Integration: The New, New Thing

If I had to bet on one underlying area of Spend Management to heat up in 2007, I'd have to say that all things "integration" will begin to take on increasing importance. Now, don't interpret this as my betting on the integration, BI , or ERP players to step up and take a more strategic role in the overall market. No, my belief is that the time is right for integration to heat up as an enabler to a new wave of more strategic Spend Management practices. The technology behind such activity will merely be an a requisite to new types of processes (defined by the business, not IT).

For example, with real-time integration into their back-end systems, manufacturers will be able to pull performance and quality information to gain insight into supplier performance and risk as a continuous process, rather than a periodic effort. The advantages of this are huge, allowing companies to sense and respond to subtle changes in activity as gleamed through subtle changes in performance and quality measurements as they happen rather than weeks or months after the fact. Consider how a company with a 60/20/20 split of business strategy could then immediately tweak allocation to its other suppliers to hedge its bets before it has time to discover the root cause of the underlying performance or quality issues showing up in its Spend Management cockpit. Maybe the issue is innocuous -- or even the result of transportation-related issues -- or perhaps it is an early warning sign of a far deeper problems with the supplier itself.

The key to dealing with any type of issue like this is lead time, and only through advances in integration will companies be able to gain the extra time required to correct their course of action before the competition does. More important, this performance-related example is only one case where better systems and process integration will transform Spend Management in the future. Consider how a new level of integration will also lead to better sourcing strategies in the first place, by offering a real-time view into current -- and even future -- requirements by bridging internal systems and functions. If a procurement organization could see, for example, the requirements of an upcoming assembly or bill of material when it is in the design phase, they could begin to tap their existing supplier relationships to understand which partners are best suited to bid and collaborate on the complex items before it is tossed over the wall after costs are locked in.

Jason Busch

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