In this episode of the Futurum Tech Webcast, I’m joined today by Carsten Storm, Head of Marketplace for the SAP Digital Experiences team for a conversation around our latest report: 2022 B2B Digital Buyers’ Journey: Forces Shaping the Future of Enterprise Procurement, done in partnership with SAP.
In 2019, our team at Futurum Research collaborated with SAP to understand the trends, practices, and challenges in relation to the digital buying of enterprise software solutions. That first edition of the report offered an inside look at the shift that was happening within procurement. But then, our world underwent a cataclysmic shift. Last fall, we again partnered with SAP to understand the forces that have shaped both the demand for and the process of enterprise software procurement.
So, what do procurement officers and businesses need to know? What did we learn in the report? That’s exactly what Carsten and I discussed in this episode. Our conversation covered the following:
- The business world has undergone immense changes in the last few years, and we kicked off the show by discussing how this has impacted purchasing.
- Our research showed that a whopping 89% of B2B organizations reported changing their business models during the past two years — and we discussed what these changes look like.
- Our research also showed that 78% of respondents reported looking for ways to streamline the procurement process, while 27% say their current process never or only occasionally operates as efficiently as it did in the past. We explored why streamlining procurement is important and the challenges organizations face in that undertaking.
- We talked about the fact that how we shop, and our shopping preferences — both as consumers and as B2B buyers — have changed, how these changes impact how we do business, and how that has spurred a rise in consumer marketplaces.
- We explored what enterprise organizations are doing to adapt to a change in procurement practices and what their challenges are as it relates to software procurement.
- We know that the future of procurement is digital, and our conversation explored what our research showed that organizations want from their procurement processes.
- B2B procurement pros are very clear: they want to purchase primarily online, through a vendor’s site or a digital marketplace, they want a one-stop shop where possible, featuring multiple vendors, and almost 20% today expect to purchase at least half of their enterprise software through a digital marketplace.
Given these very clear preferences from B2B buyers, how can enterprise organizations thrive in today’s marketplace and serve those buyers’ needs efficiently and effectively? To get the answers to that question, you’ll need to tune in and hear what Carsten has to say.
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And be sure and download the full research report here, it’s packed with information you’ll find valuable — 2022 B2B Digital Buyers’ Journey: Forces Shaping the Future of Enterprise Procurement
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Transcript:
Shelly Kramer: Hello and welcome to the Futurum Tech Webcast. I’m Shelly Kramer, Principal Analyst here at Futurum Research, and today I’m joined by Carsten Storm, who’s the head of marketplace for SAP Digital Experiences team. And we are going to have a conversation around our latest research report, which is the 2022 B2B Digital Buyers Journey. Where we take a look at forces that are shaping the future of enterprise procurement. This is a research study that we did and we have a lot of amazing data points that I think you’ll be interested in, whether you are in B2B senior leadership, or part of a B2B procurement team. This is information that I think you’ll really be interested in.
So I’m going to give some backstory here. In 2019, our team here at Futurum Research partnered with SAP, and we did our first B2B Buyers Journey surveys and we wanted to understand the trends and the practices and the challenges that people were having as it related to the digital buying of enterprise software solutions. That first edition of our report offered an inside look at the shift that was happening with and in procurement, and if you’re in procurement, you know exactly what I’m talking about.
But then of course, as we know, our world went crazy and we had to navigate a global pandemic, and that was represented as a massive shift in how people shopped, how people wanted to procure, how people thought what enterprises and businesses of all sizes, not just enterprises, needed to accommodate that shift. So last fall, we again partnered with SAP to revisit this B2B buyer survey, and we wanted to understand what those forces that have been shaping demand have done, how the processes have changed enterprise procurement. And we wanted to really take a look at the challenges that procurement teams shared that they were facing, and what B2B procurement officers and business leaders needed to know. So what did we learn? So many things, and that’s what Carsten and I will be discussing today. So with that, Carsten, welcome to the show. It’s great to have you.
Carsten Storm: All right. Thanks, Shelly. And thanks for the welcome and thanks for having me.
