Friday Rant: The 2011 eProcurement Renaissance

I've spoken to a significant range of eProcurement providers in the past few months, from some of the largest ERP players to smaller vendors with regional penetration in specific geographic markets. I've also had the chance to interview (some might say interrogate) a handful of technology leads in the P2P area for large corporations who live and breathe eProcurement solutions every day. Throughout these discussions, I've heard a number of common threads, all of which suggest to me that we're due for a renaissance of sorts in 2011.

For one, it's quite clear that there is an inconsistent correlation between the universal adoption of electronic invoicing capability along with eProcurement, despite the logical joining of the two. Perhaps as we venture down the e-invoicing path, both for potentially legislative (e.g., VAT, tax reporting, etc.) as well as efficiency reasons in the US and as Europe gets as serious about eProcurement as they have about electronic invoicing in the past, we'll see excitement build for a new renaissance around the two. A three way -- or take your pick -- match made in spend heaven (combined with a bit of celebratory 25+% APR discounting tossed in for good measure)...

I also see several other factors helping build an eProcurement renaissance of sorts as well. One major one is an interest among larger companies for re-evaluating decisions (e.g., Ariba, SAP, Oracle) made many years ago on the eProcurement front to account for new technologies, cost structures and approaches (not to mention the greater returns that are possible to achieve today for a range of reasons). I think a handful of these larger companies will opt to embrace SaaS/cloud approaches, but more will want to look at how they can upgrade their capabilities either by switching to alternative providers and/or significantly upgrading existing solution investments with their current vendors to drive increased spend under management and overall adoption. Along with this will likely come a new focus on augmenting current and new solutions with third-party capabilities that can great enhance eProcurement returns.

And let's not forget that there are more and more vendors making noise and banging on doors in the eProcurement world as well. Coupa, Ivalua, b-pack, Perfect and others continue to ramp up sales and marketing efforts; Ariba is increasing sales headcount (and has a lead generation machine humming); and the ERPs are gaining additional reach by better field education as well as their channel/BPO ecosystems. I also think that as global talk turns from economic recovery to possible stagnation -- and at the very least, inflation -- companies will look for ways to drive efficiency and spend controls without adding headcount. Add to this the growing interest in indirect procurement outsourcing and BPO vendor interest in getting more involved in transaction-based solutions rather than just sourcing or labor-cost driven savings approaches, and the cocktail mix for the eProcurement renaissance gets sweeter indeed.

So there you have it -- a partial recipe list for reinvigoration of the eProcurement market (much as we've seen strong adoption and reevaluation of spend analysis tools this year).

Jason Busch

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