Supplier Relationship Management Srm Research 2010 2011

Supplier Relationship Management (SRM)
Research 2010-2011

Solution Analysis and Business Insights

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

Contents

4 Foreword

7 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

Supplier Relationship Management Research 2010-2011

Foreword

4

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 the
still growing and investing in these applications. Although ability to migrate easily to such functionality so the need
we all assume that implementing an SRM tool is quite is great given the economic uncertainty that remains in
easy, reality shows different. Q4 2010.
Apart from the survey, which gives you an overview of
Another new item in our research is the implementation
the major players in the market, we also want to share
footprint of the different vendors. We learned through
our experiences, issues and questions we daily see as
our projects that this is valuable information for package
procurement professionals implementing and optimizing
selections. The footprint shows the geographical
SRM. We therefore asked our foremost colleagues to
dimension and the functional dimension of
share their view and experiences on SRM, which resulted
implementations.
in 5 expert opinion stories, each telling something about
SRM, all from a different perspective. Major themes
Our procurement experts have worked on this study with
include: BPO Procurement, Innovative Driven
great pleasure. We hope you enjoy reading it as much as
Procurement (IDP), Channel Selection, In-house or
we enjoyed writing it and look forward to your feedback.
software 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 SRM
functionality survey. This analysis is based on a series of We wish to thank all vendors and colleagues who have
questions designed to address whether the software contributed to this year’s SRM study.
covers a specific set of functions within the SRM
functionality.

Ton van Dolder
Procurement Transformation
Practice Leader NL
Capgemini Consulting

5

A note of
thanks….
Capgemini Consulting would like to extend its
thanks to the vendors who made time to
participate in the Supplier Relationship
Management Survey. Without their
cooperation and support, research of this
nature would not have been possible.

6


Business Insights

7

The Tipping Point of BPO
Procurement
The business process outsourcing (BPO) market is one Over the last five years, the BPO Procurement market
that is still relatively immature, particularly when has been growing steadily and while growth rate
compared to the IT outsourcing (ITO) market. This is forecasts for the next five years vary, analysts agree that
about to change: Outsourcing of indirect spend the rate of growth will increase, fuelled by a recession in
becomes more and more popular, as procurement Western economies. The four mature BPO markets have
organizations will have their hands full managing all of matured beyond a point of critical mass of supply and
the 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 Malcolm
Gladwell in his book, The Tipping Point: How Little Things The BPO Procurement market is starting from a smaller
Can Make a Big Difference. In his book, Gladwell talks base. TPI Momentum’s analysis of the 2009 BPO
about the point at which a trend which may only have a Procurement market is $778m (see figure 1), showing
short life span tips and becomes an epidemic on a global Annual Contract Value (ACV) for deals over $25m. The
scale, i.e. in commercial terms how a fashion or trend market has been growing at between 30 and 40% over
become permanent feature of the business world. Each the last five years. Forecasts for the next five years are
of the larger four BPO markets: customer contact, also varied with no consensus on the expected growth
financial services, HR and finance & administration, have rates.
now passed the point at which they have tipped. They
are here to stay, and are all forecasting healthy growth
rates 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)

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What services are included in a BPO- • Compliance management – active reporting on and
Procurement 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 in
services 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.

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• 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 consequential
As a result, the BPO-Procurement supply market is
worsening in quality of service, and more efficiently in a
maturing and there are more eligible suppliers who will
lower cost location, typically with an improved system of
compete for potential business, which makes it easier for
controls.
customers to move into the market confident about
supplier price and capability. The majority of the business case comes from a
combination of efficiency of centralisation,
standardisation, process improvement and automation
Increasing focus on technology as part of the coupled with labour economic benefits of low cost
whole… 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 more
provision of on demand (Software as a Service, SaaS) often driven out of sourcing savings, or compliance
procurement technology solutions, the provision of SaaS savings, i.e. effectiveness savings, which can dwarf the
procurement technology on demand now seems to be a efficiency savings. Also the efficiency savings in
standard part of the BPO Procurement proposition. For procurement are often less (perhaps 20-30%) as the
both eProcurement and eSourcing, customers expect resources will need to be located across locations other
service 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% above.
gives them an option other than undertaking complex
and expensive technology implementations that sit
behind their own firewalls.

