Spend Management Advice: Where Can You Turn?

Quite often, I'm asked which analyst and advisory firms can be trusted for informed, candid, no-spin advice about Spend Management vendors and market opportunities. To best answer this question, I think it's important to really look at this question as a series of areas. Personally, I think that organizations should consider three separate questions and then look at which firms are capable of answering each one of them. To wit,

1) What firm(s) can tell me where Spend Management is headed next? Who is looking around the next corner?

From a prediction and market direction standpoint, there are a number of firms to choose from. Andy Kyte at Gartner Group has done a lot of thinking about where procurement is headed and how organizations can best get to their Spend Management destination. Forrester Research, also, has stepped up to the plate over the years, prognosticating about possible Spend Management futures. At the same time, Aberdeen Group and AMR Research have their own set of predictions, which seem grounded in end-user discussion, interviews and analysis. In short, there are a number of analyst firms to go to who can help answer this question.

Where are other places to look? Ask vendors what they think. Consult your sales rep to see if they have any material or places to go to learn more about Spend Management initiatives, technologies, and processes (it’s a good sign if they’ve thought about this question and can help you answer it). Consultancies can also undertake projects to answer this question as well

2) Where can I go to benchmark my Spend Management capabilities?

From a benchmarking standpoint, only two firms really stand out: Aberdeen Group and The Hackett Group. I've looked at significant benchmark data from both firms, and I'm convinced that either organization can do a competent job on the Spend Management benchmarking side. They both approach benchmarking from different angles, so it's worth engaging in dialogue with both to see which option is the best fit. If another firm or consultancy offers to do benchmarking, I'd question the timeliness and depth (sample size) of where the information is coming from, unless they're undertaking a big, expensive, custom project.

3) What firm(s) can provide unbiased, accurate advice on which vendors are most appropriate to help in my Spend Management journey?

Unfortunately, I don't think many analysts who cover the sector are deep enough in specific vendor technology to offer decent perspective when it comes to vendor selection. I'd say that historically, I thought that AMR Research and Gartner could do a competent job in this area, but both firm's dedicated analysts, Pierre Mitchell and David Hope-Ross, who covered the sector on a dedicated basis, left in 2004. Hence, both AMR’s and Gartner’s vendor data -- from their magic quadrant and comparative vendor analyses -- is old, and not up to date, and their current analysts are too high level to really get into the product trenches. That's because while both AMR and Gartner have strong analysts covering Spend Management today, it's not their only job. That scares me a bit when it comes to vendor selection, as the person recommending vendors should be living and breathing the space. The good news is that both firms are planning to hire -- or have hired in the case of Gartner, as far as I'm told -- a new resource to augment their coverage of Spend Management in 2005.

Aberdeen Group has great depth of coverage, knowledge, and experience, but vendor selection is not a focus area, as far as I know. But with their current analyst staff and market / vendor knowledge, they could do an excellent job at it, and I'd trust them if I were the CPO and had to make a vendor selection decision.

What other firms can help? Forrester has some depth, but their main analyst who covers Spend Management is covering other sectors as well. Discount Yankee Group, unless they hire a new analyst and build up a new knowledge base. IDC’s "Insight" Practices seem promising, but it’s too early to tell if vendor selection will be a focus or forte. But the fact that Bob Ferrari (ex AMR and SAP) signed on is a good indication of the analyst talent they're attracting, and their potential for advising customers on technology trends and selection.

-Jason Busch

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