Sapphire Dispatch 7: The SAP E-Sourcing Roadmap (Part 4)

In this fourth post in my series on SAP E-Sourcing, I'll share some details on deployment approaches and other changes and trends. Since there's a lot of ground to cover, let's dig right in. When it comes to transitioning customers over to 6.0 -- because SAP has numerous customers on a single instance in a hosted environment that will have numerous options -- SAP will be able to flexibly work with the users based on their specific situation and needs. For example, if they decide to flip the switch to the new version, the process, including training, should take 1-3 weeks. This group (hosted single tenant) forms the bulk of the current SAP E-Sourcing user base today.

SAP told me that these single tenant hosted customers will have 3 options when 6.0 becomes available. They can choose to "stay as is". They can "upgrade to ES 6.0 on the single tenant [with] no additional fees -- this is part of the maintenance". In the upgrade scenario, "the technical upgrade is straight forward, and is charged as usual (a few days of consulting)". Or they can "change their contract to subscription and either stay on a single tenant, or agree to share the box on a multi-tenant environment".

SAP is currently running only a dozen or so instances of the multi-tenant environment (in this case, users will all be upgraded at once). But Hubwoo is running approximately 25 E-Sourcing customers on their single instance (which according to SAP, will require a transition all at once unless Hubwoo plans for other contingencies on a customer-by-customer basis). I suspect that Quadrem, who is another SAP source-to-pay reseller/hosting partner, will also face a similar situation (as will IBX in future upgrade situations once they go live on the ES platform).

In the past, the single tenant hosted version of SAP E-Sourcing has proved popular because the single instance allows the most simple migration path to shifting behind the firewall should an organization ever want to move down this path. It also has offered -- in the past -- greater flexibility around integration between the hosted instance and back-end systems (and certainly the perceived safety of single tenant data integration and data integrity). In this model, SAP users pay for a perpetual license and ongoing maintenance to SAP in addition to an annual hosting fee. It's more money than going with a multi-tenant SAP SaaS approach initially, but over the course of 3-5 years, it is actually a cheaper deployment model.

One of the benefits of SAP E-Sourcing relative to competitors -- except Iasta, who also bundles it in -- is that procurement contract management is bundled into the sourcing pricing, including both contract authoring and a contract repository. Users can pay a fee to upgrade to a broader license that allows the use of the tool outside of just procurement contracts. Granted, SAP CLM is nowhere near as full featured as a number of best of breed players (e.g., Emptoris or Upside) but for many companies looking for basic capabilities around managing procurement contracts, it will no doubt prove sufficient. Stay tuned for final reporting and analysis on SAP's latest sourcing moves this week, including SAP's downplaying of Outlook integration in these latest releases through Duet, a Microsoft/SAP partnership.

Jason Busch

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