Looking back five years from now, 2023 will be seen as the year that intake management found real traction.
Intake is not a new process in procurement. Arguably, every procurement team has some form of an intake. What has changed, however, is the notion of intake as a distinct tech category.
Instead of running intake “offline” via emails, phone calls, or spreadsheets, or fragmenting intake as the front end to individual processes — a sourcing intake, a contracting intake, a supplier onboarding intake — intakes have consolidated into intake management.
The question many are asking now is, “Why?” The answer is relatively straightforward: because there is real ROI to be gained from applying technology to this process. Intake is not just automation for automation’s sake, and its value lies in much more than soft factors like ease of use.
The reasons why seemingly every procurement team is starting to kick the tires on intake management fall into three buckets:
- Intake improves the ROI of current processes
- Intake improves procurement’s ability to influence spend
- Intake saves money
Reclaiming promised ROI from procurement tech
Every enterprise software deployment is based on a business case. And every leader behind a deployment knows those business cases don’t always pan out the way they look in PowerPoint.
ROI projections fall short of what they could be because they are built on assumptions, many of which make sense at first. After decades of procurement tech deployments, however, a common theme has emerged: employees don’t adopt the technology to its full extent over time.
Without adoption, benefits and ROI will not be realized. Adoption is the first step to reclaiming a promised ROI. Adoption challenges show up in spend under management stats. In 2023, one would expect that any organization with experience using procurement tech like a procure-to-pay system would be able to bring at least 80% of its spend under procurement control, however you define that. This is still not the case, though.
As Ardent Partners, a research firm, found in its 2022 benchmark study, the percentage of spend under management at the average enterprise sat at 67.4%. While this was a 7% increase compared with 2021, it’s still a concerning state of affairs.
The problem gets worse when you start looking at tech deployments specifically. According to the Hackett Group’s 2022 Procurement Agenda report, large-scale procurement deployment projects typically result in 47% adoption, while pilots/small-scale procurement deployments have a 28% adoption.
The difference between leaders and laggards all comes down to adoption. Leaders are able to ensure full adoption of their processes, through clear governance and streamlined collaboration with stakeholders. Laggards, in contrast, may have a documented process, but one that is onerous to follow, requires deciphering from stakeholders, and fails even the simplest test of offering an intuitive starting point.
The ROI of intake starts with adoption. By providing one front door for any procurement process, intake simplifies access to current processes and infrastructure, so that teams can unlock the full ROI of both. Or, if the process is still manual and reactive, intake automates adoption of governance so that stakeholders can easily interact with procurement, making it easier to build the right infrastructure with visibility and control established first.
By the numbers:
- Intake can increase spend under management by 80% in starter use cases, or push the common ceiling of 60%–70% spend under management to 90%+ spend under management
- Assuming an average of 9% savings for every new dollar brought under procurement control, this nets tens of millions in potential savings just from focusing on adoption
Making procurement an influencer
If you want to become a procurement influencer, you start a Substack or a Tiktok. If you want to influence spend, you start with intake.
You may be rolling your eyes, but influencers and procurement have something in common. Social media influencers want to get viral adoption of their platform to capitalize on mindshare — maybe a subscription, a course, an aesthetic bottle of snake oil. The point is influencers turn their captured attention into, well, influence to change how people think.
Procurement done well is not so different. Every hip procurement leader knows that the earlier you get involved in spending, the more you influence the spend. You can route potential spend to current under-contract suppliers. You can bring in competitive bids via a sourcing event. You can even shape the actual requirements of the request if you get in early enough, designing the purchase to fit the best pricing and outcomes available in the market.
With intake, this shows up in two areas: sourcing and contract renewals.
Simplifying access to procurement and request processes ultimately makes it easier to “see” spend before it gets to a contract. This is actually a fun quirk of going through an intake deployment: some organizations might temporarily see their cycle times increase once they get access to more spend, because they haven’t yet had time to optimize how they triage it. After some tweaking, though, request process times typically decrease, with the added benefit of seeing requests at much earlier stages.
This creates a lot of opportunities. If procurement is involved at the request stage — that is, before vendor selection or contracting — it can reroute requests that duplicate current supplier coverage, or if the current selection isn’t working, spin up a sourcing event from the details of that request. The best numbers on this come from a joint ISM-Spend Matters study, which found that on average early spend influence could result in a 8.59% savings at the 'Requirements Stage' , a 7.57% savings at the 'Discovery Stage' and a 6.62% savings at the 'Negotiation Stage'.
Similarly on the back half of the procurement cycle, renewals don’t always get the attention they should. This is not because of lack of care but rather lack of visibility. Often once contracts are executed, they sit in a repository with, at best, a few reminder notifications that ping you too late to really make any use of them.
