Ten Vexing Issues Regarding Supplier Networks and Platforms

optical illusion

I recently had to give a presentation to a client on the future of supplier networks and platforms. They were keen to understand where these things were going. Part of the discussion centered on clearing through all the SAP/Ariba uncertainty around fee structures and incremental capabilities. Other topical diversions took us down how to incorporate a network and platform strategy in their broader indirect (and potential direct and services) procurement capabilities – especially as it pertains to “surrounding” and getting more from current eProcurement investments.

This latter topic is one that we seem to keep coming back to after covering it in various papers and webinars. Moreover, the broader question of platforms, networks, applications and “apps” is one we’re covering extensively at the moment in our subscription content on Spend Matters PLUS and PRO (see recommended research articles at the end of this post). While we’ll leave our detailed analysis and definition of terms for our subscription content, we couldn’t just leave our casual readers without some context to explore this area for themselves.

So we present today a list of ten questions that continue to challenge us as we explore the topics of networks and platforms. If currently using supplier connectivity tools, networks and platforms to enable information exchange and e-invoicing from providers (Ariba, Hubwoo, IBX, Perfect, Basware, Tradeshift, OB10, GXS, IBM/Sterling, etc.), all educated buyers in the market owe it to themselves to jot down honest answers to these questions.

We’ll do the same in the coming weeks, and we’ll be comparing notes with our subscribers in our new forum on Spend Matters PLUS/PRO. But in the meantime, here’s the list to start:

  1. What is a supplier / business network really? Aren’t we just dealing with XML-updated connectivity standards that have existed for many years? Should we really get that excited over this on a sustainable basis?
  2. What is the fairest way to pay for these connectivity services? Is it right to charge suppliers, especially on a dollar-volume basis? And if we do, what is the true cost to us in doing so?
  3. Are supplier-paid fees simply a means of avoiding the need to get approval for software and programs that we would not otherwise be able to do on our own within budget and spending constraints? Put another way, is using a network really just a form of “maverick P2P spending”?
  4. Should we tackle global e-invoicing requirements (e.g., Brazil, Mexico, EU, etc.) separately from a broader network and supplier connectivity strategy – or on an integrated basis?
  5. When will the EDI and B2Bi players begin to push more focused and competitive offerings for indirect and services procurement (as opposed to direct spend alone) that focus on the long-tail of suppliers? And if/when IBM and GXS get serious about this market, will they deal a death blow to Ariba/SAP and other players? In the meantime, if we’re already working closely with a larger EDI provider, should we engage them in the indirect area?
  6. What is the actual window for competitors to take advantage of Ariba/SAP’s outlier pricing strategy, limited customer communications and superficially articulated network roadmap before the ERP giant gets these elements right, as well as releases what will be a potentially transformative next generation platform sometime between 2015-2016 (our estimate)?
  7. If we work with an Oracle company for eProcurement or invoicing, what can they offer us from a network and supplier enablement perspective? What is Oracle’s vision?
  8. Should we find the right Trojan horse (e.g., early payables discounting) for supplier connectivity and work with someone like a Taulia or Oxygen Finance, rather than viewing platform strategies as a primary means to enable eProcurement and e-invoicing on-boarding and connectivity?
  9. What role can networks and platforms play if we work with a smaller ERP provider such as NetSuite, Workday, Microsoft or Infor? Moreover, are these providers’ offerings outside of direct procurement worth consideration today? And how do their partner offerings play into the equation?
  10. Do we want to be an early adopter for externalized platforms such as Tradeshift and Nipendo, or do we want to go with a more established connectivity approach? Incidentally, stay tuned for introductory coverage of Nipendo this week on Spend Matters. Nipendo is a platform provider and e-invoicing competitor to Ariba/SAP, Tradeshift, OB10, Basware and others. What they have really caught our eye. And they just entered the North American market with the types of references and real-life use cases that are worth serious attention.

See also:

Extending Procurement Information Architecture to Provider Ecosystems (Part 1)

Extending Procurement Information Architecture to Provider Ecosystems (Part 2)

Extending Procurement Information Architecture to Provider Ecosystems (Part 3)

Trading “Apps” for Applications: May the Best Supply Chain Platform Win (Part 1)

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

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