The Gartner Magic Quadrant for Strategic Sourcing Application Suites
was published recently, which got me thinking about how well procurement functions use the sourcing software we have.
The report itself has some other interesting information when you get beyond the ‘magic quadrant’ (which rates vendors) itself, like the trend to more integrated application suites and that 79 per cent of references accessed their software via the cloud. Both of these seem to be good indicators of the way that the market is going - indeed following the wider business software market.
I have seen many companies that have installed new software to support the sourcing process, but have then failed to maximise the software capabilities. This is supported by the recent IBM Chief Procurement Officer Study, which surveyed over 1,000 CPOs from $1 billion organisations. The study found for sourcing and RFX solutions, 51 per cent said their solutions were of average effectiveness or lower. This suggests that there is huge opportunity for improvement as for “top performers” the figure was 10 per cent.
Before we all rush out and find new software, it is worth reflecting that often there is unfilled potential with existing solutions. In my experience, processes, capability and technology infrastructure are often the most important drivers of software effectiveness. It is worth carrying out a detailed review as to why the existing tools are not used and examining the root causes. Often reasonably simple fixes like better user training, improved measurement and reward, or larger network bandwidth can have remarkable results.
For those of you that want to revisit the sourcing software you have, the findings from the Gartner study are a great place to start. While we could all debate the definitions and inclusion criteria, those pieces of software identified as “leaders” are all great packages. BravoSolution, Ariba, SAP, IBM (Emptoris), GEP, SynerTrade, Iasta and Zycus make it into the “top” quadrant – good news for all of them. But interpret the data with caution, as there are notable absences with companies that operate point solutions (such as CombineNet and Coupa) or ERP providers (such as Oracle and Microsoft) not being included.
☛ Tom Woodham is director at Crimson & Co