While everyone is trickling in, we will start with some introductions.
First off, I'm Jordana Greenberg. I'm our VP of solutions here at Tropic. I'm really, really excited to have you all join us for today's session.
We're gonna be diving into one of my favorite subjects, data.
And if you're here, you know software and SaaS spend in general isn't getting any easier to manage.
Costs are rising. Vendor lists are growing. Negotiations are getting more complex than ever. And so that's exactly why Tropic set out to analyze eleven billion dollars in software spend from the past year.
We are gonna break down what's happening in the market, what we're seeing, how companies are adapting, how AI is changing absolutely everything, and most importantly, how you all can actually use this data to make smarter purchasing decisions within your organization.
Before we actually get into all of that, I want to introduce the other folks on the Zoom with me here. So first, we have Justin Atkin, chief operating officer here at Tropic.
He's been at the forefront of helping companies streamline their software spend and getting real value from their investments.
And then in addition, we are very honored to have Matt Schulz, founder of MatChat, who has a wealth of experience as a practitioner and a leader in scaling businesses and navigating complex procurement teams and supplier relationships.
So it's gonna be a really, really great discussion, and we absolutely want you all to be a part of it. So please drop your questions in the chat. We will get through as many as we can live in the session, so that way we can make sure this is as fruitful for you all as possible.
Cool. We have a great attendee now. Let's let's kick this off.
We want to start off by actually just talking about the role that data has in procurement.
When Matt, Justin, and I met to discuss what we wanted to talk about here, we all agreed that while data is important, its real value actually lies in the visibility that data can provide. And so, Justin, I'll pass it to you. Why don't you kick us off from there and tell us what you or what we all meant by that?
Yeah. Absolutely.
You know, I think when we talk about data, you know, data is this kind of, overarching theme that generally means, like, yes. More data is good.
But as you get into the granularity of, like, what type of data are we talking about or what data should we be focusing on, the answer to that can be quite different depending on stage of business and the systems that you have and, all the, the needs that you you might be feeling or pain points you might be feeling. So, you know, we we think about, a few different flavors of of data where, like, you know, there's, there's first party data. First party data meaning this is the data that's, you know, unique to your organization, your spend data, your contract data, your PO data, your risk data, you know, all the stuff that you're collecting and gathering to really fuel the business.
That data can live in disparate systems and silos and, and often the kind of separation of that data is poses its own set of distinct challenges, where we we all want unified data, but, you know, one doesn't always get us goes where we need to be. So, you know, siloed data versus unified data. And then another flavor of data we we often think about is third party data.
We all work and live in this kind of procurement community where, you know, the one of the beautiful things about that community is the willingness and and ability to share and and collaborate with each other. So we think about third party data as, you know, networked information around pricing, around tactics, around strategies, things that can be universally applicable to the suppliers we manage and the decisions we make. And really the intersection of that first party data and that third party data is where the where the the sweet spot is. But, you know, again, that's the dream state.
You know, Matt, I'm sure you can you can talk a little bit about the the the crawl, walk, run to get there.
Hold on. We gotta check out the chat here. This this is like a ton of friendlies here. Hey, everybody. This is super nice. Yeah. Cool to see some familiar faces.
Thanks for joining us. You okay. You talked about first party. Right? Like, what's going on in house? Where is my data?
Just this week, I dropped a newsletter and a a post where I was talking about it. It's like, otherwise, you're kinda literally just like shoot from the hip. It's like, how do you make proper business decisions without knowing your data, specifically your spend data? The things you buy to be in business, that's always fascinating. And then this was kind of like a as you're speaking, I'm, like, thinking in my head, it's like, are we kind of like, you know, this, like, crowdfunding or, like, crowdsourcing our data from our peers? Because this happens all the time.
You've got a few people that are already in the chat where it's like, we've DM ed each other and it's like, hey. Can you help me out with this? Like, I need to go and talk to this vendor or I've got a friend of a friend who's curious about this. And I'm like, yeah.
Like, this is it. We're kind of helping like, it's very communal. The community helps each other out, and those first and third party data points are so helpful. And, gosh, they're becoming even more prevalent as things get noisier, more difficult, more data, more information.
Yeah. Yeah. Totally. I and I think, you know, what we often see is, you know, the the ambition to have this kind of this unified data.
You know, let's let's first start, you know, start with the first party data aspect because third party is, something that we can get, you know, through network, through communities and and everything. But the first party data is really like the starting point. And, you know, when we're coming into organizations, often the the kind of tails hold as time is like, you know, I've got my CLM data over here. I've got my TPRM data over here and, trying to to make sense of all these different data models and and kind of data connectivity issues is a real challenge.
I'm you know, would love to hear more if you if you've seen or experienced that firsthand.
Yeah. Bobby just hit me up. She's like, I want your dashboard.
Yeah. Let's talk about that.
Over, like, I'd say probably the half past, like, half of year, I've been talking a lot about and look, I'll I'll add some context here. Like, my bread and butter was going into a company that did not have procurement. It's like, how do I stand this up from scratch and make sense of all of this stuff?
Interestingly, I did it at an early startup, and then I also did it at a company that had been in business for a really long time and just never had, like, a proper or more mature procurement function. So I talk a lot about thirty, sixty, ninety. It's like, how do I make an immediate impact? What does that look like? I've tossed that out. If people are interested in it, we can absolutely share it. It's public.
But what's so cool about that is the thing that precedes it.
During the interview process, I'm asking usually, I'm the guy who's asking for more interviews just because I wanna understand the lay of the land. How do people think about procurement? Do they even know what it means or like, what does buying look like?
And then I often speak with, yes, like the CFO or the head of FP and A or somebody who's got financial data. Because when I show up on day one, I would hope, my goal is to have a spend file. I wanna see where the business is so I can start ranking, you know, like pivot tables off of it to figure out where are we spending the most money? What's going on here?
