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G00217670
Hype Cycle for Procurement, 2011
Published: 14 November 2011
Analyst(s): Deborah R Wilson
Procurement spans a rich and diverse range of activities. The variety of tools
available that supports and enables procurement activities continues to
expand and mature.
Table of Contents
Analysis.................................................................................................................................................. 2
What You Need to Know.................................................................................................................. 2
The Hype Cycle................................................................................................................................ 3
The Priority Matrix.............................................................................................................................8
Off the Hype Cycle........................................................................................................................... 9
On the Rise.................................................................................................................................... 10
Social Procurement Tools......................................................................................................... 10
Mobile Procurement Applications............................................................................................. 11
Services Procurement.............................................................................................................. 12
Source-to-Pay BPO..................................................................................................................13
MDM of Purchased Parts..........................................................................................................15
MDM of Supplier Data.............................................................................................................. 17
Multienterprise Business Process Platform............................................................................... 18
Supply Base Management........................................................................................................21
At the Peak.....................................................................................................................................22
E-Invoicing................................................................................................................................22
Indirect-Procurement BPO........................................................................................................26
Business Process Networks..................................................................................................... 27
Procure-to-Pay Solutions..........................................................................................................31
Vendor Risk Management.........................................................................................................32
Source-to-Settle Solutions........................................................................................................34
Sliding Into the Trough....................................................................................................................35
Procurement Networks.............................................................................................................35
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Supplier Portals........................................................................................................................ 36
Contingent Workforce Management......................................................................................... 37
Contract Life Cycle Management..............................................................................................39
Sourcing Optimization...............................................................................................................41
Climbing the Slope......................................................................................................................... 43
Spending Analysis.................................................................................................................... 43
Strategic Sourcing Suites..........................................................................................................44
Online Supplier Directories........................................................................................................45
Information Exchanges and Global Data Synchronization..........................................................47
Procurement E-Catalog Management Solutions....................................................................... 49
Entering the Plateau....................................................................................................................... 50
E-Procurement......................................................................................................................... 50
SaaS Procurement Applications............................................................................................... 51
Telecom Expense Management................................................................................................53
Travel Expense Management....................................................................................................54
Appendixes.................................................................................................................................... 58
Hype Cycle Phases, Benefit Ratings and Maturity Levels.......................................................... 58
Recommended Reading.......................................................................................................................60
List of Tables
Table 1. Hype Cycle Phases................................................................................................................. 58
Table 2. Benefit Ratings........................................................................................................................59
Table 3. Maturity Levels........................................................................................................................ 59
List of Figures
Figure 1. Hype Cycle for Procurement, 2011.......................................................................................... 7
Figure 2. Priority Matrix for Procurement, 2011.......................................................................................8
Analysis
What You Need to Know
Procurement technologies, when paired with process improvement and staff development, are
delivering step changes in procurement process productivity and effectiveness.
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With a few notable exceptions (such as SAP and Oracle), specialty vendors dominate the
procurement solutions market.
The Hype Cycle
The 2011 Procurement Hype Cycle, an update of our 2009 research, reveals a market that
continues to offer a rich and diverse set of solutions to support the various processes and activities
related to procurement. We are now roughly midway through what is shaping up to be a 25-year
evolution that is fundamentally changing the way procurement operates. When the evolution is
complete, procurement professionals across industries, geographies and organization sizes will
have most of the capabilities discussed in this research as a part of their standard application
portfolio.
Specialty vendors have been the primary drivers of innovation in this market, although some ERP
vendors (including SAP and Oracle) have reasonable to very competitive offerings in several
procurement technologies. The market continues to be geographically fragmented, because of
differences in regulations and the make-up of participating supplier communities. Demand for
enterprise-level solutions that support shared services is pushing the market toward an inevitable
consolidation, and to global networks.
Notable trends illustrated in this Hype Cycle include:
Innovation: Technology Triggers, such as the improved graphics renderings on mobile devices
and the growing popularity of social websites like Facebook, are likely to facilitate useful
features for procurement solutions, and thus appear early on the Hype Cycle.
Hype: Vendor risk management solutions are the most overhyped offering as buying
organizations seek a means to reduce supply risks (such as from events like natural disasters,
security breaches and vendor bankruptcies). Solution vendors have responded to the demand
with sometimes scarcely credible claims of how their solutions can help.
Unforeseen barriers to adoption: Trying to leverage the various modes for supplier
collaboration is an area of frustration for clients, and thus a major theme in this market.
Unanticipated adoption issues and business model problems are graphically depicted by both
the supplier portal and procurement network being moved backward from the Slope of
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Enlightenment to before the Trough of Disillusionment. We also lengthened the anticipated time
to mainstream adoption for these technologies.
Maturing solutions: Meanwhile, the movement of key solutions such as e-procurement and
strategic sourcing applications to at or near the Slope of Enlightenment means that
organizations have an increasing number of mature solution types to choose from to support
procurement activities.
Since our last Hype Cycle for Procurement, some technologies have progressed along the adoption
curve very slowly, while others have moved toward mass adoption more quickly.
Slow-moving technologies include:
Services procurement, because service transactions (such as contingent worker hires versus
statement-of-work-based agreements) are highly differentiated in terms of process steps and
process flow, and so a single solution does not necessarily work well for all service types.
Master data management (MDM) of purchased parts and supplier data inched ahead as difficult
economic conditions stifled platform architecture-level investments. This issue also incited us to
delay the expected time to mainstream adoption for MDM of supplier data.
Procure-to-pay solutions remained stuck near the Peak of Inflated Expectations as buyers
demand and vendors market complete solutions; however, the reality is that buyers purchase
scanning and e-invoicing network services, rather than support requisition through payment via
a single tool.
Contract life cycle management (CLM) solutions made slow progress, because of the lack of
hard-dollar ROI, an issue in strained economic times. Also, recent CLM clients have tended to
focus on implementing just the basic functionality, which means vendors don't get the feedback
they need to hone full solutions.
We lengthened the expected time to mainstream adoption for spending analysis, because
getting good results is ending up to be more challenging than initially thought (see "Spend
Analysis Best Practices").
E-procurement and travel and expense (TEM) solutions inched toward full maturity as they
entered the mainstream market.
Fast-moving technologies include:
Supply base management solutions vaulted up the initial slope toward the Peak of Inflated
Expectations as many strategic sourcing suite vendors realized that RFI functionality could be
positioned as supplier information management.
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Contingent workforce management solutions flew from the Trough of Disillusionment to the
Slope of Enlightenment, driven by organizations' use of temporary workers instead of
permanent employees to reduce the risk of excess head count in these economically
challenging times.
There were also several changes in the composition of procurement technology profiles covered
since our 2009 research.
New Profiles:
Social procurement was added as a brand new technology for adding Facebook-like
capabilities to procurement solutions.
Mobile procurement applications is another new technology and a capability recently being
offered by some procurement solution vendors.
Tactical sourcing is no longer listed separately. As predicted, it has become a feature of other
solutions, such as e-procurement and contingent workforce management, rather than a viable
stand-alone offering.
Extended purchasing suites are no longer a distinct offering from procure-to-pay solutions, and,
therefore, are not listed as a separate profile.
Secure Web stores, Web-to-print and strategic sourcing applications have reached the Plateau
of Productivity and are no longer listed on the Hype Cycle.
Other Changes:
Procurement business process outsourcing (BPO) has been split into indirect procurement BPO
and source-to-pay BPO, because the characteristics of the offerings are differentiated.
Enterprise contract management has been renamed CLM, the more broadly accepted name in
the market.
Services e-procurement is renamed services procurement to reflect the most common name in
the market.
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Global data synchronization is renamed information exchanges and global data synchronization
to reflect a broader scope of solutions.
For advice on how to approach and order investments in procurement technologies, see
"Understanding Your Top Procurement Processes" and "Use Gartner's Pace Layers Model to
Structure Your Procurement Applications Portfolio."
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Figure 1. Hype Cycle for Procurement, 2011
Technology
Trigger
Peak of
Inflated
Expectations
Trough of
Disillusionment
Slope of Enlightenment
Plateau of
Productivity
time
expectations
Years to mainstream adoption:
less than 2 years 2 to 5 years 5 to 10 years more than 10 years
obsolete
before plateau
As of November 2011
Services Procurement
Source-to-Pay BPO
MDM of Purchased Parts
MDM of Supplier Data
Multienterprise Business Process
Platform
Supply Base Management
E-Invoicing
Indirect-Procurement BPO
Business Process Networks
Procure-to-Pay
Solutions
Vendor Risk Management
Source-to-Settle Solutions
Supplier Portals
Contingent Workforce Management
Contract Life Cycle Management
Sourcing Optimization
Spending Analysis
Strategic Sourcing Suites
Online Supplier Directories
Information Exchanges and Global Data Synchronization
Procurement E-Catalog Management Solutions
E-Procurement
SaaS Procurement Applications
Telecom Expense Management
Travel Expense Management
Social Procurement Tools
Mobile Procurement
Applications
Procurement Networks
Source: Gartner (November 2011)
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The Priority Matrix
All organizations buy goods and services to support operations. Technologies that enable
procurement to improve productivity and effectiveness can, therefore, deliver significant benefits in
terms of cost savings and process improvements.
