Here is an excerpt from the following October 2024 Procurement Insights post: How Many Solution Providers Choose The Right Clients?
Or, to put it another way, if someone asks why your clients are so successful, you can tell them it is because you choose successful clients. (How many solution providers choose successful clients or take on business with a client whom they know there is little chance of success?)
The Commonwealth of Virginia‘s eVA initiative is an example of what a successful client looks like and does – https://bit.ly/3SUWxml.
Here is an excerpt from the following June 2017 Procurement Insights post: Do Service Providers Choose The Right Clients?
Now some might immediately conclude that Ariba is the common denominator for success and that their technology provides a decided advantage.
For those who have followed me these past 10 years, you know how I feel about technology; while an important piece of the procurement success puzzle, it is not the deciding factor regarding whether or not a successful outcome is achieved. Based on years of experience covering our industry, it has become clear that capable people working together can overcome questionable technology, while good technology cannot overcome questionable people resources.
What is the take away from the Virginia and Santa Clara successes?
Service providers should spend more time on choosing the right clients rather than focusing on winning the business first and worrying about making it work later.
Whenever ProcureTech solution providers contact me for advice, most talk entirely about themselves through client logo pages, case studies, or cracking an analyst quadrant or solution map. Regarding referrals, they usually send me the targeted industry segment or, in some cases, the companies to whom they would like an introduction.
There have even been times when the case studies are outdated, or if I ask for unencumbered client access to interview them, there is hesitation. One solution provider told me they wouldn’t allow me to talk with the case study client because they didn’t want to bother them and to “just use what we send you” to introduce us to companies in the same sector. In short, shut up and just give us names, and our salespeople will take it from there.
Now, occasionally, there is an exception to the rule, and those are the ProcureTech solution providers I like to talk to, and as a practitioner, you will too. In today’s post, I am going to share with you an excerpt from a solution provider response—AdaptOne, who didn’t send brochures or an infomercial case study but responded to the question of why this particular practitioner-client would want to deal with them BEFORE asking me to reach out to them.
Asking And Understanding Versus Blind Selling
Why would a company in the hospital and healthcare diagnostic industry that had an IPO, and a Net Income loss of $15.7 million be interested in improving their Indirect and Direct procurement processes and practices?
A company in the hospital and healthcare diagnostics industry, such as Company, Inc., which had its IPO in 2020 and reported a net income loss of $15.7 million in fiscal year 2024, has compelling reasons to improve its direct and indirect procurement processes and practices. Company, Inc., focused on medical disease diagnostics with $71.3 million in revenue, exemplifies a growth-stage firm balancing rapid expansion with financial sustainability.
Here’s why enhancing procurement is a priority:
- Narrowing Net Losses and Accelerating Profitability
- Context: Company, Inc.’s $15.7 million net loss in 2024 (down from $52.1 million in 2023) reflects high operating expenses ($70.7 million) outpacing gross profit ($55 million, 77% margin). Its stated goal is positive adjusted EBITDA in 2025, signaling a push toward operational profitability.
- Direct Procurement Impact: Direct commodities (e.g., biological reagents, lab consumables) drive its $16.3 million cost of sales. Optimizing supplier agreements or bulk purchasing could reduce costs by 5-10% ($0.8M-$1.6M), lifting gross margin to 79-80% and directly cutting the loss.
- Indirect Procurement Impact: Indirect costs (e.g., IT services, marketing) dominate operating expenses. A 10% reduction through better vendor management or spend visibility could save $7M, shrinking the net loss to ~$8M-$9M.
- Why It Matters: Post-IPO, reducing losses is critical to demonstrate financial progress to investors, especially with a $15.7 million deficit still looming four years after going public.
2. Sustaining High Revenue Growth
- Context: Revenue grew 45% from $49.1M in 2023 to $71.3M in 2024, with a 2025 forecast of $92M-$95M (29-33% growth), driven by lung diagnostics ($64.7M in 2024). This requires scaling test volumes from ~100,000 to 130,000-140,000 annually.
