Over the past few years SAP has been buying up specialist cloud companies in order to broaden its procurement and spend management solutions portfolio. The three acquisitions that really stand out are:
- Ariba – a supplier network focused on buying both direct and indirect materials. Typically referred to as procure-2-payment. (It does plenty of other things but that is beyond the scope of the discussion at hand.)
- Fieldglass – a tool focused on buying services / contingent labour
- Concur – a tool focused on making travel, invoices and expenses easy
The most interesting aspect of this, is that it shows us that there is a clear long-term trend- as the procurement function matures so do the tools. Because of the way supply markets are structured and internal buying behaviours – driven by category and by industry – there will be more and more specialist tools coming out which are fit for purpose. The common thread in these tools is that they all hold supplier data even though they are being pitched as different types of tools, they are actually three tools used for buying different goods or services from suppliers / third parties.
This concept isn’t something new, Bob Solomon was maintaining such a view of vertical solutions up until 2014, which further supports the trend and explains why SAP has taken this direction.
This should also be sending some alarm bells to those who are looking at doing Supplier Information Management (SIM) within a “procurement or strategic sourcing” suite. For those who have been working in the world of supplier master data management this is nothing new but for the agnostic procurement or finance professionals who are now embarking on this journey, many end up learning the hard way, that the SIM module you are paying for will go to waste.
Why will it go to waste?
SIM is an evolution of Supplier Master Data Management (SMDM) and it is not just about surveying suppliers and collecting documents – which it has been somehow dumbed down to by the marketing and sales activities of the big P2P players. More importantly though it’s for the reasons we have been discussing above.
Your P2P suite will never have 100% of your suppliers! Most customers use a different tool for Indirect vs Direct and of course for specialist areas like construction, contingent labour, facility management, travel, etc. you will have other tools.
The key takeaway is that we need to differentiate transactional tools – which are tools like ERP and P2P – from data and information management tools. There is a reason the data management activity moved away from ERP and we should learn from the past and not try and solve the same problem with a similar tool – P2P.
The moves that SAP has made have been intelligent ones. Eventually to have control over your data and drive good data quality and 100% visibility you will need a Supplier Information and Data Management tool which can help you govern your data across multiple systems.
Doing Supplier Information Management in a system which will never have 100% of your suppliers doesn’t seem very logical to us. We are always interested in others views?
If this topic is of interest we discuss this further in this recent post: Why a Single System for Supplier Management is a Waste of Money as well as the blog post listed below.