It's often done, but it sits in an Excel spreadsheet that somebody shares and it goes through V one to v five and you can't make sense of it. It's like, now I've got modern tools. I can usually take that, throw into a no or low code, or I can buy a modern tool, Hello Tropic, and it can help me do all those pivots.
And so the reason that's so important is because, like, that thirty, sixty, ninety day almost doesn't exist without a layer of data. It's so foundational. I then build the pillars on top of it.
And, you know, the the first thirty days, it's like, okay. I my calendar is full of conversations. I wanna talk to more people from the CMO to an end user, from the CIO to an IT architect. It doesn't matter.
I wanna talk to everybody and how they think about it. While I'm looking at data and information, I'm preparing for days sixty through ninety, which is, okay. Now I wanna go back to them because I've gathered more information, contracts, or they're like, oh, I've got some stuff in a shared folder. It's like, yes.
Send that to me. I wanna house that. I'll do it for you. I'll help you out.
And they're just kind of like, woah. It's super helpful because then as I get to like, as as get to the three month mark, I really wanna start thinking about what technology I'm gonna bring in to help with all that information. So then we can start by, one, consolidating across the tech stack or finding savings. So by the first year, I know what tools I want to use and how many people I think it's going to take to do this well.
Yeah. I think, like, when we one of the decisions we've made as a as an organization when you know, we're similar to you. We're often coming in to help Yeah.
Stakeholder set up their organization for the first first time. And, like, this data challenge as part of your thirty, sixty, ninety is Yep.
Always the biggest challenge at the starting point. And, you know, we you know, one of the things that we decided is, like, this is so critical to, you know, traffic success to our stakeholders and function success. Like, we made the choice. Like, we're gonna we're gonna do this for you. You know?
We're gonna basically, like, help you get all the contracts, you know, because they're always living in the DocuSign over here, the Yep.
Your Google Drive over here. Like, let's get all the contracts, and let's let's take all the metadata that we need from these contracts to start standardizing, you know, documenting and normalizing so we have that that source of truth. Because to your point, like, that's the that's that's the baseline. You know, once we have that, then, you know, we can talk about, like, the the strategic investments and the the sourcing strategy and, you know, now actually partner with the finance org and the Totally. Stakeholder org around how we wanna be strategic and proactive procurement. And, but without that starting point, it's it's it's impossible.
And and you say something, totally worthwhile.
Look, we guilty as charged. The the narrative on LinkedIn and elsewhere, you know, like, in conferences, it's strategic. Everyone wants to get there. It's like, but in order to get there, you do need to have a really, really solid foundation.
And that, yes, includes data. It's inevitable, but it also means your process and some of the technology and and the the people and, relationships that you need to build out, but, often overlooked. It's also why, you know, folks like yourself have come to market because there's such a need. You know, Paul runs the lone wolf sourcing group here, and, they talk about it a lot.
Oftentimes, it's somebody who gets thrown into procurement, but it's they're originally a finance manager or a controller. And it's like, like, I'm now double dipping. I'm doing two jobs. I need some help.
Or where the company has made an active choice to go and hire a head of procurement.
You know, it's why I can come in and help out a company that's doing four or five hundred million in revenue with just a few people because I can leverage technology that Tropic offers or some of the tools that are out there that just help you do some of the things that didn't exist five, six years ago. I mean, it's pretty crazy in a good way. It's like a positive yeah. It's super positive.
It's it's so interesting that you say that because I I'm on calls constantly with prospects, customers who are their first procurement hire. And often what they'll say to us is, hey. So we have no idea what's going on to to whatever extent that means. We're gonna build a process to solve that. Right? We're gonna use process to drive, to collect the data, to eventually come and end in a world where I have complete visibility.
And we believe, like, that is the the wrong order. Right? If you wait if you let the process drive, it's going to take years for you to get to a point where you have enough data.
And then suddenly, you're you're still sort of in the passenger seat. There's still the the potential that something slips through the cracks. Right? You're responding responding to these individual requests, and you're not actually building the strategy upfront, which is kind of what you just outlined, Matt, which is Yeah.
A step one on day ninety. I need to know twenty four months down the line, what is my game plan here? And you can't do that if the process is is the driver. So I'm curious your thoughts on that, Matt, how you've seen that.
It's, you know, if you've if you've already heard it, I'm sorry, but I talk about it a lot because I find it so so important. Right? I I often say people process tech and in that order. And again, it's like all of that is preceded by data, which is super important to understand that.
Yes, relationships help. The tech will help the process. But if you start from a process perspective, you know, it it's kind of like, well, I'm just trying to fix this. It's it's so narrow focused that you're missing out on the bigger picture, and that's where everyone who talks about becoming strategic is going.
We all know that we're emerging from the back office positively. This is a good thing. And because of that, business acumen needs to shoot up. In other words, I need to know how this business makes money, what it's doing, where are the revenue streams because procurement will help then drive that revenue, not just cost savings. By doing that well with proper data and process and tech, you will you will be able to do that. And the narrative is, oh my gosh, we just brought a marketing tool in that's going to help the company generate more demand, which is an increase in pipeline, an increase in sales, which drives revenue, and, yeah, we save ten k because we negotiated a deal because we're sitting on great data from Tropic or company x. It gets that important.
The the order of operations is becoming, clearer. It's it's not a solve by popping in an automated workflow or a document repository. Like, that's almost table stakes. It's how are you going to do that ahead of time?
Yeah. I think I think the the concept of of having that data starting point, it allows you to layer on that process on top of an established back base, which which then creates the sustainability of that data. Right? Now we can keep our contracts current. We can be aware of what's changing and what's what add ons are happening, what, you know, POs we need to refresh or or whatever else might be. And we can, we can start from that that baseline and then layer on the right types of, you know, governance and process and procedures to to keep it up to date and and current.
