VMS and E-Procurement: Bridging the Indirect and Services Procurement Gap (Part 1) [PRO]

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For the last few decades, technology applications have developed and taken root in both services procurement and non-services procurement (or “spend management” if you prefer). We can generally segment these applications into two areas: vendor management systems (VMS) and e-procurement solutions. Somewhat remarkably, it appears that these two fundamental categories of spend, which are increasingly converging (especially with the digital disruptions happening right now), have remained in separate silos as far as packaged technology applications are concerned. In fact, there have been separate solution provider companies in each silo, with basically no overlap at all. Of course, you might argue that SAP’s assemblage of SAP ERP, Ariba, Fieldglass, SuccessFactors and Concur make for an end-to-end “solution” in terms of functionality checkboxes, but obviously it’s not a single integrated application suite to manage the end-to-end services spectrum. This is basically the “myth of the integrated ERP procurement solution” argument we’ve made before, but applied to services spend. In this multi-part Spend Matters PRO brief, we explore the following questions: (1) What are the differences between VMS and e-procurement solutions? (2)What might we expect going forward with respect to (a) solution convergence and (b) solution provider consolidations? and (3) If you have both of these application types, what strategies should you consider to leverage your existing investments but also take advantage of this convergence?

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