Rethinking Sourcing Suites and Their Sub Components — Gartner’s 2017 Magic Quadrant

Gartner recently came out with their 2017 Magic Quadrant for Strategic Sourcing Application Suite review. You can download free copies of it (see links courtesy of BravoSolution and Jaggaer). There was material movement from this year’s quadrant compared to the previous one that was published two years ago. Here’s our commentary:

  • BravoSolution and Zycus maintain a strong position. Bravo “wins.”
  • Ivalua makes a solid showing proving that French engineers can actually make something of substance.
  • Scanmarket ranks in the top three on at least one “axis.”
  • Pool4Tool makes the cut as the only direct materials focused vendor.
  • SynerTrade, which is growing by leaps and bounds in the SaaS area for its relative size (not small), especially in Europe, does fine.
  • SciQuest (now Jaggaer) hunted its way to a respectable spot. Now there’s no question they move like Jagger. And Questie, may he rest in peace, would have a smile on his beaker.
  • SAP Ariba and Determine fell from previous spots in 2015.
  • GEP shows up (like the above two providers), probably not as high as they’d want.
  • IBM/Emptoris still hangs onto a somewhat respectable position (that one is a mystery to us, as we rarely see them in new deals).
  • Scout RFP, probably the fastest growing vendor in the strategic sourcing technology sub-segment by customer count, is not on the chart. And Trade Extensions, the “world’s favourite sourcing optimization” vendor they should trademark that is not on the list either.
  • Coupa is "on the map" for the first time, as they built out their “upstream” suite capabilities since the last quadrant. Procurement organizations that select Coupa in these new areas, given Coupa’s core e-procurement and invoice-to-pay focus, will do so because they want analytics, sourcing, contract management and supplier management integrated with a broader suite (vs. buying them on a stand alone basis). 
  • Spain and Portugal may be dragging down the EU, but Vortal and Gatewit (we’ve heard a Brit say the proper pronunciation for the vendor is “gay tweet”) show up too. Unfortunately for both, they’re also not in the most advantageous position.

Does it matter? Yes. But is it useful for today’s selection processes?

Without question, Gartner has some of the best minds in the technology research sector (we have a ton of respect for Debbie and Magnus and the rest of the Gartner team covering procurement).

But given the pace of technology providers’ innovation, our perspective is that the notion of publishing a report every two years is not terribly useful outside of the point-in-time snapshot which may in fact be six months old by the time a report is published that a comparative analysis provides. For example, Gartner's Sourcing MQ states that Coupa was evaluated on Release 15. They just went live with 17 in January (perhaps most important, Coupa's acquisition of Spend360, which happened over a month ago, was also not considered in the evaluation). We also know BravoSolution's capabilities (Bravo scored first) have improved materially since the evaluation.

In a cloud world, evaluations age fast. This ain't a bottle of 1959 Lafite that we're dealing with here! But in the end, for better or worse, the Magic Quadrant becomes ubiquitous with IT professionals to shortlist vendors (and sometimes more) and makes a good CYA document for procurement. Even if it cellars like a bottle of Mad Dog.

Perhaps more so than this, our biggest beef with any single “2/2” analysis is that the curation of multiple sectors by nature must represent a judgement call that the authors must make on a single buying use case (e.g., “strategic procurement” suites in this case). It’s sort of like coming up with a consensus forecast and managing to the average while ignoring the variability (and it’s the variability that will will come around to bite you!). Gartner even backtracks on this model occasionally when it perceives a single market has made a major shift.

But in today’s world, there is never one market. Or two.

What usually happens is that the customers define what they want using their own requirements, not those of Gartner, Spend Matters or another source. One organization may want to start with spend analytics but have the option to move to sourcing via a suite. Another may want to start with sourcing and supplier management together. Yet a third may want to tightly couple a sourcing application with their P2P deployment. A fourth might not need sophisticated requirements in 90% of areas, but require extreme flexibility in the solution to support strategic processes and scenarios in the supply chain.

It’s Magic! Well...

In short, there is no single set of priorities that represents how a typical customer buys procurement technology software. There is no magic. As much as we want to believe it.

At Spend Matters, we have our own perspective on the “strategic procurement suite” market. As we define it, this sector encompasses spend/supply analytics, sourcing, contract management and supplier management — as individual functional areas but also in the unique manner that a procurement itself wants to consume solutions. Dissecting and analyzing it takes work. There is no “sleight of hand” -- it’s all heavy lifting.

In our recently published report, Sourcing, Contracting and Supplier Management Landscape Definition and Overview, we noted that, “the spend analytics, sourcing, contracting and supplier management technology segment is complex. Not a single vendor is equally strong in the four component areas we have covered in this landscape definition and overview. However, there is an increasing trend within procurement organizations to prioritize ‘suite’ capabilities over individual modular solutions. But in practice, specialized capabilities still rule the day for Global 2000 companies with complex requirements across the spend/supply analytics, sourcing, supplier and contract management areas.”

