July 7, 2023

Storm in the tech sector 

By Patrick Chabannes

Paradoxically, software vendors are making hundreds of thousands of layoffs at the same time as digital transformation is taking hold. A review of the context, expectations and proposals for action for French Tech’s procurement and purchasing information systems?

Like a foghorn in the fog, the collapse of Silicon Valley Bank signals the end of easy money and a rosy future for the tech sector. Unicorns are no longer the stuff of dreams, and technology stocks are having to prove their worth beyond their miraculous business plans at a time when the global economy is faltering. Inflation is galloping beyond stocks and property values, with cyclical price rises in Ukraine and Covid adding to the structural price rises caused by an ecological transition that sounds more technocratic than liberal. 

Diplomacy and intercultural intelligence are the essential qualities of 21st century Procurement Departments.

How, when governments, strategy companies, senior executives and professional associations are talking about digital transformation from morning till night, is it possible to see software vendors laying off several hundred thousand employees over 2022 and 2023? While some companies are looking after their profitability (SAP, SalesForce, COUPA, Accenture, etc.) and others are simply worried about the near future, most of the software vendors concerned, boosted by fund-raising, are seeing their investors questioning their profitability, their sky-high salaries and the reality of their value proposition at a time when the trade-offs made necessary by regulations are being made. 

Procurement and IT Departments are the agents of a darwinian selection of software vendors, giving pride of place to excellence over marketing, action over ideas, deeds over words.

Crises are opportunities. Vendors’ customers need to realise that they are responsible for the future landscape of procurement IS. Vendors with low-quality software, problematic technical debt, poor UX or management who are overly financial and lack a business vision will have to be eliminated in the darwinian sense by the IT Buyer and the Process & Method Manager, supported by the CPO, in order to deal with overcautious IT Departments. 

Supplier Relationship Management (SRM) is at the heart of the Procurement function’s value proposition.

For more than 10 years, Purchasing IS vendors and Purchasing Departments have over-invested in Procure to Pay, and now in eInvoicing, even though these processes are no more central to the value of Purchasing than decarbonization or CSR. SRM and the development of the supplier base into a financial asset are at the heart of the intrinsic value of Procurement. French Tech’s SRM offer needs your business skills and your vision to align with your evolving challenges.

Let’s dream of seeing the Professional Procurement Associations working in depth with French Tech to give a new impetus, maturity and recognition for some, projects and finances for others, in the service of the community.

Thanks Visualcapitalist website for their smart representation of High Tech lay-off which is not really the subject of the article but inform you of the quality of this website: https://www.visualcapitalist.com/visualizing-tech-company-layoffs-in-2022/ 

Lectori salutem, Patrick Chabannes