Is Your ERP Solution Holding Back Your Sourcing Efforts?

How does one make the case to the IT department and/or upper management for a separate sourcing solution? After a recent sourcing-focused webinar for an ISM audience (Demystifying the Sourcing Landscape: Planning for eSourcing Successdelivered together with Zycus), a question came up around what sourcing-centric tools deliver that can’t be had from ERP systems:

“My ERP solution seems to have everything you talk about - how is this different?”

The list of factors is long; consider these in particular:

Inertia – Given enough resources, time, patience, etc., current ERP systems are quite amazing. However, what you have to live with in the real world is not the hypothetical best possible installation, but what you can get through the IT and SI implementation gauntlet. As a result, you can be stuck in a depressing cycle where your implementations are focused on migrating newly acquired firms on to the common stack and moving the current data and users on to the next revision while making as few changes as possible. Don’t rock the ERP cradle. At the end of the exercise, your gleaming new ERP installation was designed to look like the design specs for the previous version implemented five years ago, which in turn was eerily similar to the one five years prior and so on.

Time to market – Rolling out a sourcing initiative from the ground up via the ERP path can take a long time: savings will not come this quarter, maybe not this year.  SaaS/cloud sourcing providers can be up and running in a matter of weeks, giving you results in time for the next performance review.

Services – By and large you are beholden to SI (systems integrator) when it comes to ERP rollouts, and if you need additional services, you often have to go to a consulting firm or BPO provider. This is something that can be costly, especially for midmarket to smaller large firms. Sourcing providers can either offer support by internal staff (fully trained already in your tool) or via partners that often come in at lower price points than the big firms.

Multi-national support – Whether languages, currencies, local market requirements, or regulations, sourcing providers are usually more capable at flexibly accommodating and incorporating local variations.

Flexibility – Whether external forces require changes or you have new internal needs, the ERP platforms are not as self-service accommodating. New supplier registration fields, onboarding steps, workflows, sourcing templates, reports, searches, etc. – this is often carefully managed by the IT department, slowing you down. Need a new Conflict Minerals survey pushed out to all your suppliers, bot incumbents, and prospects? It can be a matter of minutes with current sourcing tools, particularly those with integrated SLM functionality.

Collaborative – The predominantly on-premise model used by ERP providers doesn’t lend itself as well to open collaboration with external parties inside the solution. Consultants, suppliers, etc. are not welcome ERP guests. SaaS providers by definition have been built around sharing content over the Internet, albeit with granular access restrictions in most cases.

Small fry – That’s you in the eyes of an ERP company. Precious few clients are powerful enough to have much sway with the ERP players, as both the enormous client count and the size of the firms make them tower above all but the very largest clients. By comparison, the SaaS competitors are far easier to sway to your tune (there, you’re the big fish in the pond).

Final recommendation – At Spend Matters, we see most large firms using a multiple solutions, multiple ERP systems, multiple point tools, etc. Why not try out another sourcing solution? Doing so puts pressure on the ERP provider, showing them that you’re looking around. It also keeps you closer to cutting-edge technology and prevents some of the stagnation that can take place if you only relay on the big ERP firms. Compared to ERP implementations, price points are so modest for SaaS solutions that annual fees can come in well below even a single full-cost headcount.

Go ahead, try one out!

P.S. Don’t forget to follow our selection advice.

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