Capgemini SRM Research 2010 2011


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Capgemini Consulting research on Supplier Relationship Management (SRM) functionality is released. For more information, a copy can be downloaded from the website

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Capgemini SRM Research 2010 2011

  1. 1. Supplier Relationship Management (SRM)Research 2010-2011Solution Analysis and Business Insights
  2. 2. Contents Prepared and edited by: Sarissa Alleijn Capgemini Consulting NL Hamish McKechnie-Sharma Capgemini Consulting UK Ton van Dolder Capgemini Consulting NL Richte van Wijngaarden Capgemini Technology NL Special thanks to: Charlotte Baratti Capgemini Consulting US Andreas Bernhard Capgemini Procurement Services Bob Booth Capgemini Consulting UK Robbert den Braber Capgemini Consulting NL Sarah Conway Capgemini Consulting UK Rutger Lamers Capgemini Consulting NL Merel Plante Capgemini Consulting NL Willem Scheerder Capgemini Consulting UK Remy Schook Capgemini Consulting NL 2
  3. 3. Contents4 Foreword7 Business Insights 26 Functionality Analysis 8 The Tipping Point of BPO 32 Analysis per category Procurement Rethink Procurement for BPO Procurement 12 a contribution to 52 innovation 16 55 International Channel selector⁺ supports decision making for all P2P options Footprint and Supplier Profiles 20 In-house or as a Service? – CPOs challenge the role of the CIO 23 Can we ever fully automate Spend Analysis or do we need to have human intervention 3
  4. 4. Supplier Relationship Management Research 2010-2011Foreword 4
  5. 5. W e are pleased to present to you the In addition to the 2008-2009 SRM survey, we assessed Supplier Relationship Management (SRM) the level of support in the area of Business Process survey 2010-2011. It is interesting to see Outsourcing (BPO) Procurement. BPO Procurement that over the last ten years we have been remains a strong area for growth that is driving current doing this survey, the market for SRM is demand in organisations. Organisations are seeking thestill growing and investing in these applications. Although ability to migrate easily to such functionality so the needwe all assume that implementing an SRM tool is quite is great given the economic uncertainty that remains ineasy, reality shows different. Q4 2010.Apart from the survey, which gives you an overview of Another new item in our research is the implementationthe major players in the market, we also want to share footprint of the different vendors. We learned throughour experiences, issues and questions we daily see as our projects that this is valuable information for packageprocurement professionals implementing and optimizing selections. The footprint shows the geographicalSRM. We therefore asked our foremost colleagues to dimension and the functional dimension ofshare their view and experiences on SRM, which resulted 5 expert opinion stories, each telling something aboutSRM, all from a different perspective. Major themes Our procurement experts have worked on this study withinclude: BPO Procurement, Innovative Driven great pleasure. We hope you enjoy reading it as much asProcurement (IDP), Channel Selection, In-house or we enjoyed writing it and look forward to your as a Service (SAAS), Spend Analysis. Let it be an inspiration for your further initiatives.Second part of the study analyses the results of the SRMfunctionality survey. This analysis is based on a series of We wish to thank all vendors and colleagues who havequestions designed to address whether the software contributed to this year’s SRM study.covers a specific set of functions within the SRMfunctionality. Ton van Dolder Procurement Transformation Practice Leader NL Capgemini Consulting 5
  6. 6. A note ofthanks….Capgemini Consulting would like to extend itsthanks to the vendors who made time toparticipate in the Supplier RelationshipManagement Survey. Without theircooperation and support, research of thisnature would not have been possible. 6
  7. 7. Supplier Relationship Management Research 2010-2011Business Insights 7
  8. 8. The Tipping Point of BPOProcurementThe business process outsourcing (BPO) market is one Over the last five years, the BPO Procurement marketthat is still relatively immature, particularly when has been growing steadily and while growth ratecompared to the IT outsourcing (ITO) market. This is forecasts for the next five years vary, analysts agree thatabout to change: Outsourcing of indirect spend the rate of growth will increase, fuelled by a recession inbecomes more and more popular, as procurement Western economies. The four mature BPO markets haveorganizations will have their hands full managing all of matured beyond a point of critical mass of supply andthe risk elements in their direct materials spend. demand, and can be said to have reached the “tipping point”.The phrase Tipping Point was popularised by MalcolmGladwell in his book, The Tipping Point: How Little Things The BPO Procurement market is starting from a smallerCan Make a Big Difference. In his book, Gladwell talks base. TPI Momentum’s analysis of the 2009 BPOabout the point at which a trend which may only have a Procurement market is $778m (see figure 1), showingshort life span tips and becomes an epidemic on a global Annual Contract Value (ACV) for deals over $25m. Thescale, i.e. in commercial terms how a fashion or trend market has been growing at between 30 and 40% overbecome permanent feature of the business world. Each the last five years. Forecasts for the next five years areof the larger four BPO markets: customer contact, also varied with no consensus on the expected growthfinancial services, HR and finance & administration, have passed the point at which they have tipped. Theyare here to stay, and are all forecasting healthy growthrates for the next five years. Finance Services Outsourcing $4.909 20% Contact Center Services $4.245 17% Human Resources Outsourcing $3.138 13% Finance & Accounting $2.126 9% Facilities Management $2.045 8% Document Management $1.557 6% Industry-specific $1.287 5% Procurement $778 3% Supply Chain Management $585 2% Research & Development $488 2% Knowledge Process Outsourcing $108 <1% BPO Multi-Process $1.307 5% BPO/ITO Multi-Tower $1.783 7%Figure 1: Cumulative ACV of Active BPO Contracts by Service Line ($US Millions) 8
  9. 9. What services are included in a BPO- • Compliance management – active reporting on andProcurement deal? management of compliance. Often involves interaction with HR to drive changes in or compliance with HR policies.BPO Procurement deals typically have one or more of the Reporting is often executed in low cost locations;following components (unsurprisingly aligned to the often compliance policy is managed locally inservices that a typical procurement department will conjunction with the category managers.provide): • Reporting – provision of management information for sourcing category, compliance and supplier• Strategic sourcing – the negotiation of new contracts management. This is typically managed from a low with suppliers and the associated services, generally cost Far East location. in accordance with the commodity or the overall procurement strategy. As the BPO procurement market matures, the services Some providers offer this service locally to the client that are being bought are growing up the value chain. where the buyers are close to the client and to the Operational procurement deals often now include the supply market. Some offer this service from low cost spot buy desk, whereas two years ago, the service may locations and some offer a hybrid of this model with have been only transactional procurement with spot a local front office supported by low-cost COE in a buying being retained within the client organisation. low cost country (typically Far East locations such as Similarly some companies are in the market for one or The Philippines, China or India). more indirect categories and a few stand out as willing to• Category management – the development of outsource all of their indirect spend. category strategies, subsequent management of the category after sourcing and management of the contracts to ensure that the benefits identified are The group of eligible suppliers is growing delivered through active compliance management. Typically, any supplier management is undertaken in this area. At the beginning of 2008, the only companies who had Some providers deliver this service local to the made credible inroads into global BPO procurement business, some regionally in delivery centres and services were Accenture and IBM. Since then, the some in low cost, typically Far East locations. market has been maturing through partnership, merger• Tactical procurement (spot buying) – the and acquisition and organic growth. management of spot buying for high value and unusual items through a purchasing desk. This is • GenPact has had a successful partnership with ICG usually augmented with a front office which supports Commerce since April 2008, which has brought two employees and supplier contact in local languages. powerful players together to market, This is typically provided regionally from delivery • Steria and HPI GMBH, one of the leading centres in Eastern Europe, Latin America and Asia procurement services providers across Europe, Pacific. announced a collaboration in the procurement• Transactional procurement – the management of outsourcing space in November 2009, the requisitions and PO process plus master data • In February 2010, Capgemini acquired IBX, the management and query management that supports European procurement services and SaaS technology employees and supplier contact in local languages. business, to broaden and deepen their capability in outsourced procurement This is typically provided regionally for voice contact and regionally or in a low cost region for transactional elements. 9
