SAP's E-Sourcing Transformation: Part 2 — The Services Ecosystem

As I started to discuss in my first post in this mini-series about SAP's E-sourcing transformation, their new offering is a transformative statement to the overall apps market for our favorite Waldorf-based ERP vendor -- not just the sourcing and procurement world. The fact that SAP is flirting with four figure territory for pilot deals is remarkable indeed. But I would expect more of this in the future from SAP -- not less.

And I would also anticipate that SAP will continue to offer their own -- as well as their partner's -- enabling services on top of the application suite. In their new sourcing launch, this brings with it such optional and standard services as master data set-up (which includes the uploading of supplier lists and templates), support for category template creation, support for establishing libraries (such as event terms, information sections and message templates), the bulk loading of contract-based meta-data and related attachments, basic web-enabled support for suppliers, and application specific support.

But don't expect SAP to stop here when it comes to services. There's a tremendous opportunity for them to line the coffers of sourcing and ops practices of the Big 5 -- not to mention AT Kearney and other venerable -- in such areas as the development and deployment of category specific processes and workflow, category templates, market knowledge and more FreeMarkets-esque Full-Source like engagements. I believe this is a huge opportunity for SAP, especially given the fact that the SIs are looking for other highly functioning options outside of Emptoris and Ariba to bring into their sourcing accounts.

The piece here which is tailor-made for the consultants is the highly configurable nature of the E-Sourcing toolset -- which has the potential to create significant revenue streams from longer implementations for companies that want highly specified workflows, processes, templates, controls and permissions based on multi-level user and category specific hierarchies of the application which lets you configure to your hearts content above the code level. This was the best thing about Frictionless. And in a sense, it makes the $10K upfront pilot deal all the more insidious. A good analogy would be to dating a New England women who appeared to love nothing more than Lands End hand-me-downs only to learn that after you married her, she was really a Barney's girl, who would cost five figures a year in the clothing, shoe and handbag categories (not that I would know what this feels like 😉

But seriously, I reckon that SAP is betting on the fact that once users sip the Kool-Aid, they'll want to buy their own refrigerator, blender, mixers, and booze to tailor it just to their liking. Which of course will add several zeros onto the final price-tag, once customers get through configuring the application to their hearts content, paying SAP and their consulting partners a small fortune along the way (hmmmm ... this is beginning to sound a lot like the SAP of old, albeit with a kindler, gentler, and cheaper entry point).

In the next edition of this mini-series, I'll talk about the product and architectural evolution of SAP's E-Sourcing offering.

Jason Busch

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