What Is a Procurement Platform Anyway?

One of our analysts once said that many of his clients found it difficult to navigate through the meaning of platforms, suites, architectures and networks. So, to unwind the problem, he delved into what effective procurement information architecture looks like. And he used the term “information architecture” rather than technology architecture because “it is not so much about low-level technical infrastructure – nor about having superficial functionality-checkbox discussions about best-of-breed vendor X vs. ERP vendor Y in process area Z (sourcing, contract management, buying, paying, etc.) – rather, it is about creating an environment where different solutions approaches, application types and vendors can be interchanged more easily within a more coherent framework.”

Of all the terms, the most ubiquitous is the ‘platform.’ 

A buzzword, but an important concept

Many procurement solution providers claim to be ‘platform’ providers. What is the difference between an app provider and a platform provider? And does it even matter to procurement or others in general?

If you have sat through a software demonstration, as we do regularly, you probably have noticed that the marketing and PR team has thoroughly worked the ‘platform’ word over and incorporated it into the sales pitch. Much like ‘cloud’ and ‘big data,’ the term ‘platform’ has become another buzzword. Before it dissolves into pointlessness, let’s see what it should mean and why that’s important. As always, our point of view includes a technology perspective, but also focuses on the business value it delivers.

First, let’s consider this clearly general definition of software platform (we’ll move beyond software at a later date):

“The overall software, operating system or database where smaller application programs can run.”

Using the loosest interpretation, just about any kind of substantial procurement solution can be called a platform. This could include software-as-a-service (SaaS) applications, not just on-premises solutions. Let’s refer to this as the limited, traditional IT concept of a platform.

However, if we start to be a little broader, but still within the IT purview, we would say that platforms include software development environments that use standard ‘building blocks’ to build applications (namely, cloud-based solutions). This is the most common definition of an application platform as a service (aPaaS). If the environment lets you build hosted integration tools to connect the applications, then we’re talking about integration platform as a service.

Now, if a SaaS provider uses a PaaS to develop its cloud software such that end users and complementary providers can also build on top of the platform by using the same common lower-level tools (which are hopefully industry standard tools) as the SaaS provider, that offers value to both the installed base and to the provider. It not only lays everything bare but also lets customers tailor what’s on view to fit their needs and use complementary providers to accessorize it.

The state of the procurement platform

How have solution providers dealt with the PaaS issue? For example, Oracle and SAP several years ago wisely declared their intent to do this, although at the time their PaaS solutions were only used to develop a minimal portion of the then current code base being sold to customers. They, along with many others, such as IBM, Amazon, Google, Apple, Salesforce and Microsoft, wanted to win in the platform arena to help drive success in the applications business (with mobile being front and center, of course). Some providers include:

• Salesforce has been viewed as the most developed platform provider with its Salesforce1 platform and its supporting AppExchange marketplace, but given its CRM focus, it relies on SaaS providers to focus on the buy-side.
• Amazon, in particular, wanted to position itself as a platform since it was primarily a B2C retailer, B2B supplier, B2B marketplace, crowdsourcer (Mechanical Turk), and infrastructure-as-a-service (IaaS) player moving more into PaaS.
• SAP, for its part, used the Ariba Network (a combination of an e-marketplace for indirect spend and an increasing set of cloud-based application services) to try to appear like a platform, but B2B networks shouldn’t just be rebadged as B2B platforms. The real platform at SAP lies in a combination of its HANA cloud PaaS solution and the platform that it picked up with its acquisition of Concur.

But, there are so many other examples: ex-marketplaces like Elemica, P2P application providers like Tradeshift and even the ‘ERP graveyard’ provider turned into the potential B2B powerhouse Infor. Speaking of resurrection, the platform concept could even help firms like IBM and OpenText – and have a powerful multiplier effect on a provider like Intuit or NetSuite. It’s also been a critical competency for product lifecycle management (PLM) vendor PTC and its ThingWorx IOT (Internet of Things) platform.

Looking forward

It’s important to note that smaller providers can deliver platform-like capabilities without having to establish an ecosystem like the mega players. A platform is an environment where stuff gets built more modularly and scalably than in closed infrastructures. Note the bold terms in Merriam-Webster’s dictionary definition of platform: “a usually raised structure that has a flat surface where people or machines do work.”

There are also more business-process-oriented platforms that are looking beyond marketplaces and other matchmaking scenarios (i.e., renting out assets of various sorts that often go under the ‘sharing economy’ moniker).

Uber courted developers to build on its platform and to focus increasingly on the B2B market. Another example is the massive opportunity for a platform to manage non-employee labor. Hundreds of ‘gig’ marketplaces can help serve up various types of freelancers, and the opportunity to build a work intermediation platform (WIP) is not lost on the various managed services providers (MSPs), vendor management system (VMS) providers and “freelancer management system” (FMS) providers who’d like to be ‘platforms.’

But how will they all work together as a practitioner would want? Isn’t this going to be like the lack of interoperability with disparate business networks? Yes. And this is why a true platform provider needs to be different, even if it’s for a very narrow segment of the problem.