The major difference in sourcing decisions between Ariba and SAP relative to best-of-breed vendors will nearly always come down to enabling the following elements: A more fluid RFI/RFP process and flexible data collection, the ability to scale to tens of thousands of line items, supporting supplier creativity/alternative specifications/alternative proposals, capability to fully explore – not just weight – all price and non-price factors in a tender, creation and application of constraints (e.g., split of business) and the ability to run scenarios based on constraints and present a menu of outcomes for stakeholders to consider. And let's not forget how usability also can play a key role in selection and adoption (and increasingly, supplier search, discovery, and management).
Why do these elements matter? For companies that need to explore different commodity scenarios (e.g., who buys, from whom, how much, when, from what geographies/plants, on what terms?), discover unforeseen potential advantages/disadvantages of specific suppliers, understand the cost of tradeoffs (e.g., split of business to reduce the chance of a supply disruption in specific geographies) and truly drive a more collaborative sourcing process, a specialty solution may be a better fit.
- Ariba and SAP customers should not confuse a network vision of supplier search with the need for specific functionality
- Both Ariba and SAP can provide 60-70% of features used in sourcing solutions and may be sufficient for basic strategic sourcing use cases
- Other vendors remain in a league of their own and we encourage Ariba and SAP customers?and prospects to explore whether or not advanced sourcing/optimization capability is important based on their internal skill sets, spend profiles, and willingness to embrace alternative sourcing and negotiation approaches; if so, alternatives should be given top priority until SAP and Ariba catch up in advanced sourcing areas
- We believe SAP/Ariba will likely build out additional capability in this area in the coming 12 months or pursue a tuck-in acquisition to enable more advanced sourcing capability ?Given this final observation in particular, we strongly recommend that any companies considering SAP or Ariba Sourcing to understand the contractual obligations to support the selected application on a hosted/SaaS basis (the most frequent deployment approach) over a typical three-year contract length.
Please click here to download our full analysis: Evaluating the Capabilities of ERP Providers Compared to Independent Vendors – Know Your Size Before Trying on the Suit (available for free in the Spend Matters Research library).