Optimising Indirect Procurement With Marketplaces

OPTIMISING INDIRECT PROCUREMENT
WITH MARKETPLACES
PROS, CONS AND PITFALLS OF SELECTING AND
WORKING WITH MARKETPLACES
OCTOBER, 2020
In this report you will discover the roles, values and desirable characteristics of
the ideal marketplace to support indirect procurement savings, using the example
of an IT hardware and accessory marketplace to illustrate the key points.
We reveal the most important features, factors and considerations that can help
CPOs, CTOs and IT buyers in international companies make an informed choice
about how to choose, and when to use, IT marketplaces to save time and money
on their growing indirect IT procurement needs.

WITH MARKETPLACES
October 2020WWW.MARKIT.EU 2
CONTENTS
WHAT ARE MARKETPLACES? 3
KEY RECENT STATISTICS ABOUT ONLINE MARKETPLACES 4
OPTIMAL ROLE OF A MARKETPLACE IN INDIRECT IT PROCUREMENT 5
HOW TO EVALUATE AN IT MARKETPLACE 7
THE “BEST PRICE” MYTH 12
LOOKING AHEAD TO THE FUTURE OF PROCUREMENT 13

WITH MARKETPLACES
WHAT ARE MARKETPLACES?
Call them what you will, souks, bazaars, mercados, marketplaces have been around for millennia. In sim-
ple terms a marketplace is defined as a location where people regularly gather for the purchase and sale
of provisions, livestock, and other goods (Source: Oxford University Press).
Physical marketplaces have existed for thousands of years, for as long as humans have engaged in trade.
Fast forward to the digital age where marketplaces have evolved into essential internet-powered tools to
enable international company procurement teams to save time and money on their purchases.
In 2003, Markit began developing one of the world’s first dedicated IT hardware and accessory market-
places.
IT IS SAFE TO SAY THAT EFFECTIVE MARKETPLACES
SAVE COMPANIES TIME AND MONEY.
With less time spent vetting vendors, chasing information and quotes, handling mountains of emails and
paperwork, diminishing maverick spend, and ensuring compliance, procurement teams can devote more
of their time and energy to higher-value, or more strategic, work.
Broadly speaking there are 4 types of marketplace (Source: McKinsey).
1. Product-focused marketplaces e.g. Amazon Business, Alibaba and Markit
2. Time-and-materials marketplaces e.g. transport, travel, or labour services.
3. Marketplaces offering professional services e.g. digital services, marketing etc.
4. Corporate spin off marketplaces. InnoCentive, spun off from Eli Lilly, is a prominent example.

WITH MARKETPLACES
Even though B2C e-commerce is now widespread, it’s the recent evolution of B2B e-commerce, and
especially vertical or specialist marketplaces, that is gaining the close attention of procurement
professionals all over the world. With the topic heating up over the last few years there are clear indica-
tors as to what users look for and expect from online B2B marketplace.
• Nearly 60% of B2B buyers—58.8%—now conduct at least 25% of their business purchasing on a mar-
ketplace, according to an August 2020 survey of purchasing executives by Digital Commerce 360 B2B.
• According to Gartner, at least 70 percent of enterprise marketplaces will serve B2B transactions by
2023.
• There are more than 70 vertical marketplaces in more than 13 diverse industries, according to
research compiled by Digital Commerce 360 B2B.
• According to McKinsey industry analysts, by 2021, indirect spending will be led and directed by
tech-procurement people at up to 60 percent of large enterprises.
• Among the different platforms used to research and purchase B2B products, marketplaces stand out
as the leading destinations for U.S (United States) buyers. Source: Statista
• Buyers expect consistent, error-free buying experiences. From Sapio’s Research - The B2B buying
process report 2019.
• Ease and speed are key: 25% want easier and faster checkout, easy repeat ordering, quicker deliv-
ery, and improved tracking as a priority.
• 44% of B2B buyers experience online order errors from their top 10 supplier websites at least
every two weeks.
KEY RECENT STATISTICS ABOUT ONLINE MARKETPLACES

