Here is a thought-provoking, in some ways mind-bending discussion regarding the following excerpt from a terrific post by Jason Busch – “Earlier this afternoon, Paylocity announced it was acquiring Airbase for $325MM (TechCrunch suggests the deal valued the company at closer to $400MM based on cash on the balance sheet).”
You must read through the entire raw and unedited discussion stream because within its dialogue is the explanation regarding what will happen in 2025, e.g., the GenAI Bubble Burst. This is an essential read for practitioners. In fact, if you don’t read another one of my posts after this one for the rest of the year, I will have done my job.
Joël Collin-Demers, the first thought or image that came to my mind regarding your comment was “laying a foundation on quicksand.” Another thought was building a foundation on a buildup of failed initiatives – either way, the results of any “new builds” will not be good.
Starting new projects will only perpetuate the generational failure of 80% of past, e.g., ERP, SaaS, digital transformation, GenAI, and future implementations.
In the end, technology is not the relevant piece here, so why do organizations continue to lead with tech using an equation-based model? What will make this next generation of solutions work when those in the past did not?
We must stop chasing solutions and start solving problems using an agent-based model – https://bit.ly/3FBnFRr
Otherwise, these mergers and acquisitions will mean absolutely nothing when we have this same discussion five to ten years from now.
However, it might be helpful if these two organizations gave unrestricted access to both long-time and new clients to interview. After all, if they aren’t successful individually, how will they be successful collectively?
Jon W. Hansen – Agree but the fact that the 80% doesn’t change tells us human behavior at scale will not change… No matter how many LinkedIn posts we put out there 😅
Joël Collin-Demers So, because failure is inevitable, let’s keep doing the same thing repeatedly. Didn’t Einstein have a saying about that?
How about we stop covering companies that fail to give us transparent and unfettered access to their client base? In our report to the market, we don’t have to disclose who the clients are – just the results. If you think about most case studies, that is what they are doing now – only it would not be the provider alone who selects which anonymous client results they share with the public, it would be us.
That would be a good starting point; otherwise, what we are doing with solution maps, etc., is ultimately useless.
So, to start, I haven’t paid much attention to procuretech because I have much more fundamental issues to solve. But, my impression is that much of the tech seems to address niche questions. Perhaps I am having difficulty wrapping my grayhead around the tech landscape, but I really don’t like the idea of trying to graft a la carte systems together. An API doesn’t really assure integration.
I’ve managed to make a short story long, but I wonder if this is the start of a new ERP solution.I would have thought you’d start with the general ledger and build around. But again, tech isn’t my core strength.
Jon W. Hansen Thanks for the tag. Reading this announcement and reflecting on my company’s ERP journey, this has zero impact on my operation. It’s interesting, and I suspect you are correct when you suggest that a merger (acquisition?) such as this doesn’t really matter in the overall scheme of things.
Jon W. Hansen One of the key criteria for procurement when selecting an IT provider is their client base. Providers that have successfully worked with clients of similar size and industry are usually preferred, as this can significantly impact the success of the solutions they offer. Client feedback is also crucial for assessing a provider’s reliability and effectiveness. Procurement teams often request demonstrations of the system in use with current clients to verify the provider’s claims. These demos typically involve a multifunctional team, including procurement, IT, and system users, which helps ensure that the solutions we consider have been tested in real-world situations.
Jon W. Hansen – It’s not relevant to practitioners right this second… But it’s about what the two entities can accomplish when combined vs apart over time that will matter to practitioners.
Just basic M&A drivers… Can the combined company generate more value for customers together? Combine software? Restructure teams/org? Couple great tech with deep pockets? etc.
We’ll only know if this is significant down the line.
First, “the failure rate of mergers and acquisitions (M&As) is generally estimated to be between 70% and 90%. This statistic includes deals that fail to achieve the desired financial or strategic objectives.”
Based on the above, I disagree with your statement, “It’s not relevant to practitioners right this second.” Four decades of data tell us that the likelihood of the above M&A being successful is around 20%. Unless you know something I don’t, there is no tangible indication of why this decades-long trend will change.
So, yes, it is very relevant to practitioners, especially within the underserved SME market.
What is the relevance of as many projects (or more) starting as fail if the failure rate doesn’t go down? In fact, I’d say the more projects that start, the worse off we are, as it just crowds the field and makes it harder and harder to identify the now less than 20% of companies that will be good bets.
