New Research: A Foundational Look at the Evolution of Sourcing Technology and Platforms

Even though there used to be a lot of useful research on the souring technology market, general analyst coverage on these critical tools has materially declined over the years (except for the odd forced ranking/quadrant exercise, here and there). Yet the rate of change and evolution within the market has recently picked up considerably, and it's not easy to capture -- let alone compare -- the nuances of different vendor approaches in a clean 2x2 segmentation or ranking. Because the opportunity to inject a new level of analysis and color into this market is currently missing, we decided to incorporate vendor-focused sourcing and commodity management as a core component of our 2011 Compass Series research, and we're pleased to announce the first paper in this year-long effort: A Foundational Look at the Evolution of Sourcing Technology and Platforms. The report is free to Spend Matters readers and can be downloaded for free, via link above.

The paper traces the rapid evolution of the sector as well as some newer solutions that are coming to market. Consider that in less than six years from the advent of online reverse auctions conducted via private connectivity networks that self-service e-sourcing tools incorporating negotiation tools and market feedback mechanisms plus broader RFI, RFX and award-analysis capabilities are now the norm. Even more surprising in terms of a sourcing punctuated equilibrium is just how quickly more advanced quantitative approaches that incorporate massive data-gathering automation capabilities and Excel upload converters (e.g. comprising thousands, hundreds of thousands, even millions of individual price points), scenario analysis, supplier-defined bidding criteria/ discount structures and award-optimization analysis featuring any number of constraints -- all conducted via web browser -- have entered the market.

In this study, we wanted to explore the evolution of sourcing platforms from the basic reverse auction/RFX/e-sourcing capabilities of yesteryear to the more advanced sourcing and commodity management platforms available today. In our resulting analysis, we recommend different solution types and packages based on overall company sophistication, maturity, and spend portfolio mix (e.g., complex vs. raw material, direct, indirect, services, etc.). The paper also provides shortlists of vendors that offer different types of solutions.

Among other observations, this Compass paper suggests:

• In today's e-sourcing market, basic functional parity exists across major best-of-breed and ERP providers. Granted, there can be significant differentiation among solutions at the fringes of basic capabilities and certainly in more advanced areas such as optimization and scenario analysis. But for the basics, most of the better-known providers are predominantly on the same page
• Your advanced sourcing/optimization partner may very well not be the vendor you've chosen as your e-sourcing platform of choice. For example, Ariba, Oracle, and SAP, all of which have basic yet solid e-sourcing capabilities, bring an optimization toolset that is probably too limited for full consideration where anything more than basic constraints and capabilities are required
• Commodity management tools have lacked general awareness in a great majority of procurement organizations until recently. But these solutions, which can help organizations implement and manage commodity strategies including demand aggregation, hedging, accounting for forward positions and scheduling/logistics are growing in favor today

If you're looking for a primer on the sourcing and commodity management technology market -- from high-level solution segmentation and analysis to vendor shortlists based on specific requirements -- we encourage you to download this research brief today: A Foundational Look at the Evolution of Sourcing Technology and Platforms.

Vendor coverage includes: Ariba, Brady Solutions, BravoSolution, Co-Exprise, CombineNet, EKA Software, Emptoris, Iasta, Ivalua, FullStep, Oracle, Pool4Tool, SAP, sciQuest, SolArc, Trade Extensions, Triple Point, and Zycus.

Jason Busch