WITH MARKETPLACES
OPTIMAL ROLE OF A MARKETPLACE IN INDIRECT IT PROCUREMENT
The sweet spot for a marketplace is when the products being bought coincide with the following
parameters:
• They are available in a wide variety of options
• They have a relatively low unit cost
• They have a high annual order count
• They form a significant part of total annual spend
In other words, where the aggregate savings potential is high.
This situation is especially the case for IT accessories e.g. headsets, cables, and webcams and other such
products.
In some scenarios, traditional tenders may still make sense for a large order of notebooks, but does it
really make sense to tender frequent orders of low-cost items, especially those with in variable specifi-
cations e.g. cable lengths? No, it doesn’t - quite simply the cost of the time taken plus the fact that that
time could be put to better use, means time-wasting tendering of IT accessories should be consigned to
the past.
In the past it may have been reasonable to turn a
blind eye to maverick spending as it was labelled
under another name, “long tail spend” but that is
no longer pertinent when we look at IT accessory
purchasing.
THE EXPLOSION OF CHOICE AND USAGE OF
IT ACCESSORIES MEANS THE LONG TAIL HAS
MORPHED INTO THE BODY.
THE TAIL IS WAGGING THE DOG!
2010 2015 2020
Number of
IT accessories per
notebook/desktop
4.76 6.48 8.69
Increased usage
and demand of
IT accessories
+36 % +83%
Source: Markit purchasing data of more than 10 000 companies
Quite often, with regards to IT accessories, employees and business units look to avoid time-consum-
ing purchasing and tendering processes and buy outside their existing approved channels which are
often considered slow and inefficient for small orders. This maverick spending hurts the buying organ-
isation and is a headache for every CPO. Not only is it hard to control but it’s also the cause of multiple
time-consuming inefficiencies. Maverick spending means paying above company-negotiated prices plus
there is another downside - the added time spent on purchasing which results in a negative “double hit”
on the total cost of purchase. A triple hit occurs when the invoice reaches the accounts department.

WITH MARKETPLACES
Margus Vahemäe
Head of Sales
Markit Holding AS
margus.vahemae@markit.eu
OPTIMAL ROLE OF A MARKETPLACE IN INDIRECT IT PROCUREMENT
It’s clear that IT accessories are no longer part of the “20%” in the 80-20 rule. In fact, in some organisa-
tions, IT accessories can account for more than 40% of indirect IT spend. Markit data also shows that the
number of accessories ordered per computer has risen 83% over the past 10 years.
“Even if companies do not use marketplaces to buy all their IT devices,
they certainly should for IT accessories. It just makes sense.
The aggregate time and money savings on frequent orders of low-cost IT
accessories are significant.”
An elevated level of buyer adoption of approved IT marketplaces also
demonstrably reduces the percentage of maverick spend. Our clients’
data prove this.
However, maverick spend issues can still occur even when companies
officially use marketplaces due to low adoption and usage rates.
The most notable reasons for low marketplace usage are:
• Weak product choice.
• Insufficient technical product information.
• Lack of transparent, competitive, real time pricing, stock availability
and delivery times.
• Lack of accountability.
What is important to understand and note - most marketplaces do not handle RMAs, instead they defer
responsibility to the vendor. They do not take responsibility for fulfilment, deliveries, and warranties on
the products they sell. CPOs and IT buyers do not want that. They want a supplier AND a marketplace all
rolled into one.
THE CPO NEEDS A “MARKETPLACE-AS-A-SUPPLIER”
RUNNING A SINGLE VENDOR MODEL, NOT A BROKER MODEL