  10. 10. • The pure play Indian providers are placing great The business case for BPO Procurement differs focus on procurement, with most of the larger from traditional F&A players recruiting in this area and pricing deals aggressively to win business and grow their practice. The business case for traditional business process outsourcing is well proven; typically the service can be delivered as effectively, i.e. with no consequentialAs a result, the BPO-Procurement supply market is worsening in quality of service, and more efficiently in amaturing and there are more eligible suppliers who will lower cost location, typically with an improved system ofcompete for potential business, which makes it easier for controls.customers to move into the market confident aboutsupplier price and capability. The majority of the business case comes from a combination of efficiency of centralisation, standardisation, process improvement and automationIncreasing focus on technology as part of the coupled with labour economic benefits of low costwhole… locations. The combination of these two factors can result in benefits of 40-50% as against original cost.With Capgemini’s acquisition of IBX and SAP and Oracle’s However the business case for procurement is moreprovision of on demand (Software as a Service, SaaS) often driven out of sourcing savings, or complianceprocurement technology solutions, the provision of SaaS savings, i.e. effectiveness savings, which can dwarf theprocurement technology on demand now seems to be a efficiency savings. Also the efficiency savings instandard part of the BPO Procurement proposition. For procurement are often less (perhaps 20-30%) as theboth eProcurement and eSourcing, customers expect resources will need to be located across locations otherservice providers to be able to provide a suite of than India and other Far Eastern low cost locations,integrated services and technology as a service. This hence average saving will be less than the 40-50% them an option other than undertaking complexand expensive technology implementations that sitbehind their own firewalls. Figure 2: Building the business case for BPO Procurement 10
  11. 11. We therefore believe that a significant portion of thebenefit from outsourcing can come from effectiveness Conclusionsavings through sourcing and in particular through bettercompliance management. 2010 and 2011 will see the announcement of a number of key new BPO Procurement contracts, with some customers being prepared to outsource large areas ofHowever approaching the overall process in a way to strategic sourcing spend, and with many othersmaximise the efficiency (process) savings and maximise outsourcing operational procurement and spot buying.the (sourcing) effectiveness is the key to success,particularly as associated processes such as accounts As with any new market, there will be new entrants andpayable will need to be impacted if compliance savings players who are bold in scope and approach. Whetherare to be maximised. The potential savings can be quite this will become the norm, and at what rate of adoption,essential - up to 40 percent depending of the maturity of remain to be proven.the organization. Combined effects of better spend Either way, the pressures on the CPO to make savings arevisibility, better framework agreements and lower cost greater than ever, and outsourcing some areas offor managing the spend, make such a result possible procurement will be necessary to achieve these savings.. Whether this results in a tipping point for BPO Procurement will depend on whether those CPOs who choose to outsource and their chosen BPO solution provider can provide a compelling proposition to their business that locks in the sourcing value required and enhances the business’ ability to survive in this difficult market. 11
  12. 12. Rethink Procurement for acontribution to innovationFor companies that focus on innovation as a key Challenges for Procurementbusiness driver, finding innovation with the supplychain remains a challenge. Even though Procurement is The move towards open innovation creates the need toregarded as the interface with suppliers, it traditionally leverage and manage the innovation capabilities in thehas little role in advancing business processes. In this supply base, to:article, we discuss what Procurement should do to take • deliver more innovationsthis role successfully and contribute to innovation. • accelerate design and launch cycles • improve quality • meet more intense demands to reduce cost and riskMarkets develop towards more openinnovation These are not the usual Procurement KPI’s, with the exception of the cost/risk reduction. The economic downturn has only increased the emphasis on theseMost industries increase the outsourcing of non-core traditional KPI’s. Because of this focus, Procurement’sactivities: the average percentage of revenues procured involvement in innovation is limited to work on cost/riskexternally has risen to over 60% in the last decade due to reduction by sourcing and contracting suppliers. Inincreased outsourcing. In addition, companies are practice, this means Procurement is involved once allincreasingly outsourcing critical business functions, specifications are set in stone and the innovation is readyincluding the outsourcing of R&D to the supply base. In for ramp-up. This is a characteristic of siloed thinking, insome industries, where 70-90% of products are sourced which departments (silos) are involved one at a time infrom suppliers, the majority of products are actually order to add their value. That has remained while thedesigned and developed by these suppliers. This is in part innovation processes have become more open anddue to a shift in design towards manufacturing of whole collaborative. Although usually working in teamsystems, which results in an increase in the complexity of structures, silo-thinking remains prevalent withinsupplier relationships. departments and people (typically due to differing CXOThe increase in outsourcing coincides with an increased directives). The result is a very linear process withopenness of innovation processes. Companies are finding handovers to the next department, with a fresh set ofit more and more difficult to keep up with the pace of specific targets at every step.innovation through internal R&D alone. Intelligentlytapping into knowledge bases of (amongst others)suppliers speeds up the process of innovation andreduces total cost. To manage a greater dependency onsupplier innovation, Procurement departments havebeen moving towards stronger partnership models with alimited set of key suppliers. These partnerships are basedon shared risks and rewards instead of traditionaltransactional relationships. But strong supplierrelationships alone are not enough and a limited set of(incumbent) partners is not necessarily a good source ofinnovation. To leverage that relationship, Procurementneeds to feed end-customer needs into the supply base. 12
