Attempting to Be the Oracle of Oracle Spend Management (Part 3)

In my first post about R12 in this series I provided some specifics about how the application represented a significant step forward for the venerable database and applications vendor. In this post, I'll continue to talk about the enhancements and capabilities of R12. But I'll start with some context about the R12 ecosystem Oracle is trying to develop. In this regard, Oracle recently signed a deal with eThree, a sourcing consultancy run by two of my fellow FreeMarkets colleagues, to offer a range of capabilities to Oracle customers. These include sourcing services, category support and expertise, help desk/supplier training services, and buyer training. Essentially, Oracle is working with eThree to create a full service sourcing capability based on the Oracle suite to compete against the likes of Ariba, Emptoris and SAP. I would suspect that the eThree deal will be the first of many for Oracle. In addition, I expect expanded deals with firms such as Hubwoo and regional/industry focused Sis to broaden their reach and capabilities.

But outside of the R12 services ecosystem -- which goes beyond just relationships with technology services shops -- what are some other things to look at in the application? The ability to standardize and manage specific practices across an organization and the source-to-pay life cycle was clearly a focus in the design. It almost seems tailor-made for an environment of centralized policy but decentralized execution. This includes the ability to create standardized workflows, forms and templates for negotiations (e.g., RFIs, RFQs, auctions, and optimization), agreement creation (e.g., blanket agreements, global agreemens, signed contracts), and the implementation of agreements (e.g., POs, sourcing rules, etc.) including automatic price, term and preferred supplier enforcement. The key, in Oracle's words, is "minimizing variability" across the organization.

The self-service capabilities in R12 also warrant an additional mention. From allowing users to gain visibility into order tracking to automated receiving triggers based on invoicing, R12 is designed to free up both strategic and transactional purchasing resources from getting mired in transactional requests. As I mentioned in my initial post on R12, enhanced reporting (OBIA) is a major enhancement as well, providing procurement leaders with daily updates on KPIs, saving tracking information and related fields based upon pre-built portals with role-based access controls and permissions. This can also provide a rudimentary spend visibility capability that examines, among other areas, basic reports such as contract leakage, non-contract purchases, trending data and payables leakage. But these capabilities assume, of course, that you're running a heterogeneous Oracle environment. If not, the complexity to make them work will increase significantly.

When it comes to sourcing, the enhancements in R12 are not terribly significant, aside from new optimization capability (think Emptoris-lite -- or like -- depending on your perspective; in other words, not approaching the capabilities of CombineNet or Trade Extensions). Additional sourcing capabilities include support for more complicated services sourcing, easier scoring and weighting, support for hundreds or thousands of line items in a single negotiation, improved Excel integration, staggered closing of auctions with lot extensions and an enhanced UI throughout.

There are too many bidding and negotiation-related enhancements to list, but needless to say, Oracle learned a lot from FreeMarkets and others when they wrote the MRDs for R12 back in 2002-2003. R12 also lets procurement organizations better manage supplier information including profiles, qualification templates and ongoing performance through scorecarding and related capabilities. On the contract management front, R12 provides greater flexibility around complex payments and a deeper contract repository capability. R12 contracts also include basic capabilities for Word integration/synchronization, improved search capabilities, a work center that provides a new interface for contract administrators to track, manage and oversee specific contracting activities, and rules-based selection clauses.

In the final post on Oracle R12, I'll take a closer look at the specific enhancements around the core purchasing areas. Stay tuned.

- Jason Busch

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