July 25, 2013

Hey EAS, make room for SLM !

Enterprise Application Software (EAS) is a huge market. This is software that is intended to model how the entire organization works with the intent of furthering the needs and objectives of that organization – and, by most estimates, the demand for these EAS solutions exceed $120 billion per year.

The solution segments are commonly accepted and include areas such as: Customer Relationship Management; Product Lifecycle Management; and, Content Management, amongst others. But, often Supplier Lifecycle Management (SLM) is not included in the pack. Odd really.

To be clear, Supplier Lifecycle Management should not be confused with “Supplier Relationship Management”, which tends to focus on strategic sourcing, contract management, collaboration, etc. and often may be more services-oriented. It is also not “e-Procurement”, which manages tenders through eActioning, catalog management, PO integration, eInvoicing, etc. and is transaction-based. No, Supplier Lifecycle Management is very focused on conducting the end-to-end processes associated with managing a supplier, and all corresponding information. It includes, amongst other initiatives:

  • Supplier Discovery and Pre-qualification
  • Supplier Enablement/Onboarding
  • Supplier Information Management
  • Supplier Master Data Governance
  • Supplier Performance Management
  • Supplier Risk Management
  • Compliance

Sure, there is often some overlap and, though SRM, SLM, and e-Procurement are not sharply demarcated, one can quickly see the differences in complexity (and process) of supplier information managed in the eActioning process, versus the supplier onboarding process.

But, is there any possibility that Supplier Lifecycle Management will be absorbed, and just be a component, within one of the existing EAS’? Certainly it is possible, but very doubtful. The capabilities and functions of these solutions, such as Product Lifecycle Management and/or Human Capital Management, are decidedly different. While many believe there is significant overlap between Supplier Lifecycle Management and Customer Relationship Management, the differences are striking here as well, as managing customers (or prospects) is often far less complicated than managing suppliers. Take for example:

Item

CRM Approach

SLM Approach

Workflow Basic approvals/alerts by reporting structure Need to enforce global policy, while providing local autonomy.
Integration Primary use of integration to gather 3rd party data Primary use of integration to syndicate master data to downstream systems
Data Model Basic (leads, prospects, customers, product, communication) Complex (organizational structure, supplier relationships/engagements, multi-tier, etc.)
Master Data Management Ideal to have clean data Critical to have clean data
Compliance Pricing-oriented Process-oriented
Focus Manage all Manage by exception
Information Collection Mostly internal, or 3rd party data source Mostly external (suppliers, auditors, 3rd parties, etc.)
Language Support Standardized Localized
Stakeholders Sales and Support focused Procurement, Finance, Accounts Payable, Supply Chain, Legal/Compliance, Diversity, Manufacturing, etc.

Now, now. Before everyone comments on the simplicity, or exceptions, within these examples, they are just rough examples highlighting the inherent differences between SLM and CRM (maybe soon I will compare and contrast the two solution-sets in detail). The point is that by changing the nomenclature “customer” to “supplier”, it cannot transform CRM into SLM.

So, SLM stands alone and cannot be easily engulfed within traditional EAS solutions. But is it ready for primetime? Let’s look at the facts…

The solution solves enterprise-wide problems, versus departmental problems.

The solution solves problems that are critical in achieving the objectives of the organization.

The solution is an integral part of the organization’s information system – and will often integrate with other EAS systems.

The solution needs to model how the organization works.

The information managed through the solution requires a governance structure and process.

The solution requires performance, scalability, and robustness.

The solution is leveraged by a large amount of users/stakeholders.

The solution’s cost justification is measured within the “tens of millions of dollars per annum” tier (or higher).

Net-net: EAS… make room for SLM.

How large will the market ultimately become – and is the potential as large as the Product Lifecycle Management segment, which is estimated to now exceed $30 billion? What about Customer Relationship Management, which is estimated at $18 billion? It certainly is difficult to know yet, but with much smaller segments, such as Enterprise Asset Management, exceeding $2 billion in sales, most assuredly the SLM market is poised for growth.

enterprise application software

 

With an estimated market size now exceeding $700 million, the “Early Adopters” have bought in. Supplier Lifecycle Management has carved out a spot within EAS – and, whether in hope of maximizing procurement levers, to mitigate risk, to leverage competitive differentiators, or to enforce compliance, the mainstream market is now taking notice.

Will your organization be “mainstream”, or… “Laggard”?

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