Procurement technology – ‘best of breed’ or single solution?

I've spoken to a couple of impressive and knowledgeable guys recently - off the record - who lead on procurement technology for very large global organisations. They were both wrestling with the same issue.

Did they go for a 'best of breed' solution in each of the distinct (or potentially distinct) procurement areas, or do as much as possible with one vendor / solution?

It's probably most stark in terms of the ERP providers. If I'm an Oracle or SAP shop, do I use everything they provide in the procurement space? Or even if I'm locked in to using the basic ERP elements as part of a wider integration, do I look to supplement with more user friendly interfaces, slicker supplier adoption tools and so on?

And even in Sourcing, the same thing is beginning to apply more. As Emptoris, for example, build their range, the same issues apply - do I use a single vendor for everything they offer, or do I look separately at Analytics, basic eSourcing, optimisation, information and risk management...

The two people I spoke to were both fans of the best of breed approach. That's also what Jason Busch, who understands all this better than pretty much anyone, usually recommends.  There's more from Jason in his research, for example in the two papers here:

An ERP Outlook: Are SAP's and Oracle's Spend Management Capabilities a Fit With Your Own Technology Plans? Part 1

Making ERP Procurement Technology Work – Essential Third-Party Technologies, Solutions and Deployment Models to Accelerate Returns

Anyway, the people I spoke to were having some difficulty convincing IT and other stakeholders that best of breed was sensible. While "everything integrates to SAP", as one said, they still have to overcome concerns about that integration, about costs (although of course best of breed is not necessarily more expensive), and about user acceptance of multiple platforms.

So, it seems that building an overall business case for eSourcing or P2P is not what worries the leading practitioners now. Most organisations have made the intellectual leap to see that the payback is pretty undeniable.

Rather it is  the ability to determine the best particular technology strategy, and make a convincing case for it.  It's all about considering carefully the different options, and working out how to get the best out of increasingly diverse and broad options available in the procurement technology market.

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First Voice

  1. Tim Williams:

    This is a problem that we at Millstream as an eSourcing technology provider are also wrestling with. We are increasingly being asked to respond to public tenders where a wide range of functionality including enotification, etendering, automated evaluation, eauctions, contract management, ecatalogues and purchase-2-pay is required all in one single integrated system.

    The problem for us is that we simply don’t provide all of this functionality ourselves, partly because we prefer to concentrate on what we’re good at (enotification and etendering) but also because although the specification requires all of these functions, we don’t actually see any real demand from the people who are supposed to use them once the contract is in place. In order to satisfy the contract specification we have to partner with other companies and work out how we can integrate our various systems, all of which ends up being horrifically expensive.

    But worst of all, as Peter’s article alludes to, is that there is inevitably a compromise and while we view our enotification and etendering systems as best of breed, the other functional elements we’ve had to add to meet the spec aren’t necessarily the best, or at least they’re not ideally suited for every member of the 30/200/4000 organisations that use our various systems.

    The specification is written to satisfy the needs of the most demanding organisation, but 95% of the users won’t ever use the automated evaluation or contract management facilities, yet we’ve had to design and cost the system on the basis that they will.

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