Unsung heroes, this is what we call the procurement/sourcing teams. They are handed situations after damage has been done by organization silos. They are called upon to do miracles. Wouldn’t it be nice if they are provided with a more level-playing field with the suppliers?
Well, if it were easy, the leverage gap wouldn’t exist. Clearly the challenge is huge. Why?
Technology and services providers not only have monopolistic tendencies – lock-in, high switching costs – for their products and services, but even more frighteningly, they monopolize the share of the talent pool available in the market.
Their sales & marketing spend (with a sole focus on winning) is multiple times bigger than their R&D spend (value creation).
Technology and service providers are in arms race to expand monopoly power through platforms. The arrival of the digital, cloud, analytics, AI/ML and AR is prompting the suppliers to create platforms – platform for this, platform for that, platform for everything. Platforms enable them to exert monopoly power through lock-in and shift leverage in their favor.
Most importantly, the suppliers leave the burden for value creation from their products and services, entirely on the buyer/customer. These actions result in enormous leverage advantage for suppliers
Competitive pressure on business to “go digital”, “move to cloud” is triggering experimentation with governance and organization set-up, while leverage advantage is shifting to suppliers
The external and internal challenges are exploited by suppliers, and result in organizations overspending on IT, doing sub-optimal deals and taking on bigger share of risks while being short-changed on value creation.
What we see:
Ultimately these challenges boil down to “How To” :