  13. 13. Traditional versus Innovation Driven Procurement The difference between traditional and Innovation Driven Procurement is best explained with a simple example. Say you are looking for a home espresso machine that serves you the perfect coffee in the morning without hassle. You will have a wide range of needs and criteria the product must meet such as newness, appeal, reliability, value for money, etc. As we live in an open innovation world, we would expect the manufacturer to combine internal know-how with the latest technology available in the market to create the best product for your needs. The manufacturer in fact manages a system of solutions including the design, the pressure system and coffee packaging from a wide array of suppliers. The innovation process of this espresso machine will look completely different for the two Procurement business models.Figure 1: Procurement involvement innovation Traditional ProcurementFigure 1 gives an indication of the effect this may have. To deliver this kind of machine, the traditionalThe hand-over to Procurement usually occurs after manufacturer has started an extensive innovationsupplier involvement and beyond a point where a project. This began with efforts by Sales & Marketing tosignificant impact can be made on cost reduction and understand your needs, and R&D trying to develop this.value creation of the product. At this point it is too late As we are in an open innovation domain, R&D will haveto deliver new innovations or significantly increase worked with suppliers or even players from completelydevelopment. The only remaining factors are cost and different industries to develop a new espresso system. Inrisk reduction, and even these have been compromised. this traditional Procurement setting, there will have beenProcurement can no longer fully influence cost or risk as no involvement until there is a complete picture of thethe specifications are largely set and suppliers have been future product and its specifications. Procurement willdeeply involved in the design process. Furthermore, then be asked to deliver its services. The internal clients’traditional Procurement targets (such as savings, security needs are often specified in terms of contracts, savings,of supply, contract coverage and compliance) conflict security of supply, etc. Procurement in other words iswith project targets which may compromise the value of expected to negotiate a good deal to drive down totalthe end product for the customer. Delays or unrealistic cost and risk. As we have seen before, this may causeexpectations of supply chain capabilities are likely to serious conflicts as the specifications are largely set andoccur through these conflicts. freedom of choice in the supply base is limited. The bestTo move forward from this situation, Procurement Procurement can do now is to set up multi-disciplinaryshould have an earlier involvement. However, teams to discover what the internal clients’ needs areProcurement in its traditional form is not capable of and make the most out of it. To do this, Procurementhandling the ‘chaotic’ processes found in early connects with (potential) suppliers and conductsinnovation stages. Making a true contribution to sourcing activities, negotiates contracts and puts theinnovation processes requires Procurement to redefine operational processes to work. If conflicts occur (i.e. aits business model. This will enable them to tap into part cannot be sourced at a decent price), it will besupply base capabilities and manage supplier forced to push the innovation project back into theinvolvement. design phase. This may compromise specifications, the 13
  14. 14. total cost and the time-to-market. The end result is that organize innovation projects with dual leadership, oneyou will eventually find your “traditional” espresso R&D and one Procurement leader. Others havemachine on the store shelves at a reasonable price. But dedicated project managers, defined specific roles andyou’ll probably have lost interest in it because it was responsibilities for Procurement in each innovationovertaken by a competitors’ machine before it even stage, and used decision making between innovationcame to market. stages to enforce further Procurement support. The required competences of Procurement change as well. There will be a stronger need for people withInnovation Driven Procurement (IDP) knowledge of technology and supplier managementThe IDP producer will also listen to your needs as a capabilities, together with project management skills andpotential customer through Marketing & Sales. But now traditional Procurement skills. This can be achieved byit’s not just R&D who’s listening in; Procurement has for instance recruiting internal technical experts andjoined the project from day one. This enables training them on Procurement skills. In any case theProcurement to thoroughly understand the external Procurement, Marketing & Sales and R&D experts needclients’ needs and to assist R&D with the development to be able to communicate effectively. Beside strongeffort. Now that Procurement knows what to look for, it competencies, this requires a rigid data exchangecan connect the supply base with R&D and at the same between various systems. Integration of data providestime work on a sound supplier involvement strategy insight on both sides on specifications and impact of(reducing the risk of conflicts). The team setup above changes to designs.changes the partner structure of Procurement; it nowconsists of both suppliers and the “internal clients” in theentire innovation process. With involvement in Steps to take towards Innovation Driveninnovation, Procurement must match its activities to Procurementearly innovation stages. This still includes costawareness, but there is much greater focus on scoutingsupplier markets, enabling supplier involvement and Innovation Driven Procurement starts with a clear focusmanaging supplier inputs in the project. All of these are on the role of Procurement in innovation processes.focused on the wide range of targets of the external Once it is clear what Procurement should contribute, aclient. In later stages traditional Procurement activities business model of Procurement throughout thecome back into play to operationalize the new product, innovation process can be set up. A broader focus on thebut the real value is created in the earliest stages. The external customer and involvement from the start has aend result here is that you’re the proud owner of the big impact on the organization of Procurement and its“IDP” espresso machine standing on your kitchen table. activities. After defining the impact, the governance structure needs to be formalized with the role of Procurement in innovation firmly embedded. Once Procurement is firmly rooted in the innovation processes,Impact of Innovation Driven Procurement it can make the step to effectively line up the supply base for a contribution to innovation projects.Involvement in innovation exceeds merely involving Implementation involves selecting the right people,Procurement earlier. A change of attitude and embedding the Procurement role in processes, setting upperspective of Procurement must be embedded in the teams and structures and supporting communicationgovernance of the organization. The role of Procurement innovation projects changes, and the way This will enable Procurement to drive much more valueProcurement is managed is clearly different from from the supply base, while improving time-to-market,Traditional Procurement as it breaks through functional collaborating internally and creating a better focus onsilos. This means companies need to review decision the end product. In other words, it enables Procurementmaking protocols, process design, target setting, to make a significant contribution to innovation and theleadership involvement, team structures, competences bottom-line.and information flows. For instance, some companies 14
