirers as an alternative to an IPO.

And in a subsequent deeper dive in the August/September inaugural Spend Matters Nexus members’ newsletter for private equity firms/investors, corporate development teams and solution provider CEOs, we’ll feature Icertis and analyze:

* Icertis’ strategy: lessons learned and key takeaways
* Valuation drivers (for Icertis and similar firms) and possible Icertis M&A acquisition prospects/targets
* The prospects for procurement suite providers with legacy CLM capabilities and Apttus, Conga and others in a CVM world

OK, let’s get to it …

Commercial Value Management: Making Contracts the Commercial Core of Enterprise Value (Part 1)

contract

Contract management can seem like a boring topic in business — corporate attorneys taking far too long to create long documents of “legalese” designed around transferring risk to your trading partner in a deal. Managing these contracts in contract lifecycle management (CLM) is a step in the right direction by cross-functionally managing them throughout various business processes: order-to-cash, source-to-pay, hire-to-retire, record-to-report, etc.

Some organizations will even take contract management a little further and use the nomenclature of commercial management to help shift the focus away from the contractual artifact and more toward commercial business relationships. The focus becomes writing and managing better contracts to incentivize trading partners to more easily comply, collaborate and create a larger pie of value to share.

However, there is a subtle shift happening within the scope of contract and commercial management (CCM), and a not-so-subtle shift that is also happening within the digital realm (e.g., namely artificial intelligence, low-code platforms, open source, “XaaS”). What’s happening is that as contracts get digitized and more deeply modeled, they are becoming the single most important piece of master data within the enterprise that touches virtually every single stakeholder within these core processes and also within corporate functions such as R&D, risk management, strategic planning, treasury, audit, sustainability, digital/innovation and others.

The cornerstone to this transformation (in the private sector at least) is the notion of maximizing value created in commercial activities. Commerce is about exchanging value. Good commerce strives to maximize value for individual parties (i.e., large slice of the pie) and excellent commerce focuses on maximizing value to expand the total economic pie within a value chain. On the sell side, you want to deliver differentiated value to customers in order to retain them and make more money off them over the long term. On the buy side you want to maximize value (i.e., the most “bang for the buck”) by maximizing “bang” (what suppliers commit to deliver to you) and minimize the bucks (spend/costs) flowing out the door. These commitments of expected value to be delivered can take many forms, and using next-generation contract modeling (way beyond tagging and analyzing clause text) and process integration is turning out to be a very practical way to maximize value from the C-suite down to various functional process participants.

In this Spend Matters PRO series, we’ll cover some of the ways in which next-generation contract management (and underlying digital platforms) will model and manage commercial value much more deeply in a way that will support enterprise processes in areas such as GRC (governance, risk and compliance), Treasury, FP&A, IT service management, project/program portfolio management, commodity management, supply chain execution and many other areas.

‘Is Complexity Mastery THE Top Skill for CPOs?’ Deloitte’s 2019 CPO Survey Asks as It Closes This Week

If higher complexity firms are actually performing better than lower complexity firms, how are they doing it? Wouldn’t it be good to know what they’re doing differently?

This is one of the primary goals of Deloitte’s new annual CPO study, which Spend Matters helped Deloitte design to support this complexity management theme (as well as themes around digital, talent and supply chain). It focuses on the complexity that CPOs and their teams are facing, and also examines their complexity management capabilities (especially digitally enabled ones), and their resulting performance. It also looks at plans in these areas so that CPOs can benchmark with each other and see who’s “voting with their dollars” on what areas.

Take the survey here. It will be open through Thursday.

Watchdog Gone Wild? Why New York City’s Procurement Technology Overhaul is Actually a Good Thing

magnifying glass analysis

Recent media reports have alleged that New York City has been overpaying for its implementation of procurement software suite provider Ivalua in NYC’s procurement transformation efforts. The reports have used a watchdog group’s analysis that has tried to compare the seemingly high price tag of the NYC implementation of Ivalua to a smaller implementation of the city of Dallas by a more niche software provider named Bonfire. Ivalua and Bonfire are two procurement software providers that Spend Matters covers within the broad procurement provider ecosystem.