Figure 2: Building the business case for BPO Procurement

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We therefore believe that a significant portion of the
benefit from outsourcing can come from effectiveness Conclusion
savings through sourcing and in particular through better
compliance 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 of
However approaching the overall process in a way to
strategic sourcing spend, and with many others
maximise 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 and
payable will need to be impacted if compliance savings players who are bold in scope and approach. Whether
are 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 are
visibility, better framework agreements and lower cost greater than ever, and outsourcing some areas of
for 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.

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Rethink Procurement for a
contribution to innovation
For companies that focus on innovation as a key Challenges for Procurement
business driver, finding innovation with the supply
chain remains a challenge. Even though Procurement is
The move towards open innovation creates the need to
regarded as the interface with suppliers, it traditionally
leverage and manage the innovation capabilities in the
has little role in advancing business processes. In this
supply base, to:
article, we discuss what Procurement should do to take
• deliver more innovations
this role successfully and contribute to innovation.
• accelerate design and launch cycles
• improve quality
• meet more intense demands to reduce cost and risk
Markets develop towards more open
innovation 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 these
Most industries increase the outsourcing of non-core traditional KPI’s. Because of this focus, Procurement’s
activities: the average percentage of revenues procured involvement in innovation is limited to work on cost/risk
externally has risen to over 60% in the last decade due to reduction by sourcing and contracting suppliers. In
increased outsourcing. In addition, companies are practice, this means Procurement is involved once all
increasingly outsourcing critical business functions, specifications are set in stone and the innovation is ready
including the outsourcing of R&D to the supply base. In for ramp-up. This is a characteristic of siloed thinking, in
some industries, where 70-90% of products are sourced which departments (silos) are involved one at a time in
from suppliers, the majority of products are actually order to add their value. That has remained while the
designed and developed by these suppliers. This is in part innovation processes have become more open and
due to a shift in design towards manufacturing of whole collaborative. Although usually working in team
systems, which results in an increase in the complexity of structures, silo-thinking remains prevalent within
supplier relationships. departments and people (typically due to differing CXO
The increase in outsourcing coincides with an increased directives). The result is a very linear process with
openness of innovation processes. Companies are finding handovers to the next department, with a fresh set of
it more and more difficult to keep up with the pace of specific targets at every step.
innovation through internal R&D alone. Intelligently
tapping into knowledge bases of (amongst others)
suppliers speeds up the process of innovation and
reduces total cost. To manage a greater dependency on
supplier innovation, Procurement departments have
been moving towards stronger partnership models with a
limited set of key suppliers. These partnerships are based
on shared risks and rewards instead of traditional
transactional relationships. But strong supplier
relationships alone are not enough and a limited set of
(incumbent) partners is not necessarily a good source of
innovation. To leverage that relationship, Procurement
needs to feed end-customer needs into the supply base.

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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 Procurement
Figure 1 gives an indication of the effect this may have.
To deliver this kind of machine, the traditional
The hand-over to Procurement usually occurs after
manufacturer has started an extensive innovation
supplier involvement and beyond a point where a
project. This began with efforts by Sales & Marketing to
significant 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 have
to deliver new innovations or significantly increase
worked with suppliers or even players from completely
development. The only remaining factors are cost and
different industries to develop a new espresso system. In
risk reduction, and even these have been compromised.
this traditional Procurement setting, there will have been
Procurement can no longer fully influence cost or risk as
no involvement until there is a complete picture of the
the specifications are largely set and suppliers have been
future product and its specifications. Procurement will
deeply 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 is
with project targets which may compromise the value of
expected to negotiate a good deal to drive down total
the end product for the customer. Delays or unrealistic
cost and risk. As we have seen before, this may cause
expectations of supply chain capabilities are likely to
serious conflicts as the specifications are largely set and
occur through these conflicts.
freedom of choice in the supply base is limited. The best
To move forward from this situation, Procurement Procurement can do now is to set up multi-disciplinary
should have an earlier involvement. However, teams to discover what the internal clients’ needs are
Procurement in its traditional form is not capable of and make the most out of it. To do this, Procurement
handling the ‘chaotic’ processes found in early connects with (potential) suppliers and conducts
innovation stages. Making a true contribution to sourcing activities, negotiates contracts and puts the
innovation processes requires Procurement to redefine operational processes to work. If conflicts occur (i.e. a
its business model. This will enable them to tap into part cannot be sourced at a decent price), it will be
supply base capabilities and manage supplier forced to push the innovation project back into the
involvement. design phase. This may compromise specifications, the