  15. 15. The Client Case:The Passion Value ChainA company’s corporate image is probably one of its most How can your business achieve a passionateunderestimated assets when it comes to purchasing. value chain?Wouldn’t we all love to supply well-known companiessuch as Rolls Royce, Nokia, Audi, Chanel, Asics, eBay or Firstly, a passionate value chain takes time to create byRed Bull? Brands leverage not only sales, but also exchanging ideas and challenging existing processes. Topurchasing success. Even if you are not amongst the stimulate this kind of change, a good first step is tobrand leaders in your industry, you are more likely to create regular newsletters and conduct suppliersucceed if you stick to the values of your company and summits. If you can spare 20 minutes a day, you couldcommunicate these when you qualify new suppliers. even consider writing an online blog.Steiff is a German-based plush toy company known for When it comes to managing one on one relationships, itproducing high quality toys and teddy bears. The pays to be selective about which suppliers to spend timecompany’s co-chief executive Martin Frechen said in a with. The first choice will generally be your mostrecent Financial Times article that some suppliers only strategic suppliers, however it is always worthwhile to“think in terms of price and volume” and concludes that spend time with people who have innovative ideas, even“for children, surely only the best is good enough – the if they are not the biggest position on your categorybest design, the best production, the best safety budget.standards”. The next step is to integrate truly innovative suppliersThis kind of attitude and way of looking at your supplier with your company. To do, this, think like Mr Frechenbase makes a difference which cannot be found on an from Steiff, but backwards. Once the employees of yourRFQ template. Commitment, dedication and a passionate supplier have developed a personal connection to yourattitude have a huge influence on your bottom line products and services, there will be increased likelihoodresults. Finding high quality and passionate suppliers of innovations, improvements and true commitment. Inleads to lower reclamations, higher adherence to doing so, be aware that making the value contribution ofdelivery dates and to greater innovation. A supplier who your supplier visible could have a negative impact on theis passionate about your products is much more likely to next price negotiation. However, on balance if yourthink about your company and your products and intention is to buy value, integrating your suppliers is atherefore much more likely to deliver innovation to your beneficial way to achieve this.value chain.Frechen is not looking to discuss about his own needs, orhis productions processes, or even the needs of hiscompany Steiff. He talks about the needs of hiscustomers, or to be even more precise, the children ofhis customers. He demands that his suppliers think aboutthe needs of his “end users” – and that is the first step increating a passionate supply chain.customers, or to beeven more precise, the children of his customers. Hedemands that his suppliers think about the needs of his“end users” – and that is the first step in creating apassionate supply chain. 15
  16. 16. Channel selector⁺ supportsdecision making for all P2PoptionsThe increasing range of commodities that can be P2P channelsupported by Supplier Relationship Management (SRM)tools, together with the increased functionality of the A channel is a defined combination of processes andvarious SRM tools, makes the selection of SRM tools a tools with common characteristics to support thecomplex decision. Selecting the most effective sourcing (sourcing or the) P2P processes. A traditional Purchase-and procurement processes (or channels) for the to-Pay process will go through the steps portrayed in thevarious commodities represents a formidable challenge. Procurement Order Cycle (right side of figure 1) as soonIn particular, the lack of understanding of how to as the source to contract process is finalized and theorganize the entire Purchase-to-Pay P2P process turns contract is implemented.out to be a bottleneck for many organizations duringthe implementation of a SRM tool. The ChannelSelector⁺ provides a framework that supports thedecision making process of all possible variants in theP2P options from requisitioning to payment includingapproval of requisition, receiving goods or services,invoice settlement and communication. Figure 1 SRM process model – Procurement order cycle 16
  17. 17. Channels are grouped according to their level of buyer involvement in the requisition-order process. See the possiblechannel combinations in figure 2. Figure 2 Channel combinationsThese channel combinations are characterized by compliance, insight into commodity and processdifferent dynamics. It is these characteristics that performance and efficient operational support. If thedetermine the channels suitability for a particular balance between control, visibility and efficiency is notcommodity. These include: correct, the gains can be absent. For instance, by only• Control: Provide more control for the business and maximizing control and visibility of all commodities, procurement to ensure compliance to suppliers, unnecessary resources could to be allocated to some of contracts and specifications. High levels of the commodities where there is no need for control or visibility. This could happen in the commodity office compliance will result in better use of volume supplies, which account for a low percentage of total discounts, spend and has a low risk profile. On the other hand, if effort is put only into maximizing efficiency for all• Visibility: Provide a high level of visibility for spend. commodities, over time the risk of insufficient High visibility will result in leveraging data with compliance with the supplier contracts will increase. suppliers, which supports the sourcing process and provides savings improvement, Channel selection⁺• Efficiency: Generate transaction savings through the reduction of process time, particularly invoicing The Capgemini Consulting P2P Channel Selector⁺ processes. provides a framework that supports the decision-making process of what commodity should be acquired throughCommodities have different requirements, in terms of which P2P Channel. By running the commodityhow much control, visibility and efficiency is appropriate characteristics through a questionnaire, the differentto apply to its associated P2P channel. channel options are ranked automatically.By selecting P2P channels on a commodity basis, The Channel Selector⁺ includes all the variants of the P2Pcompanies can optimize: Contract and supplier process, including the largest bottleneck in the 17
  18. 18. implementation of a procurement system, namely how 1. Specify (Product profile): complexity,to arrange the P2P process as a whole (requisition – standardization, configurability, service or product,approval – order – receive – payment). The Channel service/product variations, volatility of price, +Selector includes: eReadiness of the supplier.• Requisition channels (for example: catalogue, free 2. Place requisition: purchasing frequency, number of text order), people requisitioning, absolute spend, inventory-• Purchase channels (for example: planned order, driven. blanket order), 3. Approve requisition: necessity of approval by• Payment channels (for example: p-card, expenses, procurement or expert or management (budget). direct invoice), 4. Place order: Number of orders, necessity of matching• Approval of requisition invoice with purchase order.• Receiving goods/services 5. Receive goods/services: necessity of goods receipt• Invoice settlement (standard, qualitative).• Communication 6. Verify process and invoice: purchase order based,Using the Channel Selector⁺, commodities can be self billing, specification.characterized according to the following P2P processsteps:Figure 3 shows the P2P process steps and all possible outcomes of the Channel Selector⁺ and includes an example of astandard commodity. Figure 3 P2P process stepsExplanation of the purchase order process in the figure for the standard commodity channel: The requisition will most likelybe placed by means of a standard catalogue. Because of the standard specification, there is no need for an expert orProcurement to be involved in the approval of the requisition, instead the approval will be transactional. After approval,the requisition automatically turns into a standard purchase order that is send to the supplier. The goods/services receivedfrom the supplier will be checked and recorded based on quantity but not quality. Invoice settlement will probably bebased on the purchase order and the preferred way to exchange messages in the P2P process will be electronic. 18