WITH MARKETPLACES
HOW TO EVALUATE AN IT MARKETPLACE
Time is money, and your time is precious, so we provide a quick checklist of some of the most important
questions and characteristics to consider when choosing a marketplace to buy your IT hardware and
accessories. As a reference we also outline the relevant features and facts about Markit’s marketplace.
QUESTIONS TO ASK TO EVALUATE
AN IT MARKETPLACE
IMPACT AND
RELEVANCE
MARKIT MARKETPLACE
FEATURES AND BENEFITS
OPERATIONAL CONSIDERATIONS
RELEVANT TO IT BUYERS, CTO AND CPO
1. How large is the vendor and
product choice locally,
nationally, and internationally?
Size of selection matters.
You need to able to find “all” your
IT hardware and accessory needs in
one place or buyers will be forced to
look elsewhere.
3 million SKUs made available
from 300+ leading international
IT distributors across 35 coun-
tries. Markit is probably the
world’s largest IT hardware and
accessory catalogue.
2. Detailed product information
available to search and find
products that match your needs?
Detailed information, images and
technical specifications help speed
up product comparison and buying.
Poor search functions increase prod-
uct search time.
Integrated CNET data and smart
search functions including multi-
lingual predictive, and paramet-
ric search functions make needs
matching easy. Synonym search
due Q4 2020.
3. Search results displaying
comparable products with
transparent, dynamic (real time)
pricing and stock availability?
Real time pricing for available stock
saves potentially wasted time on
failed purchases due to lack of avail-
ability. It is important to be able to
instantly see and compare the prices
of available items from a range of
local/national suppliers.
Able to compare real time pricing
and stock availability from 300
leading IT distributor catalogues
in 35 countries.
4. International and regional IT
buyers buy everything from one
online location? Supplier’s
geographic footprint match
yours? Local language support?
A single point of entry removes the
requirement for multiple logins to
different country marketplaces al-
lowing global and regional buyers to
“buy locally and act globally.”
Markit’s marketplace is a “one
stop shop” with a single login for
35 countries. Buy anywhere from
everywhere, with local language
support in most countries.
5. Is the marketplace easy to use?
Does it offer experience similar
to B2C purchasing?
Marketplaces that are easy to
understand and use increase user
adoption. Difficulties in adoption
can increase maverick spending.
Markit NPS (Net Promoter Score)
of 64.5 suggests clients find our
marketplace and systems clear,
simple, reliable, and engaging.

WITH MARKETPLACES
AN IT MARKETPLACE
IMPACT AND
RELEVANCE
MARKIT MARKETPLACE
6. Is transparent supplier data
available? Can you see their
identity and performance
history?
Knowing who is the ultimate
supplier and their performance can
influence purchasing decisions
Transparent supplier data inside
the marketplace
(available Q4 2020)
7. Is the marketplace catalogue
customisable?
It can be that no standard market-
place suits everyone. Personalised
marketplace experiences increase
adoption and savings levels.
Markit options include customis-
able favourite lists, access rights,
buying limits, restricted products
and more.
8. Does the marketplace offer
invoice consolidation with
multiple payment options in
multiple currencies?
For international companies, a
wide variety of payment options is
essential. Being able to pay in local
currencies increase global procure-
ment options and avoids currency
exchange costs.
Markit accepts payment in the
currencies of 35 countries and
payments methods are flexible.
Invoice consolidation by time
period or geography is available.
9. Are delivery costs and times
transparent and competitive?
Pre-negotiated or transparent ship-
ping rates and delivery terms ensure
cost effective, fast deliveries on
commodity IT items.
Markit offers cost-effective and
speedy logistics with advanced
tracking capabilities. Each order
displays shipping times in real
time.
10. Is there an ability to optimise
price, delivery speed and logistic
variables on every order?
Intelligent basket options calculate
and offer the best available price,
speed, and shipment volume
combinations on each order.
Basket optimisation is a
standard on every order. Options
to prioritise price, delivery speed
or shipment volume are transpar-
ently displayed in real time at the
checkout.
11. Are returns and refunds pro-
cessed promptly by the market-
place or are issues referred to
vendors?
Numerous hours can be wasted
dealing with inefficient RMA han-
dling processes
Dedicated client support services
in local languages to handle
returns, repairs, and refunds if
needed. Markit is fully account-
able for every order.

