Sustaining Value From Oracle Procurement: After the First Wave

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In an earlier installment in this series on getting value from Oracle procurement applications, we explored where to focus on if you want to move fast with Oracle technology. Contrary to what many might believe, it is now possible to get Oracle technology to move at whatever speed you need it to — at least in select areas. But once you get past the “first wave” of savings and value generation from Oracle procurement technology, where should you turn next? That’s the topic we’ll explore in this article in more detail, as well the implementation and deployment nuances that Oracle — by nature of being Oracle — creates relative to its peers.

This last point is an essential place to begin any examination around the topic of Oracle and procurement applications. Indeed, there are a number of fundamental considerations to take into account that make Oracle different from nearly all other vendors, perhaps with the exception of SAP. And realizing these differences is the essential piece to sustaining value from Oracle procurement technology at a level that approaches — and can even exceed in certain areas if the IT stars align — best-of-breed cloud-based peers.

I’ll opine on these topics below. I’ve also asked Karthik Duvvuri, an Oracle procurement expert at consultancy and systems integrator Data Intensity, to offer his thoughts on what makes Oracle different, as well as explain why these points are important to creating sustainable value when committing to an Oracle procurement “shop” approach.

Difference 1: IT Involvement

Jason: No discussion of Oracle procurement technology is complete without first referencing the importance of IT involvement in helping to realize the value of Oracle procurement applications — especially relative to technology alternatives. Within Oracle-centric IT organizations, not only are there unique integration considerations to consider but it is also important to take into account upgrade cycles for core ERP/financials based on the other Oracle applications being used or considered. For this and other reasons, deep IT involvement (at all levels of an Oracle procurement technology relationship and all stages) is not optional — it’s essential from the start.

Karthik: IT involvement is sacrosanct through the lifecycle of technology, starting from marketing the software internallythrough gathering user requirements/preferences, followed by making an informed decision of choosing the right technology, implementing and supporting thechosen technology.IT also functions as a champion for change management by spearheading user training, assessing need for system improvements and in many cases owning ultimate relationship with the software vendors/service providers. 

Difference 2: The Power of the Oracle Stack  

Jason: Oracle excels at the stack level, albeit not with all IT architecture stack components on a comparative basis. One area where I’d argue Oracle has been flanked is in the usability of BI applications. But still, the closer you get into underlying stack components of enterprise applications, including core data management, applications and hardware scalability/performance, it’s hard to argue with how strong Oracle is compared to its rivals, and the greater the advantage customers have to exploit it. Granted, you need to know how to leverage the power of the stack underneath the application layer.

Karthik: Oracle has always built superior underlying technology, and in most cases businesses don’t take complete advantage of applications which can solve long standing data-related problems. Some examples are Oracle Spend Classification, and Oracle iExpense. Oracle Spend Classification is a data mining engine, and an extremely important component for holistic spend analysis; there are very few technologies comparable to Spend Classification. iExpense is a travel and expense management solution that works seamlessly with Oracle EBS, and also automates travel spend management. Oracle also offers tools that provide superior business insights such as Oracle Data Visualization comparable to Tableau and Qlik, which enable users to explore “more” data faster. While most point solutions focus on specific business functions, Oracle stack extends to global requirements, addressing linguistic, legal and financial needs of organizations.

Difference 3: Aligning Internal Needs with Oracle’s Own Motivations  

Jason: If I told you that Oracle is a motivated seller of technology, of course you would say, “Yes, that’s obvious.” But what might not be obvious is that Oracle’s motivations are not entirely consistent across everything available on its pricing sheet. Within the procurement technology area, Oracle strongly incentivizes (financially) its account teams to sell Cloud, which may or may not be the right priority (or choice) for each customer, especially when you consider the ability to plug and play both Oracle enterprise software components and third-party applications together in different areas.

Karthik: One of the things we notice about cloud software is that the implementation doesn’t necessarily start from requirement gathering; instead, the project kicks off by mapping requirements with out-of-the-box software functionalities. This enables business to realize benefits faster through reduced implementation timelines by not having to address software customizations at the front end; this also has a direct impact on the total cost of ownership. While Cloud software cannot be customized, it is continuously enhanced to accommodate the ever-changing business landscape, which in turn enables business users to stay abreast of industry best practices.

Taking Full Advantage of Oracle: The Long View

Once you understand how Oracle differs from other procurement technology providers, it is easier to see where to take advantage of its capabilities relative to other available procurement technology solutions when it comes to creating long-term, differentiated value with it — and also where some of the pitfalls may lie if you don’t take fully into account what makes Oracle different.

While any panel of Oracle efforts will likely have their own opinion on the topic, it’s our view that a few key areas stand out when it comes to thinking through long-term procurement value from Oracle applications. These are master data management (MDM), supplier management and procure-to-pay (P2P).

Oracle’s MDM capability, especially when tightly coupled with both supplier management (e.g., supplier on-boarding, enablement, compliance) and sourcing (even if Oracle’s sourcing capability is moderately competitive today with best-of-breed vendors) can help put accurate supplier, spend, contract and cross-application (e.g., supply chain) data at the center of both strategic and transactional procurement activities. It’s a big competitive advantage for Oracle, albeit one only a minority of customers ever end up taking full advantage of within procurement.

The next area is supplier management, although to be honest, this is really an extension of MDM. In reality, there are dozens of strong supplier management solutions in the market today, including those that focus on risk management, supplier diversity, regulatory and other compliance areas, supplier performance management, supplier innovation, supplier quality and supplier development individually or cohesively.

Spend Matters’ perspective is that while Oracle has nothing special functionally in this area compared with peers, the ability to couple both IT and supplier master data together and then tie this into procurement functional enablement — as well as the ability to enable other areas of the business with supplier data — is awesome and a competitive advantage for those that get it right. Any company going down the Oracle path for procurement applications should smack themselves in the head if they don’t consider the advantages and use cases for supplier management more fully from a longer-term perspective when coupled with MDM.

The area of procure-to-pay is also one to consider from a sustainable value perspective with procurement applications. Karthik has more hands-on experience than me in the area, so I asked him to comment on the topic here:

Procurement is increasingly playing a bigger and significant role within organizations. Several procurement organizations have already set course towards achieving “world-class” status. The journey toward procurement excellence doesn’t necessarily require a “Big Bang” approach of implementing all available applications at once. It is extremely important to remain cognizant of what needs to be done and at what time. In most cases business requirements can be fulfilled through the use of technology, in some cases process improvements/reengineering will do the trick. Procurement maturity can be attained through a combination of best-in-class technology (such as Oracle), user training and by applying best practices. To summarize, the true potential of technology can be unlocked with a strong partnership between procurement, IT and the implementation partner/service provider.

The Last Word

It is impossible to separate out deep IT engagement from the Oracle procurement value equation. And IT’s involvement needs to rise, not fall, the more strategic and sustainably procurement becomes when it comes to leveraging Oracle’s broader procurement applications, including Oracle Procurement Cloud.

Beyond just paying IT lip service to alignment and integration, those organizations that tightly couple IT and procurement source-to-pay process leadership and stewardship are those that will have the greatest chance at turning what used to be an often-true ERP procurement sunk cost situation into the fallacy it can and should become today with Oracle’s latest procurement technology products and releases.

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