The “Uberization of X industry or product, or service” is a slightly overused term, but if you’ll forgive me, it makes a good shorthand for an important business to consumer (B2C) trend that is increasingly making its way to the business to business (B2B) world and is set to disrupt many business models and provide opportunities for procurement and CFO/CEOs to step-change their economics.
To explain, we often hear that many in the younger set are not as wedded to car buying (or even driving) as previous generations. Millennials and Gen Z can now access freedom and independence with ride-sharing solutions like Uber, Lyft, and Careem (based here in the Middle East). This trend is only going to accelerate as fully autonomous cars become more widespread. The car lover part of me struggles to grasp this, but boy does the procurement/business part of me love it! And I think this pragmatic approach would have even resonated with me when I bought my first car – a (Cortina Mk 5 for all the older Brits😊). In my first years of working the car purchase, insurance, running costs and the inevitable (huge) repair bills kept me poor at a time when I should have been doing smarter things with my limited income. If I could have avoided the costs of the asset and just consumed each journey in a cheap, quick, reliable, and easy way, even young Dan would have seen the pragmatic and undeniable logic.
But OK enough about Dan’s first banger – how does this impact procurement? Well, let’s start with the traditional approach to buying procurement technology. Typically, we would buy the asset (the software) and pay the annual maintenance fee (i.e. we ‘bought the car’ in effect) and that outlay was still significant even if it stayed off the road (a more apt metaphor for procurement software than you may think!) Fast forward now to Software as Service (or SaaS). This has allowed you to avoid the bulk of the upfront outlay of the software and instead pay a subscription fee. It reduced the total cost of ownership significantly. Essentially, in this approach, you leased the car.
This brings us to the latest approach of ‘consumption-based pricing’ – (or ‘Uberization’ if you will) that Simfoni is spearheading in procurement technology, and the market response so far implies it’s going to take off! The note below this article will tell you more about Simfoni, but let’s start with the concept …
Instead of purchasing the procurement tech (buying the car), or subscribing via SaaS (leasing the car), Simfoni’s approach is more akin to paying for what you consume (or paying per ‘trip’) – or in this case, paying per saving! (we call it PAYS – Pay As You Save).
Simfoni provides you with a full purchase-to-pay (P2P) solution, including access to a manned professional sourcing desk for non-catalog items and our private marketplace of Simfoni’s own pre-negotiated contracts. This aggregates spend volume on common items across our Spend Automation customers, thus leveraging our buying power to deliver you savings from almost day 1. Essentially, this technology is mostly provided for free (common items marketplace, ERP Integration, hosted supplier catalogues, e-invoicing, accounts payable automation, even a single vendor payment model, etc., etc.) – typically this is a significant capital outlay, that needs implementation, integration and user adoption, and even then it takes significant time to break even (maybe never). Our fees are mainly paid via an innovative gain share model that aligns our own success with yours. When we deliver you savings, you take the lion’s share, and we use our cut to fund the service/technology. Our customers only pay when they save!
Dan Quinn is the General Manager of Simfoni for the Middle East & North Africa Region, he has worked in senior procurement and supply chain digital transformation roles for over 20 years with a diverse array of public and private organisations and sectors.
Simfoni is a digital platform and professional services company that works with some of the world’s most successful businesses to help CEOs, CFOs, and CPOs leverage AI, digital technology, spend/savings analytics and expert services to identify and unlock hidden value in their procurement spend, quickly. We are a global business with regional offices in San Francisco, Chicago, London, Abu Dhabi/Dubai, and Melbourne.