Until the failure rate decreases, the only good thing that is going to come out of the forthcoming M&A mania [ https://tinyurl.com/492psd8f
] is, near the end of 2026/2027, decimation of most of the worthless logos on the mega-map [ https://tinyurl.com/3yx9shs6
]. Unfortunately, since the worthwhile logos can’t be found, most of them won’t survive either.
The fact that the madness is starting is very relevant to practitioners as now they have to be extra careful of whom they select … they at least want the provider to survive the implementation phase!
Well there’s more money moving around (even if it shouldn’t, as per your point). I agree with you on the failure rates but our agreement won’t change the fact that more money will be spent on these solutions…
That’s why it’s relevant… What we can try to help with is funneling that money to the best places possible instead of trying to prevent the inevitable.
Joël Collin-Demers, regarding your comment, “That’s why it’s relevant… What we can try to help with is funneling that money to the best places possible instead of trying to prevent the inevitable.”
That’s like saying, let’s make the cars go over the cliff faster with more features. After four or five decades of similar thinking, e.g., “the proper funneling of money,” into technology M&As, the dismal results suggest prevention, which is recognizing you are still heading toward a cliff and without changing the direction you are driving in, we are going to get the same results as before.
That’s what I am talking about.
So, following your suggestion, how have we changed direction from what has been done in the past? With how we funnel the money now, we are still heading over a cliff 80% of the time. After all these decades, why will our current funneling strategy produce a different result—especially if we don’t acknowledge the elephant in the room, which is the error in continuing to lead with an M&A-driven technology-first equation-based model versus an agent-based first model?
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Procurement Insights
Would you invest your life savings into a venture in which there was an 80% chance you would lose all your money?
Posted on September 11, 2024
0
Here is a thought-provoking, in some ways mind-bending discussion regarding the following excerpt from a terrific post by Jason Busch – “Earlier this afternoon, Paylocity announced it was acquiring Airbase for $325MM (TechCrunch suggests the deal valued the company at closer to $400MM based on cash on the balance sheet).”
You must read through the entire raw and unedited discussion stream because within its dialogue is the explanation regarding what will happen in 2025, e.g., the GenAI Bubble Burst. This is an essential read for practitioners. In fact, if you don’t read another one of my posts after this one for the rest of the year, I will have done my job.
Joël Collin-DemersYour Digital Procurement Mentor | I help thousands of readers discover how top Procurement teams use technology to deliver results for their business. Join them for free below 👇
6d
Big move! Thanks for the info Jason.
Insightful
2Reply
15 Replies15 Replies on Joël Collin-Demers’ commentSee previous replies
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
6d
Joël Collin-Demers, the first thought or image that came to my mind regarding your comment was “laying a foundation on quicksand.” Another thought was building a foundation on a buildup of failed initiatives – either way, the results of any “new builds” will not be good.
Starting new projects will only perpetuate the generational failure of 80% of past, e.g., ERP, SaaS, digital transformation, GenAI, and future implementations.
In the end, technology is not the relevant piece here, so why do organizations continue to lead with tech using an equation-based model? What will make this next generation of solutions work when those in the past did not?
We must stop chasing solutions and start solving problems using an agent-based model – https://bit.ly/3FBnFRr
Otherwise, these mergers and acquisitions will mean absolutely nothing when we have this same discussion five to ten years from now.
However, it might be helpful if these two organizations gave unrestricted access to both long-time and new clients to interview. After all, if they aren’t successful individually, how will they be successful collectively?
Sonduren Fanarredha Mathew Schulz Tanmay Kar Eric van der Bend Marios Italos Emma Dunstone Alun Rafique MCIPS CEng, MIMechE
Are you chasing solutions or solving problems? (Part 1 of 3)Features, functions, and benefits Proprietary Technology Leading Edge Technology Plug and Play SaaS, e.g., on-demand, by-the-drink tech Artificial Intelligence End-to-End Solution Suites Luggable, …
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Joël Collin-DemersYour Digital Procurement Mentor | I help thousands of readers discover how top Procurement teams use technology to deliver results for their business. Join them for free below 👇
(edited)6d
Jon W. Hansen – Agree but the fact that the 80% doesn’t change tells us human behavior at scale will not change… No matter how many LinkedIn posts we put out there 😅
Insightful
1Reply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
6d
Joël Collin-Demers So, because failure is inevitable, let’s keep doing the same thing repeatedly. Didn’t Einstein have a saying about that?
How about we stop covering companies that fail to give us transparent and unfettered access to their client base? In our report to the market, we don’t have to disclose who the clients are – just the results. If you think about most case studies, that is what they are doing now – only it would not be the provider alone who selects which anonymous client results they share with the public, it would be us.
