Procurement Outsourcing - PO technology Landscape - January 2009

Background and scope of the research Procurement technology is playing an important role in driving the Procurement Outsourcing (PO) market as organizations strive to transform their procurement process to take advantage of the business benefits and lower costs of global sourcing. The PO technology landscape is aligned to the two broad divisions in the PO market, namely sourcing and Procure-to-Pay (P2P). The market is primarily served by packaged solutions like ERP and procurement-specific Commercially-Off-The Shelf (COTS) products. PO suppliers are also investing aggressively in developing technology capabilities to deliver sustainable cost savings to their clients. In this research study, we investigate the role of procurement technology in PO and analyze the current technology landscape in the PO market. The research is based on two key information sources Proprietary Everest database of 130+ multi-process PO contracts signed as of November 2008 Capability fact-pack of 18 PO suppliers including Accenture, buyingTeam, Capgemini, Corbus, DSSI, Genpact, Global eProcure, HCL, EDS (an HP company), Hubwoo, IBM, ICG Commerce, Infosys, Surestock, TCS, Wipro, WNS, and Xchanging 2 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Table of contents (page 1 of 2) Topic Page no. Background and scope 4 Summary of key messages 5 Section I: Role of technology in PO 6 Summary 7 Current state of procurement systems 8 Key drivers for PO 9 Bundling of IT in PO 11 Technology options for PO buyers 12 Ownership of procurement systems in PO 13 Supplier provided add-on tools and technologies 14 Section II: Technology landscape in PO 16 Summary 17 Classification of typical technology solutions in PO 18 Core technology solution across FAO, HRO, and PO 19 Core sourcing and P2P solution in PO contracts 20 S2P technology landscape for PO buyers 21 Core sourcing and P2P technology vendors in PO contracts 22 Acquisitions and partnerships by ERP providers 24 SaaS as a delivery model 25 Technology capability of PO suppliers 26 Types of PO supplier proprietary technologies 27 3 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Table of contents (page 2 of 2) Topic Page no. Implications for stakeholders 28 Implications for buyers 30 Implications for suppliers 32 Appendix 35 Key procurement technology related acquisitions and partnerships by PO suppliers 35 PO-specific proprietary tools and technologies 37 Glossary of terms 39 References 41 4 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Summary of key messages 1 Few organizations have an existing mature procurement technology capability, and access to Role of procurement systems is one of the key drivers in a PO engagement technology in PO PO facilitates successful technology implementation; therefore the incidence of bundling of IT with PO is high. Nearly 70% PO contracts have procurement systems as part of the overall scope Though the technology strategy in PO depends on the existing maturity of the buyer’s procurement systems landscape, nearly 50% of PO buyers have leveraged supplier-owned systems and about 35% PO buyers are leveraging supplier provided add-on tools 2 The technology landscape of a PO contract typically involves an underlying ERP solution along with a Technology set of procurement-focused applications that could include both procurement specific COTS products landscape in PO and PO supplier’s proprietary tools SAP, Oracle, and Ariba have emerged as the leading S2P technologies though nearly 65% of PO buyers continue to have a fragmented S2P technology landscape Procurement-specific COTS (like Ariba and Emptoris) and proprietary technologies play a more prominent role in PO engagements as compared to HRO and FAO engagements. While ERPs like SAP continue to dominate the P2P space, procurement-specific COTS like Emptoris and Ariba have a stronghold in the sourcing space The procurement technology vendor landscape has also been actively involved in acquisitions and partnerships (with PO suppliers and other technology vendors). The market has seen the emergence of several players offering SaaS as a delivery model Top PO suppliers are building out their technology offerings through acquisitions and partnerships with procurement technology vendors. PO suppliers are also developing PO-specific proprietary tools/technologies; platform-based PO offerings are also emerging 5 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