WITH MARKETPLACES
AN IT MARKETPLACE
IMPACT AND
RELEVANCE
MARKIT MARKETPLACE
12. How good are the spend
management and compliance
tools/functionality?
Helps CPOs to take control of the
spending e.g. set up limits by buyer
role. This in turn helps reduce mav-
erick IT purchasing.
Markit clients can create restrict-
ed catalogues or favourite lists
for various buying groups. Mar-
ketplace content can be custom-
ised with rules set to comply with
CPO requirements.
13. Is the marketplace objective:
vendor-agnostic and ad-free?
Bias and ad-free marketplaces allow
fact-based decision making free of
distractions.
No ads. No spam. No vendor
pushing. No distractions.
STRATEGIC AND MANAGEMENT
CONSIDERATIONS
RELEVANT TO CTO, CPO, CFO
14. Does the marketplace support
your ongoing reduction in
total-cost-of-ownership /
purchase goals? Do they have
proof of delivery results?
Reducing the total cost of procure-
ment is now the number one issue.
Provable time and money savings
are what counts in IT procurement.
Source: The Hackett Group
Markit saves clients an average
of 12.5% on product costs and
is also able to deliver significant
S2P & P2P process time
reductions. Read more about
procurement time savings with
Markit.
15. Is the marketplace (and company
behind it) big enough to handle
your requirements but still small
enough to care?
Personal service and dedicated
account management to ensure an
agile, flexible partnership approach.
Markit’s user-centric market-
place development approach
means we listen to our clients
and their input helps define our
roadmap. Our super-efficient
team of 130 Markiteers are
helping clients succeed in 35
countries.
16. Does the company take full
responsibility for every delivery,
return and warranty claim? Does
the marketplace act as a single
vendor or a broker?
A “single vendor” model provides
consistent SLAs (Service Level
Agreement) and RMA handling.
A broker model does not provide
this to a client.
Markit operates as the supplier
(single vendor model) and takes
responsibility for the fulfilment,
delivery, and warranty of every
item ordered.

WITH MARKETPLACES
AN IT MARKETPLACE
IMPACT AND
RELEVANCE
MARKIT MARKETPLACE
CONSIDERATIONS
17. Are there integrated financial
service options?
Flexible payment methods are
required to match a wide range of
company procurement policies.
Purchasing, leasing and factoring
options are all available in Markit
(subject to approval).
18. Instant availability of stan-
dardised & transparent perfor-
mance metrics?
Performance data needs to be con-
stantly available.
Internal presentations of how well
the marketplace performs are
critical to support and develop buy-
in from your C-Suite and other key
stakeholders.
Single point access to a dash-
board of transparent perfor-
mance data and transaction
histories. Contact us for more
details.
19. Does the marketplace owner
have provable solid IT vendor and
distributor partnerships in all the
countries where you operate?
Reliability and flexibility in
securing best available prices, global
bid matching and stock availability
comes from strong industry
relationships.
Read about Markit’s strong
international IT vendor and
distributor relationships.
20. Is the marketplace cost effective
to trial and maintain? Are there
any hidden or expensive extra
fees?
Reaching ROI as early as possible
in the current economic climate is
essential. Predictable transparent
costs allow everyone to focus on
delivering results.
Markit charges a simple, trans-
parent percentage on each sale.
Nothing else. No setup, integra-
tion, consultancy, or
maintenance fees.
21. Can the marketplace integrate
with your SRM (Supplier Rela-
tionship Management), ERP (En-
terprise Resource Planning) and
punchout (S2P & P2P) platforms?
Do these integrations cost extra?
Integrations are necessary speed
and simplify negotiations, contract
compliance, end user ordering,
accounting, reporting and so on.
Markit offers FREE integration
with all common platforms.
Read about Markit integrations
with most common punchout
platforms.
22. Onboarding, advanced training,
and account management rolled
into the service?
To ensure maximum and speedy
adoption rates the level of education
and onboarding must be high.
Markit offers free, personalised
account management and
onboarding for committed
international clients.