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total cost and the time-to-market. The end result is that organize innovation projects with dual leadership, one
you will eventually find your “traditional” espresso R&D and one Procurement leader. Others have
machine on the store shelves at a reasonable price. But dedicated project managers, defined specific roles and
you’ll probably have lost interest in it because it was responsibilities for Procurement in each innovation
overtaken by a competitors’ machine before it even stage, and used decision making between innovation
came to market. stages to enforce further Procurement support.
The required competences of Procurement change as
well. There will be a stronger need for people with
Innovation Driven Procurement (IDP)
knowledge of technology and supplier management
The IDP producer will also listen to your needs as a capabilities, together with project management skills and
potential customer through Marketing & Sales. But now traditional Procurement skills. This can be achieved by
it’s not just R&D who’s listening in; Procurement has for instance recruiting internal technical experts and
joined the project from day one. This enables training them on Procurement skills. In any case the
Procurement to thoroughly understand the external Procurement, Marketing & Sales and R&D experts need
clients’ needs and to assist R&D with the development to be able to communicate effectively. Beside strong
effort. Now that Procurement knows what to look for, it competencies, this requires a rigid data exchange
can connect the supply base with R&D and at the same between various systems. Integration of data provides
time 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 now
consists of both suppliers and the “internal clients” in the
entire innovation process. With involvement in Steps to take towards Innovation Driven
innovation, Procurement must match its activities to Procurement
early innovation stages. This still includes cost
awareness, but there is much greater focus on scouting
supplier markets, enabling supplier involvement and Innovation Driven Procurement starts with a clear focus
managing 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, a
client. In later stages traditional Procurement activities business model of Procurement throughout the
come back into play to operationalize the new product, innovation process can be set up. A broader focus on the
but the real value is created in the earliest stages. The external customer and involvement from the start has a
end 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 up
perspective of Procurement must be embedded in the teams and structures and supporting communication
governance of the organization. The role of Procurement technologies.
in innovation projects changes, and the way
This will enable Procurement to drive much more value
Procurement 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 on
silos. This means companies need to review decision
the end product. In other words, it enables Procurement
making protocols, process design, target setting,
to make a significant contribution to innovation and the
leadership involvement, team structures, competences
bottom-line.
and information flows. For instance, some companies

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The Client Case:
The Passion Value Chain
A company’s corporate image is probably one of its most How can your business achieve a passionate
underestimated assets when it comes to purchasing. value chain?
Wouldn’t we all love to supply well-known companies
such as Rolls Royce, Nokia, Audi, Chanel, Asics, eBay or Firstly, a passionate value chain takes time to create by
Red Bull? Brands leverage not only sales, but also exchanging ideas and challenging existing processes. To
purchasing success. Even if you are not amongst the stimulate this kind of change, a good first step is to
brand leaders in your industry, you are more likely to create regular newsletters and conduct supplier
succeed if you stick to the values of your company and summits. If you can spare 20 minutes a day, you could
communicate 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, it
producing high quality toys and teddy bears. The pays to be selective about which suppliers to spend time
company’s co-chief executive Martin Frechen said in a with. The first choice will generally be your most
recent 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 category
best design, the best production, the best safety budget.
standards”. The next step is to integrate truly innovative suppliers
This kind of attitude and way of looking at your supplier with your company. To do, this, think like Mr Frechen
base makes a difference which cannot be found on an from Steiff, but backwards. Once the employees of your
RFQ template. Commitment, dedication and a passionate supplier have developed a personal connection to your
attitude have a huge influence on your bottom line products and services, there will be increased likelihood
results. Finding high quality and passionate suppliers of innovations, improvements and true commitment. In
leads to lower reclamations, higher adherence to doing so, be aware that making the value contribution of
delivery dates and to greater innovation. A supplier who your supplier visible could have a negative impact on the
is passionate about your products is much more likely to next price negotiation. However, on balance if your
think about your company and your products and intention is to buy value, integrating your suppliers is a
therefore 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, or
his productions processes, or even the needs of his
company Steiff. He talks about the needs of his
customers, or to be even more precise, the children of
his customers. He demands that his suppliers think about
the needs of his “end users” – and that is the first step in
creating a passionate supply chain.customers, or to be
even more precise, the children of his customers. He
demands that his suppliers think about the needs of his
“end users” – and that is the first step in creating a
passionate supply chain
.

