The middle market remains without a definitive eProcurement solution. Ariba, despite aggressive price points and leading overall market-share in the broader eProcurement market by our analysis, has failed to distance itself from Coupa and others within the middle market. In this environment, SAP has opted to toss its hat into the middle market eProcurement fray as well. According to their most recent announcement and trade press coverage, "SAP has introduced a new supplier relationship management (SRM) functionality for Business All-in-One offerings to help enable midsize companies to optimize procurement and sourcing processes, reduce costs and automate supplier collaboration ... The SRM functionality based on SRM 7.0, supports processes for operational procurement and strategic sourcing best practices." But how will this product stack up -- and what will the overall adoption be?
The middle market lacks a well integrated procurement and ERP capability today, encompassing broader spend management, starting with upfront spend analysis and sourcing and progressing into downstream eProcurement, invoice automation and contract management. This offering will do little to address this integrated middle market procurement void, as SAP's solution only brings capabilities in a limited area. Still, it should offer just as broad -- or broader -- capabilities than other middle market packages from JD Edwards (Oracle), Microsoft, Sage, Workday and others. Yet I'm not convinced the middle market wants or cares about an integrated eProcurement capability alongside ERP -- whether it's a hosted (SaaS/Cloud) platform or not. Take the case of Ariba, as an example.
Ariba has struggled in the middle market not for lack of solution, but I'd argue it's because it hasn't been a general corporate focus. Despite new initiatives year-in and year-out, it seems Ariba has failed to build a dominant beachhead relative to others. Moreover, Ariba does not win any usability awards alongside SMB rivals like Coupa (which, while missing a number of advanced -- yet important -- invoice management, network and related capabilities, is a heck of a lot friendlier and easier to use for companies that just want to walk up to a system with minimal configuration and start automating their requisitioning processes).
Personally, I think the dominant middle market eProcurement play will ultimately combine a tightly integrated invoicing and working capital play. And no one is there yet, although if Ariba re-skinned its applications and added some additional capabilities, it would be closest. T&E makes quite a bit of sense here in this market segment as well, as Coupa already knows and offers. As does integrated travel management and related "personal services" management capabilities from Rearden that can greatly reduce the need for administrative support.
I look forward to digging into the SAP Business One SRM solution in the coming months and quarters. But I suspect that unless SAP builds out additional capability around it quickly, that they could find themselves in a similar state to what they did with previous versions of SRM in enterprise accounts -- in other words, facing a whole lot of shelf-ware in the "un"-installed base (i.e., sold but unused or underused licenses/seats). In the meantime, if you're curious to learn more about how SRM 7.0 stacks up in the market (both strengths and weaknesses) please check out our Spend Matters Perspective on the subject.