Trading “Apps” for Applications: May the Best Supply Chain Platform Win (Part 2)

So far, I’ve only been talking about this concept in a single-tier fashion. Now imagine the network or platform serving not just as the glue that allows companies to plug and play different best-of-breed applications but also as applications that sync across multiple tiers of a supply chain. Such a vision is not too radical. In fact, it is beginning to happen right now, and it will transform the basis by which we buy applications, as well as the value they create, based on the “data exhaust” that comes out of them.

As my colleague Pierre Mitchell notes in a recent Spend Matters piece, Procurement Platforms, Suites, and Architecture Oh My!, the concept of a platform (and thinking through true procurement systems architecture in general) is “about creating an environment where different solutions approaches, application types, vendor types, and yes, named vendors can be interchanged more easily within a more coherent framework … It’s a thorny problem. For example, take scorecards/dashboards, whether for procurement or suppliers. It’s highly dependent on analytics, but also involves the workflow regarding picking KPIs, setting targets, linking dynamically to master data, etc.”

Yet a platform approach can help tackle this challenge head-on. From truly predictive risk warnings (think SAP Supplier InfoNet) to benchmarking to supplier recommendations to shared supply network design and capacity planning, the platform on which all of these apps plug into will become amazingly valuable in ways we can’t even fully imagine today. When this happens, people will no longer talk about their “back-end” or “core procurement” technology such as SAP or Oracle. They will talk about their platform first and foremost.

Buying decisions for applications will be based on which tools interoperate with which platforms. This will also allow companies to select more carefully what they need and want out of the applications. In the long term, this benefits upstarts as much as the largest providers. For example, procurement and IT organizations making decisions for eProcurement tools could more easily separate out search, content and catalog management from the P2P equation with cloud providers, allowing true best-of-breed capabilities to thrive in each area, with independent selection decisions not only possible but encouraged.

How fast will we get here? Likely more quickly than you might think. This is truly the vision SAP had when it bought Ariba, and it's what the best minds in Waldorf and Sunnyvale are at work on in building a next generation network model. But SAP will have significant competition from others as well. We see upstarts such as Tradeshift and Nipendo having a chance to topple the apple cart here. And if GXS and IBM ever get their visionary act together, they too could spoil the network parade for SAP. We’re also believers that folks like SalesForce (arguably is furthest ahead in this vision), Amazon, Google, Microsoft and even Oracle could upset the status quo. Dark horses can still apply.

Yet at this stage, the future network/platform “ring-tone” for apps is SAP’s game to lose, at least in the B2B space. They’re in the pole position to do something with the vision. The question is what it will be and when they will execute on it with a broad commercial offering. And when, of course, third party enterprise software/SaaS companies will begin to market their capabilities through these platforms rather than selling on their own stack/infrastructure, and through existing channels, sales approaches and market models.

How should procurement and supply chain leaders think about systems architecture? In the coming days and weeks, we will be providing more detailed analyses and outlooks on business networks and platforms as they related to Procurement applications and services, but for now, Spend Matters PRO Subscribers can also read:

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