SAP's E-Sourcing Transformation: Part 1 – Setting the Stage

SAP is not the company it used to be. If you told an SAP rep back in 2005 that you wanted to pilot their e-sourcing capabilities for $10K for three events, he'd probably polite tell you to add a few zeros onto your budget. But today SAP is willing to do just that -- 3 hosted sourcing events for $10K. The only caveat is that this is for North American customers only. And you don't just get software with it, either. You also get a handful of enablement services such as basic event creation, limited training for buyers and suppliers, basic master data set-up and a kick-off service to get started. They'll even toss in category templates (though it is not clear how many they have available with the service, it is "more than one"). In addition, you can pay extra for event and sourcing strategy development, active event support, and post event scoring and analysis.

I personally believe that SAP's sourcing and procurement team has thought through this offering quite well. As an example of this, they're selling it through a telesales group because they know full well that a regular SAP rep wouldn't touch something this small if they could avoid it. Then, once the pilot is underway having been sold and managed through Ma Bell, it's turned backed to a rep to close in theory what is a much larger deal.

Who is the ideal target for this offering? According to some SAP team members I spoke with, they're not targeting prospects who have little or no sourcing experience. In fact, the ideal target is already using -- or has extensively used in the past -- another sourcing platform. That says a lot for how well they believe the application demos. Personally, I think there are prettier applications out there than the old Frictionless application -- even's new user interface leaves it in the dust -- but the highly configurable nature of it should make it appealing to those who've worked with other vendors like Emptoris and Ariba who also leave something to be desired aesthetically (even if the underlying functionality is strong). IMHO, the latest Flex-based UIs leave all of these guys in the dust (incidently, SAP's spend analytic xApp UI looks to me to be Flex-based).

In the next edition of this series, I'll talk about how SAP has the potential to build out a significant services ecosystem around the E-Sourcing product. And after that, we'll get into what it means for the broader market ecosystem as a whole.

Jason Busch

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