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Supplier Management Market Observations: Recent Trending, Musings on SAP's Core Offering and General Deployment Pitfalls (for all Solutions) to Avoid

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Supplier management technologies have come a significant way in recent years, buoyed by their early adoption to enable specific initiatives (e.g. supplier diversity, supplier on- boarding for eProcurement, supplier performance management). From a broader sourcing perspective, modern supplier management covers not only the data points needed to keep the accounts payable team happy when they onboard new suppliers -- it spans a broad range of areas such as commodities, capabilities, capacities, credit and other supply chain risk, corporate and regulatory compliance, geographical coverage, diversity, performance and more.

This Spend Matters Compass report explores recent trending in the market, including the core supplier management capabilities of SAP (we'll leave our specific observations of Oracle for an analysis in 2012). The second part of this analysis focuses on general deployment pitfalls to avoid regardless of which provider you've opted to go with – ERP or otherwise.

Our summary of SAP's supplier management capabilities is largely positive with a few important caveats – and footnotes. Aside from how SAP and Oracle have greatly enhanced their core supplier management capabilities in recent years, another trend we're seeing in the market is less-than stellar implementations. In other words, companies botch the very problems they're hoping to solve.

During the second half of this Spend Matters Compass, we highlight some of the specific challenges and mistakes we see from a technical implementation standpoint of supplier management tools. Our observations suggest that companies would do well to invest more time in not just selecting the right vendor, but in making sure they tailor their deployments to fully leverage important functionality and capability that far too many users overlook that is resident in most popular toolsets.

Moreover, the money spent on hiring the right professional services teams (either from the vendor or a third-party) to help specify how best to take advantage of core capabilities resident in individual supplier management applications would be an investment that would pay dividends in most cases. No doubt, companies deploying ERP supplier management solutions would be well advised to consider bringing in a third-party advisor or consulting firm with experience in supplier management to make sure that the vendor in question is adequately representing all the capabilities that their tool is capable of providing.