LogicSource vs. Traditional Consulting: How They Built a New Category in Enterprise Procurement

The traditional consulting model for procurement was broken, but nobody seemed to notice. In a recent episode of Category Visionaries, LogicSource founder David Pennino revealed how identifying this gap led to creating an entirely new category in enterprise services.

“Having been one, consultants have two fatal flaws as it pertains to buying things. One, they don’t buy anything, they don’t bring leverage, and two, they don’t do anything. So they tend to sell really expensive PowerPoint,” David explains. This insight became the foundation for a new approach to enterprise procurement.

The problem was deeper than most realized. “It is stunning to me how many corporations, I’m talking 10-20 billion publicly traded don’t know what they buy, who they buy it from, who buys it, why they buy it, how much they pay for it, let alone is it contracted,” David notes.

Rather than following the traditional consulting-to-services evolution, LogicSource built a different model from scratch. “I’ve never found a retained professional services business, tech enabled that started from scratch. I’ve never found…guys like Bob Howe and Denny Welsh started IBM global services from within. I’ve not found another professional services firm like this that truly started from scratch.”

The company’s approach challenged industry norms in two key ways. First, they focused on execution over recommendation. “The number one finding is companies are underfunded in procurement, so who’s going to go do all the great work that consultant recommended?” David points out. Their solution? “Building a utility like we have that actually executes has been a real differentiator.”

Second, they created a hybrid model that combined services with technology. While owning their software platform OneMarket since 2009, they focused on making it work for their outsourcing clients before commercializing it. This patient approach allowed them to build technology that addressed real practitioner needs.

“We’ve built our technology for procurement practitioners, by procurement practitioners. So it just tends to work a bit better than the fancy stuff developed by kids wearing flip flops that have never been in procurement or operations a day in their life,” David observes.

This differentiation proved particularly valuable during market disruptions. “The last few years have been fascinating, and everybody needs help. So really what we’re finding, no matter how hard we try, we’re always grounded in profit improvement.”

The approach has led to consistent growth, with the services business growing 40-60% annually and their software business “growing a couple of hundred percent a year.” More importantly, they’ve maintained long-term relationships with their first customers from 2010, including Michael’s Stores and GSK.

For B2B founders looking to create new categories, LogicSource’s journey offers valuable lessons. First, deep industry experience can reveal fundamental flaws in existing models that others miss. Second, sometimes the best way to disrupt an industry isn’t through pure technology, but through a hybrid approach that combines technology with execution.

As David puts it, “About 20% of revenue, whether you’re a retail bank, a high end fashion brand, a publisher, or a hospital system, about 20% of revenue is the stuff that we buy.” By focusing on this overlooked aspect of enterprise operations and building a new model to address it, LogicSource didn’t just enter a market – they created one.

The company is now expanding into healthcare, where their execution-focused model could have significant impact. “They can’t raise price the way everybody else can, and the only way they can cost is without a firm like us is staff, which means your services, means your oncology department, means your orthopedic department.”

For founders looking to disrupt established industries, the message is clear: sometimes the biggest opportunities lie not in building better versions of existing solutions, but in questioning whether those solutions were right to begin with.