  19. 19. In order to apply Channel Selector⁺, at the outset, it isimportant to involve all stakeholders from the Conclusionorganization in the decision making process. Differentcommodities are likely to require different channels,therefore a series of multidisciplinary workshops is When organisations undertake the decision to tackle therecommended when selecting channels. Based on the P2P challenge, they should not underestimate theoutcome of the questionnaire and a valuation of the challenges they will face. Nor, however should they shybenefits and the total cost of ownership, the organization away from these challenges, or underestimate thecan choose the most appropriate channel for each strength of the tangible and non-tangible benefits thatcommodity. Future state channels must be detailed and are expected to arise.validated on a commodity basis, to ensure that channel Organisations taking on this challenge must follow aprocesses fully support additional anticipated future structured approach in order to realise the benefits.changes. This interaction through workshops is also Firstly, the organisation needs to have a vision of the P2Pcritical to achieve high levels of user acceptance, few objectives it wants to achieve. It must then use aoperational exceptions, and not least, robust functional process-focused, business-driven approach to establishrequirements. the P2P channels by means of the Channel Selector⁺, and P2P process support it wants to deploy. This, in turn, willImplementation define the business and technical requirements for the desired P2P solution. The critical success factor lies within the organization:As the implementation of all channels and commodities None of the above can be achieved without thecannot be achieved at once, an approach is needed to appropriate level of sponsorship from senior managersphase this over time. A preferred approach is to and buy-in from the key stakeholders which can beimplement the most value adding and easily achieved by multidisciplinary workshops.implementable channels and commodities in the firstphase. The second group of channels and commodities isthen selected in terms of value and ease-of-implementation, and so on. When assessing ease ofimplementation, it is important to consider factors likesupplier contractual status and eReadiness, requiredprocesses changes, availability of system support,organisational impact, change readiness, and resourceavailability. 19
  20. 20. In-house or as a Service? –CPOs challenge the role ofthe CIOIn his book, “The Big Switch”, the American IT lateral weakening economy the issue is once more gainingthinker Nicholas Carr challenges CIOs and heralds the appeal. The following are particularly appropriate forend of IT departments. He compares the trend towards outsourcing: 1. The supporting IT roles where thecloud computing and away from business computing in decision to outsource is merely an issue of cost; 2.the company’s own data centres with the transition Specialist IT functions that are not part of the corefrom self-generated to centralised power supplies by business. These roles require specialist expertise that isservice providers at the start of the 20th century. generally not available in-house.According to Carr, IT could be controlled by externalspecialists and without hordes of technical experts Purchasing as a central competitive factorwithin the company. His forecast may be radical, but itmay also serve as a wakeup call for CIOs to rethink theirstrategic role: adviser to the company, communicator or On the backdrop of the global financial downturn and theengineer. The crux of the matter is essentially looming recession, cost-cutting measures were movingoutsourcing versus in-house: should companies focus on to the fore in the corporate world - and with it,their core business and outsource those IT tasks that inevitably, the subject of purchasing. After all, theothers can do better? Take the example of purchasing; potential for cutting costs is high in this area: dependingso far in this sector, many CIOs have been somewhat on the sector of business in question, the entiresceptical of external, web-based SAP e-procurement purchasing volume can account for between 40 and 60solutions. These models are regarded by many decision percent of the companys total turnover. It is not withoutmakers as all too unsecure and inflexible. That said, on- reason that the role of purchasing has evolved fromdemand models fare well in a precise analysis of the being purely operational to being strategic; companiesindividual factors. expect their purchasing to make a significant contribution to their overall corporate performance. As aThe CIO is pulled in two directions: should he rather benchmark figure, a logical procurement strategy andassume the role of technology provider, or that of a the use of the right IT solution can save from four tostrategic business designer? Should he provide all the IT eight percent of the total purchasing, or act as the head of a network of specialistswho each play their part in the added value chain by If the CPO (Chief Purchasing Officer) and the CIO arecontrolling the outsourced IT? In his role as CIO, he looking for a suitable IT solution, then the decisiondecides on which IT activities are to be outsourced to quickly comes down to a question of faith. For the CIO,external service providers. the primary factor is whether the solution can be integrated into the companys own IT systems andAccording to a study by Ernst & Young on outsourcing in whether it complements the existing strategy. TheEurope in 2008, 70 percent of all companies’ surveyed – strategic question for the CPO is which operator model is600 decision makers in European companies – stated the most suitable one for his organisation, and which willthat outsourcing was an integral part of their business bring the greatest possible efficiency in terms ofmodel. For many years outsourcing has been seen as the procurement activities. He can choose between aoverall cure for a company’s problems. In times of a licensed in-house solution and an equivalent on-demand supplier model. The solution is then provided and managed by an external service provider. 20
  21. 21. On-demand on the riseThere are important reasons why on-demand has been on the rise for a numberof years in purchasing especially, and thecohort of licensing models is in jeopardy.According to a study by the AberdeenGroup (figure1) on-demand models arefaring significantly better than licensingmodels. They can be implemented morequickly and provide a faster Return onInvestment (ROI) – especially since thecompany no longer needs to implementthe solution itself. If a company, on theother hand, acquires a software licence, itis generally dependent on the expertise ofa consulting company for the Source: Aberdeen Groupimplementation and customisation of thesoftware. Many of the company’s own Figure 1: Top factors driving enterprises to consider on-demandresources are also taxed in the process,and high additional costs are incurred.When solutions are installed, humanresources, running and hardware costs arefound to be hidden cost drivers.With an on-demand solution forpurchasing the company pays only for themodular service elements it needs.Moreover, it has easier and more rapidaccess to the modules, since the solutionsalready run on the service provider’splatform and are being used by numerouscustomers – each with their own individualcustomisations. All the users need is apopular Internet browser. An on-demandoffer is essentially of interest to allcompanies that want to profit from loweroverall costs, faster implementation and asmooth upgrade process – and want to doso without high initial investments.Another benefit is the fact that, accordingto an outsourcing study by the Experton Source: IBXGroup, the contracts for on-demandsolutions have become more flexible as aresult of increased demand. Figure 2: Total cost comparison: On-demand vs. software 21
  22. 22. They can also be concluded over shorter periods than The second reservation as regards on-demand solutionspreviously. A sample calculation by IBX (figure 2) shows is their lack of flexibility. An in-house solution can bethat from the start the overall costs of a software adapted more easily to the company’s specific needs.installation are higher than the costs with an on-demand The advantages of an on-demand solution and itssolution. The overall costs include Equipment, adaptation to customer-specific requirementsManagement and Operations. (customisation) are not easy to combine. The issue is comparable with the purchase or hire of a weekend cabin. The purchased cabin can be designed more easilyReservations about on-demand in line with the owner’s personal tastes. It is much cheaper to rent, with a lower Total Cost of Ownership (TCO). It also makes no sense to repaint a house if it’sMany CIOs still have major reservations about a rental only going to be used once a year anyway. In this case,model. This is particularly true for the management of the standard functionalities are usually adequate.enterprise-critical data outside the firewall. Accordingly,IT security officers first need to check whether the on- The third reservation focuses on the ability of on-demand solution satisfies the internal security demand solutions to be fully integrated. The end-to-endregulations. linking of all the functionalities of the solution to the system is one of the central challenges for the CIO. An in-Historically, it has been a company’s core business to house solution in this