The procurement technologies that deliver significant benefits are those that can reliably support all
or most types of spending. Moderate-benefit technologies are solutions that support a particular
category of spending or a single mode for supplier collaboration, are too immature at this time to
deliver reliable ROI, or are capabilities that we eventually expect to be features of broader solutions.
We do not list any procurement technologies as transformational because, despite its potentially
important contribution to the organization, procurement does not by itself enable a business to
dramatically alter its overall business proposition.
The time-to-mainstream adoption of the various technologies in the procurement solutions market
is well-distributed during the next 10 years. Although we do expect continued innovation in this
market through Technology Triggers and improved offerings, it's likely that, during the next five to
10 years, many of the procurement solutions in this Hype Cycle will be as commonly deployed as
accounts payable solutions in organizations with $1 billion or more in revenue.
Figure 2. Priority Matrix for Procurement, 2011
benefit years to mainstream adoption
less than 2 years 2 to 5 years 5 to 10 years more than 10 years
transformational
high
E-Procurement
SaaS Procurement
Applications
Telecom Expense
Management
Contract Life Cycle
Management
E-Invoicing
Sourcing Optimization
Spending Analysis
Strategic Sourcing Suites
Multienterprise Business
Process Platform
Procurement Networks
Supply Base Management
moderate
Travel Expense
Management
Business Process
Networks
Contingent Workforce
Management
Online Supplier
Directories
Procurement E-Catalog
Management Solutions
Source-to-Settle Solutions
Supplier Portals
Vendor Risk Management
Indirect-Procurement BPO
Information Exchanges
and Global Data
Synchronization
MDM of Supplier Data
Mobile Procurement
Applications
Procure-to-Pay Solutions
Social Procurement Tools
Source-to-Pay BPO
low
As of November 2011
Source: Gartner (November 2011)
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Off the Hype Cycle
Three procurement technologies that were listed in the 2009 Procurement Hype Cycle are not listed
on the 2011 Hype Cycle, because they have reached the Plateau of Productivity:
Secure Web stores: The Secure Web store is a B2B, customer-specific, supplier-hosted
Internet site that provides product/service catalog content, customer-specific pricing, account-
level reporting, support for multiple users and customer branding. Secure Web stores are most
often deployed as customer-specific Web stores accessed via the Internet or as a "punchout"
website that provides content for a buyer-deployed e-procurement solution. E-Commerce
solution vendors, such as Adobe, Allurent, Amazon, Bazaarvoice, eBay, Google, IBM, Microsoft,
Oracle, PowerReviews and SAP, deliver secure Web store functionality as a feature.
Purchasing applications: the traditional purchasing module of an ERP or financial system that
creates purchase orders, blanket orders and change orders. Purchasing applications also
generally enable receiving. For communicating orders to suppliers, purchasing applications
typically offer hard-copy printouts, automatic email and/or autofax. Virtually all ERP and
financial suite vendors include a purchasing application in their offerings.
Procurement cards: special-purpose credit cards that are issued to individuals to make
purchases on behalf of the organization (see "The Role of Procurement Cards in EIPP" and
"Turbo- Charge Procurement Value-Add With Consumption Management" [Note: This
document has been archived; some of its content may not reflect current conditions.]). Most
major banks offer procurement card programs.
Multiple divisions buying similar items and/or sharing common inventory across multiple
locations
A link with one or more third-party content providers, such as D&B, for identifying and/or
validating related suppliers
The seller must ensure that the invoice contains the correct data and is authentic.
The buyer must verify the authenticity of the invoice, match it to goods or services received, and
execute payment.
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Both the seller and the buyer (or a third party on their behalf) must store the readable and
authentic invoice (this comes with a lot of added strong security) for a period of time, and must
make it available to a tax authority on request.
Position and Adoption Speed Justification: E-invoicing touches internal business processes,
mutual agreements among business partners, financial transactions, tax and legal implications, and
a lot of the IT infrastructure that supports all that. Several studies and surveys are available on the
current e-invoicing uptake, and on the projected growth of the market in the next few years. So, e-
invoicing is possible, viable and beneficial today, not only in Europe, but also across the world; in
some cases (such as Mexico and Brazil), it is even mandatory.
Normative standards abound across the world, and they keep coming; as always happens in B2B,
standards accumulate, and too many standards means that there is no standard at all. In Europe,
the EU issued a directive in 2001, and has revised it twice since, with a view to "simplifying,
modernizing and harmonizing the conditions laid down for invoicing with respect to the value-added
tax in the EU" for all member states. A core theme of the directive was to promote the efficient
cross-border creation, transmission, acceptance, storage and retrieval of invoices. To allow for
technological differences among all member states, and to stay technology-neutral, the directive
enabled several ways of meeting conditions for e-invoicing. For example, the requirements to
ensure authenticity and integrity can be met either through advanced or qualified electronic
signatures, or through electronic data interchange (EDI) with contractual security measures.
Unfortunately, this technological flexibility has led member states to adopt state-specific versions of
the directive that have disparate requirements for meeting the functional objectives. These
requirements, in turn, have led to more-stringent or less-stringent controls, depending on the
member state. Several governments in Europe (and other governments around the world, especially
in South America) mandate the use of e-invoicing for government agencies, and more are likely to
follow suit in the next year or two.
Many intricacies are associated with cross-country e-invoicing projects (supplier e-invoicing and
generic e-invoicing projects with all business partners in one country are considerably easier). There
are several axes of variance for e-invoicing requirements (internal and multienterprise business
processes, IT infrastructures, and law and security, to name a few), and they cause many
differences from the seller's and the buyer's perspectives; frequently, for example, different laws
apply to buyers and to sellers. This is, by far, the most common source of difficulties in e-invoicing
projects, and is compounded by continuously evolving regulations and general requirements.
Another complication is that most requirements, in practice, are not properly published by member
states, and are extremely difficult or expensive for businesses to obtain, interpret and monitor.
The European Association of Corporate Treasurers identified the average processing cost of a
paper invoice across Europe to be around 30. It also determined that, by using e-invoicing, an
80% cost savings is possible. Confirming that data, initial case studies also indicate that e-invoicing
has been proved to reduce the cost of processing a single invoice to less than 7. E-invoicing offers
a range of potential benefits, including improvements in accounts payable (AP) processes by
reducing invoice processing time and minimizing manual intervention, thus leading to a reduction in
operating expenses. This fact alone has prompted some companies to start e-invoicing projects; it
makes many others look deeper into the e-invoicing conundrum.
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However, after a few dormant years, e-invoicing adoption is finally taking off. None of the following
reasons in isolation is enough to warrant continued growth, but all of them together are driving and
will drive more widespread adoption:
Increasing supply, and an associated increase in the maturity and effectiveness of e-invoicing
solutions; in particular, several banks are promoting e-invoicing in their strategies (especially in
Spain, Scandinavia and Switzerland)
Increasing availability of viable (and compelling) e-invoicing references and case studies as
more companies adopt e-invoicing
E-invoicing will grow steadily in the next few years, despite all the difficulties associated with it,
simply because the momentum of the four factors noted above is stronger than the decelerating
force of the difficulties. However, many difficulties are associated with normative functions in
different countries, so we do not expect e-invoicing to reach the Plateau of Productivity before two
to four years.
User Advice: Calculate your current average invoice processing cost, and confirm it with the
business. Focus your initial e-invoicing projects in countries where B2B and invoice exchange are
already happening and maturing, such as Scandinavia, Brazil, Mexico, Spain, Singapore, South
Korea, Germany, Poland, France and the U.K. Be aware of the further constraints and limitations
based on where the countries you do e-invoicing to and from allow e-invoices to be stored.
E-invoicing services are sprawling across the world, especially in Europe and South America, so
make sure the solution you choose addresses internal and multienterprise business processes, IT
infrastructures, laws, and security, and that it's certified by tax auditors for as many countries as
possible, especially those where you have a steady flow of invoices to and from that connect with
other service providers, certified e-invoice networks and banks.
Multicountry e-invoicing projects last years, so don't sell the benefits internally to your company too
quickly. In a large project, if you make 50% of your invoicing traffic electronic in two years, you're
doing great. Never underestimate the consequences of the diversity of regulations across countries;
work with your auditors and process architects, because e-invoicing is cross-functional by nature.
