E-Sourcing Forum » It’s time to play

It’s time to play - Turn Back the Clock

May 29th, 2008 at 09:13am David Bush - Iasta

…to 2002 and the Forrester Report - Standalone Sourcing Apps Vanish. Since I am out at an analyst conference right now, and knew I would not be able to take notes and process a blog with the tight dead lines required by the supply management community, I went to the archives.

In fact, had we not moved last month, I would never have found this file in my desk, stashed into a folder of doom that had not seen light for years. I will also caveat this post by saying that no one is right all the time. I certainly am not. However, I did enjoy flipping back through this report (that can still be purchased for the bargain price of $675!). There is some standard and repeated analyst speak in here that is tried and true (read: easy/safe predictions), which you will find in almost every market report. There is also plenty of client name-dropping to enhance the credibility. However, save your budget, here are some of the highlights:

Standalone Sourcing Apps Vanish

Users aren ’t adopting today ’s best-of-breed sourcing apps –instead they ’re waiting for integrated solutions from ERP,SCM, and product-design vendors.

The result?
Standalone sourcing app vendors fade by 2003.

ACK! Wow, not only are we still waiting for ERP vendors to take over the world and become one-stop shopping for all that ails organizations, the BoBs have actually thrived and grown. After a massive shake out of the weak, unsustainable models, a very capable group of eSourcing applications have begun to entrench and grow with advanced functionality and services.

STANDALONE SOURCING APPS FALL SHORT

Despite “pilot project ROI success stories,”ISVs like Emptoris –offering best-of-breed apps for point sourcing problems like auctions, RFXs, and quote evaluation –describe painfully long sales cycles and no-decision losses to the incumbent spreadsheet. Why have these vendors failed to gain traction?

They lack: Market stability. CIOs burned in the Internet craze are more conservative about investing in solutions from small vendors. As Ariba and Commerce One proved in the eProcurement market, only a couple of serious players will survive long term — pushing most to consolidate or evaporate (see the November 6,2001 Forrester Brief “eProcurement:Winners Will Thrive On Process Skill”).

Oops, the flames from the C1 wreckage are still smoldering. So much for looking to them for market leadership. Again, reports of our death have been greatly exaggerated. I think many of the vendors during that era - us included - learned that free pilots are worth that much to the clients (nothing), just controlling that aspect probably improved the health of many eSourcing players. What is most shocking here are the options that Forrester presents for the stand alone players. “Consolidate” or “Evaporate”? Where the hell is “Innovate”??? The most obvious market response, is the one they fail to see or predict.

USERS SEEK INTEGRATED SOURCING SOLUTIONS

Repetitive procurement. To enable General Dynamics to manage material spend across divisions, apps must automatically identify suppliers, generate RFXs, and negotiate contracts. To make this happen, this firm needs sourcing functionality — like bid optimization, analytics, and supplier negotiation –integrated with procurement data like invoices and supplier performance.

Ok, that would be nice in 2001 or 2010. I’ll take “Recommendations that can never be refuted for $800, Alex.”

There are literally 10s of these types of predictions and recommendations that could be commented on. I suppose I could commend Forrester for issuing a provocative report on the future of eSourcing, but I do not really believe that is what they were attempting. This was just one in a long line of similar analysis from the period.

I guess I am most surprised by the lack of understanding of the industry. It seems to be analyzed in a vacuum, without out giving the vendors any credit for survival instincts, business sense or pride in their businesses. Software is a tough industry (one of the toughest, in my opinion) but there is never a shortage of people willing to make it work. Rolling over to die, was predicted but never happened.

Moral of the story - read these reports as a single data point. They are not written by Warren Buffet and many are done without research to fully back the findings. You can certainly learn about an industry, but you cannot get the true story without adding your own analysis.

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Entry Filed under: Analysts/Research, General, Technology / SaaS, e-Sourcing Marketplace

3 Comments Add your own

1. Eric Strovink | May 29th, 2008 at 10:21 am

“The ERP Vendors Will Conquer All” has been a recurring theme with analysts since time zero. There were similar predictions about the Time & Attendance space, which was viewed as an easy vertical that would be trivially swallowed by the ERP vendors. Well, here we are in the present, Kronos dominates the space, and the ERP vendors failed completely.

In their defense, analysts have to make predictions, and inevitably many of those predictions are going to be wrong. And, it’s hard for analysts to avoid the watered-down doublespeak that is necessary to keep the firm’s vendor clients happy, while at the same time delivering useful advice to end users.

However, I think that the main problem that analysts face is the insidious corporate culture of “avoidance of personal risk.” There was a recent article in one of the business publications pointing out that this culture breeds mediocre CEOs who are canny political survivors rather than the innovators and leaders that we really need. So, what’s an analyst to do, other than recommend a “safe bet,” one that can’t be attacked by his client’s political enemies? And what could be “safer” than an ERP vendor?

It’s a major Catch-22.
2. Charles Dominick, SPSM | May 30th, 2008 at 3:31 pm

I love this post!
3. Andreas | June 26th, 2008 at 2:09 am

I love this post, too. In 2000 the analysts predicted a prospering e-Sourcing market, in 2002 they predicted, that all the vedors will disappear! 2001 was probably the hardest year for e-Sourcing, as unlike e-procurement the prodcuts were not only covering existing processes, but demanded a complete shift in working. Sometimes you only have to have a look, where the analysts were raising their data and you know: the report is not the money worth, it was printed on. Does anybody know a report, where there was a good prediction? I am not talking about the no-brainer prediction, that “there will be consolidation” … after 8 years in e-Sourcing and e-procurement market I really lost the faith in the analysts!

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