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Marcopolis presents the Saudi Arabia Report focused on the investments, doing business, economy and other topics featuring interviews with key executives. The sectors under review in this issue are industry, real-estate, ICT, investments, banking sector, telecom sector and many more.
InterviewsMarch 04, 2024
Driving Innovation in Procurement: A Conversation with Iyad Aldalooj of Penny Software
Iyad Aldalooj, CEO of Penny Procurement and Sourcing Software and Solutions
- Written by Sandra Francisco
- Published: March 04, 2024
Interview with Iyad Aldalooj, CEO of Penny Procurement and Sourcing Software and Solutions
What Penny Procurement and Sourcing Software and Solutions offer?
Penny Software is an enterprise application that focuses on procurement. What we do is we come in to digitize, and to a great degree, automate the procurement activities and processes for corporates or companies in the mid-market and upper market. It helps maximize the value of their procurement and savings to ensure compliance and governance. We have two main products. Our first product is a source to pay product which is a fully fledged, complete procurement software that helps on the upstream and downstream sides of procurement. So, on the sourcing side all the way from purchase requisition to RPs (purchase orders) and RFQs (request for quote) and a procured pay, which is a purchase requisition, and payment along with contract management, vendor management, catalog management and approval. Our second product is a B2B e-commerce platform. So, think about Shopify or e-commerce software like Magento. B2B e-commerce is totally different to B2C because its core is procurement. We have an e-commerce platform at the front end but at the back end there is procurement. We help B2B e-commerce manage relationships with their customers and suppliers. It is heavily RFQ and RP based and hence it is the core of the procurement platform. We are serving big brands around the world and one example is Carrier Air Conditioning here in the region. In France we have Voltalia. A case study that we recently published is a conglomerate in Bahrain called Ycan. They have companies all over the world and one of their companies on the logistics side applied to use Penny to manage the high volume of RFQs and the result of that was an 18% cost reduction. So, it maximized profitability for them simply by digitizing the core of their procurements.
Can you explain more about B2B e-commerce?
The B2B e-commerce platform is a good fit for companies like group purchasing organizations (GPOs). These are the companies that do procurement as a service. They have their clients on one side and their suppliers on the other. Typically, their clients would be large enterprises that want to outsource some of their procurement activities and these GPOs come in and they use the platform, a white label platform, to fully automate this whole experience.
What are your competitive advantages over other companies that offer similar services?
Penny is the only company on the global market that provides a source to pay product for mid and upper enterprises that is highly customizable, highly configurable, quick to implement and easy to use. What we found is that one of the major challenges in digital transformation and procurement is failure of adoption by the end users. There are two types of end users if you are adopting procurement software. You have your team, on which you may or may not be able to enforce a system that is not very user friendly, but it is very difficult to enforce a system on your suppliers. Penny is providing a quick to implement, user-friendly platform that helps maximize the success of your digital transformation and procurement.
Is your software product easier to use than others on the market?
Typically, with enterprises to successfully implement procurement software you are very likely to work with a third-party consulting firm to help you implement the software and help you in the activation and adoption of the software. On the contrary, Penny can be up and running in a matter of three to four months from signing the PO to successful activation. Also on the supplier side, you do not have to train any supplier to use the system. The system is self-explanatory. If you know how to use Uber, you know how to use Penny. Today we have thousands of users, thousands of suppliers using Penny on a daily basis around the world, and we have not had to train a single one of them. It is all self-onboarding. You can access it from your computer, from your tablet and from your mobile phone. Our data shows that about 12% of our users use a mobile phone and that is on the supplier side. On the buyer’s side that is around 5%.
What is your share of the global market?
We are new players in this space, and we do not have a significant share of this market, but we are confident that by providing a competitive product we will be able to capture a major market share and be the leading product in procurement software globally.
Is it Saudi technology?
Penny Software is fully built in-house. We are a Saudi company, but our team comes from all over the world. We have offices in Bahrain and in India, but the major office is here in Saudi Arabia.
What is your strategy for expansion?
Our focus in the first three years has been on the local Saudi market and we expanded further into the GCC (Gulf Cooperation Council) in terms of outbound. We are serving customers from different parts of the world, but those customers came in organically. We decided strategically this year to continue focusing on the GCC market and we will be expanding to the global market proactively next year. We are going to be setting up an office in London to focus on the UK and EU markets next year.
Can you give details of a success story in the first few years since your business started?
The thing that we are mostly proud of is the customer success that we have created at Penny. While I am not at liberty to name them, one case that I can think of is a global brand that we are working on. We studied before and after implementing the software the turnaround time from submitting a purchase requisition all the way to receiving the final offer. We dropped that from 11 days to less than two days. And that is by digitizing the sourcing side of their procurement with Penny Software.
What is your vision for Penny Software in the short to medium term?
The first thing that comes to my mind is our vision statement which is to build a world class global software brand that inspires. What we mean by that is we want to have a global software brand to expand in our region, our market and globally as well. So, in the next three years we see ourselves as being one of the leading brands in this industry.
What are your current projects?
There is a secret, though not very secret, project that we are working on that is our AI product. We have already launched it in a Beta version that we are testing with a few customers, and they are quite enthusiastic about it. We are officially going to launch it later this year and it is going to be revolutionary in this space. It is going to take the whole procurement digitization that we know today to a whole new level. It is going to be a standalone AI product. We will be launching it initially on Penny, but you can implement it and you can have it as an add-on to other procurement services. It does the procurement and the sourcing sides for you. If your team submitted the purchase requisition it can analyze the product or services in the requisition and it suggests vendors from your vendor list or vendors outside of your vendor list. Not only this, it creates the whole RFQ for you. It fully gathers, compares and analyzes the quotations and the proposal it receives, and it can negotiate for you. Also, you have a language model there, a generative AI that you can chat with, and it can create reports and analysis based on the historical data that you have from the procurement activities in your organization. This will be out in the second half of the year. One thing that we are introducing also this year is professional services in procurement. So, we are not only providing the platform and the software for procurement, but we are also introducing professional services for procurement. Our customers can use our professional services to outsource some of their procurement activities mostly on the tail spend. The tail spend is usually the non-essential expenses, not the core side of procurement. We call it the Penny community and through it you can have access to thousands of suppliers, and you can negotiate with those suppliers. And through the Penny community there are services as well that help you consolidate that experience in terms of payment and logistics so you are dealing with one supplier that would go on your behalf and do the sourcing and procurement activities for you. And that is a professional service that we provide at Penny as part of the Penny community.
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