Shelly Kramer: Absolutely. So tell us a little bit about yourself. If you would. Kind of share a little bit about your career journey, how you ended up at SAP, how you ended up focusing where you’re focused. I want to know it all.
Carsten Storm: All right, so I’m Carsten Storm. I’m based here out of Walldorf, our SAP headquarter. I’m with the company since 17 years and I joined in marketing back then as marketing operations manager. And back then decided that I need to do the full round trip. So go into sales, go into development, and finally, I’m now where this all comes together, which is on our digital marketplace. That’s the SAP store where our customers can come and discover, try and buy solutions from SAP and our ecosystem of partners. And this is putting all of my knowledge together while our products are developed and sold.
Shelly Kramer: That’s really cool. Our circuitous career journey. I like it. Very interesting. So let’s talk a little bit about the business world and the significant changes that we’ve seen in the last couple of years. Of course, exacerbated by the global pandemic that set in in the early part of 2020. How have these changes impacted purchasing that you’ve seen?
Carsten Storm: So in this role of developing and building the marketplace, I love talking to our customers or the procurement departments of our customers. And also we regularly engage in research as with you guys so that we learn what the bigger picture is. And what we saw is basically that there is… In procurement, there is major challenges and major shifts happening in the past years, and we see those in two areas. So one area is the work itself.
So this is where traditionally procurement departments were very focused on the core value chain. So this is all the products and goods needed to develop a product that the company actually is about to sell. So there they had very good hedging strategies, they had long-term plans with their suppliers and where they had good backup plans in case products weren’t, or goods weren’t available as they were needed. But there is all the other areas, the secondary areas like office supplies, spare parts, and IT equipment that were more or less of a focus. They were mostly managed by price, mostly because availability was never an issue.
Shelly Kramer: Right.
Carsten Storm: Now with the global disruption of supply chains now, there was not only pressure on the procurement department to secure the core value chain and be creative, how to ensure that goods are being manufactured and produced. Also, secondary items that were never really on the radar eventually became a major issue. And with issues, there comes c-level attention and c-level discussions and so on and on. So on the work, obviously there’s a lot more for the procurement people to worry about and a lot more executive intention in every single item they’re about to procure.
Shelly Kramer: Yeah. That’s-
Carsten Storm: … Oh, sorry.
Shelly Kramer: No, I’m sorry, go on. I didn’t realize you weren’t finished.
Carsten Storm: Okay. So that is how the work itself changed. Then secondly, how they work, and that’s probably common as is most specific to the software business. But in the software business we see that more and more software decisions are taken in the line of businesses. So where in the past there was mostly driven by IT. Now HR takes their own decisions. Now finance takes their own decisions and so for the procurement people, that means they just need to involve a lot more stakeholders, which makes their work a lot more distributed. And then obviously COVID added to that with everybody being in the home office and smart working and all of that. So it became a big challenge for them to collaborate with all these stakeholders in an environment that they weren’t used to.
Shelly Kramer: Right. So I want to share some stat, some data, from our research, and one of the things that – the early part of the survey – one of the things that we asked the organizations that we tapped were how has your business models changed? Has your business model changed? And not surprisingly, 89% of our survey respondents said that their business model significantly changed over the course of the last year. Actually 89%, their business model changed. 39% said that change was significant, so about 50% of that. And as it relates to software, 41% of our survey responded, said that their software or their solutions needed had changed also significantly in the past couple of years. So what our survey panel told us overwhelmingly was that they are looking for ways to streamline the procurement process; 78% of our survey respondents said, “Help, we need to streamline this.” And 27% said that their current processes never, or occasionally, or only occasionally operates as efficiently as they did in the past.
And so we did this survey in the latter part of 2022, and we’ve been challenged with some really serious kind of economic challenges, the world over. And so efficiency and productivity, I think certainly as we move into 2023 are even more important than ever before. Because I think what we’re seeing across the board is businesses being asked and teams being asked to do more with less. And so that’s really where software solutions come in because a lot of times they are what enables us to do that. You know?
Carsten Storm: Yeah.
