When Are ERP E-Sourcing Tools the Best Fit? (Part 1)

The following post is based on the Spend Matters Compass Series paper 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).

It's our operating belief that sourcing solutions from ERP vendors (i.e., SAP, Oracle, and Ariba) 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 that should come before all others 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. Our e-sourcing adoption insight continuum below attempts to address this question:

Certain types of solutions are obviously best suited to specific organizational types based on overall procurement needs and ambitions. For example, it's our working hypothesis that certain organizations are likely a good fit for solutions from SAP providers. These organizations will typically place a greater emphasis, in the case of SAP, on solution suite integration (e.g., supplier management, contract management) over other areas (advanced bidding structure/formats, bid gathering, scenario analysis, etc.). When technical integration is a priority, SAP sourcing solutions tend to thrive.

As we have noted previously in our analysis, for SAP-powered organizations pursuing strategic sourcing, Spend Matters research suggests that a handful of key new integration requirements are rapidly gathering steam. These include the need for integration within the context of an RFX, including direct and indirect materials integration between back-end ERP/ECC systems plus eProcurement systems such as SAP SRM. Certain early adopter organizations already allow users to "punch out" of direct and indirect buying processes to embark on strategic sourcing events in cases where a more robust and/or competitive bidding process can yield better results than the proverbial three-bids-in-a-box.

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).

Jason Busch

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