E-Sourcing Analysis: Why You May Need More than One Solution

Next week, Spend Matters will feature a series of posts (and the launch of a new Compass paper) covering the e-sourcing market. We'll spare you the details for now, but one thing we've learned in our research is the surprising overlap in a range of companies that have access to more than one e-sourcing solution. The fascinating aspect of this is that we can only think of one other area within the source-to-pay market where buying more than one solution in a specific functional area is anything but an outlier (for a reason we'll explain in a minute).

We can't think of more than a handful of cases where a company has multiple eProcurement, e-invoicing, contract management, spend analysis, commodity management or related systems (the one exception in the source-to-pay area is supplier management because of finance (AP), diversity, risk and related organizations overseeing different initiatives). Our analysis shows that a surprising number of the Fortune 500 have purchased an e-sourcing tool from SAP, Ariba, Oracle or PeopleSoft as well as best-of-breed capabilities from sourcing vendors across the solution spectrum (not just those that specialize in an area such as optimization, although advanced sourcing is certainly a weak spot for the ERPs which have limited or no capabilities in this area depending on product).

What's fascinating here is that we know from first-hand advisory work that they have stated supplier rationalization programs focused on more fully leveraging ERP capabilities in the procurement area. Yet e-sourcing "non-compliance" seems to be ruling the day in almost fifty companies that we're aware of. And that's among procurement organizations that already have access to an ERP (including Ariba) sourcing tool. What gives? Stay tuned as we investigate.

- Jason Busch

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First Voice

  1. Chirag Shah, Chairman MarketMaker4:

    The benefits from most supply chain tools stem from process standardization and hence the need to have a single solution. However the benefit from eSourcing comes from managing input costs which are not related across spend areas. When you then consider that the ROI from eSourcing tools is so powerful, it can often be worth investing in an additional platform if an organization can generate incremental yields because a certain user group finds a particular platform more suited to a specific application or easier to use (and hence use it more often).
    It’s like having multiple cellphones if you travel a lot but still only one computer.

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