Friday Rant: SAP / Oracle May Have Caught Up in eProcurement, But ERP is Not Yet a Purchasing Island
At the same time, it's still important to understand where ERP providers fail to deliver on their own without the help of partners and other third parties. This is a subject I've ranted about extensively; I've also written a lot of research on the topic in report formats (select links at the end of this post). I'll capture the essential elements here, though, so companies going down the ERP procurement path will know exactly what trade routes they'll need to build to connect their planned transactional purchasing island oasis, lest they end up like the unfortunate native population that died off on Easter Island -- alone, cold and grasping at the metaphorical equivalent of ERP at the time, their giant Moai statues.
The first area that is essential when heading down the ERP procurement path (regardless of SAP, Oracle or PeopleSoft orientation) is supplier onboarding. We've described this area as a critical yet often overlooked aspect of P2P strategy and execution. Far too many organizations we've interviewed over the years went down an SRM or iProcurement path without fully considering the need to rapidly onboard suppliers as quickly, completely and efficiently as possible. This resulted not only in significant shelfware as a direct consequence, but as important, implementations with only a much smaller subset of suppliers ever getting fully onboarded into the system, resulting in reduced spend under management and significantly lower ROI than anticipated. Who can companies turn to in this area? A laundry list of vendors that sell direct or indirect solutions driving enablement would start with AECSoft, Aravo, Ariba, Basware, CVM Solutions, Hubwoo, Lavante, OB10, Perfect, and SciQuest.
The next area that companies should never fail to overlook is catalog and master data management. We've previously noted that "providers that can enable the ERP ecosystem in this arena typically focus on supplier self-service, multi-catalog search, configuration and what we'll term 'virtual punch-out,' which includes distributed content search, aggregation and presentation of information (not to mention the application of specific rules to this distributed data)." A range of vendors can enable ERP eProcurement implementations in this area, including Ariba, Enporion, Hubwoo, jCatalog, Ketera, Perfect, PunchOutCatalogs, SciQuest, Science Warehouse and Vinimaya.
The third area where ERP procurement systems come up short without partnerships is that of invoice automation and related connectivity. Spend Matters has noted that these capabilities "can serve as a foundation for transforming the Accounts Payable (A/P) function by bringing new levels of operating efficiency to procurement and finance organizations (e.g., reducing costs per FTE, the total cost of operations, etc.) and the overall effectiveness of the function (e.g., by improving working capital, enabling an ability to 'profit' from receivables through either treasury or third-party funded early payment, etc.)."
If you're an SAP shop, Open Text is the vendor's main partner. In Oracle's case, it's Transcepta (and customers can also use Oracle's supplier network for basic connectivity, although it's time consuming to get suppliers connected). Yet eProcurement customers should not limit themselves to ERP partner-directed options. We've written in our research that "Many SAP customers also use Hubwoo, for example, (an SAP partner)" and that "Basware, which many analysts and observers consider to have the strongest invoice automation solution, has extensive experience with enabling the EIPP and connectivity process within complicated SAP environments for both high-volume and low-volume suppliers." Who else is on the shortlist here? Ariba, Amalto, Elemica, Ketera, Kofax, OB10, Pagero, Perfect, and Quadrem, among others, are all worthy of consideration. New vendors such Oxygen Finance and Pollenware have lots of promise in the discounting, workign capital and A/P benefits capture area.
The Spend Matters bottom line is that if you're going down the ERP eProcurement path -- which is a suitable strategy, given the current state of ERP procurement capabilities -- it's essential to consider third-party vendors in the three areas outlined above. This is true regardless of whether you're migrating from Ariba or another tool or investing in P2P tools for the first time. Without a doubt, ERP transactional purchasing technology has come a very long way, but the last thing you want is to get marooned on a partially built island that looks fully constructed as you approach the harbor. Or worse, like the natives on Easter island, to invest generations in building and fighting over ERP-like Moai monuments with nothing else to show for it as your food, water and lumber supplier completely runs out.
For further reading on the topic (technology, not island cultural history), you can download two free research briefs on the subject:
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I think you allude to a really important issue that I think is only recently becoming clearly understood.
eProcurement, and the same applies to e-invoicing, can only be successful in a truly holistic purchase to pay context. e-procurement implemented by a purchasing function can be successful but unless the accounting perspective is fully understood, it will only achieve half of its objectives. Similarly, an e-invoicing program will fail if for example supplier master data cleansing isn't givien a high priority.
If fundamental critical success factors are outside of your sphere of influence, your project is doomed.
Ariba have it right. They've evolved across the P2P spectrum from a purchasing background. The ERP vendors are perfectly placed because they, generally, own the P2P infrastructure and I think this is has contributed to their successful maturity.
Good to hear from you. It's been a while. I think Duncan did a solid job on the report. I have a few questions on it (called attention to some of my quibbles earlier), but in general, as they things go (forced visual rankings are not my cup of tea), it's certainly of some use.
I also agree with Jason about the headline visual graphic - the value of the Forrester Wave is that clients can tailor it to their needs, amplifying criteria that are important to them, down-weighting those that arent, and even adding new criteria of their own. Although, when I'm in the middle of the long process of completing the spreadsheet tool, I do wish I could simply put an X in a 2 by 2 grid and be done.