Shelly Kramer: So we have changed. A global pandemic changed a lot of things about consumer buying behavior. And when I say consumer, I mean it changed the way we personally shop for groceries or take away food or whatever. But it also changed the way that B2B procurement teams buy. So I’d like to talk a little bit about what that e-commerce boom did and how that has changed kind of customer expectations and how it has really required organizations to focus exponentially more on that little thing called customer experience, probably more than ever before. So I’d love for you to share your thoughts, Carsten, on those fronts.
Carsten Storm: Yeah, okay. So in my world, everybody understands and agrees that B2B is a bit more complicated than B2C. So there’s more regulations around it, there’s more people involved, there’s usually bigger amounts to be spent, but they’re connected. So people take the experience that they have in their private life and take this to the office and then they start expecting similar things here. So I’d like to think of that as the classical innovation adoption curve where you have the innovators, the adopters, and the followers and the laggers. So I think of it as the innovators are in B2C. And once something has reached a certain maturity, then they start to expect that also in their business environment. For example, couple of years back, if you wanted to buy a 100,000 Euro car, there was no way you wouldn’t go to the dealership, test drive it and have a coffee and enjoy the experience.
But now we see people pre-ordering that online. The same happens in B2B software where in the past a 100K software was worth a sales visit, and when you would negotiate and you would redline the Ts and Cs, now we’re seeing that people and decision makers, and specifically the very young ones, they rely a lot more on online research, on demos, on trials and what their peers say, right?
Shelly Kramer: Yes.
Carsten Storm: Than they actually… the negotiation and the interaction with the company itself. And so we see the role of the sales reps decreasing and we see digital buying platforms increasing as well as buying via trusted partners. So that means anybody who cannot provide all this transparency, all the trial capabilities and the connecting other buyers with each other will probably have a harder time in the future.
Shelly Kramer: Yeah, absolutely. I think this goes back… This kind of behavior isn’t really new. It goes back a long way in the sense of, I think what we’ve seen in the era of digital transformation is that… And this is an early premise, people don’t care what your advertisements say. They’re not as prone to buy into your brand messaging and your sales messaging and everything else. They are smart. They know how to navigate the web, they know how to look for reviews, and they also know that a lot of times procuring a new addition to your software tech stack, I mean, it is so much more complicated in so many instances than just going, “Here, let me buy this.” I mean, I’ve got to buy it. I’ve got to get it integrated. I’ve got… figure out how to use it. I’ve got to get people trained on using it. I’ve got to get people adopting it. I mean, there’s so much that’s part of this. And so people are wary.
And I’m actually a primary buyer of software solutions within our organization. So what I’m always looking for is what kind of support can I expect or how complicated is it? And I’m also looking to my network of connections because you touched on this a little bit too, but it’s not uncommon to see people posting, whether it’s on Twitter or LinkedIn or on Facebook or whatever, social channel, “Hey, I’m looking at X, Y, Z solution for my procurement operations. Do you have any experience with that? Share…” And so consumers are asking those questions and I think the software vendors need to be prepared. You said it well, they need to be transparent, they need to share customer use cases, they need to share that sort of success stories and things like that. And I think that… And having an army of people who are out there saying, “Oh my gosh, I use this solution and I love it so much.” That’s the best case scenario.
Carsten Storm: Yeah, and there’s no hiding anymore.
Shelly Kramer: You know what? You’re 100% right. There’s no hiding anymore. And I think that’s okay. I mean, brands have been able to hide for a long time. And so I think that these are big investments today. And people… Another thing that you hit on is a trusted vendor partner makes a world of difference. And I think that that’s, to me, one of the beauties of the SAP marketplace is that you’re working with vendor partners who have been very well vetted, who are delivering at the highest possible level. You’re not necessarily working with some startup who may disappear tomorrow. So I think that trusted vendor part of it is a really important part of this equation as well.
Carsten Storm: Yep.