15

Channel selector⁺ supports
decision making for all P2P
options
The increasing range of commodities that can be P2P channel
supported by Supplier Relationship Management (SRM)
tools, together with the increased functionality of the
A channel is a defined combination of processes and
various SRM tools, makes the selection of SRM tools a
tools with common characteristics to support the
complex 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 the
various commodities represents a formidable challenge.
Procurement Order Cycle (right side of figure 1) as soon
In particular, the lack of understanding of how to as the source to contract process is finalized and the
organize the entire Purchase-to-Pay P2P process turns contract is implemented.
out to be a bottleneck for many organizations during
the implementation of a SRM tool. The Channel
Selector⁺ provides a framework that supports the
decision making process of all possible variants in the
P2P options from requisitioning to payment including
approval of requisition, receiving goods or services,
invoice settlement and communication.

Figure 1 SRM process model – Procurement order cycle

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Channels are grouped according to their level of buyer involvement in the requisition-order process. See the possible
channel combinations in figure 2.

Figure 2 Channel combinations

These channel combinations are characterized by compliance, insight into commodity and process
different dynamics. It is these characteristics that performance and efficient operational support. If the
determine the channel's suitability for a particular balance between control, visibility and efficiency is not
commodity. 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 through
Commodities have different requirements, in terms of which P2P Channel. By running the commodity
how much control, visibility and efficiency is appropriate characteristics through a questionnaire, the different
to 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 P2P
companies can optimize: Contract and supplier process, including the largest bottleneck in the

17

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 process
steps:

Figure 3 shows the P2P process steps and all possible outcomes of the Channel Selector⁺ and includes an example of a
standard commodity.

Figure 3 P2P process steps
Explanation of the purchase order process in the figure for the standard commodity channel: The requisition will most likely
be placed by means of a standard catalogue. Because of the standard specification, there is no need for an expert or
Procurement 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 received
from the supplier will be checked and recorded based on quantity but not quality. Invoice settlement will probably be
based on the purchase order and the preferred way to exchange messages in the P2P process will be electronic.
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In order to apply Channel Selector⁺, at the outset, it is
important to involve all stakeholders from the Conclusion
organization in the decision making process. Different
commodities are likely to require different channels,
therefore a series of multidisciplinary workshops is When organisations undertake the decision to tackle the
recommended when selecting channels. Based on the P2P challenge, they should not underestimate the
outcome of the questionnaire and a valuation of the challenges they will face. Nor, however should they shy
benefits and the total cost of ownership, the organization away from these challenges, or underestimate the
can choose the most appropriate channel for each strength of the tangible and non-tangible benefits that
commodity. 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 a
processes 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 P2P
critical to achieve high levels of user acceptance, few objectives it wants to achieve. It must then use a
operational exceptions, and not least, robust functional process-focused, business-driven approach to establish
requirements. the P2P channels by means of the Channel Selector⁺, and
P2P process support it wants to deploy. This, in turn, will
Implementation 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 the
cannot be achieved at once, an approach is needed to
appropriate level of sponsorship from senior managers
phase this over time. A preferred approach is to
and buy-in from the key stakeholders which can be
implement the most value adding and easily
achieved by multidisciplinary workshops.
implementable channels and commodities in the first
phase. The second group of channels and commodities is
then selected in terms of value and ease-of-
implementation, and so on. When assessing ease of
implementation, it is important to consider factors like
supplier contractual status and eReadiness, required
processes changes, availability of system support,
organisational impact, change readiness, and resource
availability.