Research and track, on an ongoing basis, the value-added tax (VAT) laws and e-invoice
requirements in each country, or make sure your e-invoicing solution supplier does that.
Implement e-invoicing in conjunction with e-procurement or another procure-to-pay or B2B
infrastructure, if possible, to leverage purchase order information for a higher match rate to the
invoice.
No matter what vertical or financial shape your company is in, start looking for e-invoicing project
savings opportunities now. Don't hold out for regulations and interoperability to get better; you can
reap good benefits from e-invoicing today.
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Business Impact: Plan your e-invoicing projects according to how many invoices you can process
automatically in the countries the invoices will progressively touch; plan globally from the start, even
if you are starting to execute locally. The faster you build critical mass, the greater the difference to
your company's bottom line.
Current case studies indicate that you can quantify e-invoicing savings in many ways: the cost per
invoice, the total savings due to reduced number of resources and computing power (60% to 80%,
compared with paper invoice processing), or a percentage of a midsize to large company's turnover
(around 1%). Whichever way you put it, the clear indication from case studies is that the savings for
companies that have to deal with a large volume of invoices (more than 100 per day, inbound and
outbound) are significant (see "Supplier E-Invoicing Networks"), because of the economies of scale
obtained by aligning technical, business and compliance strategies.
Other benefits of e-invoicing, when implemented through e-invoicing networks or as part of a
broader B2B solution with ad hoc applications, include:
Better tracking and enforcing of trading partner compliance with commercial terms
Easier availability of data for regulatory compliance (e.g., for supply chain traceability)
A business process point of view A BPN links the execution of a specific business process,
such as order to cash or claims adjudication, between the applications and IT infrastructure of
two or more companies. A BPN doesn't execute the business process logic per se, because
such process execution occurs within the participating applications and business process
management (BPM) logic (and, at times, partially within a multienterprise application that is
included in the B2B project). The multienterprise integration project can leverage B2B standards
or proprietary specifications. For example, to implement the order-to-cash process, a
community might use industry-standard B2B specifications (such as EDI X12, RosettaNet or
UBL) or, alternatively, a proprietary specification defined solely, for example, by a large
manufacturer or retailer.
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A multienterprise community point of view The scope of a BPN can be one to many or many
to many. BPNs that are implemented only between a company and its private external business
partners are one to many (for example, a high-tech manufacturer that implements the
integration tasks associated with a vendor-managed inventory process with its electronic
component suppliers). Many BPNs are implemented to support the interactions of a large
number of companies in a peer-to-peer fashion and are many to many (for example, Ariba,
Global Data Synchronization or Society for Worldwide Interbank Financial Telecommunication
[SWIFT]).
An IT implementation point of view A BPN can be implemented using B2B gateway software,
integration platform as a service (iPaaS) or any form of B2B integration infrastructure (see
"Taxonomy, Definitions and the Vendor Landscape for Application Integration Solutions, 2011").
In addition to, or as an alternative to, such process integration technologies, some BPNs use
BPM technologies (see "Findings: Confusion Remains Regarding BPM Terminology"). BPNs
use business process management technologies (BPMTs), particularly when end-to-end
business process visibility is important to network participants, and when network participants
want business stakeholders to make some changes to process flows, rules and user interfaces,
with minimal IT intervention. BPNs can be operated directly by companies or by a wide range of
IT service providers, including providers of application hosting, IT outsourcing, cloud services
brokerage and software as a service (SaaS). Many offer extensive complementary services for
participant onboarding, participant training and participant help desk.
Position and Adoption Speed Justification: Some BPNs, such as SWIFT, have been available for
decades. However, most bundled IT solutions and B2B projects for specific multiparty business
process integration problems are still emerging or in the early adoption stage. IT end users'
understanding of B2B integration projects is evolving from the notion of "exchanging transaction
data" to the notion of "linking business processes," and the distinctions between these (such as the
implementation of process visibility tools and rule engines in BPNs to drive process improvement) is
increasingly well understand by IT end users.
As the IT industry continues to evolve, and more iPaaS, application platform as a service (aPaaS),
SaaS and other forms of cloud computing become available, awareness and adoption of BPNs will
rapidly proliferate. For example, traditional e-procurement BPNs are increasingly augmented by
cloud computing (e.g., when SaaS functionality from providers such as NetSuite, salesforce.com
and SugarCRM are integrated with e-commerce related BPNs by providers such as Hubspan and
Liaison Technologies).
By virtue of outsourcing their SaaS functionality, IT users will be more predisposed to consuming
integration functionality in packaged form as BPNs, which will help drive the hype around these to
the Peak of Inflated Expectations in the next year or so. Next, we expect there will be a mild slip into
the Trough of Disillusionment as communities of interest discover that, despite their utility, BPNs: (1)
are not as complete as was hoped (e.g., from a predefined process, prebuilt integration and
prenetworked community point of view); (2) will not be flexible enough and cannot evolve fast
enough to meet more rapidly changing business requirements if not implemented using modern
approaches, such as service-oriented architecture and metadata-driven process definitions (e.g.,
via the use of BPMT); and (3) do not easily solve diverse semantic business process differences;
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thus, processes will not be easily linked across industries. For example, most BPNs support
substantially unique processes within their communities of interest or industries.
User Advice: Enterprises and B2B communities of all sizes should look for opportunities to license,
operate or participate in BPNs when they offer a preconfigured method of implementing
multienterprise integration for a specific business process as an alternative to a custom, multiparty
business process integration project.
When choosing a BPN, carefully evaluate the degree to which your particular business partners are
(or are not) already on the BPN provider's network. BPN offerings in which most of your community
members have already been provisioned on the network will substantially reduce B2B integration
project deployment time. BPNs with few of your community members on board will increase
deployment time and may require additional business partner onboarding fees.
When choosing a BPN, look for availability of prebuilt integration relevant to your multienterprise
process (e.g., if the process is order to cash, does your BPN provider offer prebuilt adapters and
maps to simplify and accelerate project deployment against the types of applications you are using
in that process?).
When available, consider industry standards (such as cXML, RosettaNet, SWIFT and UBL) as the
basis for BPNs, because these will accelerate time to production (versus coming up with new
integration standards from scratch) and are preferable to proprietary B2B specifications.
When evaluating BPNs, look for evidence that the solution or project leverages a metadata-driven
definition of integration artifacts, including trading partner profiles, maps for translation, process
models, business rules, etc. BPNs that are more metadata-driven are more likely to be easier to
modify when changes are required in complex, multiparty business processes.
Business Impact: Enterprises can implement multiparty business process integration projects with
external business partners faster and for less money when a BPN is available, versus having to
design and implement a set of B2B standards and implement such projects from scratch. BPNs are
available for automating supply chains, making electronic payments, exchanging product
information, sharing foreign exchange calculations and linking a wide range of other multiparty
business processes among enterprises.
Following are some IT scenarios that involve BPNs:
BPNs are often run out of the data center of a prominent host for a community of interest.
Examples are Dell, the U.S. Postal Service and Walmart, which operate their own BPNs to
support their supply chains.
BPNs are operated by business process hubs (formerly called marketplaces), which combine
multienterprise integration and multienterprise applications for specific industries. Examples
include Elemica in petrochemicals, Exostar in aerospace and defense, and Railinc in railroad
transportation.
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Organizations such as SWIFT, GS1 and E4X have implemented financial BPNs to support the
exchange of financial transactions, product information and foreign currency exchange data,
respectively (see "Business Process Networks: How to Evaluate Options in the Investment
Services Industry").
Providers of integration brokerage, such as GXS, Inovis, Hubspan, Liaison Technologies and
Sterling Commerce, also operate private BPNs (for example, to support the supply chains for
specific retailers or manufacturers), and there are public BPNs, such as GS1 Global Data
Synchronization Network (GDSN), so that their customers can publish product information to
regional data pools (see "IBM and Hubspan Deploy IaaS-Based Platform for B2B Project
Outsourcing").
Various e-commerce providers, such as E2open, e-Builder and Wesupply, which, in addition to
stand-alone SaaS and integration functionality and integration brokerage services, also offer
process- or industry-specific bundled solutions for multienterprise integration for specific
business processes (see "Oracle and E2open Deploy BPN to Simplify B2B for Global Transport
Processes").
IT service providers, such as Accenture, Atos Origin, EDS, IBM, Infosys and Wipro, typically
implement private BPNs to support multienterprise projects for their outsourcing customers,
such as the multienterprise integration component of a much larger overall procurement
business process outsourcing project.
