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1   © 2011 Forrester Research, Inc. Reproduction Prohibited
ePurchasing Technology Drives New
Economics For Commerce
Lutz Peichert, Vice President, Principal Analyst



January 19, 2012




2   © 2009 Forrester Research, Inc. Reproduction Prohibited
      2011
New developments in
ePurchasing technology
can help Procurement go
beyond the low hanging
fruit

  3   © 2011 Forrester Research, Inc. Reproduction Prohibited
Agenda


Procurement leaders face conflicting priorities in 2012

Four trends drive business technology developments

We’re beginning to see their impact on ePurchasing

Summary recommendations




4   © 2011 Forrester Research, Inc. Reproduction Prohibited
Agenda


Procurement leaders face conflicting priorities in 2012

Four trends drive business technology developments

We’re beginning to see their impact on ePurchasing

Summary recommendations




5   © 2011 Forrester Research, Inc. Reproduction Prohibited
What forces will shape your world in 2020?




              2010                                       2014   2016   2020
6   © 2011 Forrester Research, Inc. Reproduction Prohibited
Global disruptions have become common news




7   © 2011 Forrester Research, Inc. Reproduction Prohibited
Economic volatility can disrupt your supply chain




Source: www.financial-portal.com



    8    © 2011 Forrester Research, Inc. Reproduction Prohibited
Sourcing’s Goals Pull Us In Two Directions


                                                                Number of
      Rationalize                                                                  Expand
                                                                Suppliers
 Aggregate demand to                                             Costs       Expand the bidder pool
  get economies of scale                                                       to increase competition
 Dump financially weak                                                       Diversify, multi-source to
                                                                  Risk
  vendors                                                                      reduce over-dependence
 Focus vendor                                                                Introduce new blood to
  management’s
                                                            Performance        combat complacency
  attention
                                                                              Search for new sources,
 Create tight strategic                                        Innovation     anywhere in the world
  partnerships

         Answer: Do Both – create tighter partnerships in some areas while
                        increasing competition in others
  9   © 2011 Forrester Research, Inc. Reproduction Prohibited
Collaboration: working more closely with its key
 suppliers helped Ford reverse its decline
                                                                           Ford rose to 5th
                                                                            in JD Power’s
                                                                                quality
                                                                           ranking, above
                                                                              Toyota and
                                                                                Nissan




                                                               Source: Planning Perspectives, Inc
10   © 2011 Forrester Research, Inc. Reproduction Prohibited
Supplier classification example
Business Value




                                                           Timescale/ Cost To Replace
  11             © 2011 Forrester Research, Inc. Reproduction Prohibited
Relationship classification example


                                                                                                 Spouse


                                                                                       Close
                                                                                      Relative
                                                                         Facebook
Social Value




                                                                          Friend



                                                                                            Child@
                                         LinkedIn
                                                                                           University
                                        Connection




                                                         Timescale/ Cost To Replace
 12            © 2011 Forrester Research, Inc. Reproduction Prohibited
Agenda


 Procurement faces conflicting priorities in 2012

 Four trends drive business technology developments

 We’re beginning to see their impact on ePurchasing

 Summary recommendations




13   © 2011 Forrester Research, Inc. Reproduction Prohibited
Forrester has identified four broad themes driving
 business technology trends

  Empowered employees and customers energize leading
   organizations.
  Everything-as-a-service (XaaS) offers new technology acquisition
   and consumption options.
  The App Internet connects mobile users to near-limitless
   information.
  Big data extends our digital horizon and changes the way we do
   business.




14   © 2011 Forrester Research, Inc. Reproduction Prohibited
CIOs need shift budget from steady-state to new
 initiatives




                  May 2011 “Forrsights: The Software Market In Transformation, 2011 And Beyond”

15   © 2011 Forrester Research, Inc. Reproduction Prohibited
Businesses cannot, and should not, get all their
technology innovation from one source

                                                                  Self-
                                                               provisioned
                                                   iApps
                                                               Key business
                                                               applications   New supplier
                                                                                search

                                                                   Core
                               Collaboration                      Systems
                                                                              SRPM
                                                                    ERP


                                                                 eSourcing




16   © 2011 Forrester Research, Inc. Reproduction Prohibited
Agenda


 Procurement faces conflicting priorities in 2012

 Four trends drive business technology developments

 We’re beginning to see their impact on ePurchasing

 Summary recommendations




17   © 2011 Forrester Research, Inc. Reproduction Prohibited
Most enterprises still have a buyer-centric
                                 approach to ePurchasing


Ptolemy




   18     © 2011 Forrester Research, Inc. Reproduction Prohibited
The network-centric approach is better


Copernicus




   19   © 2011 Forrester Research, Inc. Reproduction Prohibited
But a universe of discrete networks is costly
                          for suppliers, and less effective for buyers

Gallileo




    20     © 2011 Forrester Research, Inc. Reproduction Prohibited
We’re now seeing the emergence of global
                    communities of buyers and sellers




                                    •Scale and reach to be effective
                                    •Unstructured collaboration, not merely transactions
                                    •Sharing information with your peers
21   © 2011 Forrester Research, Inc. Reproduction Prohibited
Important management information is distributed
 across multiple silos




 ERP
 eSourcing
 Contracts
 EDI


22   © 2011 Forrester Research, Inc. Reproduction Prohibited
The technology giants have misled us several times

  “Implement one ERP product everywhere”

  “Consolidate to a single instance”

  “Build a data warehouse”

  “Buy a spend analysis project”

  “Buy a supplier assessment project”

  So why should we believe them now?