Here's another thing, Justin.
Having that data and information and back to your point, Jordana, it's like, how do I get to the process or the people or the size of the team? It's so important. Once I understand the lay of the land of the business, like, now I'm having really great conversations with the c suite and business leaders about what's actually happening here because oftentimes we just fall into, like, financials, just numerics, literally numbers. It's like, oh, okay.
Well, but what is that thirty five thousand we're spending and that name? What is the business context behind it? And that's what procurement can help do. They add more context to the numbers, to the financials.
And so when I'm speaking with the c suite, you know, we're having these, like, mature conversations about the direction of the business and the strategy and where we want to go. And and that that didn't always happen. It's it's just a new again, it's like flipping the script. It's a new way of doing it. It's always looking for revenue generation. Cost savings comes as a result of it. And yes, it'll still probably remain your highest KPI.
Yeah. I think I think the, you know, to kind of follow that thread from our, you know, first party data and and then talking about the values of third party data. It's like once we have this infrastructure in place, you know, the house in order, the unification, the procedure and process, then you start layering in some of these insights and the intelligence that you can source and and, and access from the community and and from the networks that exist. It becomes much more powerful because Yep. You know, we've seen it so many times where, you know, a stakeholder may have the the best insight, the best price benchmark that they wanna, you know, leverage as part of a sourcing strategy. And, it's it's nonfunctional because, hey, we missed the window where it's actually gonna be impactful. And, and and so the the combination of that kind of third party data layered on top of our source of truth is when is when we really start to see the value, start to arise.
I just dropped a question into the chat. I'm curious if people if you don't mind or I don't know where we can collect it, maybe in there. I'm I'm trying to think. Like, this also changes.
We did talk a little bit about like, not everyone is walking into a situation where they're standing up a function. They might be joining a smaller team in SMB or mid market. And, you know, sometimes this differs a lot. Not the data part necessarily.
I think everyone's going to need data depending on size of business. But when you get into massive enterprises like Fortune one hundred, like, look, there are only a hundred of them. But there are millions and millions of businesses in mid market and SMB, and a lot of them are looking for this. They need the help.
Sometimes the the playbook or the approach does shift at enterprise.
However, like, gosh, here we go already. Like, it's like, we're gonna talk about AI. Here, I I bring it up. It's like, I'm curious how this then changes everything.
But it's so important. You use it as a way to help, enrich data and information so you can execute off of it. And I think you were talking about that a little bit, Justin. It's like, how do I how do I keep, like, how do I keep ensuring my data, is like, the foundation is solid.
Yeah.
I think I think one of the things that we've we've started to see in Four billion. When you when you follow through the the kind of the AI discussion around, what's the impact that AI is gonna have on these different functions and teams. Right? You know, there's lots of, you know, stories and content out there like the accounting function.
You know, for example, accounting function has a ton of manual work that has to be done matching invoices to accrual schedules and, chasing down, you know, stakeholders and things like that. There's a lot of manual work that happens in that function. And Yeah. You know, AI is is there there's a general consensus that AI is going to resolve a lot of the manual administrative work that's happening in accounting.
Yeah.
As we look towards procurement, you know, I think procurement is an interesting dynamic because there's super, super strategic procurement, which everyone here wants to be doing and spending all their time focused on. But the only way you can do that is by clearing the the plate of all the administrative and tactical work that needs to happen to keep this kind of source of truth, this data, this process compliant and running. And Yeah.
You know, we're already seeing and and and we know that there's gonna be a ton of AI benefits in terms of the administrative and the kind of operational elements of procurement to free up time and capacity and and focus around some of those strategic procurement areas.
It's interesting to think about, a story from from Forrester. Right? Like, great example, this well known research firm, unbiased research firm. And we, as procurement, here here we are months before.
Like, as soon as as soon as AI got a little more public, it's been around for a while, by the way. Like, everyone knows this. This. I hope if you, if you don't, it's been around for a while.
It's just, it, it got public because the new models came out and, and some of the companies, the timing is just right. But, here we were like going out to find, AI software engineers to help us build what it might look like. And this is early. Gosh.
I'm gonna pin this at maybe, like, early twenty twenty three where it was okay, a lot of the talk at that time was around like, oh, I don't trust it. Hallucinations, like what's going on? And we're like, well, we're sitting on a bunch of first party proprietary information that we could then put a model on top that people will trust. It's not just going out to the Internet and looking around and picking up stuff off of Reddit.
Right? It's like, I don't can I trust that? So that was super cool to see that. And it was like half a dozen engineers coming in, building something out within months, and then you released it.
And to think that was early twenty twenty three, like, how much has it changed? It's now February of twenty twenty five, two years later. And it's like that. It feels so elementary to, like, essentially throw a chatbot on a bunch of data and information, but not a lot of companies have adopted it.
I just asked if, if some people had adopted AI, because you think about putting that on spend data and it's like, woah, that would be so helpful. I know in procurement, a lot of people talked about putting on contracts because I don't wanna read contracts. I just wanna pull information out of it. Yes, that too.
But then think about the ability to forecast or understand a lot of the spending data that you're sitting on. It's super powerful. Like, I say it all the time, but procurement, that's what I mean. Like when I say procurement is in like such a unique position because it works with the entire business, that's it.
Like, that's crazy.
Yeah. Yeah. I think the, the the benefits are are are obvious because I think, like, when when you think about the best use cases for AI, it's being able to sift and filter through a bunch of, potential insights that might be might might be out there and helping prioritize what actually matters the most. You know, where are our spend variances greatest between what we are expecting to and actually spending? Or, you know, where might, the, you know, pricing be most misaligned relative to market and use AI to help surface those opportunities? You know, things that normally would take an analyst, you know, days, weeks to to go go out and research. You know, now you can can tune and leverage the right types of AI models to do a lot of heavy lifting for you.
