Author Archives: Magnus Bergfors



About Magnus Bergfors

Magnus has been a procurement professional throughout his career with deep expertise in strategic sourcing and SRM. Before joining Spend Matters, he worked at Gartner as lead analyst and agenda manager on procurement and strategic sourcing applications. He started out in the early 2000s as direct materials procurement at AstraZeneca and worked in various procurement and strategic sourcing roles at Scandinavian Airlines, IBX, Atlas Copco Tools, Effective Sourcing AB and SAAB. He brings a Europe-centric eye to procurement technology analysis and the challenges affecting the CPO community.


‘E-Sourcing Execution’ Competitors: Defining the Market Landscape (Part 3) — Specialist Vendors

It’s time to look at the “e-sourcing execution” vendors that compete with a smaller, specialized set of offerings.

In Part 2 of this Spend Matters PRO series, we focused on the suite providers in this market because, as you’ll recall, there are two distinct sets of vendors that offer e-sourcing execution functionality, the S2P providers that also offer P2P suites and the more specialized sourcing suite vendors that don’t.

The variety in the specialized group is bigger and varies from vendors that also sell contract management or supplier management on a standalone basis to vendors that only support e-sourcing execution.

Part 1 of this series explored how the problem now is that sourcing, and especially strategic sourcing, encompasses more than what the traditional e-sourcing solutions supported, which was to just negotiate online. We are therefore introducing the term “e-sourcing execution” solutions that in our opinion more accurately reflects what these solutions do: support the tactical execution of sourcing. E-sourcing as a broader term can then be divided into the previously mentioned e-sourcing execution solutions but also “e-sourcing strategy” solutions. In the e-sourcing strategy solutions category, we include offerings for market analysis, opportunity identification, strategy formulation and category management.

In this three-part series, we will present our view of the competitors in the e-sourcing execution solution market in 2020 and define expected functionality and key trends, as well as listing and providing short descriptions of the key competitors — suite vendors and specialty providers.

For Part 3, the specialty vendors discussed below are vendors in Spend Matters’ Sourcing SolutionMap. There are obviously additional vendors in this space, but because we haven’t (yet) analyzed those solutions with the same rigor as those in SolutionMap, we will list a sample of them by name below in the last section here.

‘E-Sourcing Execution’ Competitors: Defining the Market Landscape (Part 2) — Suite Vendors

There are two distinct sets of vendors that offer “e-sourcing execution” functionality, the S2P providers that also offer P2P suites and the more specialized sourcing suite vendors that don’t. The variety in the second group is bigger and varies from vendors that also sell contract management or supplier management on a standalone basis to vendors that only support sourcing execution.

Part 1 of this series explored how the problem now is that sourcing, and especially strategic sourcing, encompasses more than what the traditional e-sourcing solutions supported, which was to just negotiate online. We are therefore introducing the term “e-sourcing execution” solutions that in our opinion more accurately reflects what these solutions do: support the tactical execution of sourcing. E-sourcing as a broader term can then be divided into the previously mentioned e-sourcing execution solutions but also “e-sourcing strategy” solutions. In the e-sourcing strategy solutions category, we include offerings for market analysis, opportunity identification, strategy formulation and category management.

In this three-part Spend Matters PRO series, we will present our view of the competitors in the e-sourcing execution solution market in 2020 and define expected functionality and key trends, as well as listing and providing short descriptions of the key competitors — suite vendors and specialty providers.

For Part 2, the suite vendors featured below are vendors in Spend Matters’ Sourcing SolutionMap. There are obviously additional vendors in this space, but because we haven’t (yet) analyzed those solutions with the same rigor as those in SolutionMap, we will list a sample of them at the end of Part 3.

‘E-Sourcing Execution’ Competitors: Defining the Market Landscape (Part 1) — Introduction

“E-sourcing” emerged as a term in the 1990s as Freemarket and others developed solutions to enable organizations to negotiate online. The problem now is that sourcing, and especially strategic sourcing, encompasses more than what the traditional e-sourcing solutions supported. We are therefore introducing the term “e-sourcing execution” solutions that in our opinion more accurately reflects what these solutions do: support the tactical execution of sourcing. E-sourcing as a broader term can then be divided into the previously mentioned e-sourcing execution solutions but also “e-sourcing strategy” solutions. In the e-sourcing strategy solutions category, we include offerings for market analysis, opportunity identification, strategy formulation and category management.

The first sourcing and reverse auction solutions came to market all the way back in the 1990s. Since then many of the pioneers have disappeared, most through mergers and acquisitions, but some are still around, and a couple have even played the role of market consolidator. But more importantly there has been a flow of new vendors entering the market with slightly different approaches and views on how to improve adoption and performance over the years.