instance, however, has tosafeguard their enterprise network so one might think overcome the same hurdles as an external solution andthat by nature, an in-house installation has an advantage therefore enjoys little advantage.over the on-demand solution provided by an externalservice provider. However, this assumption might not beas clear cut as it seems due to a variety of factors: The future: coexistence of both models?One factor is that purchasing solutions are different from“classic” in-house solutions in the way that they require Many CIOs often regard on-demand supplier models as aexchange of data with a lot of different external partners threat to their justified existence. On-demand representswhich are outside the enterprise network. This includes an attractive alternative for the CIO, especially in timesinformation such as catalogues, orders or bids. Many where IT budgets are tight.times these partners are not even integrated into the But is an on-demand supplier model the best possiblecompany’s extranet. Therefore a different approach in solution for every company and every organisation? Thesecurity infrastructure and operations is required. In that following factors are crucial for or against an on-demandcase an experienced and specialised on-demand provider service: cost-benefits analysis, speed and risks.can actually have a clear advantage over an in-houseinstallation. The on-demand supplier model will not threaten to oust the licensing model. The world of procurement hasAnother factor is that significant improvements have enough space for both. They can even complement eachbeen achieved over the last years in terms of Information other perfectly.Security Management Systems that have beenimplemented by on-demand operators. Many service The on-demand model drives the focus away from theproviders are in the process of gaining certification based technology and towards strategic usage, as well ason best practice IT security and process standards like towards the use of purchasing-assisting solutions such asISO 27001 and ITIL. There also have not been any high e-sourcing and e-procurement. Buyers can thereforeprofile security problems with on-demand solutions focus more effectively on their core tasks, on reducingeither. complexity and on the relationships within the company and not lose valuable time sorting out technical queries.Sometimes it seems that the security problem is more ofa philosophical issue: Do I trust the Internet enough toconduct business over it? 22
  23. 23. Can we ever fully automateSpend Analysis or do weneed to have humanintervention?Spend Analysis is undertaken by most organisations in The Spend Analysis Processorder to provide spend visibility information onsuppliers, spend and compliancy and is considered acontinuing point of attention of our CPO’s. Spend analysis is essentially a tool; it is the process of collating, cleansing, categorising and analysing expenditure information. The end goal of any SpendSpend analysis tools Analysis should be to provide clear, consistent spend information which can feed into the sourcing process, identify sourcing opportunities, enable benefits trackingIncreasingly, tools are becoming available on the market and provide the visibility for compliance monitoring. As awhich highlight the ease and speed that can be delivered concept it should be regarded as the fundamentalby automating the process but does this change our foundation of sourcing however the process can startapproach to Spend Analysis? Over the last few years an from many different data points and by leveragingabundance of vendors has entered the Spend Analysis different sources and quality of data. The level ofmarket ranging from those for whom the move into data complexity that this drives often results in a highlyenrichment was a logical step in their respective SRM arduous and time consuming process. So how do thesuite such as Ariba, Oracle and SAP, to more recent increasingly sophisticated software tools feed into thisentrants into the Spend Analysis arena such as Emptoris, process? In order to make sense of data there are variousZycus and SynerTrade. Our survey findings have levels of intelligence that can be applied. Data analysishighlighted that both sets of players have a part to play tools use a variety of these methods to enhance data, byin managing the demand for the market, particularly if rationalisation and consolidation.some organisations wish to focus purely on a one-offspend analysis (e.g. Zycus) or have this linked into end to At a basic level, spend data is extracted straight from theend procurement visibility with an ongoing opportunity source system and displayed in reports. Usually this isto track and manage spend better. Each of these major the starting point for realising the need for Spendplayers will be able to conduct detailed spend analysis Analysis as few organisations have the fundamentals ofhowever our experience indicates that none of them Master Data so thoroughly embedded that the data cansupport entirely automated process. be reviewed immediately and used to guide sourcing decisions let alone have this conducted dynamically.Technological and digital automation is increasing in all Often data sits in numerous systems so using one sourceareas of our lives. Will we ever reach the point where system alone will not provide a fully comprehensiverobots and computers will do away with the need for picture of the spend landscape. To get the most effectivehumans? As Supply Chain professionals we need to result on spend analysis at the very basic level, multipleconsider what technology and automation can mean to extracts from different systems are needed to provideus and our roles. Thinking about this in the context of the full data set. So from this very first stage humans areSpend Analysis we’re left with the question – Can we needed in order to identify where the data should beever do away with the need for human intervention gathered from; Accounts Payables, Purchase Order orwhen conducting something as fundamental as Spend from somewhere else.Analysis? 23
  24. 24. Technology versus human like but are not spelled the same way as the search term. The logic is based on (seemingly) fuzzy rules that at first glance don’t make sense but do provide alternativeOn their own the analytics tools cannot interpret the interpretations of data that will make sense to the enddata so the tools must be programmed and algorithms user.developed which ‘tell’ the software how the data shouldbe mapped. To get the most effective result on spendanalysis at the next level the tool must be ‘told’ what Advancing Technologydata is synonymous and what isn’t. For example somevendors might have different names, but in reality are We have now reached a level where human interactionthe same; Capgemini UK, Capgemini Plc, Capgemini Ltd, with a data analysis tool is diminishing more and more.CapGem etc. The data analysis tool uses synonyms and Current technology provides fuzzy logic and learningassociated probabilities to consolidate and recognise capabilities, though arguably ‘learning’ in a very simpledata before presenting it to the user. This also applies to way. Human intervention is still required to tell softwaremisspelled data, or data with typing mistakes, which in what can be learned.both cases requires a list of possible alternative contentfor certain data, or some routine that checks alternative With more powerful computers and ever largerspelling of data. Whilst there are some tools which can databases data analysis tools can seem very advancedrecognise and highlight some of the basic inconsistencies when using the methods mentioned above, but evenit still requires human intervention. It requires someone ‘learning’ tools require a person to interpret andto tell the system what the data looks like, where to find necessitate monitoring of any invalid data or even wrongit, how to use it, how it could be misspelled or what the results that a tool can produce.synonyms are or aren’t when incorrect synonyms are All of these aspects highlighted assume a minimum levelflagged and ultimately what rules to use. That said it is of information, that of supplier name and itemfair to assume that this type of logic and business rule categorisation but what of the scenarios where thebased application can be built into spend analysis information available is almost non-existent? It may betoolsets but still requires a degree of human that the only information is the supplier name and ainvolvement. spend total. Can a tool take this data and provide aThe next step in order to ensure the most effective result reliable trusted