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The top capabilities of Source-to-Pay solutions

Source to Pay
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This Spend Matters series takes a look at the state of procurement technologies in the market today and whether they meet user demands. Spend Matters is featuring the top 5 digital capabilities of different procurement technologies and the functionality you can expect from average and top performing solutions, leveraging its SolutionMap dataset.

In this article, our analysts Xavier Olivera, Bertrand Maltaverne and Nikhil Gaur look at source-to-pay (S2P) solutions.

What does a Source-to-Pay solution do?

Source-to-Pay solutions are end-to-end suites that manage integrated procurement/payment processes spanning spend/supply analysis, sourcing, contract management, supplier management and transactional procure-to-pay (P2P).

Why buy a Source-to-Pay solution

Every procurement organization needs an S2P digital strategy, but choosing a full-footprint S2P vendor suite is a decision to be considered carefully. For example, less than 10% of large enterprises actually implement this strategy, and less than 60% combine a suite with specialist apps. The reality of various solution capabilities is that some suites are less integrated than buyers are led to believe while other integrated suites lack the capabilities to handle all spend or organizational/industry complexity. Understanding all the ROI factors (not just TCO) is critical.

Top 5 S2P tech modules

What’s the state of different procurement technologies in the market today, and do they meet user demands? Spend Matters is featuring the top 5 digital capabilities or modules of different procurement technologies and what functionality you can expect from average and top solutions, leveraging its SolutionMap dataset.

S2P

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Exploring the actual market state of the top 5 modules

1. Analytics

The ability to provide a single view into all historic, current and planned supplier spending in order to improve that spending through better sourcing, compliance and demand management. 

S2P Analytics
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On average, buyers should expect a vendor to include out-of-the-box report builders (drag and drop models), reporting dashboards and descriptive reports of all S2P metrics. Top performers have deeper analytics capabilities, such as market intelligence through community data and AI/ML-enabled actionable analytics that support the identification of opportunities.

We have seen top performers with actionable analytics for benchmarks, process KPIs, user KPIs and predictive and prescriptive analysis to guide users during their S2P activities, which helps them achieve a greater contribution from all stakeholders and generating greater value for the business.

We have seen leading performers leveraging AI to automate the sourcing process and augment sourcing professionals with recommendations on when to launch events and what to do when managing an event.

 

 

2. Contract Lifecycle Management

The ability to automate the authoring, negotiation, execution, implementation, monitoring and renewal of B2B contracts (with an emphasis on supplier contracts).

S2P CLM
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Contract lifecycle management (CLM) acts as the intermediary between upstream source-to-contract and downstream P2P processes. By connecting the two areas, organizations increase the speed and quality of the contract drafting, negotiating and ongoing repository-based management processes.

Within S2P, CLM is especially useful when it is fully integrated. For example, a sourcing event can automatically generate the creation of a new contract within the platform, or post-signature contracts can connect to the P2P side to manage corresponding purchase orders/payments. Top solutions for CLM will go beyond cross-functional/module collaboration and offer deep configurability (templates, searches, etc.), guided authoring, suggested clauses, clause-level risk scores and more.

 

 

3. Procure-to-Pay

The capacity to host a combination of processes from the e-procurement and AP Automation/I2P markets, including automation of purchase requisitions/orders, receipts, invoices and payments.

S2P P2P
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On average, you would expect a vendor to include core catalog management, requisitioning, ordering, receiving and invoicing capabilities, such as catalog creation and management, life-cycle support, content search support, purchasing guidance, workflow and business rules approvals support, order creation, order collaboration and receiving support. Core support for invoice capturing, validation, matching, compliance and approvals is also expected. Top performing vendors can support more complex P2P use cases, use AI/ML technologies to improve process automation and effectiveness, have more robust workflow and business rules engines and include additional capabilities, such as payment processing and financing capabilities.

We have seen top performers use advanced analytics embedded into these processes to guide users to make better decisions. Some even use AI/ML to make decisions for them. Top vendors have also extended their capabilities to finance and treasury areas, supporting cash management effectiveness and the optimization of working capital. Additionally, they use advanced technologies supported by managed services to improve the usage and adoption of users and providers.

 

 

4. Sourcing

The ability to support content and services for managing sourcing strategies (including category strategy), execution (e.g., RFx management and e-auctions) and portfolio/performance management.

S2P Sourcing
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Average vendors enable customers to manage moderately complex sourcing events that partially leverage the other modules of the suite (SxM and CLM). Top performers can better cross-fertilize processes by bringing more data into the sourcing process. This enhances key steps, such as supplier invitations and bid analysis/evaluation because it provides users with a bigger picture and the means to perform more complex scenarios. They also have more capabilities to bring outside-in intelligence, enhancing strategizing and execution.

We have seen leading performers leveraging AI to automate the sourcing process and augment sourcing professionals with recommendations on when to launch events and what to do when managing an event.

 

 

5. SxM

The ability to not only orchestrate user experiences between suppliers and employees across S2P but also augment sourcing/contracting and P2P solutions with capabilities to optimize supplier-related information, performance, relationship, quality, risk and compliance management.

S2P SxM
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 The average provider supports customers in managing the complete supplier lifecycle and feeds other modules and systems with supplier-related information. The differences between average and leading providers reside in the breadth and depth of managed and verified information and configuration capabilities (data model, workflows, etc.).

We have seen how leading providers help customers tackle data quality issues by leveraging various capabilities (network, community, AI/ML, etc.) and ensuring that every supplier interaction managed in the suite is an occasion to review/update data. These leading solutions also foster a bi-directional collaboration.

 

 

The vendors considered

Corcentric Platform
Coupa
ebidtopay
GEP
Ivalua
Jaggaer
Proactis
SAP Ariba

How ‘Market State’ is derived from the SolutionMap dataset

These ‘Top 5’ modules stem from the Spend Matters TechMatch workbench — derived from 449 requirements scored in the S2P Spring 2023 SolutionMap solution benchmark.

The Top 5 modules are the highest-weighted sum of critical capabilities that are central to the displayed solution market benchmark. They have been developed by Spend Matters team of analysts and refined by procurement users in tech selection projects using our market-proven SolutionMap benchmarking dataset and associated TechMatch decision-making tool.

Spend Matters® SolutionMap Procurement Technology Intelligence

Spend Matters built a better way to help companies, and their consultants, advance procurement practices via technology. SolutionMap compares technologies on two main factors: technical capability (gathered via a rigorous RFI process) and validated customer ratings. Data is refreshed every six months. Participation for vendors is completely non-commercial.

Spend Matters® SolutionMap Intelligence Process Overview

Spend Matters SolMap Process

Featured vendors undergo a rigorous, RFI-based assessment process including functionality counter-scoring, supporting materials review, tech demos and submission of independent customer references. Expert analysts deeply vet solutions capabilities prior to ranking inclusion. Only relevant industry players that meet the criteria determined by Spend Matters are invited in order to create a complete view and optimal intelligence for its members.

  • To learn more about the Spend Matters methodology, click here.
  • For deep Spend Matters insights informed by more than 10 years of independent, zero pay-to-play, brutally honest coverage of vendors, market developments, M&A activity and trends become an Insider member.
  • To compare product strengths and weaknesses, try Spend Matters TechMatch to directly assess the capabilities of digital procurement solutions.
  • For more information on procurement tech, services and vendors consult Spend Matters comprehensive free directory.
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