The same topic of course brings up the broader question of what comprises a suite — and the benefits that source-to-pay suites can bring (even if they’re not as strong functionally in key areas). This is basically the same debate, albeit broader, concerning ERP vs. best-of-breed (you can download an entire paper here on that topic). In addition, this debate applies not just to transactional e-procurement, but also to the strategic procurement arena, as we discussed in our landscape report.

Here we observed that “integration is another challenge (and story) entirely when it comes to bridging business processes, data models, workflow and analytics across these solutions. And it points to the increasing value of suite providers building out more advanced capabilities in each of these areas — and also why partial modular capability within a suite may be of even greater business value (in select cases) than using a specialized provider that is functionally superior.”

Towards Mass Customization of Procurement and Procurement Solutions

The inherent challenge of any single graphical comparative view of vendors — whether done by an analyst firm, a consultant for a client, or a procurement organization itself in analyzing any supply market — is that it can’t capture the complexity of individual company requirements. Imagine if everyone had a generic Facebook feed or if Snapchat did not curate videos, photos and other content based on what we individually would find most useful.

That’s a world hard to imagine in the 21st century. Even the manufacturing industry moved from mass production to mass customization decades ago, and it continues to refine it as software becomes increasingly responsible for the configurability (e.g., new cloud product design environments coupled with 3D printing).

And as procurement organizations increasingly mass-customize how they deliver value to the business and the technology approaches and providers they use to deliver those new capabilities and associated outcomes, we believe that evaluative exercises need to be ever more tailored to an individual organization’s needs. For subscribers, Gartner is moving in this direction as well (which we applaud). But static reports that take six months to create and then are updated every two years with monolithic graphics run counter to this trend.

Analysts Living in Glass Houses…

In 2017, Spend Matters will begin finally (yes, you heard us) publishing comparative vendor analyses of different technology sectors. We hope the market criticizes us (and we’ll listen) just as we’re critical of legacy models as well.

You’ll be hearing a lot from Spend Matters as we gear up and publish our own SolutionMap™ comparative vendor analyses, starting first with e-procurement and invoice-to-pay solutions in the coming months (but also offering readers the option of looking at these two areas collectively from a procure-to-pay perspective). Transparency, currency (frequency) and tailorability (for each organization) are the guiding principles of the approach we’re taking.

Your fearless authors of this post at Spend Matters promise to share in the magic!

Ultimately, our goal is mass customization — as your goal in procurement should be in developing, managing and nurturing your own supply chains. And this will increasingly transcend just evaluating software companies towards looking at the evolving procurement services market continuum (i.e., the procurement XaaS landscape) market that procurement has access to.

But in the meantime, we encourage you to define for yourself what your procurement technology landscape and architecture should look like.

For both procurement organizations and the consultants advising them, the following 2017 reports may be a helpful starting ground in addition to the Gartner Magic Quadrant (they define the components of each functional/technology area, segment the market and offer vendor shortlists in each category and even sub-category segment):

And they’re free. No strings attached.

But if you like what you see, “opt in” when you download the research for much more of it that’s coming from our “no subscription required” Spend Matters content calendar. Of course you can also go PRO (or Plus) if you want to double-click on any of the topics (and vendor analyses — muscles, pimples, warts and all!).

Voices (4)

  1. Jason Busch:

    I’m not sure if Gartner excluded vendors if a capability was not owned “in-house” … at least in the spend classification area, eyeballing the list, at least one uses a third-party for a key piece of its solution.

    1. Nick Drewe @ Market Dojo:

      Yeah, they said that it was permitted so long as the vendor uses their own UX layer, which is a pretty simple thing to do and not entirely ‘like-with-like’ with those that do own & operate their own module.

  2. Nick Drewe @ Market Dojo:

    Looking forward to the Spend Matters version, SolutionMap, as this Gartner report was very uninspiring.

    The eSourcing market is enormously fragmented, with so many vendors sub the $12m revenue that Gartner insisted upon. Some of the vendors excluded from the report include those that are gaining clients almost daily whilst some are perhaps on a downward trajectory, yet between them they include a raft of Fortune 500 and FTSE 100 clients whose needs shouldn’t be overlooked.

    To also exclude vendors on the basis of them not owning their own Spend Analysis, eSourcing, Contract Management and Vendor Management is also pretty strict. It leads to their self-fulfilling prophecy that the market is looking for integrated solutions covering all those areas, and very nearly includes P2P in that with only Scanmarket breaking the mould – although they shouldn’t technically qualify given that Spend360 (now their competitor Coupa) powers that module.

    If Gartner are creating such reports for organisations of $800m revenues or more, then perhaps a better way of conducting this is to actually find out which vendors such organisations are using & why.

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