The study provides a deep dive into key aspects of the PO technology landscape; below are four charts to illustrate the depth of the report ILLUSTRATIVE Bundling of IT with HRO, PO, and FAO Technology landscape of a PO contract Contracts with supplier maintained IT systems across HRO, PO, and FAO Number of contracts XXX XXX XXX 100% = PO technology landscape XX% XX% Packaged solutions Proprietary tools & technologies Contracts with supplier XX% maintained IT systems ERP-based Procurement- XX% specific COTS XX% Contracts with buyer XX% maintained IT systems HRO PO FAO Technology vendor market shares in PO contracts PO-specific proprietary tools and technologies PO suppliers Procurement-related proprietary tools XX% XX% Supplier 8 Supplier 1 xxx XX% Proprietary Process enablers XX% Supplier 7 Supplier 2 xxx XX% Supplier 3 xxx XX% Supplier 6 XX% Supplier 1 xxx Sourcing-related XX% add-ons XX% Supplier 5 Supplier 2 xxx COTS Supplier 3 xxx XX% Supplier 4 XX% Supplier 1 xxx P2P-related XX% Supplier 3 add-ons Supplier 2 xxx XX% Supplier 2 Supplier 3 xxx ERP-based Supplier 1 xxx XX% Platform-based XX% Supplier 1 offerings Supplier 2 xxx Supplier 3 xxx Number of contracts ACV as of Nov 2008 Source: Everest Research Institute (2009) 6 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Appendix: Additional PO research recommendations The following documents are recommended for additional insight on the topic covered in this Research Report. The recommended documents either provide additional details on the topic or complementary content which may be of interest 1. Global PO Supplier Landscape (ERI-2008-1-R-0265); 2008. Analyzes the fast-changing global PO supplier landscape, investigate the changing market dynamics and emerging supplier trends, assesses supplier delivery capability across scale, scope, technology, and delivery footprint. It also provides an insight into the typical characteristics of the supplier groups 2. PO Supplier Profile Compendium (ERI-2008-1-R-0273); 2008. Provides accurate, comprehensive, fact-based snapshots of 16 PO suppliers. Also analyzes the fast-changing global PO supplier landscape and emerging supplier trends 3. PO Market Dynamics in Australia/New Zealand (ERI-2008-1-R-0255); 2008. The research takes a close look at procurement outsourcing developments in the small but dynamic market of Australia/New Zealand (A/NZ). The report discusses buyer side drivers and challenges in the A/NZ region and also provides an assessment of the supplier landscape for PO in A/NZ 4. Procurement Outsourcing (PO) Annual Report 2007-2008 (ERI-2008-1-R-0234); 2007. This research analyzes the global 2007-2008 PO market and provide insights, detailed analyses and implications for stakeholders along three key dimensions - Market size and buyer adoption, transaction characteristics and value proposition, and supplier landscape 5. Outsourcing the Procure-to-Pay (P2P) Process (ERI-2008-1-R-0224); 2008. This report examines the expanding market opportunity around the outsourcing of Procure-to-Pay (P2P) processes. It focuses on identifying the emerging value proposition of an end-to-end approach in addressing converging buyer requirements between the F&A and procurement processes. Based on extensive primary research, including a buyer survey and in-depth supplier interviews, the study explores perspectives on adoption trends, solution components, supplier capabilities, and the supplier landscape of the present market For more information on this and other research published by the Everest Research Institute, please contact us: Katrina Menzigian, Vice President: kmenzigian@everestgrp.com Saurabh Gupta, Research Director: sgupta@everestgrp.com Ateendra Dabas, Senior Research Analyst: adabas@everestgrp.com Ankur Sahni, Research Analyst: asahni@everestgrp.com PO team: POresearch@everestgrp.com Everest Research Institute Two Galleria Tower 13455 Noel Road, Suite 2100 Phone: +1-214-451-3110 Dallas, TX 75240 Email: info@everestresearchinstitute.com 7 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Get the answers today that lead to tomorrow’s success Everest Research Institute has the resources, experience, and capabilities to provide companies with the strategic intelligence, analysis, and insight that are crucial to making the right decisions in today’s outsourcing marketplace. With the vision of our leadership team, the personal commitment, and indeed, the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to guide your company’s future success. Everest Research Institute Everest India Two Galleria Tower Ground Floor, Tower A 13455 Noel Road, Suite 2100 Unitech Business Park Dallas, TX 75240 South City - I, Gurgaon U.S.A. National Capital Region +1-214-451-3110 India 122001 www.everestresearchinstitute.com +91-124-304-1000 info@everestresearchinstitute.com Everest Australasia Level 6, 90 Mount Street Everest Group 150 E., 52nd Street, 16th Floor North Sydney, New York, NY 10022 NSW 2060 U.S.A. Australia +1-646-805-4000 +61-3-9833-1018 Everest Netherlands & Continental Europe Everest UK Everest Canada Everest Australia 1st Floor, Accurist House Atrium Building 3rd Floor The Exchange Tower 409a Wattletree Road 44 Baker Street Strawinskylaan 3051 130 King Street West, East Malvern London, W1U 7AL 1007 ZX Amsterdam Suite 1800 Melbourne, VIC 3145 United Kingdom Netherlands Toronto, ON Australia +44-870-770-0270 +31-20-301-2138 Canada M5X 1E3 +61-3-9509-3933 +1-416-865-2033 8 Copyright © 2009, Everest Global, Inc. ERI-2009-1-PD-0305

Procurement Outsourcing - PO technology Landscape - January 2009

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