That would be a good starting point; otherwise, what we are doing with solution maps, etc., is ultimately useless.
Thoughts? Vera Rozanova MBA, MCIPS Chartered, MEng (Hons) Elizabeth Ossler Victoria Zetterberg Kim Cullen Prather Rodolfo Medina, MBA Rodolfo Medina, MBA Tonya Lueken, MBA Katie Smith Michael Koontz Tom Kieley Sai Nidamarty Manish Pathak, MBA Vamshi Kiran Mallavarapu David Berger Paul Cateriano MBA, MCIPS Cedric Renaud David Schultz Heiko Faulhaber Heng Liu Allan Potter Ramsey Badawi Michael Schiappa Marion Van Espen Afif Mango Joe Payne
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Jeffrey Carlson, CSSGBProcurement Director specializing in Natural Resource Industries | Lean Six Sigma Green Belt | Supply Chain Operations | Strategic Sourcing | Category Management | Change Management | Inventory Management
6d
So, to start, I haven’t paid much attention to procuretech because I have much more fundamental issues to solve. But, my impression is that much of the tech seems to address niche questions. Perhaps I am having difficulty wrapping my grayhead around the tech landscape, but I really don’t like the idea of trying to graft a la carte systems together. An API doesn’t really assure integration.
I’ve managed to make a short story long, but I wonder if this is the start of a new ERP solution.I would have thought you’d start with the general ledger and build around. But again, tech isn’t my core strength.
Like
2Reply
Thomas Perkins, MBA, CPSM, CPSDProcurement Leader | Contract Expert | Change Agent | Adjunct Professor | perkins@svminerals.com
5d
Jon W. Hansen Thanks for the tag. Reading this announcement and reflecting on my company’s ERP journey, this has zero impact on my operation. It’s interesting, and I suspect you are correct when you suggest that a merger (acquisition?) such as this doesn’t really matter in the overall scheme of things.
Insightful
1Reply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
5d
Thomas Perkins, MBA, CPSM, CPSD So, from a practitioner’s standpoint, if this isn’t important, what does it matter what Airbase and Paylocity are doing?
Is it to say to the market, ” Look at us; we are now bigger and better?” Would this influence a prospective client to do business with the new entity?
Like
1Reply
Vera Rozanova MBA, MCIPS Chartered, MEng (Hons)CPO-Chief Procurement Officer | Procurement Director | Supply Chain | Invited Lecturer | Author | Business Trainer | Transformation
2h
Jon W. Hansen One of the key criteria for procurement when selecting an IT provider is their client base. Providers that have successfully worked with clients of similar size and industry are usually preferred, as this can significantly impact the success of the solutions they offer. Client feedback is also crucial for assessing a provider’s reliability and effectiveness. Procurement teams often request demonstrations of the system in use with current clients to verify the provider’s claims. These demos typically involve a multifunctional team, including procurement, IT, and system users, which helps ensure that the solutions we consider have been tested in real-world situations.
Support
1Reply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
1h
Vera Rozanova MBA, MCIPS Chartered, MEng (Hons), your high-level observations are sound, which makes the results referenced in the following even more perplexing – https://bit.ly/3XCLKRX
How Useful Is The Gartner Hype Cycle for Procurement and Sourcing SolutionsI have only one question left to ask? If Gartner was your barber, would you keep going back to them for the same results as above?
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1Reply
Joël Collin-DemersYour Digital Procurement Mentor | I help thousands of readers discover how top Procurement teams use technology to deliver results for their business. Join them for free below 👇
1h
Jon W. Hansen – It’s not relevant to practitioners right this second… But it’s about what the two entities can accomplish when combined vs apart over time that will matter to practitioners.
Like
1Reply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
1h
Joël Collin-Demers please elaborate.
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Joël Collin-DemersYour Digital Procurement Mentor | I help thousands of readers discover how top Procurement teams use technology to deliver results for their business. Join them for free below 👇
1h
Just basic M&A drivers… Can the combined company generate more value for customers together? Combine software? Restructure teams/org? Couple great tech with deep pockets? etc.
We’ll only know if this is significant down the line.
LikeReply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
20m
Let’s break this down, Joël Collin-Demers.
First, “the failure rate of mergers and acquisitions (M&As) is generally estimated to be between 70% and 90%. This statistic includes deals that fail to achieve the desired financial or strategic objectives.”
Second, check out my post from earlier today – https://bit.ly/3XCLKRX
.
The initiative failure rate for procurement and sourcing implementations follows a similar arc as the M&A success rate going back to 2000.
