The Prodigal Processes: The Evolution of Supplier Governance Technology

By Claude Marais

After years of neglecting supplier governance, many corporations are finally demanding advanced supplier management tools to increase control, automate supplier oversight, improve relationships, and reduce spending. As a result, many technology vendors are now scrambling to catch up with these evolving demands.

This article explores the shifting needs of both corporations and public sector organizations for supplier governance technology, as well as the current state of the software market addressing these needs.

The Supplier Side: Where Technology Lagged Behind

Historically, most software providers focused on goods procurement, where contract governance played a smaller role. Since the majority of corporate spend was initially focused on physical goods, technology vendors emphasized procurement and pre-contracting processes, often ignoring post-contract supplier governance altogether.

In many companies, contract repositories were treated as passive archives — essentially “contract graveyards” — where documents were stored but rarely revisited.

However, as services procurement (including Goods-as-a-Service, or GaaS) grew from 19% of Fortune 500 sourcing spend in 1994 to 56% by 2013, gaps in post-contract supplier management became glaring. Niche players emerged to address specific pain points — contract management (Apttus, SharePoint), risk management (Hiperos, MetricStream), and performance management (ServiceNow, Remedy) — but few offered truly integrated solutions.

Three critical technology gaps persisted:

• Relationship management between customers and suppliers
• Comprehensive management of supplier-customer interactions
• Fully integrated systems eliminating information silos across the enterprise

The Customer Side: A Slow Awakening

Meanwhile, corporations and government organizations started recognizing the importance of sophisticated supplier governance. Industry groups like SIG, IACCM, and IAOP helped raise awareness and develop expertise within supplier management teams, even if software budgets remained limited.

Risk management software initially took center stage, especially after 2008. But organizations soon realized that risk overlays were insufficient without robust underlying systems for managing contracts, performance, and supplier relationships. This led industries, particularly financial services, to rethink their approach and demand deeper integrations of contract lifecycle management (CLM) with risk management functions.

With growing procurement complexity, higher performance risks, and expanding services spend, progressive organizations started pushing for end-to-end, integrated supplier management platforms that combine contract, performance, financial, risk, and relationship management in a single system.

Supplier Governance: The “Prodigal Processes” of Technology

While nearly every enterprise function has been fully automated, supplier governance remained the forgotten “prodigal processes.” Technology companies were late in recognizing the market’s emerging needs, staying focused on procurement and pre-contract functions long after customer demands shifted toward post-contract performance management and supplier relationship management (SRM).

Fortunately, the free market began to fill these gaps. Industry experts, frustrated by the state of supplier management technology, partnered with entrepreneurs and investors to build solutions from scratch. Interestingly, many of these new SaaS supplier management solutions emerged not from Silicon Valley, but from India — a growing hub of expertise for back-office process automation.

According to a joint report by Google and Accel Partners, India is expected to become a $10 billion SaaS market by 2025, holding an 8% global share. Successful startups such as Zoho, Freshdesk, KiSSFLOW, Chargebee, and SirionLabs are fueling India’s SaaS growth story. (Forbes, 2017)

The Current State of Supplier Management Technology

Although many software providers now claim to offer supplier management functionality, the market remains fragmented. Some solutions offer little more than digital file storage without true contract governance capabilities, while others attempt to retrofit modern functions onto outdated platforms.

Buyers should carefully evaluate solutions to ensure true depth and breadth of functionality. Key features of leading platforms include:

• Fully integrated SaaS-based architecture
• Comprehensive contract lifecycle management
• Embedded supplier risk management
• Advanced supplier relationship management (SRM)
• Robust financial and performance management tools
• Seamless integration with enterprise software ecosystems

As Spend Matters recently noted:

“Businesses are increasingly buying outcomes rather than widgets or labor. Yet most procurement technology still reflects transactional models based on SKUs or billable hours. A handful of providers are now working to manage supplier relationships holistically — starting from contract authoring to steady-state performance, relationship, and risk management.”

The Future: Supplier-Customer Collaboration Powered by Integrated Data

The most successful technology providers are not only streamlining internal organizational processes but also directly addressing the customer-supplier dynamic. Since many disputes arise from conflicting data sets, tomorrow’s supplier management platforms will eliminate these inefficiencies by creating shared data environments — shifting conversations from “whose data is correct” to genuine performance improvement dialogues.

This evolution will fundamentally reshape supplier-customer relationships for the better — improving efficiency, transparency, and collaboration for both sides.

Originally published on LinkedIn.