The headlines appeared suspicious, and we decided to take a deeper look at the projects and the providers in question. Our analysis indicates that one report’s direct comparison of these costs is misleading and flawed. We have a few takeaways from the group’s conclusions, and our analysis indicates that the NYC deal could easily pay for itself and be a boon for the city.

UPDATE: With Barry Padgett leaving SAP, what’s next for new Intelligent Spend Group?

Barry Padgett has left SAP only weeks after being named president of the newly created SAP Intelligent Spend Group (ISG), a combination of SAP Ariba, SAP Concur and SAP Fieldglass.

Padgett had previously served as president of SAP Ariba, before being promoted to the new role as leader of the combined group. Spend Matters sources suggest he has accepted a new role as chief revenue officer for Stripe, a payments company, although this is unconfirmed at this time.

SAP’s Intelligent Spend Group told Spend Matters that Mike Eberhard, formerly president of SAP Concur, will take over for Padgett, at least as an interim leadership move. Eberhard had previously planned to “step back” from a daily role at SAP in Q3 to serve as an adviser. While on the surface, the move to promote Eberhard on a temporary basis may seem like a GE “moving around the management chess pieces,” type of maneuver, Eberhard has a unique foundation from which to sit on top of the combined organization at a pivotal time.

Not only has Eberhard had sales leadership experience and significant growing, global commercial responsibilities within Concur in the past decade, he brings leadership depth from other areas of procurement, payables and supplier management solutions earlier in his career. This includes holding previous P&L responsibilities for SAP Ariba, Xign, Peoplesoft and D&B.

Based in part on his diverse set of experiences in the “spend” universe, including P&L leadership within a number of different business cultures that sold to different economic buyers, we are enthusiastic about the selection of Eberhard as at least a temporary leader of the SAP Intelligent Spend Group.

But as Eberhard perhaps channels Constantine the Great, one of the great “uniters” of different factions in Roman history, he will nonetheless face a range of challenges on multiple fronts — internal and external — as SAP plans for simultaneous battles at the same time as it brings together three best-of-breed solutions under one roof, one that ideally represents more than just a united fighting commercial front.

Leadership Required on Simultaneous Fronts

The remainder of this research brief introduces some of the campaigns that SAP’s Intelligent Spend Business group will need to simultaneously embark upon if it is to align what is in the interests of customers and shareholders over the long term. We see three main fronts that SAP must target at the same time.

Before exploring these, we should note that Padgett left the SAP Intelligent Spend Group before having a chance to substantively make a mark on this newly created business unit. His departure at a formative, pivotal moment gives the opportunity to Eberhard (and/or a future leader) to chart a course for the future of a common SAP Ariba, SAP Concur and SAP Fieldglass at a time in which all three former independent operating units face new dynamics.

PRO subscribers can read more about the three fronts that SAP faces.

Best Procurement Solution Persona? Configurator!

pierre mitchell headshot

What’s my favorite Spend Matters’ SolutionMap persona? In one respect — as we begin a series of personal essays on buying personas (Nimble, Deep, Turn-Key, Configurator, CIO Friendly as well as Optimizer for sourcing providers and Global for CWS vendors) — it’s sort of a silly question.

Every persona is great. Is an extrovert better than an introvert? Is an Olympic weightlifter a better athlete than a marathoner? Is the procurement organization at Uber better than the one at P&G? Uber might need a Nimble solution, and P&G may need a Deep solution. But if we change the question to “what type of solution is generally most appealing to the most buyer personas,” then I’d have to pick Configurator.

Deloitte 2019 CPO Survey — Insights Needed on Procurement Mastery in Action

ISM

Deloitte has opened up the 2019 version of its annual CPO survey for participants to share their insights. It’s important to participate because the survey’s depth, rigor and relevance produce influential findings that have set the gold standard for procurement studies.

And this year’s edition is very exciting, especially for me. I’ve been doing procurement research and benchmarking for 20 years, and I was thrilled to not only be given a sneak peek into this year’s study design but to be made me an honorary member of Deloitte’s extended research team to provide input. So, my challenge became how to make a great product even better.

