Solving Tail Spend in a Legacy S2P Ecosystem – Henning Hatje from Lhotse
This week we’ve got a sponsored episode, welcoming back a guest we last spoke to in September 2021, Henning Hatje from Lhotse.
Lhotse has a tactical and tail spend solution, which they see as something complementary to a legacy suite based approach. So if you've spent a lot of money investing in one of these suites and you're not likely to change provider, or maybe your company has a strategy to use a specific ecosystem that matches and ties in with your ERP (not naming names!), then this solution could be for you.
Lhotse pivots to enterprise with a new solution
I welcome Henning back to the podcast and mention how, since he was last on the show, he’s been busy making changes to Lhotse that he’s very excited to share.
He talks about how Lhoste have been securing funding, scaling their team, refining their value proposition and pivoting their target market over the last eight to ten months.
Lhotse now have enterprise size organisations squarely in their sites. Henning explains how the team realised that Lhotse works best when implemented in large, existing structures like the ones mentioned in the podcast’s intro - for example SAP Ariba. Not so much as a standalone solution, but rather as an integrated solution that operates in the background of those legacy systems.
What makes Lhotse different?
Henning explains how these legacy systems don’t cover tactical spend well, and are often cumbersome to use from a UX standpoint. I ask him what makes Lhoste different, and how it can meet the kind of requirements that today's customer is demanding.
He explains that Lhotse’s new approach hopes to supercharge procurement systems, working on two main axes:
One focusing on the operative procurement teams, the spot by teams, the tactical teams, making their life easier and more efficient, bringing efficiency levers to their daily life, in terms of execution;
And one focusing on the requester, the business users that are spread across the organisation. Henning says that business users never enjoy these big suites, because they’re made for experts, not occasional users.
Although we both think that these big suites do have upsides, and we shouldn’t beat them up too much, we both agree that UX makes them very intimidating for new users.
For tactical spend and tail spend, users need a system that's intuitive, because if they don't have that, it results in maverick spend.
Why do things this way, as opposed to just connecting catalogues?
I put forward a logical challenge to Henning: Why wouldn't you then just just connect a bunch of punch out catalogues with something like Ariba, or one of these big suites? Where is the gap between what Lhotse does and what and what a punch out catalogue running into one of these suites can offer?
He explains that the chief benefit is central coordination and easy searchability. Lhotse can harmonise across catalogues, giving an integration layer that combines the process of searching for something, no matter if it's a catalog item, or a free text request that will go out to suppliers to get quotes.
While common, repeatable spend might benefit from a catalogue approach, not all spend is of this kind. So Lhotse is also useful when it comes to non-repeatable spend - for example a marketing assistant buying conference meeting rooms. Unique spend like this is common, and no-one wants to use a static, unintuitive catalog for these sorts of purchases.
Examples - How Lhotse could help your organisation
What does the process look like for tactical and tail spend in a poorly managed organisation, and by contrast, what does the same process look like when using Lhotse?
He proposes an example where a company is using Ariba: They get a first quote, put it into the system as a free text request, and then put this to the procurement team to action. In this example, the procurement team is effectively doing a job a robot could do....
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