When Workday closed its acquisition of source-to-pay vendor Scout RFP in late 2019, no one could have imagined the spotlight that was about to be thrown on sourcing and supply chain in the ensuing disruption of the pandemic. In retrospect, Workday couldn't have chosen a better time to round out its spend management offering. I caught up recently with Alex Yakubovich, co-founder and former CEO of Scout, who is now GM of Spend at Workday, to reflect on the changes he's seen in the market over the past 18 months as well as the transition of the Scout product to become Workday Strategic Sourcing.
One big change is that the experience of the past year-and-a-half has made sourcing much more of a strategic and urgent topic. As a result, sales conversations are now less about the product itself and instead they focus on the results that customers want to achieve. Yakubovich elaborates:
It starts off with our customers really talking about their challenges, on a global scale. It's less about features and functionality and much more so about what impact they want to have on their enterprise. That's first and overarching. We've definitely felt over the last year, we don't get on calls as much anymore and talk about bells and whistles. There's a whole different level of urgency that our customers have as they talk to us.
That's borne out by the findings from a survey of nearly 200 global business executives carried out for Workday by Harvard Business Review Analytic Services. It found that 60% have fast-tracked plans to upgrade and automate sourcing and supplier management, as a result of their experiences in the pandemic. One example cited in the report comes from Adam Andolina, chief procurement officer at Cleveland-based KeyBank, who says:
What we wanted to do in the next three years, we probably need to do in the next 12 months.
New focus on outcomes
Buyers now accept the case for automating processes and integrations so that they can have the information they need at their fingertips. For one in eight of those surveyed, that means moving off spreadsheets and email as their primary sourcing and spend management tools. For the remainder, it means upgrading existing tools or consolidating disparate systems. The HBR survey found that 92% of organizations believe their processes fall short of best-in-class for digital maturity. Yakubovich says buyers no longer need persuading:
Whereas I remember, when we started Scout, folks were like, 'Well, what's really even the benefit of automation?' And we were like, 'Well, of course, you want all your data in a system. Why wouldn't you? Why would you be on email?' We just don't have that conversation anymore.
That's why we're working so hard to make it Workday strategic sourcing and really provide a unified spend platform, as opposed to point solutions. Your customers expect automation and integration so that they could have the analytics and transparency they want to see in their procurement supply chains.
Speaking to customers over Zoom also seems to changed the focus of the sales process to be less about relationship building and more on what the product can help the customer achieve. It fosters a more disciplined approach, Yakubovich suggests, where customers are thinking about what the impact is going to be and how to measure those outcomes. He observes:
Before, you could go and get dinner and build relationships, go golfing, and all the old the way business has been done for the last 200 years. But as a result of the pandemic, you're getting on Zoom. And it's not all business, but it is much more focused on impact — how do we build a business case that's built on real outcomes? ...
I miss going out and visiting our customers and having dinners and all of that, but I think that's one of the silver linings of the pandemic — that we have been much more outcome-focused, and software platforms that really deliver, really shine.
Usability and transparency
The primary goal is to enable automation and bring data together for analysis, whether that's just with the strategic sourcing product, similar to the original Scout proposition, or connecting across procurement, inventory and supply chain, all of which now fall under Yakubovich's remit. The integration of Scout into the rest of the Workday product line has focused on elements such as single sign-on and administration, uptime and usability, as well as data integration and process flows. Converging the user interface has meant adapting Scout's original green and beige color palette to match Workday's blue and orange. But at the same time, some elements of Scout's design philosophies are being brought to the Workday spend platform. He sums up:
It's not just making Scout look more like Workday. It's also making the Workday Spend platform feel and act a little bit more like Scout.
Getting the usability right is key to enabling the wider goal of having all the data in one place so that customers can then run analysis and act on the findings. Yakubovich says:
You need that foundation, if you're going to do any of the more advanced things. So what we really focus on is making sure that we provide our customers with a really great foundation that a) works, and b) their customers really enjoy using. Our mission is delivering a product that makes it easier for our customers to adopt and love — because we feel if they don't have that, we can't enable the higher level transformation that we want to.
Customers are now starting to look for further capabilities beyond the data and analytics piece. The ability to respond dynamically to changing conditions is front of mind for obvious reasons. Transparency is another area that's getting more focus, as customers look to have more knowledge about their supplier ecosystems. There are several different motivations, depending on what's foremost for each enterprise. Some are concerned primarily with supplier diversity, others look at environmental responsibility, while resiliency and security are both becoming more important. In part, says Yakubovich, this is a response to the disruption of the past year, which has led businesses to ask what are their dependencies and alternative options when something goes wrong in the supply chain.
Conversations are also happening with finance leaders as well as with procurement and IT teams. That's a reflection of the growing attention on sourcing and spend management as a strategic function. Yakubovich says:
All of these conversations are happening at once, to make sure that as the world changes, the platforms that are in place are able to meet those changing needs for all of the different stakeholders within the company, not just checking the boxes.
A useful check-in on the integration of Scout into Workday's spend management offering. The disruption of the past year-and-a-half has underlined the importance of having timely information about your supply chain, along with the ability to make rapid changes is required. The finding that one in eight businesses still co-ordinate all of that using spreadsheets and email is a shocker, to my mind. It shows how much investment is still needed to put in place the kind of automation and information flows that are becoming table stakes in today's digitally connected world.