The scope of the solutions also has increased, and it's almost impossible to find a vendor that supports only eRFX’s and reverse auctions today. Nearly everyone has added some supplier management and/or contract management capabilities. In many cases, these adjacent capabilities are basic, but as clients mature, they start looking for more functionality and the vendors have to evolve to meet new requirements.

This has resulted in a complex but highly competitive market with a mix of suite vendors and more specialized vendors — as well as experienced vendors alongside newer entrants focused on higher levels of automation through the use of advanced analytics and AI/machine learning technologies.

In this three-part Spend Matters PRO series, we will present our view of the competitors in the e-sourcing execution solution market in 2020 and define expected functionality and key trends, as well as listing and providing short descriptions of the key competitors — suite vendors and specialty providers.

EC Sourcing: Vendor Analysis 2020 Update (Part 3) — SWOT, Competitors, Recommendations, Summary Analysis

There is a lot of competition in the e-sourcing and strategic sourcing suite marketplace today.

Granted, while new market entrants have largely if not entirely replaced some of the legacy providers from a decade or more ago, the amount of choice procurement organizations have in selecting a provider has never been greater.

EC Sourcing is one such provider that companies — especially those in the middle market — may wish to add to their shortlists, not just for core sourcing and negotiation but to enable basic category management support and upstream (non-transactional) suite capability.

This final installment of our updated three-part Spend Matters PRO Vendor Snapshot series provides a SWOT analysis, a look at EC Sourcing’s competitors and how EC Sourcing compares to vendors that customers may wish to shortlist. This post also includes a user selection guide and summary evaluation. Part 1 and Part 2 of this analysis provide a company and solution overview, product strengths and weaknesses, and a recommended fit analysis for what types of organizations should consider EC Sourcing.

EC Sourcing: Vendor Analysis 2020 Update (Part 2) — Product Strengths and Weaknesses

complex sourcing

Many procurement organizations at larger firms will soon be on their second (or even third) set of e-sourcing technologies, with many using multiple solutions. The middle market is different, with scattered adoption and a much more recent track record of “sourcing” tools for the first time, if at all. Both trends favor lesser-known providers like EC Sourcing, a closely held technology and solutions firm that has compiled a commendable e-sourcing package and various components of a broader “upstream” suite — albeit with strengths and weaknesses in different areas.

EC Sourcing built out its suite from an e-negotiation core, and now it has a range of surprisingly deep capabilities that go beyond modular capability alone, including workflow management. On a functional basis, the provider offers e-sourcing, basic contract management, supplier management (including supplier corrective action reporting, or SCAR).

This Spend Matters PRO Vendor Snapshot explores EC Sourcing’s strengths and weaknesses, providing facts and expert analysis to help procurement organizations determine if they should shortlist the vendor as a potential provider. Since our last three-part Snapshot in 2016, EC Sourcing has addressed a number of the weaknesses we pointed out. It has built a reporting module and partnered with BidMode to add an optimization module to its offering. It also has updated its UI.

Part 1 of our 2020 Update provided a company and detailed solution overview, as well as a summary recommended fit suggestion for what types of organizations should consider EC Sourcing. Part 3 of this series will offer a SWOT analysis of the company, a discussion of competitors, selection recommendations and a summary analysis.

Let’s look at the strengths and weaknesses.

EC Sourcing: Vendor Analysis 2020 Update (Part 1) — Background and Solution Overview

PaaS

This Spend Matters PRO Vendor Snapshot 2020 Update offers a refresh of our 2016 review of EC Sourcing’s solution. EC Sourcing is one of a select group of procurement technology providers targeting the middle market with an e-sourcing platform. It happens to be one of the most mature in capability, with a set of clever features that only comes from the battle scars of years of managing sourcing events. Spend Matters' analysis of the EC Sourcing platform positions it as a solid contender to fill the sourcing needs of middle-market procurement organizations looking for technology to transform their sourcing efforts. That said, the solution could also be a fit for larger organizations looking for a more specialized sourcing solution.

Since our last three-part Snapshot, EC Sourcing has addressed a number of the weaknesses we pointed out. It has built a reporting module and partnered with BidMode to add an optimization module to its offering. It also has updated its UI. That means its solution now consists of modules for e-sourcing, process management, supplier management, contract management, spend analysis, optimization, and intelligence reporting.

This update will provide facts and expert analysis to help procurement organizations determine if EC Sourcing solution is the right fit for their needs, and it will offer perspectives on alternative providers to consider in an evaluation alongside it. Part 1 will include a company and detailed solution overview. Part 2 will focus on product strengths and weaknesses. Part 3 will offer a  company-level SWOT analysis, a look at competitors, selection considerations and a summary analysis.

Updated! CORONAVIRUS RESPONSE: Sourcing and Commodity Management — Help with direct materials sourcing and automated supplier discovery

Updated April 23: This post about the Sourcing and Commodity Management category has been updated with profiles of additional solutions for direct material sourcing — Ivalua, SAP Ariba, Synertrade — as well as solutions that help with automated supplier discovery — SAP Ariba and Tealbook. The updated passages are italicized, and the new profiles are toward the end.

