Forrester’s Sourcing and Procurement Market Overview

End of November 2006, The Forrester offered a teleconference to give its views of the worldwide market for eProcurement, eSourcing, contract life-cycle management (CLM), spend analysis, electronic invoice presentment and payment (EIPP), and supplier networks for 2006-2008. The analysis, presented by Andrew Bartels Vice President Forrester Research, is based on 60 leading vendors You can access free the Forrester powerpoint presentation which supported this teleconference. The key learnings are:

  • Definition
    • Its a eight stage process: Spend Analysis; Supplier Assessment; Supplier Identification; Sourcing; Contract Mgt; Procurement; order fullfillment; invoicing reconciliation and payment
  • Trends
    • Overall: Spend management revenues (~ EUR 2 Billions in 2006) are on rise (10%+/year), with eProcurement and eSourcing still dominating; Revenues are almost equally devided between Licence, subscription, maintenance and consulting (25%); The market is consolidating and will continue to do so; eProcurement and eSourcing are the most advanced adopted technologies with respectively 7.700 and 2.900 clients on a total of 15.000; Spend Analysis is the worst adopted technology with 400 clients; SaaS is most popular for eSourcing, EIPP and spend analysis; European demand is strongest at middle sized and large companies.
    • The top 2 leading European eProcurement Service Providers are IBX and Hubwoo with ~60 clients; they are far behind SAP (2500 clients) and Oracle (2400) or Ariba (250).
    • Ariba is leading the market of eSourcing Services with 300+ clients. Followers with ~150 clients are Procuri, Emptoris, I-Faber (Europe), Oracle, SAP.
    • eSourcing market is shifting from services: Licences, maintenance and subscription grew from 60% to 75%.
    • Best Spend Analysis providers are Emptoris, Verticalnet and Ariba. Spend Analysis Market is shifting to SaaS.
    • Contract management (CLM) is dominated by Accruent, I-Many, Oracle, Procuri, Ariba; they all claim more than 100 customers. CLM boomed in 2006 with a 25% growth.
    • Leading Supplier Network providers are Ariba with 132.000 suppliers, Perfect 11.500, Quadrem 46,500, CC-Hubwoo 12,000, IBX Europe 10,000.
  • Key Recommendations for buyers
    • Look separately for procurement/EIPP vs. eSourcing/spend analysis vs. contract management
    • SAP and Oracle are still not ready, having holes and weak points in their offerings
    • Expect new entrants and consolidation in EIPP and contract management
    • Foresee prices declining for eProcurement and eSourcing as products get commoditized
  • Key Recommendations for Vendors
    • Demand is growing but unevenly — pick your segments!
    • SAP and Oracle are not dominant yet
    • Global 2000 enterprises are not as saturated as it had seemed!
    • Expect new entrants from enterprise content management into contract management market
    • Understand where demand for SaaS is strong

If I can add my modest contribution to it, I would say:

  • The number of Spend-Management-solution clients, i.e. 15.000 worldwide spread accross 60 vendors, looks to me ridiculously low, as well as 60 clients per vendor when SAP can claim 2 to 20 times more. Comparing this market to the VoD or other C2C or B2C markets makes it even more amazing. Thus, I would anticipate following:
    • 1) Important consolidation still in the coming years,
    • 2) A boom of SaaS solutions,
    • 3) Dramatic price reduction while hundred thousand(s) of SME will pick up the SaaS functionalities that enable them to buy faster and cheaper, taking into account the emergence of free open source solutions,
    • 4) Very limited services (Google model: everything will be online and automated; even training or support will be done with VoD or similar)
  • Be carefull selecting a vendor as consolidation shall keep its pace: ensure at least that an export/import functionality for all your content-data is available and garanteed in case of liquidation of the vendor you would select.
  • How can it be that Spend Analysis automation has such a low adoption as it is the basis for identifying improvement potentials? I see a great potential for vendors in this field and a great opportunity for buyers to find new performance potential.
  • There is barely no leading European Vendors on this market (Except SAP).
  • Supplier Networks, an abused marketing term as it doesn’t refer to reality really, will be a key differentiator and added value for SaaS providers, enabling quick-supplier pre-qualification and quick-deal making. Currently I would suggest to verify what you can do with those Supplier Networks…and I would assume very little. You will probably get the guarantee that those suppliers are ‘ready to use your vendor platform’ – which is a plus! –
  • Last and maybe least: I’m not sure you should look separetly for eSourcing and contract management (CLM). Those 2 applications are rather closed to each other and I see a lot of benefits to get them integrated with each other. A lot of content-data are to be shared between those 2 applications: supplier information, contact details, KPI’s, tendering specification, negotiation results, contract performance and issues etc…

No Responses

Laisser un commentaire

%d blogueurs aiment cette page :