Providers of e-invoicing services, such as Basware, OB10 and TrustWeaver, operate BPNs that
are focused on electronic invoicing, particularly in regions such as Europe and Latin America,
where it is increasingly mandated by governing bodies.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: Ariba; Basware; Crossgate; Descartes Systems Group; e-Builder; E2open; E4X;
Elemica; Evenex; Financial Information eXchange; GXS; Hubwoo; IBM; Infosys Technologies; Inovis;
Liaison Technologies; OB10; Perfect Commerce; Quick Connect Computer Services; Railinc;
Rearden Commerce-Ketera Technologies; SciQuest; Society for Worldwide Interbank Financial
Telecommunication; Sterling Commerce; StrikeIron; SupplyOn; TrustWeaver; Wallmedien;
Wesupply; Wipro; Xign
Recommended Reading: "Taxonomy, Definitions and the Vendor Landscape for Application
Integration Solutions, 2011"
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"The Role of Procurement Networks in EIPP"
"Business Process Networks: How to Evaluate Options in the Investment Services Industry"
"Oracle and E2open Deploy BPN to Simplify B2B for Global Transport Processes"
"IBM and Hubspan Deploy IaaS-Based Platform for B2B Project Outsourcing"
"Examining the Embedded Multienterprise Integration Market"
Procure-to-Pay Solutions
Analysis By: Deborah R Wilson
Definition: As its name implies, a procure-to-pay (or purchase-to-pay) system is a fully integrated
solution designed to support an end-to-end process that begins with goods and services
requisitioning and ends with ready-to-pay files for upload into an accounts payable system.
Procure-to-pay solutions use a scan-and-capture service, supplier portal and/or a multienterprise
network to enable suppliers to submit invoices electronically. In addition to core e-procurement
functionality (including e-requisitioning, approval workflow and e-catalog management), procure-to-
pay solutions offer purchase-order-to-invoice matching and processing for invoices that don't
match or when goods are returned.
Position and Adoption Speed Justification: In 2009, we positioned procure-to-pay solutions just
ahead of the Peak of Inflated Expectations, because the vendors were vigorously hyping their
solutions as suitable for eliminating all paper invoices and supporting all spending. However, many
types of spending, such as for-lease payments, business services and software maintenance fees,
are awkward, at best, when supported via purchase orders. Hence, with most clients handling only
a portion of their total spending on purchase orders, accounting often rejects a procurement
solution that addresses only a minority of incoming invoices as not particularly useful. Goods and
services suppliers also frequently rejected these solutions as too cumbersome and expensive,
particularly if they were required to pay fees to submit invoices.
Some procurement solution vendors are adapting their solutions to these realities by partnering with
scan-and-capture services, such as Ariba's agreement with ScanOne, and they are adding
functionality for invoice approval without a purchase order. Hence, when desired, clients do not
have to issue purchase orders to use the system. However, these enhancements are not universal.
Organizational barriers to procure-to-pay adoption result from the expansion of the scope of a
program beyond procurement and into accounts payable. Many organizations investing in
procurement solutions already have scan-and-capture programs internally or through a business
process outsourcing (BPO) provider, and/or an accounts payable automation solution. Thus, they
have no desire to change the provider or the solution. Accounts payable typically reports to the
CFO, and CFOs are often rightly suspicious of procurement vendors trying to play in the financial
applications space. These issues do not have an easy resolution, and they will continue to impair
procure-to-pay technology adoption.
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User Advice: Consider procure-to-pay solutions to extend the value of your investment in e-
procurement applications, especially if you don't have an accounts payable automation or scan-
and-capture solution.
Evaluate the matching and invoice processing functionality of any prospective procure-to-pay
solutions provider, because features may not be on par with a specialized accounts payable
automation solution.
Consider the impact of your solution on, and benefits for, your suppliers when choosing a solution.
The supplier experience and, therefore, adoption can vary markedly across the procure-to-pay
vendors.
Unless your organization is legally required to manage all spending on purchase orders, choose a
solution that offers flexibility for non-purchase-order invoice receipt and approval workflow, as well
as scan-and-capture services.
Caution is advised for any prospective buyer of procure-to-pay solutions with plans to implement
outside its home country. A successful procure-to-pay system must comply with local B2B taxation
and electronic invoice regulations, and much work remains for the vendors to ensure compliance.
Business Impact: Procure-to-pay solutions deliver ROI in an e-procurement solution by enabling
suppliers to submit invoices electronically, reducing or eliminating paper invoices, automatically
matching purchase orders to invoices and processing invoices that don't match. These capabilities
can enable organizations to reduce accounts payable head count and improve the ability to take
early payment discounts.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: Advanced Business Solutions (ABS); Ariba; Basware; Coupa; Oracle; Puridiom;
SAP; Verian Technologies; Wax Digital
Recommended Reading: "EIPP Can Improve Finance and Purchasing Management"
"Decision Framework: Choosing the Right EIPP Technologies"
"E-Procurement Market and Vendor Landscape"
"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"
Vendor Risk Management
Analysis By: French Caldwell
Definition: Vendor risk management (VRM) is the process of ensuring that the use of service
providers and IT suppliers does not create an unacceptable potential for business disruption or a
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negative impact on business performance. VRM technology supports enterprises that must assess,
monitor and manage their risk exposure from third-party suppliers (TPSs) that provide IT products
and services, or that have access to enterprise information.
Position and Adoption Speed Justification: The growing reliance by enterprises on third-party
service providers, the large number of major corporate data breaches and the increasing U.S.
regulatory activity on privacy policies of those service providers have accelerated VRM to the peak
of the Hype Cycle. Many businesses, as well as government agencies and other organizations,
increasingly rely on IT vendors and service providers to support core business processes and
provide hardware, software and licenses needed for IT operations. This reliance exposes them to
greater risk of delivery disruption or failure, damage to their reputation and impacts on business
performance. Essentially, it extends the enterprise risk boundaries to include the many business
and IT risks facing their IT suppliers. Challenging economic conditions compound these risks (see
"Vendor Risk Management: Criteria You Can Use to See Whether Your Vendor Is in Trouble").
Furthermore, compliance mandates that require monitoring the risks of TPSs are proliferating, as
are third parties. As an emerging market, the functionality offered by VRM vendors varies
significantly.
User Advice: VRM solutions are emerging to enable the assessment and management of risks from
third-party service providers and IT suppliers. VRM is an important element of enterprise and IT risk
management, and is mandated by a number of privacy and data breach notification regulations,
such as the Gramm-Leach-Bliley Act in the U.S. and the Federal Data Protection Act or
Bundesdatenschutzgesetz (BDSG) in Germany. Business performance can be improved through the
VRM process. As part of a vendor management program, VRM can be a catalyst for improved
vendor performance by identifying risks early and mitigating them through effective controls and
process improvements:
Consider VRM technology solutions that can provide a common system of record for all the
parties involved in that program.
Ensure that the processes and methodologies used in the enterprise's approach to VRM are
supported by the functionality and services offered by the vendor.
While the evaluation of a VRM solution may be led by the enterprise risk management,
procurement, vendor management or IT organization, ensure that all relevant parties are
involved, including strategic vendors.
Business Impact: VRM enables a shared understanding within the enterprise and between the
enterprise and its service provider/IT supplier partners of the full risk exposure. Some industries,
including banking, healthcare and telecom, have industry-specific regulations that mandate
monitoring TPS risk. Most other enterprises face compliance pressures as well to improve VRM
because of PCI, state-level and national data breach notification regulations, and other privacy
regulations. For enterprise risk management purposes, it is important to have a thorough
understanding of the risk to business performance from vendor performance failures and
disruptions. Furthermore, business performance can be improved through VRM, and VRM can be a
catalyst for improved vendor performance by identifying risks early, and mitigating them through
effective controls and process improvements.
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Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: Agiliance; Avior Computing; BWise; Evantix; Hiperos; MetricStream; Modulo;
OpenPages; RSA (EMC)
Recommended Reading: "Emerging Vendor Risk Management Solutions"
"The Supply Base Management Application Market and Vendor Landscape"
"Outsourcing Lessons Learned: Regularly Assess Vendor Risk"
"Assess and Manage Vendor Risks to Protect Your Business"
"Gartner's Simple Vendor Risk Management Framework"
"Toolkit: Getting Started at Vendor Risk Management"
Source-to-Settle Solutions
Analysis By: Deborah R Wilson
Definition: A source-to-settle solution is a complete suite of procurement applications that has
been designed to support upfront processes, such as spend analysis, sourcing and contract
management, as well as downstream, transactional procure-to-pay processes, including e-
requisitioning, e-catalog management and e-invoicing.
Position and Adoption Speed Justification: Several procurement technology vendors have been
positioning their suites for years as source-to-settle solutions. Until this year, only Ariba and SAP
have had "good enough" or better products across the suite to qualify as credible, relatively
complete offerings. Many buyers who bought less robust suites now find themselves sorely
disappointed, so this technology type is sliding into the Trough of Disillusionment.
