An Analysis of Forrester's eSourcing Wave

For an updated analysis of Forrester's 2009 Sourcing Wave see this Spend Matters post.

Tonight, I had a fun-packed evening leafing through Forrester’s new report: The Forrester Sourcing Wave: eSourcing Suites, Q4 2005. I don't want to give away the results of the analysis as Forrester has paying clients, so I'll limit my observations and critique to how the firm approached the study. But before delving into the analysis, I was excited to find that Forrester plans future Waves that will examine "standalone spend analysis and contract management solutions, as well as full supplier relationship management or enterprise management suites." Finally, Forrester is making a concerted effort to invest in covering Spend Management!

But onto my analysis ... to begin, a number of summary perspectives are in order. First, I was pleasantly surprised at Forrester's depth in the report (something which I’m not used to seeing). The analyst who authored the report, Andrew Bartels, is a really solid IT analyst. But while I've always respected Bartels as an objective IT intellectual, I’ve never given him too much credibility as a Spend Management expert. With this report, however, he's beginning to prove himself as someone who understands the sector -- not at the same level as a Tim Minahan, but he's putting Forrester on the playing field.

I particularly liked Bartels' short history lesson on the sector inside the report. He does not get down to the level of detail that only a true insider who lived through the period would know. For example, how during the B2B heyday Ariba completely overpaid for Tradex, Trading Dynamics and the joke that passed for Supplier Market. But hey, it’s not a bad piece of history, and I appreciate Bartels' stage setting. And yes, if you’re wondering, my cynicism earlier in this paragraph comes from the fact that I knew a number of individuals from vendors Ariba acquired back-in-the-day that made out with millions -- in some cases tens of millions -- from products that didn’t exactly work from a GA perspective, while I was working 80+ hour weeks for a vendor that was actually delivering results, but whose market cap was crumbling by the day.

But back to the report: I disagree with Bartels' premise that Ariba and Emptoris are fighting for leadership with each other. In my view, both are pursuing different strategies, and the word on the street is that they do not overlap in deals as much as some would think. Also, I can claim from a practitioner perspective that the ASP vendors that Bartels pegs as less expensive options (which are not as well ranked as larger vendors) are sufficient for many users today from a pure sourcing perspective. In fact, I've heard about users who in some cases prefer vendors like Iasta and Procuri over larger providers thanks to their user interface and reasonable price points.

In addition, I question the depth on the product evaluation side that Forrester went into in their research. I heard from some vendors who participated in the study that Forrester only provided one hour for them to demo their complete suites (which is absolutely insufficient), but at least Bartels made the effort to dig below the atmospheric-level prognostications that David Metcalfe used to make.

As a final piece of commentary, Bartels claims that Forrester validated findings with reference calls to "some of each vendor’s current customers". But knowing what I know about the reliability of the recent products release from at least one vendor in the study, it's clear these reference calls were limited. Bartels did not dig deeply enough to discover the fresh skeletons that are lurking out in the market. Clearly, solution capabilities and vendor strategy do not matter at all if a sourcing suite crashes during key activities.

Enough of the criticism ... I'm too deep in the market for my own good. My points are all small nits. Overall, I'm extremely excited that Forrester took the time to go into this level of detail in their Wave. I also like the disclosure and more transparent nature of Forrester’s Wave relative to Gartner’s Magic Quadrants (which are absolutely useless, in my opinion, given the leap of faith that a reader must take in analyzing the rankings without a transparent ranking methodology). While I greatly respect Gartner, they lost credibility in my book as a firm by confusing the market with their last Magic Quadrant (which had the transparency of a stone wall).

In short, after reading this report, I would encourage all of you (users, vendors, and consultants) to take Forrester more seriously as an analyst voice in the Spend Management world. Even if you disagree with some of the rankings (which I do), at least Forrester made a solid, objective effort to investigate the market. I sincerely look forward to their future efforts and analysis in the sector. At this point, Forrester is a strong number three (passing Gartner in my book) behind Aberdeen and AMR in covering Spend Management.

-Jason Busch

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