Shelly Kramer: So let’s talk a little bit about the hurdles today when it comes to software procurement. You touched on this a little bit at the beginning of our conversation. So we know that business requirements are constantly changing, and with those changes, also we have changes in the type of software solutions that enterprises need to procure. So we’ve got increased demand for new and updated solutions, and that means that procurement teams kind of have to… are expected to do more and work harder.
But what we’re also seeing, again, in these times when companies are lean sizing, right sizing, whatever, we want to call it, staff reductions. But we’ve got procurement teams who I believe have already been operating fairly lean and now perhaps they’re operating even more in a more lean fashion. So now we have to, I think the challenge for them is to do everything that they can to streamline and reduce friction from their existing procurement processes. There has to be a better way, there is a better way. And I think that’s what our research showed that people are looking for, that procurement teams are looking for is those better, more streamlined, more efficient processes. And I’m guessing that you probably don’t disagree.
Carsten Storm: No. So we definitely see that every day. So the decision making process in our customer side has become more complicated. There’s more executives involved. And at the same time, the sheer volume has dramatically increased because this is how people consume cloud software. They don’t buy one big thing. So they come with multiple smaller increments. And so the number of requests they have to work on is increasing by… I think the audience said some 40% as the volume gone up. And at the same time, almost everybody we talked to has struggles to complete those requests in time. So why is that? Because also new stakeholders come into play that are probably not used to buying software, and therefore they need to be enabled. They may ask the wrong questions or not the right ones to the vendor. So there’s rebirth and then in the beginning they think it’s all simple.
“I want this solution.” And along the process they figure out, “But that wasn’t really what I needed.” Something that their IT guy would probably have told them right up front. But this is chaff, and right now everybody needs to make their own experience and it’s on the shoulders of the procurement people. So if they have more work, they have more to coordinate, and at the same time regulations go up, there’s a lot more to adhere to, a lot more to worry about and more security gains, more all of that. So right, in general, more complexity, a lot more volume, and that’s what the folks are struggling with.
Shelly Kramer: Yeah, absolutely. So what we know to be true is this, the future of procurement is digital. I mean, that is 100% a given. So what we looked at in our research, we looked at what organizations said that they wanted from their procurement processes. And this was not surprising in any way. A majority of procurement professionals, 54% said that they wanted to be purchasing primarily online by 2024, either through a vendor’s own site or through a digital marketplace; 44% said that having a one stop place for multiple vendors was an incredibly important feature for them in a digital marketplace. And we had about 16% of our respondents say that they expect to purchase at least half of their enterprise software through a digital marketplace.
So those are really compelling stats. This is how people want to buy, this is how… By the way, this is how we buy in our personal lives. This is how we want to buy in our business lives. So if you are a business leader, if you are a procurement leader, this is really, really important to understand because this is what customers are saying they want. We have to adapt and be able to give them what they want.
Carsten Storm: And in my opinion, that’s the only way they can overcome the challenges. So they need to rely on marketplaces that act as aggregators. So for them to do a lot of the work in comparison – so how do this one solution and the other one differ to collect all the customer reviews and to provide independent certifications and so that they can relax a little bit on that side, don’t need to do that many research and they can trust the aggregator that they have done their homework. Then we can use AI to serve them the best information when they’re needed and do suggestions. And ultimately, if they have an aggregator marketplace or use that they save a lot on vendor set up, time and cost because they’re ultimately setting up this one vendor instead of the 200, 2000 or how many suppliers are behind them. So huge efficiency gain for procurement partner, in my opinion.
Shelly Kramer: Well, efficiency gain and cost savings. And again, I feel like I’ve beat the drum about tough economic times, but the reality of it is we don’t have any client across the board at all who’s not looking at how can we reduce costs? How can we do more with less? How can we work differently? How can we use AI powered solutions? How can we use marketplace solutions? So I think this is really an important time for that. To your point, one of the things that our research showed is not only do we have business leaders involved in making technology software, technology decisions, what we’ve seen is that the role of procurement teams has advanced significantly.
