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Why Comparing Sales Bonuses to Procurement Savings is Misleading

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The comparison—where a $100K sales win gets a $10K bonus, but saving $100K on a procurement contract gets nothing—might seem like a compelling argument for unfairness at first glance. However, this comparison oversimplifies the complex roles of sales and procurement teams. Let’s unpack this misconception from different angles. Different Objectives and Impact While it’s tempting to see a $100K sales win and a $100K procurement savings as equivalent financial achievements, their impact on business objectives diverges. Sales teams are revenue-generating and focus on top-line growth—bringing money into the business. A $100K contract directly boosts revenue, essential for business growth, performance metrics, and investor confidence. This tangible addition to revenue is why sales bonuses are usually tied directly to contract wins. Procurement’s role, however, centers around savings, cost efficiency, and risk management. A $100K savings may not affect revenue but enhances profitability by im...
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The SaaS Market and IT Procurement: A $350 Billion Opportunity or a Continued Shoving Around the Executive Table?

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S SaaS is booming—but at what cost? The market is set to skyrocket, potentially reaching $1 trillion by the early 2030s—up from the current $240-$320 billion range. But this explosive growth hides a disturbing flipside.                     2.  The hidden cost: unused licenses and soaring spend. Nearly 50% of SaaS licenses go unused, while companies add an average of six new apps each month, building on an already bloated base of 269 apps. SaaS spend has reached $3,900 per employee annually.                     3. Digital transformation: trillions to spend better. Companies are investing heavily in digital transformation—$2.5 trillion in 2024, projected to reach $4 trillion by 2027 ( according to IDC ). Yet, the results are grim: 90% of projects fail to deliver measurable ROI, or 80% outright fail, according to Gartner .       ...
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Why Do We Have to Bother With Transactional Costs?

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The true cost of a Purchase Order In today's business environment, transactional efficiency in procurement processes is crucial in maintaining smooth operations and optimizing costs. One of the most common aspects of procurement is processing purchase orders (POs). Whether running a small business or a large enterprise, understanding the cost per PO is essential for identifying inefficiencies and improving the transactional cost. In this post, we'll analyze the cost per PO processing for a European company with 1,000 employees and €1 billion in revenue. We'll consider labor, system costs, overheads, and approvals and detail each step involved. I used ChatGPT for these calculations, but the logic and reality checks were still human. After six rounds of review, we developed the proposed case, and it's likely a partial one. Please don't hesitate to expose gap coverage or give more realistic inputs. Company Overview For this analysis, the company: - Operate...
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