And and to even add to that, Justin, I think I'm getting a little ahead of myself because I'm gonna talk about third party data. Right? But with Tropic, especially, right, with a lot of our customers and, Matt, I know you'll agree with this. Negotiation is art and science.
Right? There is data that powers a negotiation, and there's tactics that work because we know what a vendor cares about. But at the end of the day, there is still art to it because there are so many external factors that go into what makes an optimal commercial negotiation. Right?
What does your CFO care about at any given time? Are they focused on cash flow? In that case, maybe knowing what our preferred payment terms is way more important than actually negotiating a better unit cost. And so I think with with Tropic, what we've done is we've integrated not just our price benchmark data and your own first party data, but also all of our negotiation tactics and strategies to help you build the art.
The art which is, hey. I care about all of these different things at any given time. I need to ebb and flow with the business strategy and the way our company is going. And, our playbooks, which are powered through AI, are going to customize that to your nuances and your preferences, which I think is really important because data is one piece.
It's it's it's so crazy to think about this.
I promise I'll get back to what you're saying, but it's like, as procurement practitioners, we feel a little inundated at times. Like, there's a sense of overwhelm just because of the number of tools that are available to us right now. Right? It's like four hundred plus.
But sales or marketing, they handle, like, thousands and thousands of tools available. Like, this is nothing. We haven't even hit four digits yet, and I'm assuming that will happen. We'll see.
There's a, you know, I think there's assuming that will happen. We'll see. There's a, you know, I think there's a divide. Some will think there's consolidation, others, it continues to grow.
Look like businesses are not going to stop spending. That's for sure.
The reason I say that is because what you're talking about or the way in which I'm interpreting it or or I think others should is, like, you're help you like, you're equipping practitioners with data and information that they didn't always have, that you used to jump in like a text chain with, or, like, hit somebody and be like, oh, like, I got IBM coming up. Can you help me out? Like and it's never a one for one. But when I start aggregating data from all kinds of different businesses in the in the space that are like you, that's super helpful.
You know, if Tropic can help tee me up for a five hundred million revenue business in this vertical and say, yeah, you wanna get thirty licenses, you should probably benchmark it at this. It's like, okay, now I feel equipped to show up to the negotiation table. I think sometimes we often forget that sellers are so equipped. They have all kinds of tools, and now with AI, even more working on giving them information.
They may not know your name. They most likely do. Like, your phone number, where you sit. I mean, it's crazy, the information that's available.
And now you're helping and I I hate to this this makes it sound like it's a battle or, like, equip practitioners, but it's just like, I I don't even wanna say level playing field, but it's like you you're helping with more information.
My my hope is that people take that and we start having frictionless conversations between buyers and sellers, or we're able to utilize platforms like Tropic that can do that because I wanna spend my time being strategic. Yeah. And don't get me wrong. Like, I love the art of negotiation too.
You know, in reality, it's probably just cause I like hanging out with people, but it's like, how do I how do I how do I know I'm buying the right thing at the right price and feel comfortable about that in a good way so that this relationship starts off positively and we can both grow companies. That's that's the goal there. And I think you you help. And by by doing what you're doing and what you said, I mean, that's the way in which I I interpret it.
I think most should. It it's not easy because CFOs breathing down your neck and you're like, oh, okay. Like, I'll get some savings. I'll do this.
And it's like you're souring the relationship from the get go, which is very, very tough.
It's so true. And I actually think before we go fully into third party data, I mean, I there's a lot I wanna add there. Why don't you actually let's walk through. Through I feel like let's walk through the report now, Justin. If you can just give us a brief walk walk through of what we were seeing in twenty twenty four, and then we we can continue on from there.
Yeah. So I'll spin through this. And just to kinda tee this up is, you know, Matt, I think you said it really well. Like, you know, historically, this you know, particularly in the software and and kinda tech technology procurement area, you know, this this category has been mired by information asymmetry for a really long time.
And and, you know, while, you know, the concept of leveling the playing field, of course, like, you know, every every procurement, practitioner's hope is to let's create collaborative and mutually beneficial relationships. But that's a very hard thing to accomplish when the the level of information and the level of awareness is so distinctly different. So a lot of our goal is to, is to help, you know, to level the playing field in a way where we can get rid of some of that information asymmetry. And with symmetry, it becomes much more, a clear and aligned outcome orientation as opposed to the battle and the combativeness that might exist absent that symmetry.
So, let's, I'll jump into this real quick. Won't spend too much time here just to highlight. Again, this is our our twenty twenty, four software buying trends report.
This is made up of all of the third party data that we're seeing across our customer base and some of the trends that exist. This is on available on our website if you wanna go deeper on it. But, you know, just a you know, to start at the highest level, what we've done is benchmarked, you know, typical spend based on a couple of different, you know, company range profiles. One of the dynamics that I think is interesting within this is, you know, we're both, benchmark the kinda average annual spend on software, but also the per employee spend.
This shouldn't be a surprise to anyone, but as you get bigger and bigger organizations, the efficiency of the tech stack improves, you know, where we're seeing in the mid market and up to the, you know, enterprise nine thousand dollars per employee on kind of a software budget versus the SMB and and growth stage where you're gonna see kind of mid mid tens around what that what that costs. More people leveraging more technology. Obviously, the cost per employee will will ultimately go up in that sense.
So we have we have a section here that surrounds, like, common tools.
You know, this is top ten tools adopt by adoption percentage.
Again, none of this should be so revolutionary or game changing just be based on the names that you're seeing here. These are some of the leaders in, you know, application technology and and are generally applicable across, you know, different sizes, cohorts of customers. So, you know, this is the the highest adopting group.
