Sourcing and Procurement: Information, Data and Analytics Architecture (Part 2)

Click here for Part 1.

Procurement information architecture is heady stuff. There’s no way around it. Making systems – especially internal and external systems and information sources, structured and unstructured – talk to each other and interoperate across commodities/categories, business units and core procurement workflow is the hard work that only a small percentage of companies has invested the time to get right so far.

The end result is that far too many companies end up addressing the issue when it’s too late – and requires a seven or eight figure project or hand-off to a Big 5 consultancy, BPO or other services firm to get right. Moreover, in many cases, it’s only partially “right” even after this monumental, bottom of the ninth heavy lifting hand-off for a single area of procurement, such as indirect spend.

We’ve seen it again and again. The primary issue is that far too many companies have built what amounts to a beautiful home atop a temporary foundation that can’t support the growing family of information and activity that is just about to move in. And no one in the vendor, analyst or general provider community has the incentive to drive prospects and customers to spend time addressing underlying architectural questions.

In other words, we’re sitting on a bubble that is waiting to pop. It reminds us of a hybrid of the mortgage crisis and the Chinese drywall scandal all wrapped up in one. Think about it. Much like working with a Realtor to buy a house, no one is motivated to give you a true honest appraisal of the situation first because nearly all of the parties involved make their money by getting deals signed – not by pushing them off until all the ink is dry on the right set of architectural blueprints and infrastructure.

Ultimately, the house will crumble under the weight of those calling it home. For procurement, this will be the end result:

  • A continued investment in “patches” such as supplier networks that paper over other fundamental issues (e.g., supplier on-boarding and data management processes)
  • Technology tools that are partially used or not used at all
  • The inability to implement and monitor savings programs (and make changes in real-time) across all spend types
  • Difficulty addressing new compliance and regulatory requirements without starting anew with stand-alone solutions
  • Challenges adopting to changing requirements in a global world on a localized basis (e.g., supporting efforts to develop and manage local supply chains in emerging markets)

Consider just how challenging the situation is when it comes to just the one area of supplier portal platforms, as my colleague Pierre Mitchell observes on Spend Matters PRO (PRO subscribers click here: Procurement Information Architecture Part 2: Portal Infrastructure):

The market has yet to be able to support a strong best-of-breed vendor to enable a true supplier portal platform, but there could be many contenders. IBM has all the piece parts here in terms of supplier connectivity, technical infrastructure, analytics, professional services, and an application suite in Emptoris as its ‘guinea pig’ to begin using some of these various components. Oracle and SAP are of course racing to put in their newly built/acquired infrastructure components (with mixed success) and Microsoft continues to be a big question mark which is too bad given how many large companies use SharePoint and other Microsoft infrastructure, but the ability to integrate all these moving parts is unclear. Similarly, HP has some of the infrastructure components, but is not focused strongly on application markets like Procurement. We’re making it our mission on Spend Matters PRO to bring procurement information architecture to the forefront of planning and decision making when it comes to how CPOs and P2P process owners alike are prioritizing where to put overall investments and what they multi-year systems plans should look like.

This is a topic that can neither be tightly boxed in a “leaders” quadrant or grouping, nor distilled into a single comparative vendor matrix. But we promise that getting it right is far more important than selecting Ariba/SAP/Oracle vs. Coupa for req-to-pay or Spend Radar/SciQuest vs. BravoSolution, Iasta, Emptoris/IBM, GEP and many others for spend analysis.

Join us on Spend Matters PRO as we evangelize the need to get procurement information architecture right – and provide the necessary blueprints to get your systems, data and analytics foundation in order before building a house of cards that you’re likely to end up holding together with duct tape.

A selection of our recent PRO analyses on the topic include: 

The Trouble With Tribbles and the Problem with Portals

Procurement Information Architecture Part 2: Portal Infrastructure

Procurement Information Architecture Part 3: Analytics

Procurement Information Architecture Part 3: Analytics (simplified architecture)

Procurement Information Architecture Part 5: Workflow (System of Process)

What Marketing Analytics Can Teach Us (Part 1)

What Marketing Analytics Can Teach Us (Part 2)

The Meaning of Big Data for Procurement and Supply Chain: A Fundamental Information Shift

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