David Loseby MCIOB Chtr’d FAPM FCMI FCIPS Chtr’d FRSA MIoD MICW indicates that the rate of initiative failure goes as far back as the 1990s.
Based on the above, I disagree with your statement, “It’s not relevant to practitioners right this second.” Four decades of data tell us that the likelihood of the above M&A being successful is around 20%. Unless you know something I don’t, there is no tangible indication of why this decades-long trend will change.
So, yes, it is very relevant to practitioners, especially within the underserved SME market.
Thoughts, Mathew Schulz Michael Lamoureux Dr. Thierry Fausten MS Vijayalakshmi Ian Westlake, MCIPS Gaurav Beniwal Kim Castellucci Jaime Robles Thierry Jaffry David Berger Manish Pathak, MBA Prof. Dr. Florian C. Kleemann
How Useful Is The Gartner Hype Cycle for Procurement and Sourcing SolutionsI have only one question left to ask? If Gartner was your barber, would you keep going back to them for the same results as above?
Like
2Reply
Michael LamoureuxFractional Chief Research Officer, Procurement/Supply Chain Expert, Optimization Guru, Solution Engineer, Technology Management, Due Diligence, Writer, Leader, Board Member, Scholar, Futurist, & “the doctor”.
12m
Joël Collin-Demers
What is the relevance of as many projects (or more) starting as fail if the failure rate doesn’t go down? In fact, I’d say the more projects that start, the worse off we are, as it just crowds the field and makes it harder and harder to identify the now less than 20% of companies that will be good bets.
Until the failure rate decreases, the only good thing that is going to come out of the forthcoming M&A mania [ https://tinyurl.com/492psd8f
] is, near the end of 2026/2027, decimation of most of the worthless logos on the mega-map [ https://tinyurl.com/3yx9shs6
]. Unfortunately, since the worthwhile logos can’t be found, most of them won’t survive either.
Jon W. Hansen
The fact that the madness is starting is very relevant to practitioners as now they have to be extra careful of whom they select … they at least want the provider to survive the implementation phase!
M&A Mania is Coming Again … but will it be the same as last time?
the doctor agrees with THE PROPHET that M&A in Procurement, Supply Chain and Finance Tech is Back On For Q4 and 2025 , because M&A Mania is part and parcel with the The Marketplace Madness that the doctor told you is coming back in May. The only…
Insightful
1Reply
Joël Collin-DemersYour Digital Procurement Mentor | I help thousands of readers discover how top Procurement teams use technology to deliver results for their business. Join them for free below 👇
28m
Well there’s more money moving around (even if it shouldn’t, as per your point). I agree with you on the failure rates but our agreement won’t change the fact that more money will be spent on these solutions…
That’s why it’s relevant… What we can try to help with is funneling that money to the best places possible instead of trying to prevent the inevitable.
(ProcureTech Market is forecasted to be 18.76 Billion USD by 2032: https://www.globenewswire.com/fr/news-release/2024/08/09/2927785/0/en/Procurement-Software-Market-to-Reach-US-18-76-Billion-By-2032-Push-Towards-Digital-Transformation-The-Adoption-Of-Cloud-Based-Solutions-Drives-Growth-Research-by-SNS-Insider.html?f=22&fvtc=5&fvtv=32464777&utm_source=substack&utm_medium=email)
Like
1Reply
Jon W. HansenStrategic Advisor/Analyst Specializing in Emerging AI Tech, Sales and Marketing (Procurement) Thinkers360 Top 50 Global Thought Leaders & Influencers on Procurement! (April 2021)
49s
Joël Collin-Demers, regarding your comment, “That’s why it’s relevant… What we can try to help with is funneling that money to the best places possible instead of trying to prevent the inevitable.”
That’s like saying, let’s make the cars go over the cliff faster with more features. After four or five decades of similar thinking, e.g., “the proper funneling of money,” into technology M&As, the dismal results suggest prevention, which is recognizing you are still heading toward a cliff and without changing the direction you are driving in, we are going to get the same results as before.
That’s what I am talking about.
So, following your suggestion, how have we changed direction from what has been done in the past? With how we funnel the money now, we are still heading over a cliff 80% of the time. After all these decades, why will our current funneling strategy produce a different result—especially if we don’t acknowledge the elephant in the room, which is the error in continuing to lead with an M&A-driven technology-first equation-based model versus an agent-based first model?
LikeReply
NOTE: Use the following link to join the live discussion stream on LinkedIn. If you are not on LinkedIn, share your thoughts in the comment section of this blog below.
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