One thing to to note is, you know, we saw some some companies that were on this list last year that dropped off this year, ZoomInfo, Carta, Greenhouse, some companies that we've seen, you know, change and have some kind of increased competition in their respective areas where the option has gone down.
Keeping going here. So most commonly used tools. Again, this is kind of taking that previous chart, separating out by, you know, those different, segments. So the way the way to think about using this is as, you know, as you profile yourself in these in these organizations and these sizes, you can see, you know, what does this kind of top adoption, you know, grouping look like.
And one thing I think that's notable is for a lot of these suppliers, you see the same ones over and over again across the SMB up to enterprise. Right? Mhmm. These companies obviously have massive, go to market motions that appeal to, you know, customers, stakeholders, organizations at every stage of the market.
So for some of them, what that means is is you're on the if you're starting on the early end, there's plenty of opportunity to grow and expand with these suppliers as you move, you know, higher and higher up.
So, and and they're kind of expecting it based on their on their models.
This one's pretty interesting.
This is we we we like to call out fastest growing suppliers. So what that means is, you know, adoption rate changes, you know, quarter by quarter. So we can see here, no surprise, that OpenAI as the kind of green line here, biggest year on year growth rate. You know, everywhere, companies are investing in AI, leveraging some of the the kind of enterprise models and OpenAI being the leader within that right now.
But just to speak to some of these others, all of these other companies are companies that we would consider to be very AI enabled. You know, maybe they're new, maybe they're, you know, existing, but all of them have adopted AI as part of their their capability set in a way that's making their users and their stakeholders more, efficient, being able to do things that they previously weren't able to do, and, and customers seeing a lot of the value within that. You know, I think about Notion and Canva and Yeah. Palo. All of these are are big AI powered companies now, and and getting rewarded in the market for it.
Wow.
Couple other points here. We we break out the the fastest adoption, cat fastest cat fastest growing categories by adoption as well. Design development being a big area continuing to grow in in emphasis as companies think about designing their products, their platforms, their solutions, a lot of growth in in that category.
Again, breaking out more more growth, by company size. So if your organizations are using some of these suppliers or you're seeing these requests come in, you'll know, like, hey. You're in good company.
There's there's plenty of others that are out there doing the same thing.
Contract term trends, you know, the companies that the the longest average contract terms that we're seeing out here, a breakdown around, contract length.
And, and we'll just wrap up here with some of the kind of general category ACV per FTE. One one so what this chart represents here is, on the y axis here is the adoption change that we're seeing.
You know, how, sorry, the the the ACV per FTE change. So, basically, think about this as pricing.
Finance category spend, they're seeing a five hundred six dollar cost per FTE, which is relatively high, in in the in the general kind of table here. And it's also increased forty percent forty seven percent since last year. So what that means, big focus on back office functions, growing costs, expanding capabilities for, you know, the finance org, which is shouldn't come as a surprise for anyone as we're seeing those efficiency dynamics play out, more meaningfully.
And can I jump in real quick, Justin? Yeah. Sorry. Can you scroll back up? Because I I made a note to myself that finance was last on something. You had a bar graph just above this.
Finance was last on, yes, on Top ten tool adoption by percentage.
This is procreate. Yeah. On the Okay. This is the actual adoption change. So, basically, the way to interpret the those two charts together, finance tool adoption is staying relatively flat.
Like, we're not expanding the Yeah.
The kind of solution set dramatically, but the price per solution is increasing, as the as companies are becoming more willing to invest in their finance tech stack Yep. And expand feature sets capabilities within that. Totally. Okay.
Cool.
And that's basically it, in terms of some of the data. You know, one of the things that we wanna just point out around the the AI factors, because we're talking about it, and we can use this to shift gears here is one one thing that's very true about AI is that it's introducing a completely new paradigm around pricing and kind of, ROI.
You know, the whole point of using a a high leverage AI solution is this is take this is accomplishing tasks for you. It's resolving issues, resolving inquiries, resolving problems. And that concept of a resolution is being increasingly adopted by these companies for how their core pricing model works. So what that means for procurement teams and finance teams is, like, the maintenance and measurement of of how pricing is evolving and changing is getting way harder to predict.
Good for the suppliers in a lot of cases, hard to manage for procurement teams. So there's gonna be a lot of new capabilities that we all have to develop for how we keep track of, you know, our pacing and our predictability around resolutions within the organization.
Alright. So that leads us into our so I don't know. Any any you know, one of the big points of this now is, like, great. We've got all these insights.
We've got all this data. We need to put it to use. Right? We need to apply it.
Yeah. I I took a few notes, if that's okay. AI, inevitable. Right? Like, it goes back to that story where I was, like, early two thousand twenty three, it was at, like, a single digit percentage.
And now it's like, if you aren't using it, what are you doing? Like, you're missing out. Paul had a good point. I just asked a question back to him.
He had said, hard to do at a public company adoption because of info security information security, teams. And I just asked if maybe you had, like, a committee that's helping decide that. Paul, if you're still on it, be curious. Or if others have that, like, what's the adoption looking like?
OpenAI Notion in Canva. Like, I love Notion in Canva too. It's just in my tech stack, but I think most people, it's like, I don't I don't care if you're using it for personal or at work. And I think that's the beauty of both of those tools. It's just, like, so friendly, so end user. Like, anyone can jump in there and figure it out. You like, you then become a designer or, you know, project management is easier.
And then I did have the question on the finance and how you jump back into that. That that was curious.
You know, and think of procurement tools. Like, just now, we're getting a new like, a fresh look at modern tools into procurement, and it's kind of like, I don't know what else got it. Like, why were we last? What happened here? But because you would think finances are the most important, often the most important part of a business. Like, otherwise, you're not in business, which is hard to fathom. But, you know, obviously, you need to drive some sales.
