Count Andrew Durlak among the entrepreneurs whose product was borne from frustration. Mr. Durlak is a cofounder and COO at Scout RFP, the producers of e-procurement software which helps companies streamline their buying events and make purchasing decisions.
Scout helps companies strategically source by offering RFx tools which help companies build RFPs, RFQ’s and RFIs through questionnaires and pricing sheets, automated messaging, and team evaluations. The RFPs can be quickly converted into auctions. Auctions can also be initiated from supplier lists. Extensive negotiations can be simplified and competitive bidding encouraged. Savings tracking tools allow users to hold companies accountable for savings goals.
“In a huge part of my interactions, what I realized was a lot falls on CFOs from other teams,” Mr. Durlak said.
Some of Mr. Durlak’s cofounders had supply side backgrounds and knew most of the work was manual. The bigger the company, the more data changes hands. There’s no reason for that data to be manually exchanged.
When designing Scout the team held more than 300 direct one on one interactions with potential users. They found some common challenges. The first was the procurement process was extremely manual in nature. Replacing those long-employed processes, no matter how inefficient, would involve re-envisioning the process from the ground up.
Procurement is also not a visible process, Mr. Durlak said. Communication between departments can be poor, leading to timing gaps, repetition and other avenues for inefficiency.
“The biggest complaints were tribal knowledge. Budget holders may be in different groups from the procurement teams. Due to the lack of technology, there were few conduits for collaboration with the sourcing department.”
Many budget holders may only interact with sourcing departments two or three times each year, so they are not familiar with how they work.
While many companies consult with their customers when designing products and services, Scout formalized the process by creating a Customer Executive Board to expand their products and help sourcing teams engage vendors, adjust to growth, and improve the pace of service delivery. The board’s members include representatives from software, oil and gas, manufacturing, retail and biotechnology.
“We didn’t just want a high-level feedback channel, we wanted to push forward a better, customer-driven design,” Mr. Durlak said. “What we’ve done with our design process is get it in front of them early and let them play with it, then get them together in the same room to discuss it.”
In less than two years since its launch, Scout has been adopted by more than 80 companies, including more than 20 Fortune or Global 2000 companies. It recently closed a $9 million investment round from New Enterprise Associates and expanded its global enterprise sales and marketing teams.
Did an increasingly global economy affect Scout’s design?
“It’s shocking how quickly Scout became global,” Mr. Durlak said. Most businesses have international suppliers and complicated systems quickly fall apart do to language and cultural barriers.
“What we found works best is simplicity.”
The proof is in the numbers, Mr. Durlak said. Scout has 15,000 active users in 55 countries. The system is easily learned and Scout has not had to train one supplier.
By automating their processes companies can increase their number of active sourcing events from one or two to six or seven, Mr. Durlak said.