- Direct Procurement Impact: Increased demand for reagents, blood collection kits, and sequencing consumables risks supply chain strain or cost overruns. Streamlined procurement (e.g., securing volume discounts, avoiding shortages) ensures production matches sales, protecting revenue. A 5% COGS saving on a projected $22M in 2025 saves $1.1M.
- Indirect Procurement Impact: Scaling IT infrastructure (e.g., cloud services for AI) and marketing to physicians could inflate expenses. Capping growth at 20% vs. 33% (e.g., $85M vs. $94M) saves $9M, aligning costs with revenue targets.
- Why It Matters: Growth is Company, Inc.’s strength, but unchecked procurement costs could erode margins, undermining its 2025 outlook and investor confidence.
There are three more points like the above, but you get the idea.
I am also impressed that they used the company’s actual financial information to establish “reasonable expectation” goals.
TODAY’S TAKEAWAY
Don’t make the problem fit the solution; fit the solution to understand and solve the problem – Solution Providers – Stop Telling & Selling and Start Asking & Solving!
30
Procurement Insights
Don’t tell me about your tech, ask me about my specific problems that need addressing
Posted on April 2, 2025
0
Here is an excerpt from the following October 2024 Procurement Insights post: How Many Solution Providers Choose The Right Clients?
Or, to put it another way, if someone asks why your clients are so successful, you can tell them it is because you choose successful clients. (How many solution providers choose successful clients or take on business with a client whom they know there is little chance of success?)
The Commonwealth of Virginia‘s eVA initiative is an example of what a successful client looks like and does – https://bit.ly/3SUWxml.
Here is an excerpt from the following June 2017 Procurement Insights post: Do Service Providers Choose The Right Clients?
Now some might immediately conclude that Ariba is the common denominator for success and that their technology provides a decided advantage.
For those who have followed me these past 10 years, you know how I feel about technology; while an important piece of the procurement success puzzle, it is not the deciding factor regarding whether or not a successful outcome is achieved. Based on years of experience covering our industry, it has become clear that capable people working together can overcome questionable technology, while good technology cannot overcome questionable people resources.
What is the take away from the Virginia and Santa Clara successes?
Service providers should spend more time on choosing the right clients rather than focusing on winning the business first and worrying about making it work later.
Whenever ProcureTech solution providers contact me for advice, most talk entirely about themselves through client logo pages, case studies, or cracking an analyst quadrant or solution map. Regarding referrals, they usually send me the targeted industry segment or, in some cases, the companies to whom they would like an introduction.
There have even been times when the case studies are outdated, or if I ask for unencumbered client access to interview them, there is hesitation. One solution provider told me they wouldn’t allow me to talk with the case study client because they didn’t want to bother them and to “just use what we send you” to introduce us to companies in the same sector. In short, shut up and just give us names, and our salespeople will take it from there.
Now, occasionally, there is an exception to the rule, and those are the ProcureTech solution providers I like to talk to, and as a practitioner, you will too. In today’s post, I am going to share with you an excerpt from a solution provider response—AdaptOne, who didn’t send brochures or an infomercial case study but responded to the question of why this particular practitioner-client would want to deal with them BEFORE asking me to reach out to them.
Asking And Understanding Versus Blind Selling
Why would a company in the hospital and healthcare diagnostic industry that had an IPO, and a Net Income loss of $15.7 million be interested in improving their Indirect and Direct procurement processes and practices?
A company in the hospital and healthcare diagnostics industry, such as Company, Inc., which had its IPO in 2020 and reported a net income loss of $15.7 million in fiscal year 2024, has compelling reasons to improve its direct and indirect procurement processes and practices. Company, Inc., focused on medical disease diagnostics with $71.3 million in revenue, exemplifies a growth-stage firm balancing rapid expansion with financial sustainability.
Here’s why enhancing procurement is a priority:
2. Sustaining High Revenue Growth
There are three more points like the above, but you get the idea.
I am also impressed that they used the company’s actual financial information to establish “reasonable expectation” goals.
TODAY’S TAKEAWAY
Don’t make the problem fit the solution; fit the solution to understand and solve the problem – Solution Providers – Stop Telling & Selling and Start Asking & Solving!
30
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