Well, I think that's like a I mean, it's it's such an interesting counter trend because, you know, we sit at the center of it as one of the Yeah. You're in it. Two procurement technology companies that that were started.
But, you know, before twenty nineteen, you know, when we were in the grow at all cost days Oh, yeah.
The the g and a expenses, procurement, finance, etcetera, were kind of like necessary evils for Yeah. The the overall budget. And it was always about do more with less. You know, we don't need to innovate. We just need to make it work. And I think what we saw with COVID in the aftermath is people started to realize the critic the criticality of a strategic procurement function Yeah.
Strategic finance function and the impact it can have on bottom line and, and growth, in a lot of ways.
So I think that, this this overall trend is one that is is good for, obviously, all of us here, but but also good for businesses as we as we as we kind of balance out the the relative importance around the go to market function relative to some of the g and a and, you know, functions that exist.
Oh, do we know how the business runs?
I I wanna acknowledge Brent's comment because I I do totally agree with you, Brent, in the chat, which is, like, Brent, just quickly summarizing, has seen severe price increases across some of you know, I'm looking at this list of vendors. Oracle worked out. Imagine those are big line items for you, and having rock solid data is key. It's also timing, which is what I would add to to your point, Brent.
Right? Because, like, having the data is important, but the the leverage you get by having the data early. Right? Because you can't go to work day the days leading up to your opt out and start trying to negotiate.
So to gain leverage, you need time, and that's kind of coming back full circle here. But that's what's so important to all of this is, you know, with our customers. We, one, recently, we were chatting with Automox. That was what has made their director of procurement a superhuman, is the fact that he's seeing the data well before it can actually impact his renewal conversations.
So he has months to plan. He's has time to consider alternatives, and that's how he can start now actually leveraging this going into his own Workday negotiation, for example.
So, you know, I'm curious, Matt. Like, how else do you think about leveraging this data, in you know, any advice you'd give to the group?
I think you nailed it. And, look, I can only imagine you probably talk to as many practitioners as I try to, being on the front lines. And it's like, that's why procurement can be so impactful, because we've finally I say we finally.
In my brain, we've made this, like, this reactive to proactive, you know, and everyone will be like transactional to transformational. Like, I love all the buzzwords. Again, guilty. I use them.
But it's helpful, because I think then practitioners can take that and, sell themselves in the value of procurement internally, which is great. Whereas, maybe you've missed a renewal or, some of the data and information that you've had has been stagnant or wasn't updated because you didn't have the functionality in your old school technology tool or you're just, you know, swamped trying to do run the day to day operational, components of the job. But I think you're absolutely right. It's, as a result of that, not only were we able to see the data and and have visibility into it, but, like, what's the tactical thing?
It's like, I'm not gonna sit at my desk. Like, I'm gonna package that up, and I'm gonna go talk to the CMO, and we're gonna talk about the next thirty deals coming up over the next two quarters. Because I know that I need that much lead time. Everyone talks about ninety day renewal notifications.
It's like, I'm I'm even further. It's like, I wanna go maybe six months. Like, I'll I just wanna, like, plant that seed so that I can work backwards. Because if it's a big enough critical tool, like a piece of technology that you need to pull out because you want to go with somebody else, it takes longer than you think.
And then to Paul's point, if you're working with a CSAIL or IT, it's like, okay. Well, now I've got it like, this now becomes much more cross functional than it ever was. So, you know, again, back to the foundational pieces of data, there's so much more as a result of it. Like, I'm I'm I I just feel so much more empowered as a practitioner and so does the team, and that's the whole point.
Yeah.
One one factor that we what we see we've seen a lot is, you know, the the and I think you said transformational proactive, like Yeah.
Yeah.
This this drive for procurement teams to be able to reach out into the organization and Yeah. To be credible and to Oh, for sure. To have a a strategic role within those conversations. One of the strategic role within those conversations.
One of the things that's incredibly challenging about technology and software is it moves so fast. Like, it's it's impossible to be in the central function, not out in the field talking to new vendors, talking to new suppliers, being aware of the trends without having some source of that kind of aggregated data to to use to to foster your own credibility. And so Yeah. One of you know, like I said, one of the things that we're trying to do, part of this level of the playing field is also internally within the organization.
How can we, provide the right type of leverage and guidance for, the central procurement stakeholders to know what's happening in aggregate in the market so that if a stakeholder comes to you or better yet, you can go to a stakeholder and say, hey. I see that we're using the supplier and and and satisfaction may be a bit low. Have we considered making a switch to one of these others that has has generated a lot of interest? We're seeing a lot of good ROI trends, you know, for other users.
You know, should we should we take on this, this initiative?
And one thing I would add to that too, Justin, like, one of the one thing that's I I think, makes Tropic unique in this is that because we're not just data and process, we are also people.
Our people team is a team of procurement specialists who are going out and talking with these vendors every day. Right? And so when the software landscape is moving and evolving so quickly, our team is very frequently the first to know. And what we could do with that is then we can actually broadcast that out to our entire customer base.
It's like, hey. You don't wanna find this out. You don't want your your we'll stick to Workday. Sorry.
We're picking on you, Workday. But you don't want your your Workday a e being the one to email you to let you know about this price increase.
So I I'm just, like, again, reading the chat here. That's what's really important is that you're partnering with, when you're thinking about buying third party data, you're partnering with a source that has is on the field. Right? Is learning the data in real time because, again, the data is only as strong as as as it is relevant.
And so that's something that Tropic can uniquely help with since we are literally negotiating on behalf of our customers and talking to these vendors.
I love Paul goes, I wanna be superhuman here.
Yeah.
Steven, twelve months or more. Totally. I'm with you.
