SAP has taken a strategy similar to Ariba in product releases, at least when it comes to their sourcing product. To wit, they are on a more frequent release schedule (quarterly) than the installed product. However, in Q309, SAP will release version 6.0 of the E-Sourcing product in both On Demand and installed/on premise versions. This release will provide complete out of the box integration with SAP ERP including direct integration around purchase requisitioning, purchase orders, contracts and master data. It will also include a new user interface that I will be reporting back on in a future post.
One of the more interesting elements of the timing around this release is that SAP will also be providing exclusive capabilities to IBX around the same time frame that will give the Nordic provider new SAP sourcing functionality ahead of features that will ultimately be included in a general On Demand release in Q1 or Q2 2010. These 6-month exclusive capabilities will include advanced pricing and bid optimization, reverse dutch auctions, and a simplified way to download and upload offline questionnaires and supplier responses in Microsoft Excel.
There's no word yet on what the capabilities of the optimization product will look like, but I am expecting, at least in the initial release, targeted capabilities that allow for somewhat basic constraints (e.g., split of business) and rapid solve times. It will probably not be at the Emptoris level -- and certainly not at the CombineNet or Trade Extensions level -- but I'm guessing that it will be sufficient for many users, just like the new Oracle optimization enhancements.
Specific functionality aside, the more interesting question is why SAP made this deal. I'm guessing that SAP made the promise of these exclusive features to IBX in order to eventuall woo them away from the Emptoris and Portum solutions. After all, these capabilities were resident in the Emptoris product that IBX still uses -- for now. Regardless, these capabilities will give IBX a six month head-start on Hubwoo who will also be offering E-Sourcing 6.0 On Demand, albeit with a lesser feature set for the exclusivity period. Still, I highly doubt this will change many customer decisions, as IBX tends to primarily serve customers in Northern Europe while Hubwoo has its strongest penetration lower on the Continent as well as in the US.
IBX’s Andreas Bernhard told me that there was no specific migration deadline from Emptoris and Portum. In his words, “We continue to support customers on Portum and Emptoris and to work closely with our customers to provide the best procurement result.” He told me that their move to SAP E-Sourcing was based on a thorough analysis and that the “SAP eSourcing platform based on the Frictionless acquisition is a very strong product because it offers strong process support for the strategic sourcing processes, is user friendly and provides full integration to contract management and supplier management.”
In addition, Andreas noted that “The corporate sustainability of SAP and long term roadmap is very strong and a great strategic fit to the IBX customer base” and that “customers will benefit from very good integration capabilities between internal ERP systems and IBX SAP based eSourcing platform.” Overall, this will enable IBX to provide “a strong integration story based on the SAP platform from sourcing and contract management over to operational procurement.” IBX will complement the SAP offering with, in their words, “purchasing expertise, on-demand delivery expertise, supplier network and own development of innovative modules such as service procurement, supplier management and supplier portals including invoice matching.”
All in all, IBX makes a strong case for SAP’s forthcoming E-Sourcing release. But whether what appears to be their ultimate migration away from Emptoris is an isolated case or the first of other takeaways remains to be seen. Stay tuned for the second part of this post where I'll discuss future plans for SAP E-Sourcing and my thoughts on how it stacks up in the market today -- and how it will stack up tomorrow.