Last month, about the same time Jason Busch over at Spend Matters was offering up his Reflections on Spend Management’s Decade, Mickey North Rizza of AMR put out the short article Procurement and Sourcing Technology Celebrates a Decade of Growth.
In this piece (now restricted to AMR clients only), AMR projects that the supply management market is looking at a continued growth of 9% a year and that SaaS will continue to aid in the growth and demand is expected to increase at a Compound Annual Growth Rate (CAGR) of 26% over the next five years.
Mickey also notes that, moving forward, solution companies will likely round out their products through partnerships or acquisitions, and that potential extensions may include:
- combined suites of sourcing and procurement systems
- Product Life cycle Management (PLM)
- “What-if” cost modeling tied to SKUs for immediate margin improvements
- Supply Risk Management (SRM)
- Integrated Master Data Management (MDM) functionality
Although I more or less agree, what I’d like to point out is that most solution companies still do not have solutions that cover the end-to-end sourcing cycle or the end-to-end procurement cycle. In sourcing, many suite vendors are missing supplier management or supplier self service, decision optimization, and/or integrated compliance tracking in their contract management system (if they even have one). In procurement, many companies do not have the end-to-end web-enabled EIPP (Electronic Invoice Presentation and Payment) solutions. Etc.
I think that in the near future, you will see companies focused on rounding out their core solutions in their area of expertise and building integration points into systems that implement processes that come before or after the processes enabled by their systems. In other words, the initial focus will be on rounding out current offerings and building integration points between sourcing systems and procurement systems.
Then the focus will be on collaboration, since that is a prerequisite for good PLM in a world where product design occurs across your supply chain.
As for MDM, I believe that most companies with integrated suites have already addressed that problem, and there are already companies out there offering cost modeling templates and solutions.
SRM is coming, but first of all companies need to get good, basic, supplier management and visibility systems in place – since you cannot manage a risk before you can even identify what it is and track it.
Mickey was right … but I think most companies still have to fill in some basic capabilities before they can move up the solutions ladder. One step at a time.