Jason Busch on Ariba and How To Choose Procurement Software

Our US based colleagues write a huge amount of useful material, and the team there are certainly more technologically savvy than Nancy and I here. Every so often, there is an article that really is essential reading, and this one from Jason Busch last week fell into that category. The article is titled Procurement Technology Tip: When Ariba/SAP Plays the Executive Card, What Should You Do?

It does cover that specific – how to react if SAP tries to bypass the procurement executive and go to the CIO or CEO when a procurement technology decision is being made. That’s an interesting topic in its own right, but really, the article is much broader than that.

Jason looks at procurement technology as a spend category for which we in the profession really should be experts. If we can’t manage the sourcing of our “own” spend on technology well, why would other areas within our organisations trust us with their categories? (That’s been a favourite topic of Pierre Mitchell in our US team too).

But there are particular problems when a firm of the size and breadth of SAP are looking to persuade a potential client that theirs is the best solution. Now Jason emphasises that very often, the firm is good candidate for the short list in many cases. But ...

“The problem is that when Ariba and SAP play the executive influence game (CPO, CIO, CFO, CEO), it helps no one in a formal selection process, which should be fundamentally procurement-led and best-practices based. There needs to be a single driver at the wheel of the selection car – collecting data and managing the process based on input from all key participants”.

So he lays out some of the key points to consider for anyone looking at investing in ERP technology in particular, although much of the advice applies to any sort of procurement-related technology, we’d suggest. If Ariba or SAP plays the executive-sponsorship card to get a leg up or ram their way into a selection process, Jason recommends five steps that you can take. Here is just one of them – his final point - as a sample.

“Most important, and if you had to net it down to one recommendation... run the sourcing event big, run it competitively, and run it smartly (i.e., don't use a winner take all approach). You will save a lot of money and most importantly, get the right tools for the job. Make sure to include switching costs, risk factors, and anything else that might favor the incumbents, but build a balanced sourcing scorecard and run the event fairly, transparently, and rigorously. Procurement would do that for any other major strategic sourcing event, and what could be more strategic than getting the right technology to support a 10X ROI profit center like procurement, right?”

It’s excellent advice from start to finish – the whole article is here. As the market overall develops better and better capability, SAP/Ariba face stronger than ever competition, from Coupa, iValua, Selectica/ b-pack, and Vortal as well as e-invoicing or sourcing specialists, this is well worth reading.

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