Back to a little bit of a story. Only having a small three person team, overlooking an entire business. You know, there's there's often the the pushback from, colleagues internally. Like, you don't know everything.
You don't know all the marketing tools. And I'm like, well, you probably don't either because it's changing so fast, but there's the beauty of Tropic. Right? It's like, I can tap into that because, gosh, maybe the last time I negotiated that deal was twenty four months ago or thirty six or even longer.
And it's like, okay.
Like, that's changed. That's not how they even do the business model anymore. And look, we all know that businesses change how they sell stuff, change the name of line line items. And it's like you're spending so much time just getting back to a level playing field when rather I could just tap in to an organization with people and data to help me out.
And that was it. It's like, I know that, like, I don't have budget to build out a twelve person team, which I probably also don't wanna do anymore in today's world. I just wanna leverage some of the outsourcing capabilities that I can. Modern tools like drop like, it just makes sense.
Like, there's the secret. If everyone's looking for it, it's like, there it is. Like, just it's how do I think smarter and and stop doing the button clicking heads down POs? Like, that's not procurement anymore.
Matt, I'm curious about obviously, like, all of this sounds amazing, but everyone here has their own limitations of time and Yeah. Capacity. Like, you know, how do you think about prioritizing time against the biggest opportunities and and the biggest, like, impact?
Yeah. You know, probably one of the the cooler, cooler, maybe, like, more prioritized columns within our vendor database was criticality.
I don't know why we called it that, but it just made sense. It was like, okay. Without these tools, our company doesn't run. Like, if we shut down, this is not good.
People get mad. And so it's like those were heightened. You had a handful of those that were just super, super important. And then you also had, like, large amounts of money spend, whether that's services or technology, and those were also heightened.
And you focused on those. Right? Like, we'll go back to the eighty twenty rule. Right?
That that makes sense. It's there for a reason. People use it all the time. And I get a lot of, pushback sometimes.
People are like, okay. Well, what about all the tailspin and all this other stuff? And I'm like, yeah. That's probably really important in a massive fortune one hundred, but, like, here, we're just we're just trying to get the basics right.
Like, if we're doing this, we're saving five mil a year. Like, we're feeling comfortable. We're doing great.
The team's getting promoted as a result of it. And it's like, I'm we're just not worried about that little thing. We'll get there. Like, I promise we'll get there.
Maybe a new tool will pop up in the next couple of months to help us do it. But, I think, you know, we try to, like, you know, like, do boil the ocean. Like, I just wanna do everything. And it's like, no.
No. No. I wanna focus on those critical tools and pieces of software and and services that we're buying that keep this business afloat and, you know, inevitably, it goes back to, like, this concept and idea of business acumen and understanding what really pushes and propels this business forward. When you start talking like that, like, the c suite is just absolutely attracted to it.
They want to know, Bobby mentioned that dashboard.
It was the thing that set us apart to the c suite in one of the companies where it stood up a function because they just hadn't seen something like that before. And look, it was all built off of a no code tool. And now, like, this preceded the tropics of the world. It's like, well, how do you have that?
This is great. Like, why would I go build it? It's even easier. And the other thing is, like, I don't have budget.
And it's like, yeah. You do.
You can show ROI. One, you'll cover your salary and the team salary for sure, and then also the cost of any technology or tools that you use. It's just how you how you pitch it.
Yeah. One of one of the things that we're starting to see, some of some of our close procurement practitioners do is kind of with this balance of or unification of first party, third party data, what we've been able to show them is, hey. You may have ten, you know, huge suppliers coming up for renewal in the next six months.
Five of them, you actually already have great pricing. You know what? Like, maybe Good. Maybe maybe not don't worry about spending, you know, all the hours, all the cycles on those, you know, five. There's three that are okay. Maybe you should invest some of the effort there, and there's two words bad. And those are really the big opportunities.
So create and, again, talking about, like, speaking to the c suite, being able to show, like, hey. This is where I'm gonna get this is where we're gonna get the biggest bang for my time, which is ultimately what the c suite cares about with procurement investment is, you know, time ROI. Where are we gonna get the biggest bang for the buck from this human or the these humans that we that we brought on And being able to position the time being spent on the highest ROI opportunities is also a critical way to to establish value.
Yeah. That's it. Like, you you you start speaking the language of the c suite and what they care about, and they wanna listen to you. And then when you can back it up and say, well, yeah, this is off of eleven billion dollars worth of spend that has been aggregated.
It's like, okay. Well, this is great. Otherwise, it's like, you know, no wonder it's always been like, oh, just get someone from procurement to go negotiate. And it's like, what are we negotiating? What do like Yeah. This is so helpful.
There's sorry.
Go ahead.
No. No. That's it.
There's I was there's a I remember, you know, even in the in the tropic days as as we are managing and and kinda negotiating our own spend, you know, before we had the kind of breadth of of third party data insights, I remember I would go talk to, you know, the Salesforces of the world or to the Yeah.
You know, core core other, like, the the Slacks before the, you know, the merger or whatever and Big ones.
Yeah. Core infrastructure to us. And just the feeling of banging my head against the wall of, like, there's no movement happening here. There's no movement here happening here.
Yeah.
You know, supplier telling me that you've got bottom dollar pricing, but you always hear that. You know, that's what Yeah.
Of course.
That's what it Here's a funny analogy.
I use this all the time. It's like, you know, people can often relate. It's like, I dropped my car off with a mechanic and I'm like, I don't know. But I need a car.
Like, I know I need this software. I need that tool. I'm gonna pay whatever. Like, but I don't know if I'm getting a good deal or not.
And this is just a way to level up. Again, we're just sitting on so much information, and you've done such a great job of being able to collect it and offer it in a way to practitioners that's super beneficial for themselves and their careers and the organizations they work in.