WITH MARKETPLACES
AN IT MARKETPLACE
IMPACT AND
RELEVANCE
MARKIT MARKETPLACE
CONSIDERATIONS
23. Is the marketplace built on a
solid technical foundation?
Is it strong enough to handle
a huge volume and variety of
transactions?
Support is needed for instant pur-
chasing, bespoke orders, and instant
RFPs to suit all purchasing scenarios
Markit’s large team and
future-proofed system is built to
scale and handle high loads - and
is also flexible enough to handle
complex procurement process
flows.
24. Proof of credible and technically
solid company behind the
marketplace?
Switching suppliers is a big step.
Technology features are not enough,
the relationship must be founded
on demonstrations of expertise and
trust too.
Markit’s custom built market-
place is used by 9500+ compa-
nies across 35 countries – includ-
ing 20% of Forbes 2000.
Our clients’ success stories prove
our ability at helping them save
time and money. Our market-
place has 99.9% uptime.
25. Does the marketplace recognise
your global bid pricing agree-
ments but also offer override
possibilities?
Global bid recognition is essential
however on rare occasions a local
supplier may be able to beat negoti-
ated global bid prices.
In Markit the global bid recog-
nition is configurable with an
override possibility and available
on all orders.
26. Are there co-branding or
own-branding options?
Can you customise the product
categories and lists?
Customisation helps buyers know
they are in the right place, “feel at
home” and access only the products
the CPO and CTO want them to see.
In Markit the marketplace prod-
uct categories and lists are fully
customisable.
27. Does the marketplace support
your organisation’s sustainable
IT purchasing and other CSR
goals?
Sustainable IT procurement compli-
ance is a key and growing require-
ment for publicly listed and interna-
tional companies
In Markit the parametric eco-fil-
ters find products under 7 sus-
tainable IT label categories.
Global-to-local buying with
local-to-local deliveries ensure
lower last-mile distances.

WITH MARKETPLACES
THE “BEST PRICE” MYTH
“THERE IS NO SUCH THING AS A BEST PRICE. A GOOD OR BEST PRICE IS ALWAYS THE FUNCTION OF
CONSISTENT, STRONG AND RELEVANT COMPETITION”
How else can you achieve a good or “best” price, or even know if that
it is a good price? How do you make sure and how would you maintain
good pricing?
The bottom line is that you need to be able to create competition for
your required items and that should be the focus of attention. Also con-
sidering the total P2P or S2P process, what are the costs of the pre- and
post- transaction steps?
The value of the time alone is significant, chasing a great unit price
for hours or days doesn’t always make sense – you could be left with a
great price in the middle of an expensive time-consuming mess.
Therefore, successful or even optimal purchasing is NOT about the
PRICE, but about the buyer’s ability to create consistent and relevant
competition for the total cost of your items.
You can most effectively create that competition and cost-efficiency
through strong single-vendor model marketplaces.”
Andres Agasild
CEO
Markit Holding AS
andres.agasild@markit.eu

WITH MARKETPLACES
LOOKING AHEAD TO THE FUTURE OF PROCUREMENT
According to various research, and from what we at Markit know from 17 years of experience of market-
place development, the future of IT marketplaces could see some or all the following developments:
• New areas of both standardised and tailored performance evaluation at supplier, vendor and even
transaction level.
• Shifting of roles where the marketplace provider and buying organisations collaborate further on
customisable marketplace development plans to support individual company needs.
• Further development of co-branded/own-branded internal company marketplaces run by external
marketplace owners.
• Closer strategic ties between marketplace and international buyers to develop long-term innovation
roadmaps that help both parties’ evolution of their digital procurement-related processes
• Improved transparency so “nothing is hidden” from the client about price, end vendor status and
margins.
• Stronger focus from marketplaces on designing for value creation especially where IT commodity
item pricing becomes less of a differentiator.
• Consolidated IT purchasing on both a local and global level as required. In that way, spend visibility
rises, risk reduces, and compliance with various criteria can be met.
To view the choice of IT hardware and accessories available in your country, visit the Markit IT market-
place now or contact us for a discussion about saving time and money on your international IT require-
ments.

TAKE THE CHASING
OUT OF IT PURCHASING
WWW.MARKIT.EU
LET’S TALK ABOUT YOUR INDIRECT
IT PROCUREMENT CHALLENGES
Our extensive experience, industry-recognized abilities and
singular focus on the indirect IT category mean we know how to
unlock the time and money savings potential in your IT
purchasing processes.
Markit is transforming the indirect IT procurement function.
We have helped over 400 Forbes Global 2000 companies save
time and money on their IT hardware and accessory purchasing.
We can do this for your company too, by listening carefully, deeply
understanding the challenges and tailoring a managed service
and IT Marketplace Solution to deliver significant savings.

Optimising Indirect Procurement With Marketplaces

More Related Content

Similar to Optimising Indirect Procurement With Marketplaces

More from Markit

Recently uploaded

Optimising Indirect Procurement With Marketplaces