I’ve been slow to make a set of predictions for 2011, but I’ll continue to trickle them out in the coming weeks. One prediction I’ve been thinking quite a bit about — which is already becoming reality in contingent procurement via advanced VMS tools today — is the rise of what is probably best described as “embedded analytics” within workflow-driven and decision support tools themselves, rather than specialized analytical toolsets. In short, I think 2011 will be the year where we begin to expect embedded analytics across a set of source-to-pay tools. These will range from what Coupa has been up to for some time with embedded benchmarking capabilities in the P2P area and system-based flagging for certain expense submissions that could trigger a review process to insight in sourcing and total cost modeling tools that let category and commodity managers know how they’re performing relative to the market — not to mention what actions they should consider taking (e.g., LTA, forward contract, etc.) based on spend profiles and market conditions.
But I believe the best hints to date about how embedded analytics will ultimately transform broader procurement applications into knowledge platforms and intelligence-driven decision support tools most certainly starts and ends with what a number of VMS providers are up to in the contingent procurement area. By showing, for example, comparative cycle times, rates, vendor performance, and other information in the context of workflow as well as in a user portal/front-page, the entire experience of using a toolset to manage a process or drive to a specific outcome — from a multi-million dollar sourcing decision to a $65 PC or notebook peripheral purchase — changes. No longer is a tool just about driving process adherence, enforcing standardization, etc. Rather, the tool itself becomes an indispensible knowledge asset that makes its users smarter, not just more efficient.
Just as consumers feel better about making a purchase on Amazon knowing the vendor and product reviews of other users and the fact that we’ve steered ourselves towards a group of related items to buy based on what other users have bundled in the past, the idea of providing pricing and supplier intelligence behind a purchase is nothing new. But the trick is putting the information in the context of a typical mundane use case. Even users who don’t know how to manipulate a pivot table and think SAS is only an airline end up making better, everyday decisions in this type of environment. So five years from now, when everyone in procurement uses analytics and market intelligence without even knowing it, Spend Management technology enthusiasts like us will all look back on early use cases for embedded analytics in services procurement and ask ourselves: how did our teams function before this level of insight was at their fingertips?