However, prospective buyers have been clamoring for years for complete source-to-settle suites, to
enjoy the benefits of a single data model, platform cohesiveness and the reduced need for
integration. Vendors have been striving to meet this demand by rapidly building out and filling out
their portfolios. This year, many more, such as GEP, Ivalua and SciQuest, have become good
enough to consider for a source-to-settle suite commitment.
We expect rapid suite building and enhancement to continue during the next three to five years,
before fully stabilizing. This activity will push this technology type more quickly than usual to the
Plateau of Productivity.
User Advice: Source-to-settle suites are available, but invest with caution. Most vendors have
uneven suites, with some solutions quite mature, but others relatively new. Vet their portfolios
before you buy by profiling product maturity and client counts for every module.
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Business Impact: A unified data model and a cohesive platform is nice, but it is not a necessity.
The integration points between the upfront and downstream processes are fairly minimal, which is
why the market has thus far tolerated point solutions and "suitelets."
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: Ariba; Capgemini; GEP; Hubwoo; Ivalua; Perfect Commerce; Periscope Holdings;
SAP; SciQuest; SynerTrade
Recommended Reading: "Competitive Landscape: The Source-to-Pay BPO Tide Rises as New
Entrants Flood the Market"
Sliding Into the Trough
Procurement Networks
Analysis By: Deborah R Wilson
Definition: A procurement network is a type of business process network: integration as a service
tailored with applications to support one or more procurement processes, such as:
Purchase to pay, with e-catalog management and purchase order document exchange
Supplier information management, with credential document and firmographic data storage
E-sourcing, with opportunity listings for suppliers and support for supplier electronic bid
submission
The defining characteristic of a procurement network is multienterprise integration support that
enables suppliers to view information from and participate in processes with multiple buyers, in the
same account.
Position and Adoption Speed Justification: Procurement networks have been placed much earlier
on the Hype Cycle, compared with our 2009 report, because it has become evident that current
offerings are still evolving in terms of business model, functionality and geographic support. For
example, most procurement network providers predominantly support a single geographic region,
whereas many prospective users want a global network. Also, suppliers chafe at having to pay for
access to a procurement network, because few vendors offer interoperability with other network
vendors, and because the added value of the network functionality often does not meet
expectations. Finally, many of the industry consortiums formed early in the 2000s appear to have
waning businesses. Therefore, we place the procurement network before the Trough of
Disillusionment, because these issues remain unsolved, and will probably take years to resolve, due
to the complexity of the obstacles. It is possible that the procurement network will never reach the
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Plateau of Productivity in its current form, but will involve a more flexible, generic multienterprise
business process platform, or be componentized and sourced via cloud service brokers.
User Advice: Leverage a procurement network to facilitate scalable supplier collaboration. Be wary,
however, of a vendor's geographic, scope and business model limitations before making an
investment.
Business Impact: Procurement networks provide substantial value by streamlining and enhancing
procurement-related, multienterprise business processes. Procurement network vendors provide
community management services, such as supplier onboarding and supplier technical support,
which ease collaboration for the buying organization. Although barriers exist to procurement
networks delivering fully on their potential, they do deliver decisive benefits that are not achievable
via other means.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Ariba; Basware; BidSync; BirchStreet Systems; Capgemini; Elemica; Fieldglass;
GHX; Hubwoo; IQNavigator; Mediagrif; Oracle; Perfect Commerce; SciQuest; Vortal; Wallmedien
Recommended Reading: "Taxonomy, Definitions and the Vendor Landscape for Application
Integration Solutions, 2011"
"E-Procurement Market and Vendor Landscape"
"Examining the Embedded Multienterprise Integration Market"
Supplier Portals
Analysis By: Deborah R Wilson
Definition: Supplier portals are one-to-many, specific-purpose Web pages where suppliers can log
in, enter data manually, upload/download files and participate in one or more steps of a process.
Supplier portals are delivered as a feature of a procurement application or suite and, therefore,
come preconfigured with specific functionality, such as supporting purchase-order flip into an
invoice or publishing an RFP. The portal infrastructure allows buying organizations to limit supplier
access to specific features and their own data. For example, a supplier logging into a supplier portal
would typically see only its own scorecard or orders, not everyone else's.
Position and Adoption Speed Justification: Supplier portals have been placed much earlier on
this Hype Cycle, compared with our 2009 report. It has become evident that the limitations of
supplier portals have more of an impact on suppliers than we initially judged. First, portals are not
scalable for suppliers. When a supplier logs into a portal, it supports a single customer. Portals are
fine when only a few clients request interaction through them. It becomes a major problem,
however, when a supplier has dozens or even hundreds of portals to individually log into to support
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clients. Secondly, supplier portals are not flexible platforms that support the publication of anything.
Because they are sold as a feature of an application, their functionality is limited to the application
that they extend. For example, a supplier portal configured as an extension of a strategic sourcing
application is usable for supplier invoice submission, unless the vendor preconfigured it otherwise.
Consequently, buying organizations are ending up with multiple supplier portals, one for each major
application covering some element of procurement. This often increases complexity for sellers and
buyers. Finally, many supplier portals are licensed and installed on the buying organization's
premises, and so the buyer takes the often unwanted responsibility of onboarding suppliers,
providing technology to suppliers and managing supplier accounts.
Despite the shortcomings, supplier portals have an important role to play in procurement
transformation. When a buyer and a seller need to exchange unstructured or unique data, and the
data exchanged is not for consumption by the seller's software application, but for consumption by
an individual, portal technology works very well. For example, a supplier development program with
milestones, scorecards and performance reports is best shared through a portal extension of a
supply base management application. Moreover, because they are owned and managed by the
buying organization, supplier portals are typically free of charge to suppliers, which can encourage
participation.
User Advice: Deploying a supplier portal can provide significantly enhanced supplier collaboration
when the status quo is manual interaction. Beware, however, of the limitations of the supplier portal,
whether or not a particular solution will deliver productivity improvements to the supplier and
convey all relevant documents and data. If the data shared can be reduced to a common format,
consider a many-to-many mode, such as a procurement network or an integration service provider.
Business Impact: Supplier portals improve productivity and scalability for the buyer by enabling
not only the timely sharing of information en masse, but also processes, such as reverse auctions.
Collaborating with suppliers via a supplier portal is far more efficient than exchanging information
via email, paper, fax or phone. Supplier portals work best for large organizations that can demand
supplier participation and have the resources to handle onboarding and ongoing supplier support.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Emptoris; GEP; Oracle; Puridiom; SAP; Wax Digital
Recommended Reading: "Examining the Embedded Multienterprise Integration Market"
Contingent Workforce Management
Analysis By: Deborah R Wilson
Definition: Contingent workforce management applications are procure-to-pay solutions
configured specifically for the unique requirements of contingent workforce requisitioning, hiring
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and ongoing management. Typical contingent workforce management application functionality
includes:
Maintenance of the list of preferred staffing suppliers and controls to limit requisition publication
to those that are preferred
Web-based, self-service time cards, with allocations of time and expenses to multiple funding/
billing codes
For transportation lane-specific bid responses, plus the ability to combine lanes.
Support for constraint-based optimization with rules, such as "award no more than 25% of the
business to any single supplier."
Support for conditional supplier proposals, such as "if business requirements for Norway are
included in our award, then take 10% off our proposal." Suppliers can combine elements to
offer lower costs, if they are guaranteed demands for both, such as a carrier bidding for two
lanes of transportation as a group bid. Suppliers can submit "unbundled" bids that is, they
are not forced to bid on many requirements, but they are permitted to bid on only those
requirements that they find suitable.
The construction of "what if" scenarios, such as "calculate the difference in the total award
amount for: (1) giving 30% of the business to the incumbent supplier at its current bid and the
rest to the lowest bidder, versus (2) awarding all my business to the lowest bidder." What-if
scenarios can be saved for later evaluation, audit trail creation and/or reporting.
Support for optimization against multiple constraints, plus automated scoring of elements of
supplier proposals, such as awarding a higher score for longer proposed warranty periods.
Position and Adoption Speed Justification: Specialized SO offerings for transportation truckload
bid optimization have been around for several years, and competition in this specific space is
established. In large part, SO has become a piece of a holistic multimodal transportation
management system (TMS), and there are advantages to having SO integrated with TMSs; however,
some stand-alone solutions remain. SO for other transportation modes, such as less than truckload
(LTL), air, ocean and rail, is less mature, although solutions are evolving to support them. General-
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purpose SO offerings are available as solutions or services from specialty vendors such as
CombineNet, Trade Extensions and Emptoris.