23   © 2011 Forrester Research, Inc. Reproduction Prohibited
Supplier managers need to combine internal and external
information sources into a formal risk analysis process




24   © 2011 Forrester Research, Inc. Reproduction Prohibited
Forrester named this emerging category “Supplier
Risk and Performance Management”




25   © 2011 Forrester Research, Inc. Reproduction Prohibited
SRPM is more than data gathering and reporting




                                                                                               Performance
                                                                               Risk            optimization
                                                                               management
                                                               Performance
                                                               monitoring
                                      Supplier
                                      Information                              Action needed   Process management

                                                                Searching for insight
                Self-
                registration
                                         One supplier master


     Basic data collection

26   © 2011 Forrester Research, Inc. Reproduction Prohibited
Vendor viability




                                                                  Risk     Vendor
Vendor risk
                                                               tolerance   viability




27   © 2011 Forrester Research, Inc. Reproduction Prohibited
Forrester sees forward looking risk management as a
 must




28   © 2011 Forrester Research, Inc. Reproduction Prohibited
Agenda


 Procurement faces conflicting priorities in 2012

 Four trends drive business technology developments

 We’re beginning to see their impact on ePurchasing

 Summary & recommendations




29   © 2011 Forrester Research, Inc. Reproduction Prohibited
How can you make use of these forms of
 unstructured collaboration?

  Idea forums that include key suppliers
       – Users’ problems, suppliers’ ideas, voting on which ones to take
         forward, workspace for project teams to share information

  Engineering change process
       – Consider the impact of proposed modifications before they are put into
         effect

  Community performance rating
       – Aggregate objective and subjective data from your peers to evaluate
         prospective suppliers

  Urgent problem resolution
       – Creation of ad hoc teams, live web conferencing, asynchronous
         messaging

30   © 2011 Forrester Research, Inc. Reproduction Prohibited
What can you do now?

 If you’re just starting out…                                     If you’re further along…
     • Don’t wait until you have a                                • Use technology to work even
       disaster to create the                                       more closely with your key
       business case for SRPM                                       suppliers
     • Convert Ptolemaic or                                       • Focus SRPM attention based
       Copernican supplier                                          on importance, not just
       collaboration initiatives into                               spend
       community programs                                         • Automate analytics
     • Start somewhere                                            • Manage improvement
       important, but doable                                        processes




31      © 2011 Forrester Research, Inc. Reproduction Prohibited
Thank you


Lutz Peichert
+49 69959 29846
lpeichert@forrester.com
www.forrester.com




  © 2009 Forrester Research, Inc. Reproduction Prohibited

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E purchasing technology drives new economics for commerce