In this installment of our “Coronavirus Response” series, Spend Matters will explore sourcing and commodity management, with a focus on direct materials. With the COVID-19 crisis impacting logistics and existing supply bases, in China (even though China seems to be recovering), the rest of Asia and Europe (thus far), there will be numerous emerging needs for companies across manufacturing. This PRO brief will focus on solution providers that we’ll profile in this category: Allocation Network, Coupa, Jaggaer, Ivalua, SAP and Synertrade — which help with direct sourcing. You can also use solutions for automated supplier discovery from SAP Ariba and Tealbook, although other COVID-19 related resource sites for supplier discovery have also popped up from scoutbee, Thomas, and various sector-specific resources (e.g., D&B, govshop, and others in the federal government).

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the second of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc. (Read this category’s PRO analysis and solution recommendations here.)
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source.
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP. (Its profile for this series is here.)
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic. (Read in-depth detail on this category here.)
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions: for sourcing remote/online work; solutions for sourcing and managing mobile-first contract workers anywhere you need them; solutions to “direct source” and manage contract workers; and solutions for data management and analytics.

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For sourcing and commodity management, the emerging needs for companies across manufacturing will include rapidly identifying new sources of supply, conducting complex sourcing events for materials, parts and components (which may be tied to broader bills of material), qualifying suppliers based on targeted requirements (e.g., for a specific line), and managing and tracking suppliers based on custom scorecarding.

After the pause button is lifted on production — in cases where one is put into place — these needs will become especially acute during the recovery phase in specific regions (which may be different from the recovery phase in other geographies).

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how sourcing and commodity management can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

Kodiak Rating: Vendor Analysis (Solution Overview, Strengths/Weaknesses, Company SWOT, Selection Checklist, Analysis)

As we’ve mentioned in previous research, the market for supplier management applications is fragmented with many types of solutions and approaches. At Spend Matters, we have defined five core supplier management capabilities:

* Supplier information management (SIM)
* Supplier performance management (SPM)
* Supplier relationship management (SRM)
* Supplier risk management (Supplier Risk)
* Supplier quality management (SQM)

Most supplier management applications today have their origin in the SIM or risk areas. There are very few, if any, vendors focused on SPM, and to get that functionality, buying organizations have usually been forced to invest in broader suites, either full S2P suites or extended SIM or Supplier Risk applications. As a result, many organizations, especially (but not limited to) mid-size organizations, have resorted to using Excel as the primary tool for supplier performance management.

But, that said, SPM needs information from other applications to measure performance and has overlaps with the other SXM areas. You typically need some basic information about your suppliers (SIM) and both risk and quality data (Supplier Risk and SQM) to rate your suppliers, and in order to act upon the ratings, some SRM capabilities are needed.

Kodiak Rating’s solution stands out in the market with its primary focus on SPM (and to a lesser degree SQM) supported by basic capabilities in the other SXM areas.

This Spend Matters PRO Vendor Introduction offers a candid take on Kodiak Rating and its capabilities — features that support rating, monitoring and managing your suppliers. The brief includes an overview of Kodiak Rating and its solution offerings, a summary solution evaluation, solution strengths/weaknesses, a company SWOT analysis and a selection checklist for companies that might consider the provider.

What’s going on at SAP Ariba (sorry, I mean SAP Intelligent Spend Group)?

SAP Ariba (and before that Ariba on its own) has been the dominant vendor in the source-to-pay market for almost two decades. And it was arguably the first S2P vendor, after its acquisition of Freemarkets in 2004 (depending a bit on how you define S2P!)

Since then, other vendors have constantly compared themselves to Ariba and SAP — and bragged about “wins against” them and replacement deals. And on the end-user side, the stalwart has pretty much been a consistent presence on any procurement technology evaluation longlist and most shortlists as well. But over the last couple of years something has changed, and SAP Ariba is facing some serious challenges in keeping (or perhaps even regaining?) its dominant position in the market.

But to understand the present and gaze into the future, we must first fully appreciate the past.

In 2011 SAP started (or should we say launched?) its journey toward the cloud with the acquisition of SuccessFactors. This was the first in a series of acquisitions of cloud-based, domain-specific solutions.

This includes Ariba (2012), Fieldglass (2014) and Concur (also in 2014). Well actually, to get ahead of all the reply guys, SAP had acquired Frictionless Commerce in 2006 (Frictionless was the first vendor with an integrated upstream suite back in 2003), which at that point was sort of a cloud solution. However, it was never sold as such by SAP and was basically treated as a stopgap e-sourcing and CLM product until the Ariba acquisition. Then just last year, this combined trio of assets for SAP, became the new SAP Intelligent Spend Group.