19

In-house or as a Service? –
CPOs challenge the role of
the CIO

In his book, “The Big Switch”, the American IT lateral weakening economy the issue is once more gaining
thinker Nicholas Carr challenges CIOs and heralds the appeal. The following are particularly appropriate for
end of IT departments. He compares the trend towards outsourcing: 1. The supporting IT roles where the
cloud 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 core
from self-generated to centralised power supplies by business. These roles require specialist expertise that is
service providers at the start of the 20th century. generally not available in-house.
According to Carr, IT could be controlled by external
specialists and without hordes of technical experts Purchasing as a central competitive factor
within the company. His forecast may be radical, but it
may also serve as a wakeup call for CIOs to rethink their
strategic role: adviser to the company, communicator or On the backdrop of the global financial downturn and the
engineer. The crux of the matter is essentially looming recession, cost-cutting measures were moving
outsourcing 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, the
others can do better? Take the example of purchasing; potential for cutting costs is high in this area: depending
so far in this sector, many CIOs have been somewhat on the sector of business in question, the entire
sceptical of external, web-based SAP e-procurement purchasing volume can account for between 40 and 60
solutions. These models are regarded by many decision percent of the company's total turnover. It is not without
makers as all too unsecure and inflexible. That said, on- reason that the role of purchasing has evolved from
demand models fare well in a precise analysis of the being purely operational to being strategic; companies
individual factors. expect their purchasing to make a significant
contribution to their overall corporate performance. As a
The CIO is pulled in two directions: should he rather benchmark figure, a logical procurement strategy and
assume the role of technology provider, or that of a the use of the right IT solution can save from four to
strategic business designer? Should he provide all the IT eight percent of the total purchasing volume.
in-house, or act as the head of a network of specialists
who each play their part in the added value chain by If the CPO (Chief Purchasing Officer) and the CIO are
controlling the outsourced IT? In his role as CIO, he looking for a suitable IT solution, then the decision
decides 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 company's own IT systems and
According to a study by Ernst & Young on outsourcing in whether it complements the existing strategy. The
Europe in 2008, 70 percent of all companies’ surveyed – strategic question for the CPO is which operator model is
600 decision makers in European companies – stated the most suitable one for his organisation, and which will
that outsourcing was an integral part of their business bring the greatest possible efficiency in terms of
model. For many years outsourcing has been seen as the procurement activities. He can choose between a
overall 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

On-demand on the rise

There are important reasons why on-
demand has been on the rise for a number
of years in purchasing especially, and the
cohort of licensing models is in jeopardy.
According to a study by the Aberdeen
Group (figure1) on-demand models are
faring significantly better than licensing
models. They can be implemented more
quickly and provide a faster Return on
Investment (ROI) – especially since the
company no longer needs to implement
the solution itself. If a company, on the
other hand, acquires a software licence, it
is generally dependent on the expertise of
a consulting company for the Source: Aberdeen Group
implementation and customisation of the
software. Many of the company’s own
Figure 1: Top factors driving enterprises to consider on-demand
resources are also taxed in the process,
and high additional costs are incurred.
When solutions are installed, human
resources, running and hardware costs are
found to be hidden cost drivers.

With an on-demand solution for
purchasing the company pays only for the
modular service elements it needs.
Moreover, it has easier and more rapid
access to the modules, since the solutions
already run on the service provider’s
platform and are being used by numerous
customers – each with their own individual
customisations. All the users need is a
popular Internet browser. An on-demand
offer is essentially of interest to all
companies that want to profit from lower
overall costs, faster implementation and a
smooth upgrade process – and want to do
so without high initial investments.
Another benefit is the fact that, according
to an outsourcing study by the Experton Source: IBX
Group, the contracts for on-demand
solutions have become more flexible as a
result of increased demand. Figure 2: Total cost comparison: On-demand vs. software

21

They can also be concluded over shorter periods than The second reservation as regards on-demand solutions
previously. A sample calculation by IBX (figure 2) shows is their lack of flexibility. An in-house solution can be
that 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 its
solution. The overall costs include Equipment, adaptation to customer-specific requirements
Management 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 easily
Reservations 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’s
Many 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-end
regulations. 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 to
safeguard their enterprise network so one might think overcome the same hurdles as an external solution and
that by nature, an in-house installation has an advantage therefore enjoys little advantage.
over the on-demand solution provided by an external
service provider. However, this assumption might not be
as 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 a
exchange of data with a lot of different external partners threat to their justified existence. On-demand represents
which are outside the enterprise network. This includes an attractive alternative for the CIO, especially in times
information 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 possible
company’s extranet. Therefore a different approach in
solution for every company and every organisation? The
security infrastructure and operations is required. In that
following factors are crucial for or against an on-demand
case an experienced and specialised on-demand provider
service: cost-benefits analysis, speed and risks.
can actually have a clear advantage over an in-house
installation. The on-demand supplier model will not threaten to oust
the licensing model. The world of procurement has
Another factor is that significant improvements have
enough space for both. They can even complement each
been achieved over the last years in terms of Information
other perfectly.
Security Management Systems that have been
implemented by on-demand operators. Many service The on-demand model drives the focus away from the
providers are in the process of gaining certification based technology and towards strategic usage, as well as
on best practice IT security and process standards like towards the use of purchasing-assisting solutions such as
ISO 27001 and ITIL. There also have not been any high e-sourcing and e-procurement. Buyers can therefore
profile security problems with on-demand solutions focus more effectively on their core tasks, on reducing
either. 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 of
a philosophical issue: Do I trust the Internet enough to
conduct business over it?
22

