New Research: Criteria for Selecting an E-Sourcing Provider

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Sometimes it takes a lot of creativity – and wheel spinning – to go against the Gartner grain. What I’m referring to is the iconic and ever-quoted Gartner “2 by 2” Magic Quadrant approach to rating and ranking just about any technology. In the coming weeks and months, Spend Matters PRO members will have a chance to see our take on an update on a decades-old approach to racking and stacking the e-sourcing market – which will be like comparing apples and oranges with Gartner’s general approach to comparative analysis.

We won’t spoil the end products, but in the meantime we will share some of our methodology and sausage making with readers in an effort to create what we believe will be a more pragmatic, practitioner-centric approach to comparative analysis than what’s been done in the past. Our recently published Compass paper, E-Sourcing: Criteria for Selecting a Provider  (free download with registration), recently “open-sourced” a number of excerpts from PRO briefs investigating the e-sourcing market, including how to go about creating at shortlist that is right for a specific set of users versus one size fits all.

This research is based on select excerpts from Spend Matters Plus/PRO subscription content. Original titles appear below:

Having taken a close look at over fifty sourcing and related tools in recent quarters – working with dozens of practitioners on shortlist and selection processes – it is our belief that a one-size-fits-all approach for ranking is not terribly useful in the real world of sourcing technology adoption and use. This is not a knock on traditional analyst firms; it is classic Taylorism (specialization of labor).

Taylorism alone creates brittle supply chains, and procurement organizations need to be wary of hierarchical category management. While cross-functional in nature, hierarchies do not stay fixed and can lose sight of disruptive supply market forces that transcend traditional supply market category boundaries.

So, like adopting Lean/Six Sigma in the supply chain, many companies will try to adopt common tools to create some synergy across the silos. This is a good start but only goes so far. Going back to the technology market example, Gartner tries to use tools such as “hype cycles” (the procurement ones are terrible in our opinion) and “magic quadrants” to provide commonality. Such crude tools do not get to the “mass customization” that is needed to analyze these complex service supply markets and apply them to different types of practitioner firms.

One Size Does NOT Fit All

Procurement organizations are built to reflect the nature of their broader enterprise missions. World-class athletes come in all shapes and sizes. Similarly, developing provider ratings in silos based on a “one-size-fits-all” procurement organization isn't exactly a recipe for success. I (Pierre) had this same problem at The Hackett Group, where a “World Class” designation was given to top quartile performers for weighted requirements/KPIs of a ‘typical’ synthetic procurement organization. The same goes with market coverage: one size of market visual does not fit all.

In designing our Spend Matters comparative coverage of the technology and solutions market, we wanted to properly reflect the need to see technology and solutions across a broader set 
of criteria, considering solutions in the context of how they will actually be used (e.g., sourcing tools applied to a direct materials manufacturing environment; sourcing tools for sourcing large, complex categories like logistics or MRO). Beyond this, organizations will still often have a need for further customization and tailoring of potential short lists to address their own unique complexities and requirements.

To read more about our approach to overcoming this evaluation and selection challenges –essentially creating an analysis for “markets within markets” to get more granular and to the level we believe that companies need to be to create the right shortlist of possible solutions for them – you can download E-Sourcing: Criteria for Selecting a Provider from the Spend Matters free research library today.

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