Continuing interest in this technology has attracted new competition. The broadened field of players
has helped to more clearly define the value proposition of SO, which has, in turn, aligned market
offerings more closely with buyer expectations. Moreover, managed service providers that
supplement SO tools with services and expertise are helping companies learn and exploit the value
of these types of solutions. The technologies are proven and users are plentiful and growing, but
largely the market has been the domain of more sophisticated organizations with high spending;
thus, overall market penetration remains modest. The net result is that SO has moved past the
Trough of Disillusionment; however, conservative buyers are only now considering these
technologies, although many will favor managed service providers to gain expertise in the use of
advanced SO technologies.
User Advice: Transportation organizations:
Consider truckload SO where you expect to make strategic awards to many carriers. If you are
looking to source other modes, then make this requirement explicit during vendor evaluation to
ensure that you develop the appropriate shortlist of vendors.
Favor vendors that offer deep market knowledge of the spending categories you need to
source, because this kind of expertise can dramatically improve event results.
Consider specialized service providers that will provide SO as a managed service, combining
robust tools with specialized domain expertise.
Other commodities:
Procure SO as a service unless you have the know-how inside your organization to set up and
operate this powerful but complex solution.
Business Impact: The ability to simultaneously evaluate hundreds of unbundled, conditional bids
against dozens or hundreds of business rules or preferences enables large organizations to
effectively leverage multiple sourcing options and to quickly identify the best combination of
sources, even when there are thousands (or more) of individual bids to consider.
Basic freight costs are often locked in during periodic freight-sourcing exercises, so the business
value of freight SO is high. This technology empowers organizations to source in ways that were not
previously possible, which facilitates hard dollar savings.
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Chainalytics; CombineNet; Elemica; Emptoris; GT Nexus; JDA Software;
LeanLogistics; Manhattan Associates; Oracle; RedPrairie; Trade Extensions
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Climbing the Slope
Spending Analysis
Analysis By: Deborah R Wilson
Definition: Spending-analysis applications provide organizations with a single, enterprisewide view
of spending. The supported process includes downloading and aggregating transaction data from
multiple heterogeneous systems, including accounts payable systems, procurement applications,
enterprise contract management solutions, travel and expense applications, procurement card
statements and supplier sales order systems. The data is then cleaned and enhanced. Although
most spending-analysis solutions include embedded support for reporting and analytics, customers
sometimes use their own business intelligence (BI) tools instead. The difference between a
spending-analysis solution and a BI application is content. Spending-analysis solutions leverage
external data (such as supplier linkage) and embedded rules (such as "classify all spending from
XYZ company as public relations business services") to make the transaction data as usable as
possible.
Spending analysis can be conducted at three levels:
Supplier-level classification involves identifying duplicate and/or related suppliers and reporting
spending by supplier and/or supplier family. Organizations use the output to determine their
largest suppliers, quantify how much they are spending overall with suppliers, track diversity
spending and track compliance with preferred supplier programs. Spending-analysis solutions
streamline supplier classification with predefined business rules that recognize common
iterations of supplier names, such as "I.B.M. is the same as IBM." External data sources,
including D&B, Experian, Equifax and Bureau van Dijk, provide up-to-date information on
linkage and ownership. Supplier-level classification is the most straightforward to implement
and the most commonly used type of spending analysis.
Category-level spending analysis assigns category codes to transactions. The United Nations
Standard Products and Services Code (UNSPSC) and eClass are the most commonly leveraged
classification schemas; however, many organizations classify to a proprietary code structure or
a hybrid. Organizations use category-level spending analysis primarily to identify opportunities
for cost savings to develop bid lists for sourcing events and to prioritize investments in
procurement transaction automation. For example, an organization with large amounts of
contingent workforce spending should pursue different technology partners versus an
organization that spends heavily on catalog-based scientific supplies. Category-level analysis is
much harder to do than supplier-level analysis, but is the type of spending analysis that adds
the most value.
Part-level spending analysis focuses on identifying purchases for like items and often includes
cleansing/enhancing line-item transaction details. The resulting data is used to monitor price
compliance and measure overall demand for products and/or parts. Part-level spending
analysis can be performed on indirect or direct spending; however, the approach to the two
spending types differs. Part-level analysis is the most difficult to perform and the least common
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type of spending analysis. It adds value primarily when multiple buying centers procure the
same thing(s), but refer to those things differently.
Position and Adoption Speed Justification: Spending-analysis solutions have now moved well
past the Trough of Disillusionment, as the mainstream market increasingly recognizes what these
solutions do, how they work and how they add value. Competitive techniques for analyzing
spending, such as "getting all your transactions in one system," building/maintaining your own
classification rules database or expecting master data management to keep data that continually
evolves clean, are increasingly recognized as insufficient and inefficient.
User Advice: Large organizations with $1 billion or more in spending (or $2 billion in revenue)
should invest in spending-analysis solutions as a foundation technology for procurement. Midsize
organizations with $1 billion or less in spending, and a single ERP, should opportunistically evaluate
spending analysis, depending on the degree to which duplicate suppliers and multiple
heterogeneous systems are thwarting more-traditional reporting methods. All prospects should
recognize that implementing spending analysis can be challenging, and may take several iterations
before results are acceptable. Classification accuracy rates will vary based on the quality, type,
structure and geographic dispersion of transaction data.
Business Impact: For companies that spend more than $1 billion annually, managing procurement
without some form of spending analysis is like trying to sail a boat without a rudder. Spending
analysis is a key foundational solution for procurement transformation because it provides a map of
opportunities for cost reduction and supply base rightsizing.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; BIQ; BravoSolution; Emptoris; Global eProcure; Iasta; Ivalua; Ketera
Technologies; Oracle; Rosslyn Analytics; SAP; Spend Radar; SynerTrade; Zycus
Recommended Reading: "Magic Quadrant for Strategic Sourcing Application Suites"
"Understanding Your Top Procurement Processes"
Strategic Sourcing Suites
Analysis By: Deborah R Wilson
Definition: The strategic sourcing suite is a project-oriented set of applications that facilitates the
process of supplier rationalization and strategic sourcing. The typical elements of the strategic
sourcing suite include strategic sourcing, spend analysis, contract life cycle management and
supply base management applications, all united by a common user interface, a common database
and multiple, native integration points.
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Position and Adoption Speed Justification: Organizations rarely buy a strategic sourcing
application by itself; most deals Gartner sees include integrated spend analysis, contract life cycle
management and/or supply base management solutions. Therefore, we place the solution well into
the Slope of Enlightenment, and we estimate that between 5% and 20% of the target market owns
at least two sourcing suite applications from the same vendor. We expect the strategic sourcing
suite to take at least three years to move onto the Plateau of Productivity, however, because most
suites have one or more applications that are fairly new and, thus, are not fully mature as a set.
Clients compensate for this by sticking with specialty solutions for the weak components, and by
selecting vendors that have strength in the solutions they plan to implement first. It will take several
years before 50% or more of the target market owns three or more strategic sourcing suite
applications from the same vendor.
User Advice: Do not invest in a strategic sourcing, contract life cycle management, supply base
management or spend analysis solutions without understanding first what suite, if any, a
prospective vendor offers, and how balanced the maturity and adoption is across the suite.
Choosing a supplier that can provide a suite may be useful for organizations that eventually plan to
invest in multiple applications. Moreover, the native integration, common user interface and
common master data that a suite provides can make individual solutions easier to implement and
maintain.
Business Impact: The impact of strategic sourcing suites is high, because these tools enable
organizations to deliver measurable cost reductions, significant productivity improvements and
greater control, while building a high-performing, low-cost strategic supply base. Larger,
decentralized organizations can save as much as 20% of overall spending by leveraging strategic
sourcing techniques and technology.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; BravoSolution; Curtis Fitch; Emptoris; Fullstep; GEP; Iasta; Ivalua;
Pool4Tool; SAP; SciQuest; SynerTrade; Zycus
Recommended Reading: "Best Practices for Choosing, Implementing and Using E-Sourcing
Solutions"
"Magic Quadrant for Strategic Sourcing Application Suites"
"The Benefits and Drawbacks to Group Purchasing Organizations and Collaborative Sourcing"
"The Supply Base Management Application Market and Vendor Landscape"
Online Supplier Directories
Analysis By: Deborah R Wilson; Nigel Montgomery
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Definition: An online supplier directory is a third-party, software-as-as-service-delivered registry of
B2B suppliers. It is an organized, searchable channel where suppliers can advertise their offerings
to attract new customers. Sites that sell products do not qualify as online directories.
Most online supplier directories are oriented to a particular geography, spending category or
industry. Some strategic sourcing suite vendors, such as Ariba and Vortal, bundle access to a
supplier directory into their e-sourcing solutions.
Position and Adoption Speed Justification: Several moderately established to well-established
online supplier directories are available in the market. These sites serve industries that regularly
need new suppliers, like the construction and aerospace industries and the public sector; they also
support spending categories for which enterprise buyers routinely switch suppliers or seek new
sources, such as printing and marketing materials.
