As long-time Spend Matters readers know, I come from a sourcing background. Even though I spend the majority of my time today writing about purchase-to-pay, services procurement and risk management, my procurement heart is still closely linked to the world of sourcing – RFIs, RFPs, category management, commodity management, and creative and mutually-beneficial ways of working with suppliers. For this reason – at least in part – I’ve looked upon the commoditization of basic sourcing capability over the years with both a smile and a frown. There have been countless vendors that have taken the sourcing basics and woven them into either a suite or stand-alone toolset.
In a series of posts considering the commoditization of the basics – and why this can seem like a good or bad thing depending on perspective – I hope to share both sides of the argument concerning the bifurcation of the e-sourcing, commodity management, and related technology markets into truly simplistic and more highly advanced tools (and not much in between), with both groups of providers supporting efforts with varying success in helping procurement organizations source and manage risk more effectively.
Today, I’ll start with accentuating the positive of lower-end tools (I won’t cover who these providers in this post – see our Spend Matters Plus/PRO research, linked at the end of this post, for detailed shortlists and market analysis). Lower-end tools tend to cover the sourcing basics at highly attractive price points (or not, in the case of the ERPs). The “basics” include:
- Simple event creation (and sometimes export/import functionality)
- Simple knowledge repositories
- Simple scoring of providers and qualitative/quantitative assessments of vendors and bid results
These tools often lack more advanced capabilities, including tighter integration into third-party tools; supplier collaboration processes and overall project management; category management and comprehensive knowledge repositories; advanced workflow support and automation; access restrictions and audits beyond the basics; and advanced data collection and bid analysis.
While basic tools like these capabilities, these can still be useful under certain scenarios:
- Enabling “three bids in a box” type of capability in an automated manner
- Running basic auctions and competitions
- Capturing and documenting the RFI creation, distribution, and supplier bidding process
- Getting tools in the hands of front-line, non-procurement users (i.e., those who would not otherwise use sourcing tools)
- Enabling the “punch-out” to the tools from P2P suites for enabling competition rather than simply buying from catalogs and vendor storefronts
These benefits are all commendable. But lower-end sourcing tools are often used for the wrong reasons. Next up in this series I’ll consider some of the dangers of using basic tools under the wrong scenarios and why many companies “don’t know what they don’t know” – a danger place to be – when going through selection processes for individual tools of broader sourcing and/or source-to-pay suites.