  • 1. 1 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 2. ePurchasing Technology Drives New Economics For Commerce Lutz Peichert, Vice President, Principal Analyst January 19, 2012 2 © 2009 Forrester Research, Inc. Reproduction Prohibited 2011
  • 3. New developments in ePurchasing technology can help Procurement go beyond the low hanging fruit 3 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 4. Agenda Procurement leaders face conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations 4 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 5. Agenda Procurement leaders face conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations 5 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 6. What forces will shape your world in 2020? 2010 2014 2016 2020 6 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 7. Global disruptions have become common news 7 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 8. Economic volatility can disrupt your supply chain Source: www.financial-portal.com 8 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 9. Sourcing’s Goals Pull Us In Two Directions Number of Rationalize Expand Suppliers  Aggregate demand to Costs  Expand the bidder pool get economies of scale to increase competition  Dump financially weak  Diversify, multi-source to Risk vendors reduce over-dependence  Focus vendor  Introduce new blood to management’s Performance combat complacency attention  Search for new sources,  Create tight strategic Innovation anywhere in the world partnerships Answer: Do Both – create tighter partnerships in some areas while increasing competition in others 9 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 10. Collaboration: working more closely with its key suppliers helped Ford reverse its decline Ford rose to 5th in JD Power’s quality ranking, above Toyota and Nissan Source: Planning Perspectives, Inc 10 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 11. Supplier classification example Business Value Timescale/ Cost To Replace 11 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 12. Relationship classification example Spouse Close Relative Facebook Social Value Friend Child@ LinkedIn University Connection Timescale/ Cost To Replace 12 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 13. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations 13 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 14. Forrester has identified four broad themes driving business technology trends  Empowered employees and customers energize leading organizations.  Everything-as-a-service (XaaS) offers new technology acquisition and consumption options.  The App Internet connects mobile users to near-limitless information.  Big data extends our digital horizon and changes the way we do business. 14 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 15. CIOs need shift budget from steady-state to new initiatives May 2011 “Forrsights: The Software Market In Transformation, 2011 And Beyond” 15 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 16. Businesses cannot, and should not, get all their technology innovation from one source Self- provisioned iApps Key business applications New supplier search Core Collaboration Systems SRPM ERP eSourcing 16 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 17. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary recommendations 17 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 18. Most enterprises still have a buyer-centric approach to ePurchasing Ptolemy 18 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 19. The network-centric approach is better Copernicus 19 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 20. But a universe of discrete networks is costly for suppliers, and less effective for buyers Gallileo 20 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 21. We’re now seeing the emergence of global communities of buyers and sellers •Scale and reach to be effective •Unstructured collaboration, not merely transactions •Sharing information with your peers 21 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 22. Important management information is distributed across multiple silos ERP eSourcing Contracts EDI 22 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 23. The technology giants have misled us several times  “Implement one ERP product everywhere”  “Consolidate to a single instance”  “Build a data warehouse”  “Buy a spend analysis project”  “Buy a supplier assessment project”  So why should we believe them now? 23 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 24. Supplier managers need to combine internal and external information sources into a formal risk analysis process 24 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 25. Forrester named this emerging category “Supplier Risk and Performance Management” 25 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 26. SRPM is more than data gathering and reporting Performance Risk optimization management Performance monitoring Supplier Information Action needed Process management Searching for insight Self- registration One supplier master Basic data collection 26 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 27. Vendor viability Risk Vendor Vendor risk tolerance viability 27 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 28. Forrester sees forward looking risk management as a must 28 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 29. Agenda Procurement faces conflicting priorities in 2012 Four trends drive business technology developments We’re beginning to see their impact on ePurchasing Summary & recommendations 29 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 30. How can you make use of these forms of unstructured collaboration?  Idea forums that include key suppliers – Users’ problems, suppliers’ ideas, voting on which ones to take forward, workspace for project teams to share information  Engineering change process – Consider the impact of proposed modifications before they are put into effect  Community performance rating – Aggregate objective and subjective data from your peers to evaluate prospective suppliers  Urgent problem resolution – Creation of ad hoc teams, live web conferencing, asynchronous messaging 30 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 31. What can you do now? If you’re just starting out… If you’re further along… • Don’t wait until you have a • Use technology to work even disaster to create the more closely with your key business case for SRPM suppliers • Convert Ptolemaic or • Focus SRPM attention based Copernican supplier on importance, not just collaboration initiatives into spend community programs • Automate analytics • Start somewhere • Manage improvement important, but doable processes 31 © 2011 Forrester Research, Inc. Reproduction Prohibited
  • 32. Thank you Lutz Peichert +49 69959 29846 lpeichert@forrester.com www.forrester.com © 2009 Forrester Research, Inc. Reproduction Prohibited

Hinweis der Redaktion

  1. Riskier environment – economic, political, environmental; price volatility; Need to drive down costs – by consolidating spend with fewer suppliers, while increasing the bidder poolNeed to co-innovate with suppliers
  2. Riskier environment – economic, political, environmental; price volatility; Need to drive down costs – by consolidating spend with fewer suppliers, while increasing the bidder poolNeed to co-innovate with suppliers
  3. Image:http://clichegal.blogspot.com/
  4. So how do you decide which suppliers will fit in which category?
  5. To add or remove rows in the table:Select the table. Your cursor will change to an icon of two lines and an arrow above and below will appear on mouse-over of the baseline of the row.Right-click and select INSERT > ROW BELOW. Or DELETE ROW.To add a row after the last row, you can press [Tab], and the cursor will go to a new row.Highlighting new areas:Select the bracket group from the right bracket. Hold SHIFT and pull cursor down over the next bullet item. Select the previously highlighted text and in the HOME tab unclick the [B] button for bold, and click on the [A]buttonand choose the gray swatch (Gray-50%, Accent 5) second to last in the top row of the palette. Select the text for the newly highlighted area and click the [B] button for bold, and click on the [A]buttonand choose black.
  6. Use of ePurchasing to assist supplier tiering and then monitor performance at an intensity level appropriate to the tier.
  7. Facebook was only effective because it dominated. E.g. half your friends are at party down the road that was advertised on BeboWe wont accept such a monopoly in a B2B context, but we will accept 3 or 4 community platforms, especially if they integrate with each other.
  8. This prompted us to research the market, and publish our analysis in a couple of reports of which this is one
  9. We identified a maturity curve, from basic self-service as part of master data management, through wider risk & performance reporting, to a full optimization stage, including processes to address problems and drive improvement. For example, early stage processes disqualify suppliers that fail r&p criteriaAdvanced processes help those suppliers improve.
  10. Use of ePurchasing to assist supplier tiering and then monitor performance at an intensity level appropriate to the tier.