Can we ever fully automate
Spend Analysis or do we
need to have human
intervention?
Spend Analysis is undertaken by most organisations in The Spend Analysis Process
order to provide spend visibility information on
suppliers, spend and compliancy and is considered a
continuing 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 Spend
Spend analysis tools Analysis should be to provide clear, consistent spend
information which can feed into the sourcing process,
identify sourcing opportunities, enable benefits tracking
Increasingly, tools are becoming available on the market and provide the visibility for compliance monitoring. As a
which highlight the ease and speed that can be delivered concept it should be regarded as the fundamental
by automating the process but does this change our foundation of sourcing however the process can start
approach to Spend Analysis? Over the last few years an from many different data points and by leveraging
abundance of vendors has entered the Spend Analysis different sources and quality of data. The level of
market ranging from those for whom the move into data complexity that this drives often results in a highly
enrichment was a logical step in their respective SRM arduous and time consuming process. So how do the
suite such as Ariba, Oracle and SAP, to more recent increasingly sophisticated software tools feed into this
entrants into the Spend Analysis arena such as Emptoris, process? In order to make sense of data there are various
Zycus and SynerTrade. Our survey findings have levels of intelligence that can be applied. Data analysis
highlighted that both sets of players have a part to play tools use a variety of these methods to enhance data, by
in managing the demand for the market, particularly if rationalisation and consolidation.
some organisations wish to focus purely on a one-off
spend analysis (e.g. Zycus) or have this linked into end to At a basic level, spend data is extracted straight from the
end procurement visibility with an ongoing opportunity source system and displayed in reports. Usually this is
to track and manage spend better. Each of these major the starting point for realising the need for Spend
players will be able to conduct detailed spend analysis Analysis as few organisations have the fundamentals of
however our experience indicates that none of them Master Data so thoroughly embedded that the data can
support 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 source
areas of our lives. Will we ever reach the point where system alone will not provide a fully comprehensive
robots and computers will do away with the need for picture of the spend landscape. To get the most effective
humans? As Supply Chain professionals we need to result on spend analysis at the very basic level, multiple
consider what technology and automation can mean to extracts from different systems are needed to provide
us and our roles. Thinking about this in the context of the full data set. So from this very first stage humans are
Spend Analysis we’re left with the question – Can we needed in order to identify where the data should be
ever do away with the need for human intervention gathered from; Accounts Payables, Purchase Order or
when conducting something as fundamental as Spend from somewhere else.
Analysis?

23

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 alternative
On their own the analytics tools cannot interpret the interpretations of data that will make sense to the end
data so the tools must be programmed and algorithms user.
developed which ‘tell’ the software how the data should
be mapped. To get the most effective result on spend
analysis at the next level the tool must be ‘told’ what Advancing Technology
data is synonymous and what isn’t. For example some
vendors might have different names, but in reality are
We have now reached a level where human interaction
the 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 learning
associated probabilities to consolidate and recognise
capabilities, though arguably ‘learning’ in a very simple
data before presenting it to the user. This also applies to
way. Human intervention is still required to tell software
misspelled data, or data with typing mistakes, which in
what can be learned.
both cases requires a list of possible alternative content
for certain data, or some routine that checks alternative With more powerful computers and ever larger
spelling of data. Whilst there are some tools which can databases data analysis tools can seem very advanced
recognise and highlight some of the basic inconsistencies when using the methods mentioned above, but even
it still requires human intervention. It requires someone ‘learning’ tools require a person to interpret and
to tell the system what the data looks like, where to find necessitate monitoring of any invalid data or even wrong
it, 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 level
flagged and ultimately what rules to use. That said it is
of information, that of supplier name and item
fair to assume that this type of logic and business rule
categorisation but what of the scenarios where the
based application can be built into spend analysis
information available is almost non-existent? It may be
toolsets but still requires a degree of human
that the only information is the supplier name and a
involvement.
spend total. Can a tool take this data and provide a
The next step in order to ensure the most effective result reliable trusted output? Even the providers of spend
on spend analysis is to have a tool that can ‘learn’ how to analytics software would have to agree that this cannot
make sense of data with minimal intervention of an end be fully automated. For example the tool may be
user. Using a tool that learns how to analyse data at first programmed to state that Capgemini should be classified
will not give great results, and requires the procurement as a Consultancy; however it could also be classified as
professional to interpret the data and extract the reports an IT provider or an Outsourcing organisation. With a
required. 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 spend
can ‘learn’ from these actions what to do with it. If the details which all had to be categorised. Conversations
professional has extracted data from two different with several spend analytics providers stated that their
systems to obtain purchase order and invoice data, the approach would be to manually categorise in the first
tool can do this automatically next time. If data for two instance and then use the software to harmonise and
product categories is put together manually, next time cleanse the data clearly demonstrating the importance of
the tool can do this automatically. Further improvements human intervention in the process. There may also be an
to data analysis tools can come from methods like ‘fuzzy additional level of analysis needed to re-classify existing
logic’, where the relationship between data is information where items have been mis-classified or
determined based on rules that are less clearly defined simply identified as “miscellaneous”, the software can
than conventional rules. As an example Google search only interpret the data to a finite level before human
can be used, where the search engine interprets the intervention is needed to validate and confirm the
user’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

