Friday Rant: Could SAP/Oracle Transform the Spend Management Technology and Information Market??

It's the Friday before I head down to SAP Sapphire, so let's flip convention on its head for a moment. Suspend disbelief and consider a world where the ERP giants aren't fast (or even slow) followers in a procurement or general business application way, but true innovators in the market in their own right, pushing us all forward and changing what's possible. That's right -- changing what's possible as we evaluate our entire procurement processes, supply market analyses, sourcing strategies and overall approaches to reducing supply chain risk exposure. Just as Peter Kraljic forever changed our approach to analyzing categories, suppliers and supply markets to inform sourcing strategy and broader supply management approaches, so too might the ERP giants change the basis of how we think about buying and managing suppliers.

Yes, this statement is a stretch. But I actually believe that SAP and Oracle (and perhaps even Google) have an opportunity in changing procurement that even a provider like Ariba, with leading market penetration in targeted application areas, can't come near. Consider seven components these giants have going for them and the building blocks of what could amount to a truly game-changing strategy:

  1. Massive installed basis (think ERP) -- across industries, geographies and companies
  2. Trillions of operational data points resting with customers (e.g., PO cycle time, on-time performance, PPM, etc.)
  3. New technologies such as in-memory technology that provide transformative speed to query massive data sets
  4. Data management as a competency (or at least a growing competency)
  5. Integration (technical and process) with other functional areas of the business such as HR, IT, supply chain/operations planning, etc.
  6. Experts with a content- and data-centric perspective driving efforts (sometimes stealth efforts)
  7. Specialized development and R&D teams that dwarf the size of other vendors let alone engineering groups

If you put some of these elements together ten years ago and built functional business process applications on top of legacy architectures and thinking, you got early P2P Hindenburgs like SAP SRM in its infancy. Granted, SRM 5.0 and 7.0 fixed a lot of things, but they still led to potentially bloated implementations that continued to lack key functional enabling capabilities without incorporating potentially costly third-party solutions. But flash-forward a decade and the building blocks of what ERP brings to the table could prove transformative indeed.

Take, for example, SAP's current attempt to aggregate operational ERP data coming out of its customers, particularly in the A&D market -- yes, it's operational and in beta today -- to forecast potential supply risk factors in both a reactive/reporting and potentially predictive (forward-looking manner). Such a model where ERP customers gain value from networked deployments -- even behind the firewall deployments that share aggregate information in controlled manners -- brings a gigantic number of potential benefits from a procurement standpoint.

Clearly, SAP and Oracle are getting better and better at competing in certain functional areas. SAP's latest Sourcing release (including its supplier management capability) and Oracle's latest Supplier Lifecycle Management and Supplier Hub releases are great examples of ERP playing fast catch-up -- and even flanking best-of-breed providers -- in certain areas. Yet for innovation and procurement, I think we could very well begin to see SAP, Oracle and even Amazon or Google begin to do things that are completely outside the box in what we conceive of applications today.

Stay tuned in the coming weeks as we share some of the use cases and ideas that we believe these true technology giants may begin to deploy not just to test the procurement waters, but also to change their depths, currents and temperatures entirely. Of course SAP and Oracle's ability to execute both from an R&D and commercialization standpoint with radical thinking in the applications and business connectivity space is certainly a question. But if they can pull off what I think what the sum of their building blocks are even 50% capable of, then they could be key drivers in pushing the overall procurement market forward -- in ways many of us can't even conceive today.

But whatever you do, please don't think that buying SRM or eBusiness suite is going to make you innovative. It's what's next, not what's in the rear view mirror!

Jason Busch

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