Most online directory vendors have had difficulty building a profitable business model, however. As
a result, it's common to see experimentation among the vendors in terms of who pays what and
when to participate. For example, some supplier directories are buyer-funded, meaning that buyers
subscribe to a solution to get access to the directory. But buyers often would rather not pay the
entire bill for access when suppliers may be willing or forced to pay. Other supplier directories are
supplier-funded, and suppliers pay for placement in search results, ads related to keyword search
terms or fees based on the amount of business won on the site. Many supplier-funded directories
have failed, because they have not generated enough business for sellers to make it worthwhile.
Until the business model issues are fully sorted out, this technology will not reach the Plateau of
Productivity.
User Advice: Buyers should carefully screen online supplier directories prior to use by checking
references and evaluating sites for sources of funding, site affiliation and resulting potentials for
bias, geographic appropriateness, category depth and how prospective suppliers are screened. For
example, a directory may or may not vet suppliers for inclusion, and a directory may or may not
determine which suppliers are listed at the top of search results based on how much advertising
money they spent on the website.
Business Impact: For buying organizations: Although most buying organizations spend a small
percentage of their budget on new suppliers, the effort required to locate suitable prospects can
consume considerable time and resources. The availability of reliable, online supplier directories can
enhance organizational efficiency in industries that routinely need to find new suppliers. Online
supplier directories can reduce the time it takes to find suitable suppliers by more than half,
compared with using alternative approaches.
For selling organizations: For larger companies with brand recognition and an established
customer base, the impact of using online supplier registries will be negligible. For small companies
that lack effective sales channels to expand their markets and sell into industries that regularly need
to find new suppliers, the impact will be moderate.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
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Maturity: Early mainstream
Sample Vendors: Achilles; Alibaba; Ariba; Elance; MFG.com; ThomasNet; Vortal;
www.armedforces.co.uk; Yahoo
Information Exchanges and Global Data Synchronization
Analysis By: Andrew White; John Radcliffe
Definition: Information exchanges and global data synchronization (GDS) supports the need to
synchronize master data between (business-to-business) organizations via the use of some central
shared authority model, rather than a specific direct connection commonly associated with
electronic data interchange.
Many organizations have synchronized data between themselves using technology specifically
focused on this task. Several such exchanges have formed, mostly oriented around specific
industry sectors, based on data and/or process standards and technology. Some of the specific
examples are led more by data and process industry standards support, such as in healthcare with
information exchanges and in consumer goods and retail, where there is a Global Data
Synchronization Network (GDSN).
Others are less standards based and driven by vendors seeking to support the same idea, for
example in the chemicals sector, Elemica hosts product data exchanges for some of its customers.
In healthcare, information exchanges are used to distribute a definition of "patient" to keep the
specifics of a patient consistent across different healthcare providers, services, provisioning
systems, billing and insurance, for example. A specific example is Covisint, that hosts information
exchanges for some of its customers.
In consumer goods and retail, these systems (hosted by 1SYNC, GXS and others) manage and
distribute a single definition of basic product attribute data. This helps to align business process
integrity (focused on promotion management, forecasting and replenishment, for example), via the
GDSN, in support of data standards from the GS1 association.
There are growing links between the two as the GS1 seeks to continue to promote its product
data standards to the healthcare industry in 2011.
Position and Adoption Speed Justification: Information exchanges and global data
synchronization are categorized under one technology, due to their similarities, even though
industry nuances differ.
The GDSN is partly mature in some areas (where basic and core items attribute data
synchronization by region) and immature in others (lack of global implementations or more complex
data types). GDSN is operational and acts as a "stepping stone" to the synchronization of more-
complex data, even if the more valuable use cases remain difficult to perform.
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Information exchanges acting as patient registries have been operating for various healthcare value
chains for several years under strict regulatory control (the U.S. Health Insurance Portability and
Accountability Act [HIPAA]). Patient data cannot be physically centralized, so a registry key is
maintained centrally that "points" to where the actual patient data resides across the value chain.
As such, these patient records are not unlike the product records in a GDSN.
The standards body GS1 U.S. is continuing in its efforts to align GDSN with healthcare in terms of
products and services (not patients), as a means to enhance inter- and intra-industry data
synchronization efforts. These technologies are emerging slowly from the Trough of Disillusionment,
because they are relatively old and no longer hyped significantly, although they remain a key part of
industry-level information infrastructures. Starting in 2010 and continuing in 2011, interest and
demand has been picking up.
There are benefits to using information exchange and GDS technology and users have reported on
these. The benefits remain targeted (when the business case is clearly identified as in the case of
healthcare) and elusive (as in the case of GDSN, where benefits have been limited to basic item
data synchronization and not yet elevated to strategic value).
Barriers to success with this technology are many (not least is the issue of critical mass). A
successful network only provides value to those that invest in its set up and management when
sufficient organizations participate. The next few years, through 2013, may be critical.
GDS in consumer/retail markets needs to go global, or increase maturity for mastering and
synchronizing complex product data. Healthcare also needs to integrate further with GDSNs to
reduce integration costs, or some other trigger has to emerge, to reinvigorate the next evolution of
these technologies. Otherwise, they will continue their slow adoption up toward the Plateau of
Productivity.
User Advice:
Evaluate your internal capability to publish and/or consume high-quality master and enriched
data and introduce an appropriately implemented master data management program as a
prerequisite to achieving a "single view" of such master data in your enterprise and among your
supply chain partners.
Evaluate the ROI if not mandated to participate as part of a larger value chain.
Note that some vendors offer technology that is used behind a firewall to gather data and
prepare for synchronization; some vendors actually move the data between organizations and
other vendors provide services to support the effort.
Business Impact: Information exchange programs meet many and different value propositions,
depending on the industry, climate and business goals. For example, GDS will reduce "out of stock"
instances by aligning data and processes and reduce lost time to manually cope with mismatched
data and processes, including: retail and supply chain partners, settlement queries, lead times, new
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product introductions, planning and replenishment cycle times and economic transaction costs, by
eliminating data re-entry and streamlining semantics across the value chain.
GDS will also synchronize multichannel integration, enable business-to-business synchronization
and enhance revenue.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: 1SYNC; Covisint; Elemica; GHX; GS1; GS1 UK; GXS
Recommended Reading: "Best Practices: Checklist for Issues to Consider in Multienterprise
Collaboration"
"Gain Value Sooner With a Clear Understanding of the Global Data Synchronization Road Map"
"Information Commons: Emerging Online Centers of Gravity and the Impact on Business Strategy
and Enterprise Architecture"
Procurement E-Catalog Management Solutions
Analysis By: Deborah R Wilson
Definition: Procurement e-catalog management solutions are stand-alone applications used by
buying organizations to present and manage catalog content for commercial, off-the-shelf, indirect
goods and services in one or more e-procurement solutions. Functionality includes catalog content
upload staging, content update evaluation tools, content normalization services and catalog search
tools. Solutions are typically offered by MDM of product data vendors or by specialist vendors with
intelligent agents that download data from online, e-commerce websites.
Position and Adoption Speed Justification: Procurement e-catalog management solutions have
been in use for nearly 10 years by organizations with e-procurement solutions that lacked robust e-
catalog management functionality, and by organizations desiring a best-in-class, shared-e-catalog
solution to complement multiple ERP systems. This solution is near the Plateau of Productivity,
because user requirements are well-defined and its technology capability has, for the majority of
users, matured sufficiency to meet the majority of requirements.
User Advice: When exploring options for provisioning one or more e-procurement solutions with
catalog content, consider the procurement e-catalog content solution as a viable alternative to the
supplier portal and procurement network for indirect materials and services.
Business Impact: Procurement e-catalog management solutions add value by providing e-
procurement systems with content, and by making it easy for requisitioners to buy goods and
services from preferred suppliers at prenegotiated, discounted prices. The procurement e-catalog
management solution has been marginalized over the past few years, however, by the more broadly
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scoped, multienterprise-enabled procurement network, which can deploy catalog content uploaded
once to support multiple buyers, and provide community management services, such as support for
supplier self-service catalog upload assistance. Today, procurement e-catalog management
solutions appeal most to larger organizations that have the bandwidth to manage catalog content
themselves.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Heiler Software; jCatalog; Netsol Technologies; Science Warehouse; Vinimaya
Recommended Reading: "E-Procurement Market and Vendor Landscape"
Entering the Plateau
E-Procurement
Analysis By: Deborah R Wilson
Definition: E-procurement applications support indirect spending by giving casual users (i.e.,
employees who are not procurement professionals) a self-service solution for requisitioning and
ordering goods and services. Although e-procurement solutions are geared toward indirect
spending management by enabling individuals to initiate the requisition process and select
purchases, they are occasionally configured for direct materials procurement, when plan-driven
inventory replenishment isn't practical.