output? Even the providers of spendon spend analysis is to have a tool that can ‘learn’ how to analytics software would have to agree that this cannotmake sense of data with minimal intervention of an end be fully automated. For example the tool may beuser. Using a tool that learns how to analyse data at first programmed to state that Capgemini should be classifiedwill not give great results, and requires the procurement as a Consultancy; however it could also be classified asprofessional to interpret the data and extract the reports an IT provider or an Outsourcing organisation. With arequired. The tool however tracks what the professional recent client (a leading CPR Manufacturing company)does to the data, and as usage of the tool progresses it there were over 3,000,000 lines of vendor and spendcan ‘learn’ from these actions what to do with it. If the details which all had to be categorised. Conversationsprofessional has extracted data from two different with several spend analytics providers stated that theirsystems to obtain purchase order and invoice data, the approach would be to manually categorise in the firsttool can do this automatically next time. If data for two instance and then use the software to harmonise andproduct categories is put together manually, next time cleanse the data clearly demonstrating the importance ofthe tool can do this automatically. Further improvements human intervention in the process. There may also be anto data analysis tools can come from methods like ‘fuzzy additional level of analysis needed to re-classify existinglogic’, where the relationship between data is information where items have been mis-classified ordetermined based on rules that are less clearly defined simply identified as “miscellaneous”, the software canthan conventional rules. As an example Google search only interpret the data to a finite level before humancan be used, where the search engine interprets the intervention is needed to validate and confirm theuser’s input in multiple ways including words that sound categorisation. A viable alternative is a hybrid approach where pending the quality of the data, spend analysis 24
  25. 25. tools are used to drive accelerated categorisation prior tohuman intervention. Conclusion So in answer to the question can we ever do away withUncovering the subtleties of expenditure the need for human intervention in Spend Analysis? Well it varies on situation but human intervention willThe requirement for human validation of data leads onto increase based on the quality of the data, the complexitythe importance of understanding what level of data of the business rule logic and ultimately the nature of theaccuracy and information is needed by the end user in suppliers for the respective organisations. Will aorder to meet their sourcing requirements. Is it just to procurement professional ever be able to wholly rely on aknow how much is spent and with which Supplier? Does piece of software to perform a full and proper datait need to go down to category level or should it be to analysis without second guessing the result? Again thissub-category level? It may become clear that spend with almost seems a rhetorical question which can only beCapgemini is labelled as Consultancy however in order to answered with an empathic “No”. Whilst the analyticalbe useful to the end user, they may need to know if the tools on the market really do a play a part in accelerationspend is Technical Consultancy, Strategy or Supply Chain of categorisation for procurement professionals and can– and this supplier is likely to be treated differently expedite what has historically been a time consumingacross organisations. It is at this point that the human process, the systems are not yet advanced oreye is needed in order to uncover the subtleties of the sophisticated enough to completely remove the need forreal expenditure. This can also highlight the differences human involvement. Spend Analysis continues to be ain interpretation, in some organisations the category tool to enable us to buy better and importantly it is theConsultancy is used to identify any services provided by a input into the human generated process of sourcing,third party be it temporary labour, project management, procuring and negotiation.and advisory. In other industries and in differentorganisations ‘Consultancy’ may be restricted toManagement Consultancy. The need at this point for thehuman eye to uncover these idiosyncrasies leads ontoanother key aspect of Spend Analysis which requireshuman intervention: that of Focus Interviews. All SpendAnalysis should be supported by Focus interviews inorder to put the data into context. As identified everyorganisation is different and so the application of datarules will vary. 25
  26. 26. Supplier Relationship Management Research 2010-2011Functionality Analysis 26
  27. 27. F or organisations embarking on their Supplier Relation Management (SRM) journey, the most difficult challenge is being able to understand thespectrum of suppliers that could satisfy yourrequirements. • Top Acquisitions in 2010 Google acquired ITA Software • SAP acquired SybaseThe key questions in support of this that are oftenconsidered are which applications are available on the • IBM acquired Sterling Commerce, Bigfixmarket and what functionalities do these applications • Oracle acquired PhaseForwardprovide? Do applications offer the same services acrossall aspects of the procurement function or are they • HP acquired Palmspecific to one component of SRM? This chapter will • Capgemini acquiring IBX (now known aselaborate further on these questions. Capgemini Procurement Services) • Cisco acquired Optic networksInsights into the vendor market • Symantec acquired PGP, Versign SecurityIncreasingly organizations and government agencies are Divisiondemonstrating that supplier relationship management • Apple acquired Quattrohas a key part to play in addressing immediate economicpressures. For those already on the journey, the • VMWare acquired Zimbraemphasis is on re-evaluating contracts to improve • Iron Mountain acquired Mimosaefficiency and savings. Supplier relationship managementdepends on collaboration amongst the enterprise’s • CA acquired Nimsoftinternal and external suppliers for survival and progress. • Avnet acquired Bell MicroCollaboration across sourcing strategies, managementand governance remains critical to the success of • Juniper Network acquired Akeenasupplier relationship management.As we move into the first quarter of 2011, the abundance Today, as companies seek greater synergies and try toof mergers and acquisitions continues in earnest across jump-start growth coming out of the recession, thetechnology vendors. Market values have dropped, relationship between IT and Business Processcreating bargains for value shoppers, and smaller Outsourcing (‘BPO’) is strengthening and becomingcompanies have experienced more difficulty obtaining increasingly vital. Although the IT Outsourcing marketfinancing, and as such the market for technology (‘ITO’) is outpacing BPO the BPO market is fast catchingmergers and acquisitions has accelerated. Technology up. In many instances ITO and BPO are merging into onevendors have put together several multi-billion dollar seamless enterprise wide solution. Market exit,deals so far this year as the economy comes out of what acquisitions and the ascent of new vendors willmany believe is the worst recession since the 1920s. rearrange the BPO provider landscape in the comingIndeed, there have been more than a handful of deals years.worth hundreds of millions of dollars as the technologyvendor marketplace has consolidated through thesemergers and acquisitions. 27
