When are ERP E-Sourcing Tools the Best Fit (Part 2)
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). Click here for Part 1.
E-Sourcing: Exploring SAP and ERP Suite Integration Organizations are also aggressively starting to close the PO loop, linking sourcing and contracting into back-end systems for transactional buying through the integration of outline agreements. Either type of integration is possible with off-the-shelf capabilities without significant customization. Going forward, it's likely that SAP users will demand ever tighter linkages between sourcing and other capabilities, making use cases such as the linkage between sourcing tools and general supplier and item-level data management more common.
Such a model will create a singular view of the sourcing activity by leveraging a common record system including suppliers, payment terms, item specifics, groups/division/organization, codes (company, category, materials) and more. At the same time, Spend Matters is beginning to see advanced sourcing integration approaches drive better business reporting, tracking and forecasting across vendor and buyer activities, item and commodity event results, etc.
It's critical to note that all these cases of sourcing integration use make the procurement user (e.g., commodity manager, category manager, sourcing director, category analyst, VP of procurement) the front and center beneficiary as opposed to broader business stakeholders (e.g., operations, manufacturing, line of business, IT).
E-Sourcing: The SAP/Ariba Question Earlier this year, the Spend Matters team interviewed an SAP user who had migrated off an Ariba Sourcing deployment prior to the acquisition (we know: irony of sourcing ironies). For this SAP client, the Holy Grail of sourcing was the ability to push information into and out of their SAP systems directly into a strategic sourcing environment. Across categories ranging from chemicals to global relocation to hotels, this company saw faster event creation, captured savings across greater spend areas, implemented savings faster and improved overall reporting.
One of the primary lessons learned in the transition from Ariba to SAP Sourcing was the importance of considering all integration points into different SAP systems and versions to ensure that data would flow directly into the hands of those who need it during the sourcing process. Moreover, the transition also identified the importance of providing the right set of information and controls to those who must buy off contracts and terms negotiated during a previous strategic sourcing process. The company also suggests the importance of setting and managing deployments to milestone goals and performance-- in their view, a critical recipe for success.
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).