Posts

3 E's of Value Creation

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The journey to holistic value Let's nail it - those obsessed with savings only look at a single link of a complex value creation chain. It's not just about the Needs to Resources transformation - it's about the impact we created.   The following sketch isn't my idea—I found it elsewhere and adjusted it to my beliefs. In the procurement context, we should look at economies but remember Efficiency and Effectiveness.  Like anyone else's, our work must be measured by its impact. Savings don't create an impact. We must consider whether we made our company more competitive or our society a better place (affordable prices, new business for SMEs, cleaner environment, etc.)  Our actions and decisions are deeply interconnected, and their actual value is often more significant than the sum of their parts. The flow from economy to effectiveness in the (procurement) process isn't just a chain of steps; it's a value-creating journey that can make or break the success

Value - Procurement Framework in the Context of Servitization

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It all started in the attempt to understand the theoretical concept of servitization , i.e., the transformational shift from a product-centric to a service-centric business model and logic that we observe extensively in the area of IT procurement, in particular. In our earlier posts , we analyzed the notion of XaaS (Anything-as-a-Service) in the context of outsourcing.  Eventually, the research path led us to the notion of servitization, and we went even further this time.    IT servitization and procurement IT servitization has gained significant traction in the procurement landscape in recent years, revolutionizing how businesses approach their IT needs. It refers to transforming traditional IT products into service-oriented offerings, wherein the focus shifts from merely selling hardware or software to providing comprehensive solutions and ongoing support. Rather than investing in expensive hardware or software licenses upfront, businesses can now opt for subscription-based

Product Differentiation and Pricing-Based SaaS Negotiation Strategies

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We often choose products or services based on their value or price. Value can be found in savings, efficiency, or competitive advantage.  On the other hand, price is a standard measure that indicates the competitive market for such a product. We select from a few available options by comparing their prices.  This post suggests we use a similar approach when purchasing SaaS (cloud software). We propose looking at SaaS from two angles: product differentiation and pricing method. SaaS Negotiation Matrix Among many available pricing methods, we selected the value- and competitor-based ones. Competitor- and value-based pricing Competitor-based pricing assumes that SaaS providers set their prices based on the ones charged by their competitors for similar products or services. This method allows SaaS businesses to remain competitive in the market while aligning their offerings' perceived value with others. Value-based pricing focuses on the price you believe customers are willing to pa

How to Save 30-50% of the Cloud Software (SaaS) License Cost

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100-million-dollar waste. Recently, we wrote about the information asymmetry in SaaS negotiations : buyers tend to limit their spending on SaaS due to the need for more knowledge of its fair market price. Still, the SaaS industry is booming and is expected to reach 1 Trillion USD in the early 2030th .   At the same time, industry researchers assume that 30-50% of SaaS licenses are not fully utilized or unused . Even 30% of the 300-350-million-dollar industry gives us around $ 100 million annual wastage of SaaS investments, which is a flip side to its ease, flexibility, and speed. However, this blog isn't meant to hail perpetual licenses - it's all about IT procurement. 5 Possible Answers to the Problem Software Asset Management (SAM). When a company purchases software, that license is considered a business asset. As companies have come to depend increasingly on technology to carry out daily business activities, managing these licenses and applications has become an essential pa

My SaaS Negotiation Course is Live on Udemy

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My online course, "Modern Approach to Cloud Software (SaaS) Negotiations," is live on Udemy.  Please follow this link  https://www.udemy.com/course/cloud-software-saas-negotiations/  and get closer to becoming the SaaS negotiation expert. Software as a Service (SaaS) procurement refers to acquiring cloud-based software applications on a subscription basis rather than through traditional software licensing models.  One of the critical specifics of SaaS is its flexibility. Businesses can select from software solutions tailored to their specific needs without physical ownership constraints of long-term capital commitments.  Just as SaaS is flexible, so should the act of its buying . We no longer buy physical objects but unique services that require a custom approach, even upon contract signature and renewal with the same vendor.  Moreover, SaaS procurement often involves a pay-as-you-go pricing structure, providing cost predictability and easy scale-up and down of the license m

My Q&A on Agility for "Trusted Magazine" (December 2023)

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The source link . How could you describe your career path in a few words?   I worked in procurement for 22 years - telecom, airline, railways, public infrastructure services and consulting industries, and multiple geographies. I’m a Fellow of CIPS and an author of “ The Technology Procurement Handbook ,” where I tried to share my passion for what we used to call “IT Procurement.” This is where I started digging deeper into the Agile agenda , thinking of finding repercussions with our professional life and blogging on related topics.      How do you think agile practices have transformed companies over the past two years?   I assume that Agile practices in procurement are hyped more than used : many companies still mandate the use of the RFx as the sole answer to any emerging sourcing requirement, many fear or don’t appreciate the demand management, and digital transformation frequently happens without any comprehensive strategy and benefits tracking. Our strategies and plans aren’t ag