New Research: Supplier Management — Recent Trending, Musings on SAP's Core Offering and More

Supplier management technologies have come far in recent years, buoyed by their early adoption to enable specific initiatives (e.g. supplier diversity, supplier on-boarding for eProcurement, supplier performance management). For broader sourcing, modern supplier management covers not only the data points needed to keep the accounts payable team happy when they onboard new suppliers -- it spans a broad range of areas such as commodities, capabilities, capacities, credit and other supply chain risk, corporate and regulatory compliance, geographical coverage, diversity, performance and more. This topic and others are explored in more detail in our latest Spend Matters Compass brief: Supplier Management -- Recent Trending, Musings on SAP's Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid.

In a recent poll of over 500 practitioners conducted by Spend Matters and ISM, roughly 40% of respondents suggested they were using some type of dedicated technology other than MS Excel, Office, Access and SharePoint to manage supplier relationship-type initiatives. Of these, the majority of respondents that answered in the affirmative suggested extensions of sourcing and other existing investments (e.g. spend analytics) into new areas were the current preferred means of managing supplier data and relationships.

Yet judging from the growth of supplier management vendors and service providers like Aravo, Achilles, and others -- as well as the early uptake of solutions from SAP and Oracle in the area -- an increasing percentage of companies are evaluating dedicated, purpose-built tools and solutions designed to drive supplier management initiatives including supply risk management, supplier performance management, CSR/compliance management, supplier diversity, P2P on-boarding, supplier development and many other related areas.

This Spend Matters Compass report explores recent trending in the market, including the core supplier management capabilities of SAP (we'll leave our specific observations of Oracle for an analysis in 2012). The second part of this analysis focuses on general deployment pitfalls to avoid regardless of which provider you've opted to go with -- ERP or otherwise.

Our summary of SAP's supplier management capabilities is largely positive. It is clear, in our analysis, that the potential for greatness is there in SAP's Wave 7 release -- the configurable executive dashboards, the many data points captured and tracked, etc. As background, SAP has deployed several iterations of its sourcing application over the years. At the time of evaluation, "Wave 5" (version 5) appears to be what is in actual use in the market place. According to SAP, the Wave 6 released was not broadly adopted because Wave 7 came out shortly afterward. Several clients have now implemented Wave 7, but in the short-term these clients have decided not to launch public 'walk-in' supplier registration portals, instead opting for private registration links. Moreover, Wave 8, which is now generally available, adds additional features as well, including greater flexibility in uploading scorecard definitions as well as enhanced granularity around tracking specific KPIs/metrics.

Aside from how SAP and Oracle have greatly enhanced their core supplier management capabilities in recent years, another trend we're seeing in the market is less-than stellar implementations. In other words, companies botch the very problems they're hoping to solve. During the second half of this Spend Matters Compass, we highlight some of the specific challenges and mistakes we see around the technical implementation of supplier management tools. Our observations suggest that companies would do well to invest more time in not just selecting the right vendor, but in making sure they tailor their deployments to fully leverage important functionality and capability that far too many users overlook -- that which is resident in most popular toolsets. Moreover, the money spent on hiring the right professional services teams (either from the vendor or a third-party) to help specify how best to take advantage of core capabilities resident in individual supplier management applications would be an investment that would pay dividends in most cases.

Whether an organization opts to deploy an SAP, Oracle, or best-of-breed supplier management toolset, our field research suggests that it is imperative to make sure that the right implementation team with experience in the real world of vendor management -- and its specific sub-disciplines including supplier diversity, supply risk management and supplier performance management -- is included at every stage of the deployment process. In particular, companies deploying ERP supplier management solutions would be well-advised to consider bringing in a third-party advisor or consulting firm with experience in supplier management to make sure that the vendor in question is adequately representing all the capabilities that their tool is capable of providing.

If you're an SAP customer considering supplier management technology solutions or are interested in the topic today -- or any of its sub-disciplines -- don't delay. Download our latest Spend Matters Compass brief: Supplier Management -- Recent Trending, Musings on SAP's Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid today.

Jason Busch

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