But you can participate too. CPOs and their direct reports are needed — and participants will get an intelligence briefing about the study’s results. At the end of this article, I’ll get more specific about the ROI of participating in this year’s study.

Tealbook: Vendor Introduction (Part 2) — Product Strengths and Weaknesses

cloud solutions

In our last Spend Matters PRO brief, we introduced you to Tealbook, a five-year-old provider based out of Toronto (with an office in New York City) that is deploying a new platform for supplier information management (SIM) and discovery. Combining machine learning to accelerate data cleansing and gathering with a social media-like user experience to encourage collaborative supplier information management, Tealbook is gaining use cases and enterprise-class procurement customers that want to:

— Consolidate and better manage their supplier master data — aka the “I” (Information and Intelligence) in SIM.
— Discover and on-board new suppliers more effectively than 1) Google searches and 2) searches within proprietary supplier networks.
— Create a system of intelligence surrounding suppliers both internally (e.g., within a spend category team or project team) and externally through fully permissioned, community-based knowledge sharing.
— Quickly bring supplier diversity programs to target levels.

Part 1 of this brief provided an overview of Tealbook’s offering and a short selection requirements checklist that outlined the typical company for which Tealbook might be a good fit.

In Part 2, we provide a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis, and some final conclusions and takeaways.

Tealbook: Vendor Introduction (Part 1) — Background and Solution Overview

Procurement organizations today talk a big game about automating transactional processes so that they can focus on upstream value creation opportunities. The thinking goes like this: The biggest opportunities for procurement are not in squeezing diminishing savings out of the usual vendors year after year but in identifying and contracting with the most innovative suppliers that can enable exclusive competitive advantages. These include not only strategic sourcing efforts around major categories or products but also mutually beneficial relationship-based activities like supplier collaboration, development, innovation and risk mitigation.

Yet there are several obstacles to this shift in emphasis toward more strategic activities. One is remarkably simple: The majority of procurement organizations do not have a single, accurate record of all of their suppliers. Most of the vital information that would constitute a vendor master file is instead scattered across various silos, including ERP systems, dedicated P2P or S2P tools, homegrown tools, and proverbial three-ring binders. So before procurement can earnestly attempt to spend more time on higher-impact value creation opportunities, most organizations have a lot of work to do forming a baseline off which they can build stronger supplier management, discovery and development competencies. This baseline of supplier knowledge is not just about maintaining an accurate vendor master file to pay the bills, but also a hub for information to help build supplier intelligence and a private supplier network (albeit with some community-based elements) rather than any single commercial network/marketplace.

Helping organizations form this baseline is how Tealbook, a four-year-old provider based out of Toronto (with an office in New York City), is deploying its platform for supplier information management and discovery. Combining machine learning to accelerate data cleansing and gathering with a social media-like user experience to encourage collaborative supplier information management, Tealbook is gaining use cases with enterprise-level procurement organizations that want to consolidate their efforts in master data management (MDM), quickly bring their supplier diversity programs to target levels, and find new suppliers more effectively than a search on the open web allows, as well as expedite the supplier on-boarding process. And as it continues to bring more users and suppliers into its network, Tealbook generates insights that becomes increasingly valuable to its community (without ever sharing proprietary information between organizations).

This Spend Matters PRO Vendor Introduction offers a candid take on Tealbook and its capabilities. The first part of this brief includes an overview of Tealbook’s offering and a short selection requirements checklist that outlines the typical company for which Tealbook might be a good fit. The second part of this brief provides a breakdown of what is comparatively good (and not so good) about the solution, a high-level SWOT analysis, and some market implications and takeaways.

Ivalua NOW 2019 Chicago: Next Procurement Megavendor Steps Out of the Shadows

After attending Ivalua NOW 2019 in Chicago this week, the conference solidified in my curmudgeonly mind that Ivalua will be the next break-out vendor, following on the heels of SAP Ariba and Coupa (on a software/SaaS revenue basis, at least).

Ivalua is like the tortoise in the race with the hare, but in this case, the tortoise has been putting on roller-skates and building a jet pack into its upgraded shell (161 upgrades to be exact). And the firm’s stats prove the point.