tools are used to drive accelerated categorisation prior to
human intervention. Conclusion

So in answer to the question can we ever do away with
Uncovering the subtleties of expenditure
the need for human intervention in Spend Analysis?
Well it varies on situation but human intervention will
The requirement for human validation of data leads onto increase based on the quality of the data, the complexity
the importance of understanding what level of data of the business rule logic and ultimately the nature of the
accuracy and information is needed by the end user in suppliers for the respective organisations. Will a
order to meet their sourcing requirements. Is it just to procurement professional ever be able to wholly rely on a
know how much is spent and with which Supplier? Does piece of software to perform a full and proper data
it need to go down to category level or should it be to analysis without second guessing the result? Again this
sub-category level? It may become clear that spend with almost seems a rhetorical question which can only be
Capgemini is labelled as Consultancy however in order to answered with an empathic “No”. Whilst the analytical
be useful to the end user, they may need to know if the tools on the market really do a play a part in acceleration
spend 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 consuming
across organisations. It is at this point that the human process, the systems are not yet advanced or
eye is needed in order to uncover the subtleties of the sophisticated enough to completely remove the need for
real expenditure. This can also highlight the differences human involvement. Spend Analysis continues to be a
in interpretation, in some organisations the category tool to enable us to buy better and importantly it is the
Consultancy 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 different
organisations ‘Consultancy’ may be restricted to
Management Consultancy. The need at this point for the
human eye to uncover these idiosyncrasies leads onto
another key aspect of Spend Analysis which requires
human intervention: that of Focus Interviews. All Spend
Analysis should be supported by Focus interviews in
order to put the data into context. As identified every
organisation is different and so the application of data
rules will vary.

25


Functionality Analysis

26

F or organisations embarking on their Supplier
Relation Management (SRM) journey, the most
difficult challenge is being able to understand the
spectrum of suppliers that could satisfy your
requirements. •
Top Acquisitions in 2010

Google acquired ITA Software
• SAP acquired Sybase
The key questions in support of this that are often
considered are which applications are available on the • IBM acquired Sterling Commerce, Bigfix
market and what functionalities do these applications • Oracle acquired PhaseForward
provide? Do applications offer the same services across
all aspects of the procurement function or are they • HP acquired Palm
specific to one component of SRM? This chapter will • Capgemini acquiring IBX (now known as
elaborate further on these questions. Capgemini Procurement Services)
• Cisco acquired Optic networks
Insights into the vendor market • Symantec acquired PGP, Versign Security
Increasingly organizations and government agencies are Division
demonstrating that supplier relationship management
• Apple acquired Quattro
has a key part to play in addressing immediate economic
pressures. For those already on the journey, the • VMWare acquired Zimbra
emphasis is on re-evaluating contracts to improve
• Iron Mountain acquired Mimosa
efficiency and savings. Supplier relationship management
depends on collaboration amongst the enterprise’s • CA acquired Nimsoft
internal and external suppliers for survival and progress.
• Avnet acquired Bell Micro
Collaboration across sourcing strategies, management
and governance remains critical to the success of • Juniper Network acquired Akeena
supplier relationship management.

