Why A Source-To-Pay Ecosystem Is Best-Practice
Learn why end-to-end, source-to-pay (S2P) suites are no longer a feasible option for modern businesses and instead, organisations should turn to partner ecosystems.
Master of all? Or specialise?
Once upon a time the “one size fits all” vendor approach seemed ideal. It definitely held appeal as it seemed to be an ideal way to cover all an organisation’s S2P needs while only requiring one vendor.
But now, the industry has matured to learn that no vendor truly offers a full source-to-pay (S2P) suite that is best-in-class across all modules. Not to mention, the time it would take to roll out and maintain such a solution. In the past decade, vendors attempted to support the entire S2P process, however, as buying organisations strive to digitalise procurement and sourcing, it’s becoming apparent that a single suite is typically not enough to accomplish their goals.
Understanding your S2P ecosystem
Similar to wireless providers that switch between towers to ensure you never lose service, a proper S2P partner ecosystem makes sure you cover all areas of business spend, by using a multivendor approach. As noted in Gartner’s “Predicts 2019: Sourcing and Procurement Application Vendors Embrace APIs and the Ecosystem Approach”, “Growing partner ecosystems are making it easier for organisations to take a connected, multiple-solution approach to sourcing and procurement automation.” “By 2021, major source-to-settle and procure-to-pay vendors will have more than doubled their preconnected partner ecosystems.”
While the bulk of importance is directed towards automating purchasing, payments, and a flexible supplier network, there are many value-add services that surround the S2P process. Services like supplier management, risk management, and contract lifecycle management often only offer basic functionality from suite providers claiming an “end-to-end” solution. Best-practice suggests selecting one vendor for the core areas of focus, then supplementing with other products and services from specialised providers. Companies should evaluate the data in an ecosystem to ensure core information is shared between partners so that analytics can be applied on data across the systems.
To understand the value of a vendor’s product ecosystems and to evaluate the effectiveness of its community, Gartner recommends requesting the following:
- Data from the vendor outlining the number of ecosystem participants, the trajectory at which the ecosystem is growing, and insight into those that use it regularly.
- Metrics that disclose the number and frequency of documents, components or templates being uploaded by the vendor to the community (often called an online library).
- A summary of the past three years of product updates originating from, or inspired by, suggestions by ecosystem partners.
- Customer references that you can contact directly for an assessment of the vendor’s product ecosystems, and any user groups that they may participate in.
Analyst perspective
In an interview with Magnus Bergfors, in conjunction with Spend Matters, Magnus details why, at one point and in some circumstances, an end-to-end suite.
He explains, “An end-to-end source-to-pay suite often seems more appealing than a specialist solution at first glance. And there are advantages to it — there’s no doubting that. The most practical one is from an IT management perspective. Your business will have fewer solutions to deal with and fewer integration points with an end-to-end approach. Second is that you get a similar look and logic across multiple solutions, making it easier to use. The third advantage is in the analytics where you can have data from multiple modules succinctly located in one place.”
Bergfors reveals that though there are many appeals to a singular S2P suite, it’s not always the best option. There are inevitable problems, including “…that your organisation sacrifices specific functionalities with a unified suite. When you sacrifice too much, it starts impacting your ability to manage your spend and stay agile in your operations.”
Additionally, he warns that “A lot of the end-to-end suites in the market today aren’t natively developed or integrated and are instead made up of acquisitions, some of which are better integrated than others.” So, even if a S2P suite claims to be end-to-end, it might operate more like a patchwork of solutions than a cohesive unit.
Join Basware at Connect Digital – free webinar series
Join Basware for our new Connect Digital webinar series where Magnus will further discuss his views and we’ll offer the opportuning for a live Q&A session. Find details for the webinar below.
Determining Your Future Tech Strategy – Spend Matters
Wednesday 10 June 2020
Hear from leading industry analyst Magnus Bergfors from Spend Matters on how to best determine your technology strategy and get the most out of the increasingly diverse and broad options available in the procurement technology market.