For the first couple of years after being acquired, Ariba acted very independently of SAP, even if they brought in Walldorf wunderkind Alex Atzberger from SAP to lead Ariba. But since Alex left Ariba to take over SAP CX (which he also has left to become the CEO of Episerver) and the departure of Barry Padgett, the replacement SAP Ariba president who briefly last year became president of SAP Intelligent Spend Group before becoming the CRO of Stripe, it feels like Ariba is being pulled in more to the SAP mothership, at least organizationally.

But when it comes to the product lines and products, it’s a more complex question. This leads us to a couple of areas that we view as introducing controversy and uncertainty to customers, prospective customers and partners at the moment. Which is our focus for today*. This PRO analysis explores the following topics:

* Aging technology
* Integration and product rationalization
* Leadership turnover and reorganizations
* The rise of S/4HANA (i.e., Will the ERP offering from SAP ultimately replace the different solution sets within the Intelligent Spend Group?)

* Our analysis has been informed by dozens of discussions with SAP Ariba clients and partners. While this research brief introduces these topics on a high level, there are a lot more technical details behind the scenes, and the analysis simplifies some of the technology complexity that exists underneath and within the product stack. For example, in sorting through SAP Ariba and SAP today, there are also some key application/platform/integration strategies (e.g., master data management) that procurement and IT groups will still need to formulate in the absence of a clear stated strategy from SAP. For practitioner organizations who are wrestling with these and other decisions, please don't hesitate to contact us here.

2020 Predicaments in Supplier Management: Top 3 Problems in SXM

LinkedIn ProFinder

(Editor’s note: Spend Matters’ analysts are taking on the new year by looking at their areas of procurement technology to see what’s broken and what can and should be fixed this year. Here, analyst Magnus Bergfors lays out the predicaments faced in supplier management (SXM). And for our PRO subscribers, his other post today offers his predictions for 2020.)

Just before the holidays we published a PRO brief (The 5 Building Blocks of Supplier Management Capabilities) on the complexity of the SXM market and created a framework for how to define this space. That article highlights one of the lingering issues with supplier management: There is no one-size-fits-all solution here. That is, however, a very broad predicament, and in this article we want to break this down into a few more specific predicaments.

2020 Predictions in Supplier Management: 5 Areas for Improvement in SXM

In our other post today on SXM predicaments in 2020, we discussed some of the current predicaments around supplier management centered on supplier data, supplier segmentation and category management.

To address these issues, buying organizations need to get serious about supplier data management as well as overall supplier management strategies. Unfortunately supplier management is often a secondary responsibility for procurement organizations where the focus tends to be on sourcing and delivering savings. The exception is in some cases in the IT space where some organizations have established vendor management offices (VMOs) to manage the more strategic and critical supplier relationships.

The sourcing and savings focus also results in a lack of interest in making sure that supplier data is managed correctly. Onboarding suppliers often falls to accounts payable organizations whose focus is on making sure that the vendor master data is accurate from a standpoint of getting invoices paid and preventing fraud.

More mature organizations have, however, realized that suppliers need to be managed (not only sourced) and that there is an enormous amount of value to be realized through better supplier management and collaboration — as well as, in some cases, co-innovation.

But we also need improvement in the applications and technology to support this. In this Spend Matters PRO article, we will explore five predictions in how we think applications and the SXM market will evolve to meet these challenges and help procurement organizations manage their  suppliers better.

2020 Predicaments in Strategic Sourcing: How to Make It More Strategic

(Editor’s note: Spend Matters’ analysts are taking on the new year by looking at their areas of procurement technology to see what’s broken and what can and should be fixed this year. Here, analyst Magnus Bergfors lays out the predicaments faced in strategic sourcing. And for our PRO subscribers, his other post today offers his predictions for 2020.)

Strategic sourcing as a concept was introduced in the 1980’s and heavily influenced by consulting firms such as McKinsey (which gave us the famous Kraljic matrix) and A.T. Kearney — and is a process that is designed to help procurement organizations successfully source or renegotiate products and services in a deliberate manner.

While this process can deliver billions in savings, there is a larger problem. This approach is binary — you either run a strategic sourcing project or you don’t — and it’s very episodic in that once you have implemented the strategy, you then move on to the next project. This is the proverbial “drive-by sourcing” and “three bids and a buy and a cloud of dust.” This means that the follow-up and management of the contract is ignored.

Then there's the concept called category management. It has its roots going back to the Kraljic matrix (which profiles various spend/supply categories and then tailors the resulting supplier sourcing/management strategies), but the term “category management” really originates in retail, where the idea is to treat your categories as individual business units. Applied to procurement, it becomes a process to continuously manage your category.

In 2020, how should these two concepts be addressed by procurement technology vendors?