There has been much chatter in the market of late about the eventual migration away from Frictionless (also described internally at SAP and with partners as the "bridge" platform). I recently had the chance to catch up with Marko Navala, who not long ago took ownership of the solution for SAP, and Paige Leidig, a long-time product and marketing veteran of the SAP procurement suite. They told me that "there are no plans to re-platform the e-sourcing" solution set. A few weeks ago, David Marchand, who used to focus on SAP's e-Sourcing product before changing his role within the company, also suggested the same thing. Moreover, the current SAP party line appears to be that there are "no plans to force e-sourcing [customers] to another platform." Moreover, while the age of the Frictionless design (over ten years) implies an eventual migration to a more modern SaaS platform at some point in the coming years, according to SAP, "re-platforming" will "not happen in 2010 or 2011."

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I've written about SAP's Frictionless acquisition countless times on Spend Matters -- what it meant initially, the advantages it provided SAP, its disadvantages, and how the platform would ultimately become part of a broader On-Demand strategy encompassing a range of business applications. Now, it appears, a number of sources indirectly tied to -- though not employed by -- SAP are suggesting that the venerable ERP provider will soon kill off the Frictionless platform in favor of its home-grown Business ByDesign SaaS platform (originally aimed at just the SMB market). I reached out to SAP this week, and the contact I spoke with suggested that this is unequivocally not the case (when it comes to e-sourcing), and that we can expect to see the Frictionless platform continue to serve as the foundation for a range of On-Demand initiatives for some time. However, not everyone is convinced.

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This second prediction for 2010 is bound to generate some controversy (read the first here). After all, ERP providers have lost one opportunity after another to consolidate the Spend Management market in recent years, giving best-of-breed providers like Ariba, BravoSolution, Emptoris, and Zycus lease after new lease on life. I believe, however, that 2010 could signal a major inflection point for ERP's software in the Spend Management sector. Indeed, 2010 may very well be the year ERP gets it right.

Consider: Oracle is driving new flexibility in deployment models -- not to mention breaking new functional ground and surpassing best-of-breed competitors in emerging areas (more on that in the coming weeks) -- and SAP is embracing its BPO channel-partner ecosystem as well as a suite of home-grown On-Demand capabilities to get around the forklift-upgrade challenge. Looking at this, it becomes pretty clear that, for the first time, ERP is playing with a full deck of Spend Management cards -- or the fullest set it's been dealt to date. Add to this the fact that Infor, a dark horse in the ERP race for business application suites, could very well make its first major procurement acquisition in 2010, and the ERP Spend Management market is looking more interesting than ever.

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In sports, it's common to handicap competitors. This allows observers of the game -- not to mention those actually participating in the festivities -- to better understand how they stack up to their peers. Now, many factors can comprise a handicap. Some are purely quantitative (in golf, a handicap is calculated from your scores on given courses, each with its own set rating). Others are more qualitative, often based on a combination of expert analysis and a competitive-market pricing environment (betting at the race track, football/soccer game spreads through your friend in Vegas, etc.) Regardless of how the actual handicap or comparative benchmark is created, it's the range of factors that go into creating the score -- or the specific votes in the form of educated guesses and bets -- that matter most for truly understanding how a competitor stacks up

For example, It's one thing to know that Horse A faces 20-1 odds, but when handicapping the race yourself it's far more useful to know that Horse A's past performance on specific track conditions is actually stronger than the relative measure portends, and might not be factored into the current odds by other participants in the market. At this point you're probably asking yourself, "What the heck does this mean when handicapping SAP and Oracle in the procurement sector?" I'd argue that it means quite a bit, because unless you know the relative strengths of their approaches to each other, it becomes hard to see through the noise of individual announcement, product reviews, and analyst rankings.

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It appears SAP is taking a move from Oracle's playbook when it comes to becoming more transparent with its On-Demand pricing and discounting: at the Influencer Summit last week, SAP shared a number of pricing details around its On-Demand products. As an example, consider SAP's approach to pricing its On-Demand E-Sourcing offering (not including contract management or supplier management, mind you). For its "standard offering," SAP pricing starts at 300 euros per month for primary users ("sourcing-event owners" in SAP-speak); other users are free. Sourcing-event owners have, in SAP's words, "full access to the features listed in the functional package [including the ability to] create, edit, and delete sourcing event information." Pricing for the standard offering drops to as little as 30 euros per month per seat for each sourcing-event owner above 250 users.

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At SAP's Influencer Summit last week, one thing became quite clear rather quickly in discussions with key SAP team members as well as during the specific analyst and customer briefing on its latest products. And that's the fact that SAP is prioritizing E- Sourcing as a key component of its broader procurement portfolio. The three reasons SAP outlines for this are fairly cut and dried: One, SAP views cost reduction as one of its customers' largest concerns of late (no surprise there; however, quite an about-face for an ERP provider to speak to ROI vs. TCO, no?) Two, SAP also sees sourcing as a significant opportunity because of the rapid time to value it can deliver. And three, SAP believes that an on-demand value proposition is central to engaging procurement organizations already sold on all the benefits of SaaS- or cloud-delivered solutions.

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Last week I had the chance to get an update from SAP on the latest positioning and solution elements of its overall procurement portfolio. In this post, I'll continue to share what I learned, focusing on providing an update on the provider's latest strategy, which embraces what SAP describes as, "the BPO channel" (semantics aside, some of its partners in this regard are clearly what we've come to think of as procurement-BPO providers, while others look more like solutions providers and marketplaces that deliver hosted SAP solutions). SAP continues to believe that a BPO-partner strategy is key to reaching a material portion of the market (as opposed to traditional direct-sales relationships and indirect SI-consulting-partner relationships).

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On the second day of SAP's Influencer Summit, the venerable ERP provider disclosed quite a bit about its broader On-Demand strategy, products, and pricing in the sourcing and contract management areas. But from a new-product perspective, it also unveiled an On-Demand supplier information management offering. (This "new" solution is really not so new; it leverages many of the capabilities already resident in the e- sourcing platform.) The result is an offering that companies can purchase independently of -- or in conjunction with -- SAP's sourcing and contract management capabilities. On paper, SAP's On-Demand supplier management capabilities seem to check a number of the boxes that companies are looking for in the supplier information management area.

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Every so often you read something that just makes you go, "wow."

Paul Hopes was a 58-year-old with greying hair and a double chin who lived in a modest house outside Reading, a mid-sized town 40 miles west of London. He had risen to the dizzying heights of purchase-ledger manager at the UK head office of Toys 'R' Us. Paul was happily married and served as a volunteer for his local Soccer Association -- as Finance Director. Everyone liked him; he was nice quiet guy. "We just knew him as 'Paul from Finance.' He was a quiet, likeable chap," said a colleague.

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I'm flying out tonight for a crazy few days on the East Coast. I’m starting the week at SAP’s Influencer Summit in Boston, hoping to glean some new insights into where SAP is headed with its On-Demand strategy and products as well as the latest in what may soon come out of its procurement and SRM solution areas. Clearly, SAP has its work cut out for it in convincing not only analysts, media, and bloggers but also practitioners that its Spend Management solutions warrant material investigation and consideration outside of ERP-related upgrade decisions. I begin to drink some of the SAP Kool-Aid when I hear its vision in such areas as spend performance management and supply risk, but it'll need a whole lot more than just vision and early proofs of concept to convince a procurement audience increasingly skeptical of ERP's ability to deliver cost-competitive solutions that meet the same functional specifications as best-of-breed competitors. Regardless, the summit should prove insightful on a number of levels, and I look forward to reporting back what I find tomorrow and Wednesday.

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