Is SAP E-Sourcing (or now just “Sourcing”) Still Competitive? (Part 1)

Earlier this fall, I sat through a product update with the SAP E-Sourcing team to discuss the latest solution developments in their solution area. Perhaps most important from a nomenclature standpoint, the "E" is no more. The product is now simply called SAP Sourcing (SAP Sourcing and SAP Sourcing OnDemand to be specific, depending on deployment model). Despite the slimmed-down naming conventions, the product is still based on the original Frictionless architecture, that despite all the rumors (and I mean all the rumors -- they never stop), is very much alive and kicking. However, SAP has made a number of enhancements, including a UI update, simplified navigation and a range of functional updates that are helping to bring a platform whose legacy stretches back over ten years into the next sourcing decade. But how competitive is the solution in the market today? In this two-part series looking at SAP's recent enhancements, I'll share the key updates while also offering up my own thoughts based on what I've seen of the solution in the market and how channels and customers are reacting.

With the latest Sourcing release, SAP continues to sell three distinct modules -- Strategic Sourcing, Contract Lifecycle Management and Supplier Management (CLM). Our own intelligence suggests Sourcing remains the biggest driver of sales of the platform (customer growth is expected to reach 400+ customers by the end of 2010, up from just over 300 the year before), with distribution split relatively equally between the US and European markets (Asia Pacific and Latin America comprise a smaller overall share). From a deployment model perspective, SAP shared with Spend Matters that they're seeing "much more interest in on-demand than on-premise" over the past 12 months and more recently, they've spent quite a bit of effort educating "the field and customers" of the value of the OnDemand deployment model. For SAP, OnDemand delivery means the option of single-tenant hosted versions as well as multi-tenant deployments.

In terms of recent enhancements, one feature that stands out is an enhanced search feature that enables the capability to search across all business documents in this system (e.g., sourcing projects, RFXs, etc.) as well as some of the master data fields (e.g., suppliers). However, all of the data must reside within the SAP Sourcing system for the cross-document Google-like search to occur (i.e., it can't reside in another SAP system or platform). Also in the latest release (Wave 7, for those who follow SAP's release model) are new features that enhance usability, including three types of dashboards -- Sourcing/RFX, contracts and supplier management. In addition, users can customize the platform in a more flexible manner, including saving favorites and searches. They can now access information on mobile devices as well.

Specific SAP Sourcing module enhancements include the ability to create line-item formulas from a total cost modeling perspective. The new modeling features follows similar capabilities of vendors like Emptoris, BravoSolution, CombineNet, Trade Extensions and others that offer the ability for a business user to construct similar, Excel-like models from a costing perspective. While we're on the subject of everyone's favorite operating environment (Excel, that is), Wave 7 also includes enhanced capabilities for both the import and export of Excel documents for both buyers and suppliers (e.g., supplier can now upload bidsheets and responses from Excel). Again, this advanced import/export feature is one that SAP's competition has had for some time, but its inclusion is most welcome, even if it is late to the table.

From a negotiation standpoint, the latest release also includes support for Dutch Auction capabilities (something which some of SAP's competitors have had for over five years) as well as greater flexibility in setting and configuring starting prices. But perhaps the most powerful sales tool SAP has in its sourcing favor relative to the competition is not its updated functional build-out (and the fact that it really does offer the 80% feature-set now -- some might say more), but rather its tight integration into SAP ECC, which allows integrated workflow and data integration (push/pull) between back-end systems and the Sourcing platform (including CLM) without expensive, customized implementations. For SAP shops needing solid if not leading sourcing capability, this is a big selling point.

Stay tuned as we continue our analysis of SAP's latest sourcing release in Part 2 of this post.

Jason Busch

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