I'm curious, Matt. Question for you and Justin. I know we have around nine minutes, so this might be a heavy topic I'm bringing up, and I might regret it.
But but something we've lost on in Nine minutes?
Will they go an hour already?
No. But I but I think, you know, we talked about it in when we were meeting in advance, and I think it's important because we do hear from procurement folks a lot that, like, sometimes this data feels so powerful. Like, it's almost threatening. Right?
It's like, well, if there's all of this data, what does that mean for me? And so I'm curious. Like, you know, we fundamentally believe it's the opposite. Right?
Even to that point, to get the most out of a vendor, there is absolutely strategy and tactic that needs to go into it. So I'm curious how you think about positioning. If you were, you know, someone on this call going to want to ask for a budget for data, how would you position it so it doesn't feel like threatening to your job and instead just, like, making you the superhuman that, has to be? Yeah.
Yeah. I love it, Paul.
Well, jokingly, I always said this and I shared it with my team in a way, you know, it was like tongue in cheek, but it was if I could it was almost like, if I can almost automate myself out of a job, I know I've done a great job kind of a thing. Like, if I can end up replacing myself because we put great technology in place, great process, and we've just built out a a, like, a really good buying culture, that's a good thing.
It's counterintuitive, of course, but to your point, it's it's the opposite. Usually, if you're if you're the person who's able to do that, nobody wants to get rid of you. Like, it's the opposite. It's like, I wanna hold on to that person for dear life because they're able to do things like this and they're usually, well known within the culture and a change agent and, you know, it would be a hurt if you left.
I it it feels the opposite of what it really is. It's to me, it's less so, like, you know, automating myself out. To some extent, yeah, but I also didn't wanna do that. Like, I was done clicking the buttons.
I wanted to be out working with the organization.
And even more so, I did think about this. It's like, how do I help level up my team? That's super important too. It's like, maybe I'm not gonna be here forever.
How do I help them with their careers? And that's something fundamental about procurement practitioners. We're always looking out for the community, one anothers, and people on our team. And so think about it in that way.
Right? It's just like this mindset flip, a little more positive on it.
Not easy to do just given where historically we've been and come from.
But, yeah, to me, it's just it really does turn you into that superhuman and, you know, just say the thing. Maybe just say it out loud. If I can automize automate myself while I have a job, they're like, But then they're like, no. You can't go anywhere. We don't want you to leave.
It it really is powerful.
Yeah. I think about the concept of empowerment versus replacement.
And Yes.
You know, the you know, when when companies are thinking about investing in their procurement organizations, it's again, it's it's it's, you know, an ROI per person that we can accomplish.
And if we can make that ROI better by investing dollars here to power us with data and intelligence, and that is gonna have an outsized return on the actual savings or efficiency that we can we can drive across the organization, That's a no brainer investment in in my mind. And, and I think that, you know, the kind of the best procurement people that that we speak to are thinking about, you know, how can I, to your point, Matt, empower my team to be as successful as possible to to establish that credibility across the organization so that we become that strategic, that proactive lever to pull instead of the necessary back office function that exists to keep the the trains moving?
Yeah. I hear it a lot, and I think it's important.
And, I'll share some maybe not so public information that that happens, and I'll keep it anonymized. But people reach out and they're kind of like, I don't know if this is the place for me anymore. And I'm like, it might not be because things are shifting. And if they're not and then if I'm going, gosh.
Organizations. I hope you're paying attention because you're going to lose really good talent. They will vote with their feet. They'll just leave.
You know, a lot of people will say, but, oh, I'm just told to do this. And I'm like, you you could go look elsewhere. Like, there are opportunities out there, and you probably will really enjoy it and stand out. Tough, tough to say.
I know, but like it's part of it. And when you've got folks like yourself helping, it's like becomes a bit of a no brainer. It's much easier to do.
Totally. Yeah. I'd argue it it justifies your job position. So I Yeah.
Exactly.
Go with you.
We have four minutes left. Any questions from the audience?
Any burning last things you wanna know from myself, Justin, and and Matt?
Oh, Alex is on. This is awesome. They're like, hello, everybody. What's up? Happy third. Tomorrow's Valentine's Day.
Exactly. Happy Valentine's Day.
Cool. Well, there's no other questions.
Matt, Justin, parting words, things you wanna leave the group with.
I'll let I'll let you have the last word, Matt.
But, No.
No way. No way.
I'll I'll take the I'll I'll take the baton.
No way. No way.
I'll, I'll just say, you know, like I said, you know, we covered we covered a lot of ground here on the the types of data. And, you know, my my parting guidance is just is to make sure that you're thinking about those different types of data at your organization.
And if you can, if you see some of that siloing, if you see some of the challenges with bringing that data into, you know, a single place in unification, you know, ask why. Like, what what's stopping me from doing this? You know? And and if it's just organizational, you know, inertia and that's the way it's always been, you know, challenging those paradigms and thinking about how can we do this better more efficiently, like, it is possible.
And, and so encourage everyone to to seek it out.
I'll I'll I'm gonna I'm gonna do the practitioner's part. And, hopefully, on behalf of the audience, thank you for putting this together because this helps this helps us. This helps level up procurement in whole, which is great. You know, there's obviously a people component to this and having, modern technology and tools and data to help, benefits all of us. So I'll I'll do that instead rather a a thank you.
Great. Thank you, Matt, for for joining us.
Yeah. Yeah. Matt, thank you so much. For sure. Thank you. Was an awesome conversation. I hope everyone in the audience enjoyed it as much as I did.
I know I learned a ton. You guys have any questions, feel free to shoot, our team an email, a LinkedIn message. We're always happy to help and chat about data more. So thank you everyone for joining, and I hope to see you all soon at our next webinar.
Thank you. Bye, everybody. Bye.
See you all later.
