We're excited to announce our latest Compass research series paper: Evaluating the Capabilities of ERP Providers Compared to Independent Vendors: Know Your Size? Before Trying on the Suit. The paper, free to all registrants, provides a cursory scan of the relative capabilities of ERP providers in the e-sourcing sector compared to specialist vendors. It also provides recommendations for how to discern whether ERP vendors can provide the right mix of capabilities either replacing or augmenting existing providers (it's important to remember that a surprising number of the more advanced procurement organizations are using specialist e-sourcing tools alongside Ariba, SAP and Oracle).
At this stage of development, it's our operating belief that sourcing solutions from ERP vendors can do a commendable job – at least when configured properly, used to their fullest and deployed as part of an overall procurement transformation program – under a range of different circumstances and use cases. But for us, the fundamental question around these tools is whether or not the primary purpose will be to focus on driving better sourcing and purchasing outcomes or impacting the business in different ways beyond procurement.
The last thing a Global 2000 company needs is a procurement mid-life crisis over investment in the wrong sourcing tool. That said, how do you know what set of tools are the most appropriate based on your individual operating environment, current (and expected) sourcing skill sets and overall source-to-pay footprint? And what role should ERP and non-ERP sourcing toolsets play in this regard – even potentially alongside each other? These are questions that not enough procurement organizations ask themselves early enough in the evaluation and selection process, and this Compass paper aims to tackle them.
Based on longevity and organizational penetration levels inside typical Global 2000 firms, one would expect that among the individual solution markets within the source-to-pay spectrum that sourcing-focused technologies would have the highest adoption rate. Yet as you peel the onion, such a statement would be misleading. It is correct that many organizations have adopted sourcing solutions in some capacity. But most procurement organizations have only scratched adoption, compliance and the category management surface with their sourcing toolsets.
And for good reason! Many have not only adopted solutions that might not be ideally suited for their requirements. They have also put the sourcing cart before the horse and not looked enough at broader sourcing leadership, process, category expertise, business influence/relationships, knowledge management and related areas to get the most from a strategic sourcing program itself. Within this environment, one could point the finger at SAP, Ariba, and Oracle for being the most predatory vendors, using their reach and suite-driven sales approach to take advantage of procurement organizations that they know full well will never be able to truly use a new sourcing toolbox (without fundamental change first).
Yet this isn't quite fair. Yes, SAP, Ariba, and Oracle deserve their share of the blame, but so do best-of-breed vendors – many of whom are guilty not only of putting a sports car in kid's hands and turning off the traction control, but also providing them with a lot of options that they know they'll rarely or minimally take advantage of. This is what we sometimes describe at Spend Matters as the classic Porsche 911 syndrome. Take a middle-aged man who has always aspired to drive the rear-engine sports car and has previously made do with a minivan or estate car (wagon) and hand over the keys with minimal training while selling him every option in book.
This paper attempts to help users and prospective users of ERP e-sourcing technology avoid this situation in the first place. It provides a high-level overview of current ERP e-sourcing capability, including a quick comparison between Ariba and SAP solutions, excerpted from a Spend Matters PRO analysis. It also includes a scoring matrix to explore how ERP providers generally stack up to specialist counterparts.
If you're curious about understanding the relative merits of ERP e-sourcing tools in relation to specialist providers, we encourage you to download our latest Compass research paper: Evaluating the Capabilities of ERP Providers Compared to Independent Vendors: Know Your Size? Before Trying on the Suit.