IT and marketing teams have always relied heavily on external expertise due to the increasing complexity of these roles. The tech world is increasingly changing and adapting, with tech skills more in-demand than ever before, making it difficult to recruit employees with the right skills.
The most in-demand tech skills are not regularly available and take too much time to recruit.
Many of the most sought-after independent professionals are not looking to be employed. (Malt & BCG, Freelancing in Europe 2021)
A potential road blocker to accessing independent talent with these skills? Strict compliance regulations and cost-saving goals often lead to complex RFP processes and excessive bureaucracy coming from procurement and HR departments.
But it doesn’t have to be this way - digital sourcing and recruitment solutions provide a huge opportunity to improve efficiency and save costs in HR and procurement processes. Additionally, it's a great opportunity to position HR and procurement at the forefront of innovation and digital transformation.
Internal compliance processes vs. agility: From friction to creating a spark.
In order to meet the demands of a fast-paced tech business, individual departments need to be able to access external resources and talent quickly. Building a flexible pool of talent to utilise as and when you need it is the key to agility.
However, it's often the case in bigger organisations that procurement teams, who oversee the sourcing of external service providers, are focused on cost savings and compliance hoops. For departments needing additional resources, it can mean losing valuable time waiting for drawn-out approval processes to take place or choosing to bypass procurement resulting in “Maverick Buying.“
Why? Because they have to deliver on project goals and KPIs, and fast.
But there is good news: Procurement departments that manage to overcome the red tape of bureaucracy and free themselves from operational processes that would otherwise slow them down can unlock a huge potential for cost reduction, efficiency and more security.
The emergence of increasingly specialised and advanced marketplaces in the B2B world can be the answer to this challenge.
What are B2B marketplaces?
Just like B2C marketplaces B2B marketplaces bring together many sellers and buyers in one place to reduce search costs and simplify the supply chain - in this instance, to find and manage highly skilled freelance talent.
The difference with B2C marketplaces is that the services and processes offered by a B2B marketplace have to match the needs of multiple stakeholders within a company, not just one person. B2B marketplaces have to be fit to understand complex organisational structures and the challenges that each of their stakeholders faces.
With the right setup, B2B marketplaces are able to respond to critical procurement challenges and give back accountability and autonomy to internal stakeholders, who can now choose and order themselves. This allows procurement teams to spend more time monitoring and focusing on high-value tasks. At the same time, it can also lead to a change of behaviour on the user side towards more responsibility and ownership.
So let’s talk about some typical characteristics of B2B marketplaces and what features you should prioritise for your specific needs.
Product vs. service: Products are simple, and services are complex.
Product marketplaces offer goods such as office supplies, furniture and equipment or packaging.
Service marketplaces offer services such as freight services or consulting services e.g. by freelancers.
Some product marketplaces also offer services related to their products such as providers of maintenance, repair and operation (MRO). So far, quite simple.
But, the product or service really makes all the difference regarding the features a marketplace should focus on. Because in the marketplace world products are simple, and services are complex.
For the online trade of products, the one-stop-shop solution is always attractive. The more “complete” the range of products within a marketplace, the higher the potential for cost savings through high volumes, as well as efficiency gained through centralised management.
Service marketplaces, however, often involve solving a complex problem as is the case for example with consulting services. This makes quality and level of customisation a decisive factor.
The more complex the service requirements, the more important it is for the marketplace to offer quality control and advanced customisation. In most cases, this is only possible through verticalisation.
In order to ensure efficiency in the purchasing process, service marketplaces need to offer a flawless customer experience, support and security guarantees.
Vertical vs. Horizontal: Finding the right balance.
Horizontal marketplaces try to cover as many suppliers as possible. Prominent examples are Amazon Business or Alibaba. The advantage of horizontal marketplaces is the one-stop-shop solution they offer.
However, we have already seen in the past how marketplace giants like Craigslist or eBay were disrupted by competition that specialised in specific segments or categories of a horizontal marketplace. Through verticalisation marketplaces move away from the one-stop-shop in exchange for more tailored solutions.
The advantage is that they fundamentally improve matching. They understand the specific challenges within their category and can respond to problems of their market with specialised solutions, high-quality standards and good service.
In theory, verticalisation can go on and on — each time creating a solution that is even more tailored. However, at some point, a high fragmentation of suppliers comes at the price of efficiency for the procurement manager since it leads to the administration of many different suppliers again.
The challenge for the procurement manager is to find the right balance between tailored solutions where needed and centralised solutions where possible.
Local vs. global: Remain true to your needs.
