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Digitizing both sides of the P&L

Author: Asif Khan

“...platform businesses, from [taxis to hotels and more], whose spectacular growth, abruptly upended their industries.”  - Harvard Business Review, April 2016

Digital disruption is here. We can choose to ignore it or choose to embrace it; either way it’s impacting us all. Today, the speed of developments in disruptive technologies has a major influence on organisations globally and this is taking place at an exponential rate rather than a linear pace. Such examples include; Uber, Airbnb, Facebook & Apple all of whom who have disrupted their industries by storm. Albeit, these examples pertain to the realm of Business-to-Consumer (B2C), Business-to-Business (B2B) entities are also now being forced to rethink and to reinvent their business models to get the most out of their organisation due to disruption in their respective industries. This implementation of digital transformation has begun in two key areas of B2B; Increasing revenue and profits (Sales) and reducing operational costs (Procurement).

 

Digitization of Procurement (Supply Chain): beyond just buying

The procurement function has seen transformations in recent years as digital technology is being incorporated into its supply chain. The function itself has become more strategic with value expected across a companies’ entire supply chain,  not just one department. More and more options for this are available focusing on everything from Predictive Analytics, Big Data Analytics and Simulation tools to the more commonly recognized e-procurement software, with all set to impact the future of procurement. However, with all these technological disruptors CPO’s and individuals involved in the buying activity face a myriad of issues ranging from legal to regulatory, and even ethical.  All topped with the cost of these technologies not taken into account. 

And, to the best of my knowledge, the technologies out there today do not make the procurement function into a profit center (i.e. savings in “hard cash”).  Although, the use of rebates is in existence, they are unreliable as they depend on a single buyers purchase volumes as well as having a negative effect on the Supplier price point.  As for the Buyer, let’s not forget the cost of Implementing and managing a rebate program in-house.

Digitization of Sales: beyond the conventional

The pressure in increasing revenue and profits has given ‘food for thought’ to management teams across the globe in rethinking their sales strategy and methodologies. However, even with all of the technology there is still resistance to change.  Research carried out by AT Kearney found that that the biggest challenge many leaders face is “sales organisation inertia and a reluctance to change”. We are all aware of the fact that a large percentage of the sales and marketing budget will not yield much in return, yet it is considered as an acceptable expense. The cost of all this?  To put it into perspective, Salesforce research found that 99% of B2B sales and marketing costs are wasted. This equates to billions of dollars lost. 

Selling the traditional way is doomed to failure in this day and age. The problem lies not in only approaching the buyer at the wrong time, when they are not in a position to buy,  but also in the technology available to the buyer. Addressing both should not only benefit the buyer but also reduce sales and marketing overheads. 

So is there an alternative? 

Digitization: beyond traditional commerce

INNOVO is a free disruptive platform for all goods and services where buyers and suppliers co-operate to create and share savings. I have found a platform, built from the ground-up, that shifts away from traditional commerce. Called INNOVO, it purports to be a free disruptive platform for all goods and services where buyers and suppliers co-operate to create and share savings.  INNOVO addresses the age old problem of high customer acquisition costs arising from low conversion rates by providing real leads from customers who are in the market to buy now.  What’s more, it allows suppliers to sell their wasted spare capacity without disrupting their original price points via a multi-tier selling feature. For a buyer, it means getting much better prices on everything through crowdsourcing their buying power since, in effect, they are now members of a free, global, open consortium without any constraints. Furthermore, due “network effects,” buyers gain access to a free market place of suppliers. 

Unlike other digital Platforms/Technology where change is seen as a difficult thing, INNOVO is designed not to change an organizations’ usual process but merely an added new tool for both parties to utilize for free. 

Too good to be true?

Case studies include Bank of America saving 25% on their employee training, MacIntyre Hudson saving 22% on their electricity and a global investment banking & financial services firm with $30bn p.a. spend planning to use the INNOVO Platform for a 150 of its own companies in utilities, transport, energy, infrastructure and communications across 28 countries worldwide.  So if you are a supplier looking for your next customer they are probably here. Also as an FYI for you buyers out there - current suppliers’ savings being offered are averaging more than 15%.

Refs:  AT Kearney: Sales Optimisation from the middle (2015)

 

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