Intake, interestingly, is not just about the start of the process, but about how the start of the process interweaves with the rest of the process. As part of intake, forward-looking teams will include info about renewal in the intake process — when the contract will come up for consideration, all the team members involved in a decision, whether the agreement contains specific termination considerations — so that these steps can be automated later on. In fact, teams operating this way often begin seeing their renewal pipeline as a key source of savings opportunities.
By the numbers:
- Intake translates influence into savings: a typical large enterprise can expect anywhere from $5 million to $10 million in increased supplier savings attributed to improved negotiation from earlier visibility
- Intake can make it easy to cover 100% of renewals with enough time to proactively plan, assess, and negotiate new deals with current suppliers.
- Assuming a conservative savings of 4.5% savings per contract based on earlier negotiation, you entire portfolio is ripe for real savings
Intake saves money
Let’s not beat around the bush: procurement is here to save the company money.
Of course, procurement is here to do that and more. But in the context of decoding intake’s popularity, it’s important to note that before any piece of technology — procurement or otherwise — can tackle “big picture” issues, it has to deliver an ROI. That means the first hurdle is it has to save you more money than it costs to license, deploy, and maintain the tech.
If intake were only about soft factors like ease of use, procurement perception, or vague notions of modernization, it would be a curiosity, not a category that is actively redefining how most procurement tech vendors approach the source-to-pay process. The reality is that intake has grown so quickly because early adopters have understood its potential to deliver value, first and foremost through cost savings.
The big gain is through supplier consolidation. Because intake improves visibility into both requests and the current supplier portfolio via improved spend under management, organizations will begin to proactively identify consolidation opportunities, which helps both prevent duplicate purchases and create negotiation opportunities through competitive bidding.
Related to this is also the ability to more easily reject spend. While this more accurately is cost avoidance rather than pure savings, the dynamic controls provided by intake help procurement more easily prevent spending it would not normally see. (Shadow IT spend in the form of SaaS licenses, sometimes snuck in via a freemium model, is one example that comes to mind.) In the nerve-wracking days of the SVB crisis — which was, implausibly, just nine months ago — we saw some teams temporarily drop their approval threshold for new spend to just $1, illustrating the power of intake to control spend and ensure revenue can still reach the bottom line in times of crisis.
The more subtle way intake saves money is through optimization of the accounts payable (AP) process. This may seem odd at first, as intake is thought of as an “upstream” process. But really, intake is more accurately the correct starting point of a larger set of processes, one that connects to everything downstream.
In this case, intake is a great way to manage tail spend. Many small value or repetitive purchases can be effectively automated through a proper intake process that collects the right purchase info up front and route qualifying spend to the right payment method. Virtual cards have become extremely popular for things like software spend, digital advertising, one-off marketing purchases, and the like both because they eliminate AP processing costs but also because they generate rebates. The intake part ensures you’re not incentivized on a “spend more to get cash back” model, but still generates cashback savings on the types of purchases that logically an AP or procurement manager shouldn’t have to touch with the right workflow and controls attached.
By the numbers:
- Intake helps you identify vendor overlap, consolidate to eliminate unnecessary spending, and prevent new duplicate purchases.
- A typical company can consolidate vendors to avoid spending an additional 6% on unmanaged unnecessary spend.
- Intake allows you to route one-time and recurring purchases to virtual cards and obtain savings with rewards generated from Vendor Card spend.
- Virtual card rebates vary, but commonly you can expect anything in the range of 1%–2% cashback rewards on all qualifying card spend
- Intake also reduces or eliminates manual effort spent tracking requests, coordinating supplier data collection reviews, and managing vendor information across systems.
- In our experience, intake results in anywhere from 45% – 65% hours saved of the first year of a deployment
This is just the beginning for intake
When you have better and earlier visibility of spend, you can control it more effectively. This allows you to optimize the process and find untapped savings opportunities. But improved visibility has a key prerequisite — full adoption — that many legacy approaches have failed to deliver.
Intake management as a market excels at cracking this upfront adoption problem, which in turn enables intake providers to deliver better ROI from the processes they orchestrate, improved procurement influence over spend they are now aware of, and crucially, real savings generated from better control established through intake.
It’s also important to note that this market is only a few years old.
As we see increased application of AI to this area, along with broadening integration depth into other aspects of the procurement tech ecosystem, I expect the ROI opportunities to only increase. Think about it: there’s category intelligence and supplier performance data to infuse into request, approval processes, and renewal processes; insights and recommendations to drive continuous improvement on workflows; and multiple process automation opportunities to drive more autonomy (with oversight) of stakeholders, so teams can drive more sourcing activity to save more.
So in five years, 2023 will not only be viewed as just the start of intake. It will also be viewed as the seed of something much larger. Which should make 2024 all the more interesting for procurement tech!
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