Our research showed that 51% of procurement teams are now significantly involved in determining enterprise software needs. What that means for procurement pros though is that their responsibility now – and you just touched on this a minute ago – includes the testing of these potential applications and showing them to senior executives in making recommendations, kind of putting your neck on the line here. “This is what we want to buy and here’s why and here’s how it works and here’s the bottom line impact that it’s going to have.”
So I think that this is a big driver of business strategy and of tech stack strategy as well. So procurement leaders really need to – not put any more pressure on them – but they really need to be sure they can stay ahead of the curve as it relates to what’s out there, what’s available, what marketplaces they should be looking at, and that sort of thing.
Carsten Storm: And we as vendors need to help them in the most objective and neutral fashion that’s possible. So I think as soon as the suspicion comes up that the search results are fake to promote one app over the other, then we are losing those trusted buyers and therefore the marketplace needs to be neutral to the extent that’s possible.
Shelly Kramer: Yeah, absolutely. All right. So what I would love now, Carsten, is as we wrap up this show, what is your best advice for business leaders and procurement leaders on – We know that you are thinking about – you, our audience – are thinking about procurement challenges on a daily basis. I would guess that most of you are wading through that every day. So what is the best advice you can share with business leaders and procurement leaders on how to start thinking about how to better streamline your procurement operations? Where do you start?
Carsten Storm: Yeah, so generally I think don’t be shy. Reach out to your trusted vendors and ask them to work with them to integrate into existing procurement processes. That’s a must have for every vendor. And therefore it’s a starting point, in my opinion, for every buyer and so we work together. And so the boundaries of the company, they have to be overcome. And so there needs to be close integration between those trusted partners that you have selected to go forward with. And then there’s a lot that those vendors can do for you to take the workload of your staff and integrate, automate, and make sure you’re, at all points in time, compliant. And the rules you set out are adhered to. So there’s something I observed recently is before people were coming to me and asking, “Why can I not buy this solution online?”
Now in the past year, I’ve noticed that more and more companies come to me and say, “Listen, from my company, these two people are allowed to buy. All the rest is forbidden.” And that’s the only way for them to gain control over what is happening in the market. And that’s what we’re here to help for. And this is why I would start as a buyer.
Shelly Kramer: That makes perfect sense. So if someone wants… So for our viewing and listening audience, of course, I will include a link to our research report, the 2022 B2B Digital Buyer’s Journey – Forces Shaping the Future of Enterprise Procurement. I’m going to include a link to that report for you, but Carsten, where can somebody go if they want to learn more about what’s available for procurement professionals through a marketplace? Where do they go?
Carsten Storm: Yeah, obviously one stop shop is SAP.com-
Shelly Kramer: SAP…
Carsten Storm: … store.sap.com, which is a good starting point for all of this.
Shelly Kramer: Okay. Okay. Well, I knew that would be your answer. I will also include a link to SAP Store in our show notes, and I’ll include a link to Carsten’s LinkedIn profiles. And I have a feeling that if you have any questions or you want more information, he’d be happy to help you. And with that, Carsten Storm, thank you so much for joining me today. It’s been a terrific conversation and I know that the challenges that procurement pros have are significant. I think there’s some great solutions out there to help them, aren’t there?
Carsten Storm: All right. Thanks, Shelly, for having me.
Shelly Kramer: Thanks again. Bye-bye.
Author Information
Shelly Kramer is a Principal Analyst and Founding Partner at Futurum Research. A serial entrepreneur with a technology centric focus, she has worked alongside some of the world’s largest brands to embrace disruption and spur innovation, understand and address the realities of the connected customer, and help navigate the process of digital transformation. She brings 20 years' experience as a brand strategist to her work at Futurum, and has deep experience helping global companies with marketing challenges, GTM strategies, messaging development, and driving strategy and digital transformation for B2B brands across multiple verticals. Shelly's coverage areas include Collaboration/CX/SaaS, platforms, ESG, and Cybersecurity, as well as topics and trends related to the Future of Work, the transformation of the workplace and how people and technology are driving that transformation. A transplanted New Yorker, she has learned to love life in the Midwest, and has firsthand experience that some of the most innovative minds and most successful companies in the world also happen to live in “flyover country.”