Q&A on Digital Procurement’s Role in Sustainability, Ethics and Compliance

As supply chains get increasingly externalized and globalized, the broad scope of operations is subject to equally broad regulatory oversight and supply risk. Meanwhile, as consumers increasingly demand transparency and ethical behavior by value chain brand owners, supply chain organizations at those brands (and also at their suppliers), are having to increasingly respond to these demands. Procurement organizations, for their part, are trying their best to support this externalization on all fronts, but they are so busy with strategic sourcing and P2P execution that even the “basics” of supplier qualification, certification and on-boarding are suffering — never mind having time for more strategic activities in supplier innovation, advanced risk management, digital transformation and other areas.

So, what’s the solution? Well, procurement must first practice what it preaches by tapping supply market innovation for itself, and this innovation is taking many forms. In an everything-as-a-service (XaaS) world, procurement must not only take a leadership role in robustly contracting for these diverse cloud services, but also:

— identifying how various providers beyond cloud applications can help procurement execute much more efficiently — at the cadence of the business.
— embedding the best digital supply market innovations into its own service delivery in order to expand its own influence and brand within the enterprise.
— enabling and empowering functional partners in GRC, IT, Finance, Legal, HR, Risk/Audit, etc. to enable their own service value (increasingly in a cross-functional GBS environment) and integrate the disparate services together much more coherently.

For example, consider the question: Who is responsible for establishing the single face to the supplier when we digitally on-board and manage them to not only transact with them in a compliant manner, but also ensure that they’re operating securely, ethically and transparently more broadly? It’s not just procurement, but rather a combination of procurement, IT, GRC and various centers-of-excellence that should be working tightly together. Unfortunately, misalignment is the norm, but not because of outright conflict or malfeasance, but because functional folks are too busy just trying to execute within their own silos. And they’ll never extricate themselves from that situation unless they have drastically new capabilities to deploy.

This is where procurement organizations need to make smart choices on how they apply digital strategies and tools/services to this area of sustainability, ethics and compliance.

I was recently catching up with an industry colleague of mine named Tomas Wiemer on the topic (he’s a former procurement transformation leader from Nokia and Alcatel-Lucent). He is very deep into this area and typical of leaders at European firms who are definitely in the vanguard here. Tomas is considering some career changes right now, primarily with some emerging tech players who can have a dramatic impact in the industry. Tomas reminds me a bit of a European version of Roy Anderson, who just joined Tradeshift (here’s part 3 of an interview that I did with him), and I think that Tomas will do similarly well when he lands somewhere. He’s doing some interim work for a client, and I agreed to let him interview me for my inputs, but given my role, I asked him for the questions in writing so that I could fully respond in kind and publish it to our subscribers. The questions are below:

How do you view topics as compliance and sustainability in the procurement digitalization landscape?
Do you foresee a convergence/harmonization of sustainability/compliance requirements toward suppliers thanks to the rise of S2P platforms/marketplaces?
What do you believe is the greatest added value of procurement digitalization / AI for compliance and sustainability?
What do you think are the key conditions/requirements to enable the emergence of sustainability/compliance topics in digital procurement?

What’s interesting is that this topic is very hot right now. My business partner Jason Busch just attended the recent EcoVadis conference in Paris, and the buzz (beyond the buzz from the sustainably grown coffee that was undoubtedly served there) was palpable. Part of the reason is that the topic is giving many procurement organizations new ways to engage the business and the suppliers alike in a way that drives much more meaningful value across the value chain beyond just price-centric cost savings. And it also engages a new generation of procurement professionals who want to have a meaningful impact on value chains rather than just being deal-makers and “firefighters.”

Anyway, the questions above are big ones, and require very thorough answers, so without further ado, let’s get to answering them ...

ISM 2019 Houston Conference: Highlights and Musings (Part 2)

After a Spend Matters' team went to the ISM 2019 conference last week in Houston, I recapped the event in an earlier post, but today I want to focus on two more sessions, one titled "Procurement Hacks" and the other about sustainability, given by HP Enterprise. And I have a special shoutout for Katie Smith, who discussed a procurement digital transformation case study for HERE Technologies.