Global availability can be a huge advantage that online marketplaces can deliver quite easily. This is why many B2B marketplaces want to become global in order to expand their product portfolio and provide competitive prices through increased competition among their suppliers.
This advantage is again especially true for product marketplaces. But we have also seen early service marketplaces like Fiverr or Upwork adopt the global concept. Their main advantage is that they are able to offer significant cost advantages compared to local vendors.
However, for a global approach, the marketplace also needs to shift to products or services that are rather standardised.
Services designed to solve a complex problem on the other hand require direct personal contact, local accessibility and local expertise as is the case for marketplaces that offer legal expertise or tax consulting.
But also independent professionals working in consulting tech or marketing are often key resources in transformation and digital projects.
A recent study by McKinsey for example looked at the productivity gap between average and high performers and showed that the difference is most dramatic in complex projects. For a very complex project, the productivity of “high performers” exceeds that of the average performer by 800%.
Marketplaces that offer such profiles must be able to understand and meet customer needs very precisely and provide the right matching features.
Direct vs. Indirect: Cut out the middleman, but be ready.
One of the main advantages of a marketplace is cutting out the middleman.
Facilitating a direct relationship between customer and supplier and thus cutting the supply chain short can be an extremely powerful cost saver.
But the more complex the supply chain, the better the marketplace must be designed to replace previous structures and ensure a smooth process between customers and suppliers.
Depending on the supply chain, we can observe marketplaces that are therefore still an extended distribution channel for traditional intermediaries like it is the case in freight services for example.
Procurement managers should carefully evaluate at what point in the supply chain they still need to rely on the traditional service provider and when the marketplace design allows them to actually take back control.
The deeper the cut, the more disruptive and transformational a marketplace can become, by offering price advantages that are far beyond manual competitors.
There are some features that distinguish an advanced B2B marketplace from a simple platform that offers a centralised place to meet each other without additional services.
In order to significantly increase efficiency and be an attractive option for large companies, B2B marketplaces need to provide high-end management systems with end-to-end digital processes, automatised payment workflows with integration to S2P (Source to Pay) systems and in-depth reports and insights across all departments. The big advantage apart from saving costs is regaining control and transparency over the supply chain which will improve security and compliance and at the same time give back autonomy to the internal buyers using the marketplace.
Open vs. closed: Everything comes at a price.
Open marketplaces are able to offer increased product choice as well as transparent and competitive prices. With no admission requirements, anyone can become a supplier allowing the marketplace to grow fast and become a global player quickly.
At the same time, the risk in terms of quality and security becomes higher. To meet these risks, marketplaces can implement built-in quality control features. These can range from recommendation systems to automatised document verification processes. The most restricted one being a manual selection of suppliers which often results in a closed marketplace.
While manual selection promises higher quality, it also requires more resources to offer this service. This will not only increase the margin price, but it also requires perfect communication and market knowledge. Especially in human resources, it can be problematic to have “an outsider” making the selection for you, since it’s a very personal and individual decision.
The solution is marketplaces that find a middle ground between built-in security checks and sufficient product choice for the client to be autonomous according to their needs.
Sometimes the additional services managed by the marketplace can be so valuable that customers start using the marketplace even if they already have access to the product directly because, for example, they have superior delivery services such as Amazon or Deliveroo. You can order a Deliveroo next door because the service will be better or bring your tickets bought on another service to google flights because the UX is so convenient.
Usability: The secret ingredient to becoming popular.
Coming back to our initial problem, B2B marketplaces can not only free procurement from transactional tasks and make their own processes more efficient, they also give autonomy to single departments and thus have the power to reduce the challenging KPI of the Maverick Buying ratio.
To ensure that, procurement managers must assess the needs of the individual departments carefully and ensure that the new solution will be broadly used.
Besides flexibility, speed and high-quality supply, there is one factor that helps to achieve this but gets neglected too often: Good Usability.
A user-friendly and intuitive design is an absolute must-have in every B2C software and has by now established the standard in people’s expectations when using the software. The “users” in the B2B world are the same as in the B2C world and they more and more expect the same user experience they are used to in their private life.
The mere existence of start-ups such as Userlane proves, however, how little importance is still attributed to usability in the B2B world. Managers often prefer to make sure tools and providers are able to mimic every single detail in the existing process, even if it’s at the cost of usability. This is often fatal.
To really close the gap between internal stakeholders, simplicity is no longer a “nice-to-have”, but an absolute necessity.
To conclude: Well designed B2B marketplaces give procurement managers the key at hand to close the gap between internal stakeholders and ultimately drive forward the digital transformation of their business by providing fast access to the most crucial resources.