Core e-sourcing has taken a bit of a hiatus as a standalone technology buying priority for many procurement organizations of late. If anything, basic solutions have been bundled in with broader spend analytics, supplier management or even full-suite deals, and solutions designed to tackle specialized categories or advanced sourcing have created a market niche unto themselves. Granted, a handful of lower-cost solution providers have continued to plod the market with their wares. And some have enjoyed solid growth, albeit from a tiny base.
In short, it’s a highly fragmented market overall, and one in which incumbents and the “heir apparents” to the FreeMarkets/Procuri legacy are failing to pull ahead. Consider the case of MarketMaker4, which appeared to have the most traction at this time in 2015, as part of Xchanging, but has unfortunately been a bit lost in the shuffle of the broader business process outsourcing (BPO) sale, and no longer is sitting in the pole position for growth overall. It’s keeping up with others, but not pulling ahead or creating distance.
We'll have much more information on the e-sourcing outlook for 2016 at our Global Procurement Technology Summit in March, but to summarize:
- In 2016, the core e-sourcing market is shaping up to be more fragmented than ever before. Participants include everyone from basic suite providers with simple to strong core capabilities (and one suite vendor with advanced sourcing solutions as well), ERP providers, cheap independent vendors, specialized providers and a new wave of sourcing upstarts
- A couple of new upstarts (e.g., Scout) are doing some very cool things, albeit quietly and without marketing horsepower behind them yet. They are looking to do what Coupa did for e-procurement in terms of usability and adoption. Watch them closely and check them out
- Newer-generation source-to-pay suite vendors (e.g., GEP, Zycus, Coupa) have built integrated suites from the ground up in recent years and should not be overlooked for sourcing, although they have varying degrees of capability depending on provider
- The re-architecture of core sourcing platforms by a number of long-term providers (e.g., BravoSolution, SciQuest, Determine) is complete and the new solutions often cleverly combine supplier management, contract management, P2P, project management and other capabilities as an integrated extension of e-sourcing (note: specific modular capabilities beyond sourcing vary!)
- Some European firms are starting to come on strong in building a U.S. market presence — especially in complex sourcing, project enablement and manufacturing, including Ivalua, Pool4Tool, SynerTrade
- Other European firms (e.g., ScanMarket) are further ahead in winning share for general e-sourcing and building more than just a presence in North America
- Direct materials centric procurement vendors represent a class of solution unto themselves and should be looked at independent of the broader market
- A number of upstarts with lower-end solutions can be had at very reasonable cost (and can do the basic job)
- Advanced sourcing and sourcing optimization (e.g., Trade Extensions, Keelvar, SciQuest, BravoSolution, Determine) remains a market of its own with significant differentiation among vendors within it — separate out decisions for these solutions from core e-sourcing or suite-based selections
- Don’t forget ERP (and Ariba). We believe there is more (and new things) coming from this direction in 2016
In short, for procurement practitioners, perhaps it’s time to take a new look at the e-sourcing, bid portal and RFI/RFX market in 2016.
Curious to learn more about where e-sourcing is headed and what vendors to consider for your needs? Join us at the ISM/Spend Matters Global Procurement Technology Summit in March! I’ll be there with the rest of the Spend Matters research team to answer questions and point folks in the right direction.