Category management – 2024 Key topic at SAP Spend Connect Live event in Las Vegas

A couple of weeks back I had the great pleasure of joining our friends at the SAP Spend Connect Live event in Las Vegas. It was great to see category management being consistently raised as a key topic by the keynote speakers. This reflects the emphasis that SAP is placing on their relatively new product in this space. It was clear from the sessions that I attended how much emphasis and investment is being made in the product and that there are significant developments in the pipeline – including CPO dashboard, GenAI recommended strategic options, and AI co-Pilot feature. The presentation by Ram Gopalakrishnan, the CatMan solution lead (including the development roadmap) is available here and the SAP Ariba CatMan solution homepage is here.

A clear takeaway for me was the potential for AI to help category managers accelerate the development of actionable insights and value opportunities. In the short term, these are not going to be perfect and will require validation from category experts. However, AI can empower less experienced category managers to achieve meaningful results more quickly and with reduced oversight. Allowing AI tools to access external category knowledge, as well as curated content is going to be an interesting development that will test corporate procurement departments and their security colleagues as they balance accessibility with data protection and compliance requirements in the coming years.

In the ‘fireside chat’ that Ram and I had we discussed some of the practices used by leading organisations to embed category management:

• Adopting a strategic approach above category management to coordinate activities, categories, and suppliers. This was raised by a number of attendees who recognised that category management drives value at a category level but does not deal with x-category challenges or create a pipeline of category and supplier projects. More information on strategic alignment can be found here.
• Ensuring category strategies are created at the right level in a taxonomy. Here we discussed how leaders recognise that strategies should not be created at too high a level in the taxonomy, as we then start to have multiple sets of business requirements, supply markets etc. It results in more strategies being created, but they each are more specific and identify specific value lever opportunities.
• Setting standards.  As obviousas it may seem, our research shows that only leading organisations have defined standards for what a good strategy looks like and hold reviews with PLT members and senior business stakeholders.
• Sourcing activity separated from strategy creation. One of the advantages of the SAP CatMan solution is the integration with spend control tower and sourcing – what they are calling the ‘triple crown’. This may help others to follow in the footsteps of leading organisations, where 80% in our latest survey have separate teams doing strategy creation and sourcing.
• Strategies are continually updated. In the past strategy creation tended to be a 3-year cycle of heavy lift activity and the attendees had similar experiences. Technology now facilitates more frequent strategy updates and bite size working. Leaders are seeing their strategies as live and continually evolving. This is a major shift for most organisations and will require some change management to maximise the opportunity from this shift.

At an engaging ExxonMobil session, they presented their category management journey with SAP and shared a number of familiar improvement opportunities that they were looking to strengthen by digitising their approach to managing $55bn spend:

• Making strategy content and formats more consistent
• Creating category strategies at the right level in the taxonomy
• Encouraging category manager to start building strategies earlier
• Allocating more category manager time allocation onto strategic thinking

A rounded change management approach was being adopted to ensure the new way of working landed well with the team, alongside an expectation of ongoing functionality improvements from SAP.

Our aim is to continue to work with SAP, and other digital solution providers, to help to develop the effectiveness and efficiency of our clients’ Procurement teams. to be very clear about the outcomes we are trying to achieve, to make sure we are clearly building in that direction.

Further reading:

Case study – Talent and strategy make for successful category management at ExxonMobil