This week on the podcast I’m joined by two guests, because we’re actually going to be talking about a customer success story on the show.
Børge Langedal, Co-Founder and CRO of Norwegian spend analytics, vendor and category management tool Ignite Procurement joins me together with Arndt Romer from their German customer SEG Automotive.
We dive into how and why SEG Automotive chose Ignite as their digital solution and how they’ve seen benefits since its implementation.
Building a digital strategy with the right partner after a divestiture
SEG Automotive is best described as a large medium-sized business focusing predominantly on automotive products.
With 7,000 employees across 14 locations and annual turnover of €1.5 billion (approx. $1.9 billion). Based in Stuttgart, Germany, they were spun off from Bosch in early 2018 and therefore had to develop their own in-house systems as part of the divestment.
Ignite Procurement is based in Oslo, founded in 2016 by an ex-BCG team and has since grown to 50 employees. It’s a spend management solution to make strategic procurement easy, with data management and procurement analytics as the core offering.
Bosch had a well developed system landscape which essentially SEG would no longer have had access to after the carve-out and them becoming an independent company.
This led to the need to find and develop their own digital procurement and spend management strategy to enable them to have access to good, clean data without being dependent on an ERP system and Excel spreadsheets.
Bosch had a central procurement team and a lot of the main team at Bosch remained there, which resulted in the need to hire and onboard a lot of new team members when SEG was carved out from Bosch. The transition from following the processes and internal controls of a global corporation to becoming a leaner and more agile mid-market business necessitated the need to improve their reporting and decision-making landscape.
How did SEG arrive at the decision to select Ignite Procurement?
Arndt mentions that it was a three-prong strategy.
They were aware of some of the more well-known tools and approached them to understand what they could offer. They also considered out-of-the-box solutions such as Power BI, as well as exploring the possibility to develop some in-house solutions. On top of this, they had a digitalisation team internally who was out there going to different trade fairs, researching niche / best-of-breed solutions on the internet to discover tools that were not already known to the business. It was at one of these trade fairs shortly before COVID hit that they were introduced to Ignite.
Bringing these three approached together required a scorecard to allow different stakeholders to evaluate the capabilities of each of the different solutions. This enabled them to move forward to pilot phase with shortlisted vendors, at which point, Arndt says it became obvious that Ignite was clearly the best solution for what they were looking for.
How did Ignite Procurement go about assessing and evaluating SEG Automotive’s needs vs. their offering?
First and foremost is understanding whether they can indeed solve their challenges and meet their requirements. Trying to be everything to everyone ultimately is a road to disaster!
Ignite’s team quickly realised that making data more accessible was a key customer requirement and also a key feature of their software, and as such they determined that SEG would be a very good match in terms of system capabilities vs. what they saw as must-haves from a customer perspective.
Børge also says that they were quickly impressed with the SEG Automotive procurement and digitalisation team’s rigorous structures and processes, which went alongside the desire to digitise and improve their operations.
Why didn’t SEG Automotive choose to go with an established Suite?
As a EUR 1.5 billion company, SEG would definitely have been within the orbit of the major, established suite providers. I ask Arndt why they didn’t take the easy / lazy option of just choosing whatever enterprise procurement suite Bosch had been using and instead opted to go through this process.
He mentions that having a divestiture is a catalyst for driving change and striving to make things leaner, faster and better. Lots of new employees, a fresh breath of life into the company and also starting with a blank slate. It was not a foregone conclusion at the beginning that they would go with a best-of-breed solution. This decision came over time as they started to understand the market better, with the capabilities and limitations of other solutions that are out there.
Flexibility to develop and add / customise features, as well as the speed of implementation were also cited as being contributing factors around the final decision to go with Ignite rather than an enterprise procurement suite. Ultimately, agility and the ability to grow and expand as partners was a key factor.
Straddling the gap between best-of-breed and suite capabilities
I ask Børge about Ignite’s solution kind of sitting between a classic best-of-breed application but not being as comprehensive (or expensive!) as a suite. Is this the direction of travel and will we see this as a trend going forward? His answer is that they see themselves as a best-of-breed solution around data analytics and spend management, but with additional features where they have the expertise to complement what procurement teams typically need to go hand-in-hand with these requirements e.g. contact management, supplier management and assessments alongside. Asking themselves where do they have synergies to complement their existing functionality is a key building block of their development strategy.
Utilising modern APIs to connect different best-of-breed solutions together is becoming more commonplace and is enabling companies to not just have one solution but to connect multiple best-of-breed providers together to accomplish everything they need to do. Børge does see more of a trend towards mini-suites and best-of-breed solutions expanding their offering to be more versatile and offer more than just one single solution. Nonetheless, at the same time, there is always a limit to just how many solutions can be joined together.
How has Ignite helped SEG with regards to business planning and forecasting?
- There are fewer requests to run special, customised reports which has freed up controlling resources.
- Global meetings within the procurement community are possible without lots of slide preparation and reworking of data. If nobody trusts the figures, then nobody will use a digital spend analytics solution. Getting to this point has been key with building trust among users when it comes to using the application.
Lessons learned by Ignite from the implementation with SEG
An implementation with a big, strategic client has been hugely beneficial to Ignite in terms of identifying numerous future joing initiatives and a strong continuous improvement culture.
The input from SEG has been a huge asset in helping with their product development.
Automatic integration of commodity prices with their spend data
Negotiation strategy
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