  28. 28. Setup of the SRM Survey Good or bad?A functionality analysis is conducted based on a list of When interpreting the data it is important to remember221 questions, covering the entire spectrum of the that this analysis is based on a series of questionsprocurement process. These questions represent the designed to address whether the software covers a“most asked-for” and the “most-critical functionalities”, specific set of functions. We stress that it is importantas we recognise them from our clients discussions and that all the questions have been scored withoutinteractions. Vendors are given the opportunity to weighing. This means that a high or low score does notindicate whether the requested functionality is available indicate whether an application is good or bad; it merelyor not. states the coverage of the SRM functionality within the application.Compared to our previous SRM surveys the setup of thisyear’s survey has been changed. We want to ensure that When selecting or evaluating an application, it isthe survey evaluates the market to a level of depth and important to determine which functions are critical forcompletion required to accurately present the relative your company’s procurement processes. Therefore astrengths/weaknesses of the vendor landscape. weighted score addressing your preferred functionalities,Therefore, we build in a random check to ensure that the may result in a different outcome from those shown forsolutions score as accurate as possible. The following this survey. In order to distinguish the functionalities ofvendors were invited to give a demonstration of the the applications, it is necessary to understand whichfunctionalities in their solution. functionality supports the procurement processes.Company Product Modules To assess the level of support, we divided the overall SRMBupros Bupros Open Sourcing, process, into eight sub-categories: Source Spend Contract Management Management • Procurement Intelligence and • Project Management Procurement Intelligence • Inc. ebidQL Operational o Electronic Tendering Procurement o eAuctioning and Contract Management • Contract ManagementSynerTrade SA SynerTrade 6 Operational • Supplier Management Procurement • Catalogue Management and Procurement • Operational Procurement Intelligence • External ResourcesTable 1 Participating vendors in demonstrationSpecific details on the participating vendors can be foundin the ‘International Footprint and Supplier Profiles’chapter. 28
  29. 29. In addition to the 2008-2009 SRM survey, we assessed In each chapter we will indicate to which part of thethe level of support in the area of Business Process procurement process the application is relevant in ourOutsourcing (BPO) Procurement. BPO Procurement model as shown below.remains a strong area for growth that is driving currentdemand in organisations. Organisations are seeking theability to migrate easily to such functionality so the needis great given the economic uncertainty that remains inQ4 2010. Figure 1: Capgemini Procurement Process ModelOverall Functionality AnalysisAs in previous studies, this year’s vendor review shows reviewed SRM applications are very capable, there arethat the differences between applications are most substantial differences between these applications andvisible in coverage at a functional level. of course each of them will have a different fit withinSome applications provide full coverage for all sub- your organisation. Although it might seem that certainprocesses, whilst others can be considered niche players applications have a low overall score, we cannotsupporting only a selected functionality. Although the conclude these applications are of lesser quality. . 29
  30. 30. Overall conclusions from this year’s survey immediate economic pressures. Compliance remains one of the number one aspirational areas ofConsidering the survey as a whole, the following reporting which is being identified in the market as arepresent the major findings and conclusions: major driver.1. Across the top 10 vendors there is little to choose 4. Surprisingly 25 percent of the responding vendors across the principle functionality, whilst rich and cited no form of Project Management functionality varied, remains common and meets the majority of being in place. Given the necessity to ensure tighter requirements in the market – this includes timelines for all procurement activity and the advent specifically ensuring visibility and transparency of benefits being clearly documented this remains across the entire Procurement suite of technology. surprising but in essence a differentiator. At a detailed level this common set of functionality accounts for over 60 percent functional coverage across the vendors interviewed, and represents a 5. Year on year the area of functionality that is marked improvement which witnessed below 50 improving at a pace is Contract Management. It is percent from previous functional reviews. This this area that is now becoming the pivotal demonstrates the maturity of the vendor market and component of SRM functionality given its link to both demand necessity organisations are striving for. operational sourcing through P2P and strategic sourcing. Only 3 vendors responded with a score of less than 70 percent coverage in this area, with the2. In line with the observations in the 2008-2009 SRM average alone above 85 percent. Contract survey, the survey shows that an integration of Compliance is the next phase once P2P compliance functionalities is still evolving with respect to those has been achieved or is maturing so it is anticipated vendors that remain focused either on Sourcing or that this area will only further increase in Operational Procurement. functionality and richness of capability over the next In addition, the focus on Sourcing is still greater than year. on Operational Procurement demonstrated by the following observations: 6. External resources still proves to be a key • 90 percent of the vendors offers Sourcing differentiator. A major difference lies within the functionality, whereas only 75 percent offers dependency between Operational Procurement Operational Procurement functionality. functionality and External resource functionality. In • 50 percent of the vendors have a higher score on previous years there was a direct dependency Sourcing functionality compared to Operational between both functionalities, however this year’s Procurement; 30 percent of the vendors have a survey shows that the dependency is decreasing. higher score on Operational Procurement functionality compared to Sourcing; 20 percent of the vendors have an equal score for Sourcing 7. With an average of 62 percent and with more 100 and Operational Procurement functionality. percent functional coverage (other than project management) Business Process Outsourcing (BPO) remains a strong area for growth that is driving3. The survey indicates that there is little overall current demand in organisations. Organisations are increase of Procurement Intelligence functionality seeking the ability to migrate easily to such compared to the SRM survey of 2008-2009. This was functionality so the need is great given the economic a surprise as an increase was expected given the uncertainty that remains in Q4 2010. importance of tracking operational improvement benefits and assessing and ensuring compliance which have a key part to play in addressing 30
  31. 31. Figure 2 gives an overview of the available functionality of each vendor. The Y axis represents the vendors and the X axisrepresents the categories within the SRM suite. In addition a line graph displays the average full suite functionality score ofeach vendor. Figure 2: Overview of the functionality analysis 31
  32. 32. Analysis per category We do not aim to show the answers to every question in this report; rather, we provide the outcomes of theWhen selecting a tool, you might have certain analysis per functionality group.requirements that are more critical than others. If youare looking for a full suite application the overall Throughout the report the same structure is applied perfunctionality scores may be sufficient for your selection. sub-category. First we start each sub-category explainingHowever if you are looking for a particular functionality what this specific category means. Secondly theor a set of functionalities, you will require a more in- conclusions we have drawn for this category are detailed,depth review of the results. followed by the total scores per vendor, presented in a graph. This graph shows the scores for each application’sThe in-depth application review is structured according functionality within the the eight subcategories listed earlier. These sub-categories have been further divided into a number offunctional categories as shown in Table 2. Procurement Project Sourcing Supplier Contract Catalogue Operational External Intelligence Management Management Management Management Procurement Resources General Project General General General General General Specify Management Spend Strategy Evaluation & Authoring User Requisitioning Approvals Analytics development Development Capabilities Compliance Request for Requisitioning Operational Demand Database Supplier quotation Repository Selection & reporting aggregation capabilities Approval Order Electronic Administration- Purchase Monitoring tendering content & Order review After Care eAuctioning transmission approval Negotiation Receiving Administration- and goods and creation services Contract Administration- signing Invoicing maintenanceTable 2: Additional Functional Categories 32