Next Level Sourcing and Commodity Management Compass
Evaluating the Capabilities of ERP Providers Compared to Independent Vendors – Know Your Size Before Trying on the Suit
Jason Busch, Managing Director, Research, and Thomas Kase, Lead Analyst, Spend Matters
It’s our operating belief that sourcing solutions from ERP vendors (i.e., SAP, Oracle, and Ariba) can do a commendable job – at least when configured properly, used to their fullest and deployed as part of an overall procurement transformation program – under a range of different circumstances and use cases. But for us, the fundamental question that should come before all others when considering these tools is whether or not the primary purpose will be to focus on driving better sourcing and purchasing outcomes or impacting the business in different ways beyond procurement.
The last thing a Global 2000 company needs is a procurement mid-life crisis over investment in the wrong sourcing tool. That said, how do you know what set of tools are the most appropriate based on your individual operating environment, current (and expected) sourcing skill sets and overall source-to-pay footprint? And what role should ERP and non-ERP sourcing toolsets play in this regard – even potentially alongside each other? These are questions that not enough procurement organizations ask themselves early enough in the evaluation and selection process. This Compass paper tackles these two questions.
These areas are important to give adequate consideration to. Based on longevity and organizational penetration levels inside typical Global 2000 firms, one would expect that among the individual solution markets within the source-to-pay spectrum that sourcing-focused technologies would have the highest adoption rate. Yet as you peel the onion, such a statement would be misleading. It is correct that many organizations have adopted sourcing solutions in some capacity. But most procurement organizations have only scratched adoption, compliance and the category management surface with their sourcing toolsets.