As we move into the first quarter of 2011, the abundance
Today, as companies seek greater synergies and try to
of mergers and acquisitions continues in earnest across
jump-start growth coming out of the recession, the
technology vendors. Market values have dropped,
relationship between IT and Business Process
creating bargains for value shoppers, and smaller
Outsourcing (‘BPO’) is strengthening and becoming
companies have experienced more difficulty obtaining
increasingly vital. Although the IT Outsourcing market
financing, and as such the market for technology
(‘ITO’) is outpacing BPO the BPO market is fast catching
mergers and acquisitions has accelerated. Technology
up. In many instances ITO and BPO are merging into one
vendors 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 will
many believe is the worst recession since the 1920s.
rearrange the BPO provider landscape in the coming
Indeed, there have been more than a handful of deals
years.
worth hundreds of millions of dollars as the technology
vendor marketplace has consolidated through these
mergers and acquisitions
.

27

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 remember
221 questions, covering the entire spectrum of the that this analysis is based on a series of questions
procurement 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 important
as we recognise them from our clients discussions and that all the questions have been scored without
interactions. Vendors are given the opportunity to weighing. This means that a high or low score does not
indicate whether the requested functionality is available indicate whether an application is good or bad; it merely
or not. states the coverage of the SRM functionality within the
application.
Compared to our previous SRM surveys the setup of this
year’s survey has been changed. We want to ensure that When selecting or evaluating an application, it is
the survey evaluates the market to a level of depth and important to determine which functions are critical for
completion required to accurately present the relative your company’s procurement processes. Therefore a
strengths/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 for
solutions score as accurate as possible. The following this survey. In order to distinguish the functionalities of
vendors were invited to give a demonstration of the the applications, it is necessary to understand which
functionalities in their solution. functionality supports the procurement processes.

Company Product Modules
To assess the level of support, we divided the overall SRM
Bupros Bupros Open Sourcing, process, into eight sub-categories:
Source Spend Contract
Management Management • Procurement Intelligence
and • Project Management
Procurement
Intelligence • Sourcing

Eeebid.com Inc. ebidQL Operational o Electronic Tendering
Procurement o eAuctioning
and Contract
Management • Contract Management

SynerTrade SA SynerTrade 6 Operational • Supplier Management
Procurement • Catalogue Management
and
Procurement • Operational Procurement
Intelligence
• External Resources
Table 1 Participating vendors in demonstration
Specific details on the participating vendors can be found
in the ‘International Footprint and Supplier Profiles’
chapter.

28

In addition to the 2008-2009 SRM survey, we assessed In each chapter we will indicate to which part of the
the level of support in the area of Business Process procurement process the application is relevant in our
Outsourcing (BPO) Procurement. BPO Procurement model as shown below.
remains a strong area for growth that is driving current
demand in organisations. Organisations are seeking the
ability to migrate easily to such functionality so the need
is great given the economic uncertainty that remains in
Q4 2010.

Figure 1: Capgemini Procurement Process Model

Overall Functionality Analysis
As in previous studies, this year’s vendor review shows reviewed SRM applications are very capable, there are
that the differences between applications are most substantial differences between these applications and
visible in coverage at a functional level. of course each of them will have a different fit within
Some applications provide full coverage for all sub- your organisation. Although it might seem that certain
processes, whilst others can be considered niche players applications have a low overall score, we cannot
supporting only a selected functionality. Although the conclude these applications are of lesser quality.
.

29

Overall conclusions from this year’s survey immediate economic pressures. Compliance remains
one of the number one aspirational areas of
Considering the survey as a whole, the following reporting which is being identified in the market as a
represent 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 the
2. 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 driving
3. 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

Figure 2 gives an overview of the available functionality of each vendor. The Y axis represents the vendors and the X axis
represents the categories within the SRM suite. In addition a line graph displays the average full suite functionality score of
each vendor.

Figure 2: Overview of the functionality analysis

31

Analysis per category We do not aim to show the answers to every question in
this report; rather, we provide the outcomes of the
When selecting a tool, you might have certain analysis per functionality group.
requirements that are more critical than others. If you
are looking for a full suite application the overall Throughout the report the same structure is applied per
functionality scores may be sufficient for your selection. sub-category. First we start each sub-category explaining
However if you are looking for a particular functionality what this specific category means. Secondly the
or 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’s
The in-depth application review is structured according functionality within the category.
to the eight subcategories listed earlier. These sub-
categories have been further divided into a number of
functional 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
maintenance

Table 2: Additional Functional Categories

32

Supplier Relationship Management Srm Research 2010 2011

Supplier Relationship Management Srm Research 2010 2011

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