E-procurement applications deliver functionality beyond the traditional purchasing modules of
financial suites and ERP systems with an intuitive user interface (UI) for non-procurement-
professional users, approval workflow, support for internally stored catalog content and a means for
accessing external content via XML-based standards, such as commerce XML (cXML), XML
Common Business Library (xCBL) and SAP's Open Catalog Interface (OCI). Most e-procurement
solutions provide multiple means, including email, auto-fax, a portal and XML for communicating
orders to suppliers. Packaged integration and an open application programming interface (API) are
the standard functionality for connecting to one or more ERP systems. Buyers can use the
embedded catalog management capabilities of their e-procurement solution, or opt for an e-catalog
specialist vendor (such as Vinimaya, Heiler or jCatalog) for content and community management.
Position and Adoption Speed Justification: E-procurement solutions have been adopted by a
diverse range of organizations, driven by the economic necessity to drive down costs. This broad
adoption has led to an increasingly true understanding of the technology's applicability, risks and
benefits. Moreover, e-procurement solutions are widely available from niche procurement
applications vendors; some ERP vendors offer competitive solutions. The net result of this broad
adoption is that e-procurement technology is now approaching the Plateau of Productivity.
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User Advice: Deploy an e-procurement solution when you need improved control over spending or
better access to procurement information, such as preferred vendors and contract pricing. E-
procurement deployments deliver the most value when a variety of strategic supply agreements are
already in place, and when the organization is culturally able to mandate usage.
Business Impact: E-procurement solutions deliver value through compliance in three ways: by
ensuring compliance with budget; by helping individual requisitioners readily identify preferred
vendors and contract prices at the right time, and by giving organizations the means to slow down
and redirect spending. The financial impact of improved compliance can deliver significant savings.
E-procurement solutions also improve productivity by empowering individuals to place and track
orders themselves.
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Advanced Business Solutions (ABS); Ariba; b-pack; Basware; BirchStreet
Systems; Capgemini IBX; Coupa; Elcom; Evenex; GEP; Heiler Software; Hubwoo; Ivalua; jCatalog;
Mercado Eletronico; Oracle; Paperless Business Systems; Perfect Commerce; Periscope Holdings;
Proactis Group; Puridiom; SAP; SciQuest; SynerTrade; Verian Technologies; Vinimaya; Visma;
Wallmedien; Wax Digital
Recommended Reading: "E-Procurement Market and Vendor Landscape"
"Cut Indirect Costs Now With E-Procurement"
"Turbo-Charge Procurement Value-Add With Consumption Management"
SaaS Procurement Applications
Analysis By: Deborah R Wilson
Definition: Procurement applications are solutions that make processes related to buying more
effective and efficient. Some solutions support supplier selection and supplier management
processes (see "Magic Quadrant for Strategic Sourcing Application Suites"). The primary focus of
other procurement applications is transaction enablement (see "Critical Capabilities for Best-of-
Breed E-Procurement Vendors" and "Critical Capabilities for ERP-Based E-Procurement
Solutions").
Procurement applications are natural candidates for delivery via software as a service (SaaS),
because they are multienterprise in nature, and because integration between cloud-delivered
procurement applications and related on-premises solutions is maturing and increasingly
commonplace.
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Position and Adoption Speed Justification: Since their introduction in the early 2000s, SaaS
applications have steadily gained traction in procurement. As a set, they have entered the Plateau of
Productivity. For example, in our current work to update purchase-to-pay vendor ratings, 83% of all
references that have used their system for two years or less have chosen SaaS delivery. Forty-three
percent of respondents use a hosted, single-tenant solution; and 43% have deployed a multitenant
SaaS application. The delivery mode breakdown from "Magic Quadrant for Strategic Sourcing
Application Suites" from 2010 is similar; 71% indicated some form of SaaS delivery. Clearly, SaaS is
the delivery mode of choice for procurement applications.
Three primary drivers account for mainstream acceptance:
The SaaS delivery model enables buyers to access innovation quicker than traditional software
licenses, because, with SaaS, customization is often discouraged or even prohibited in
procurement application markets, solutions are architected for configurability, and the vendor
assumes the burden of upgrades. In rapidly innovating markets, the ability for the solution to
evolve on a real-time basis is valuable. For example, in the supply base management market,
we see rapid innovation provided in SaaS-delivered solutions, because requirements are being
understood and addressed on a real-time basis.
SaaS has proved to be an economical delivery mechanism for multienterprise solutions. For
example, catalog hosting services are offered almost exclusively via SaaS, because this model
enables buyers and suppliers to leverage established third-party communities of trading
partners.
User Advice: Consider SaaS procurement solutions when IT resources and/or your capital budget
is constrained, when the proposed application can be used successfully without customization,
when you want to avoid supplier onboarding/community management work by leveraging an
established, SaaS-delivered procurement network, and/or when you want relatively painless access
to vendor innovation. Mitigate the risks of SaaS-delivered solutions by clearly establishing upfront
with your vendor how the risks of data and/or solution loss will be addressed (see "Develop a
Framework for SaaS Application Business Continuity Risk Mitigation").
Business Impact: SaaS options can significantly improve the value of certain types of procurement
applications by reducing the need for IT resources for data center management, avoiding the need
for capital expenditure funding and facilitating access to innovation. The benefit rating is high for
multienterprise SaaS applications because, in this case, the delivery mode enables organizations to
leverage online communities in ways they could not before (such as running live, reverse auctions).
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
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Sample Vendors: Aravo; Ariba; BirchStreet Systems; BravoSolution; Coupa; DocuSign; EchoSign;
Emptoris; Fieldglass; GEP; Hiperos; Hubwoo; Iasta; IQNavigator; Rearden Commerce-Ketera
Technologies; SAP; SciQuest; Verian Technologies
Recommended Reading: "Magic Quadrant for Strategic Sourcing Application Suites"
"SaaS Impact on Procurement Applications"
"Develop a Framework for SaaS Application Business Continuity Risk Mitigation"
Telecom Expense Management
Analysis By: Phillip Redman
Definition: Telecommunications expense management (TEM) includes the management of fixed
and mobile communication services and hardware. It may also include professional services that
support sourcing, auditing and strategy. TEM employs offerings ranging from an on-premises and
software-as-a-service (SaaS)-based application, to a managed service scenario to full business
process outsourcing (BPO) offerings for managing telecom spending. Eventually, stand-alone TEM
offerings disappear, and managed mobility services, which incorporate TEM and mobile device
management (MDM), emerges as a wider outsourcing offering.
Position and Adoption Speed Justification: TEM has been stabilized in service offerings during
the past four years and is considered mature in North America. However, on a global basis, TEM
offerings are still developing, often transforming from software to a managed service, which is a
standard offering in North America. During the past year, there was significant consolidation of
major TEM vendors, which is expected to continue for the next 12 to 24 months. TEM continues to
be adopted mainly as a managed service, though full business process offerings are maturing and
being adopted. Fully managed BPO continues to be a fast-growing area, as companies look to fill in
missing resources by outsourcing the service management components, such as rate plan
optimization, invoice management and bill payment. The number of market entries continues to
expand, as does the number of regions that have TEM providers, although the majority are still in
North America. Global TEM is still a main interest, but it lags behind domestic TEM services in terms
of maturity.
User Advice: Many companies are already on their second or more TEM provider. Most report
continued value from their TEM experience in relation to management and efficiency, if not dollar
savings. TEM continues to provide excellent management capabilities that can help companies
identify and control areas of spending. TEM outsourcing has grown as a way to help fill in services
that the enterprise no longer has resources to manage. Identify key areas that go beyond the
enterprise core competency, and that have growing usage and increasing costs for outsourcing,
including global management, policy, procurement and mobile device management. Enterprises
need to include fixed and mobile TEM as part of their outsourcing strategies for cellular, data, long
distance, Wi-Fi hot spots, dial-up and other remote-access services. Enterprises must create a list
of expectations about how TEM will change the way telecom services are sourced and managed
regarding key elements, such as expected return on investment, responsibilities and impact on
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head count. Consider benchmarking current hard and soft costs, to understand the full impact of
TEM services.
Business Impact: TEM reduces external network service provider costs and internal service
management costs. TEM reduces the costs of telecom services by providing rate plan optimization
and invoice management (error reduction dispute management). TEM provides management and
resources for service. Although support is just growing, this capability is required to be provided
globally to allow a global view of telecom service expenses when needed. In addition, depending on
the current level of governance, a continued savings of 10% to 35% of total spending may be
achieved, though first-year savings will be higher than concurrent years, with a relative investment
of 0.25% to 3% of service spending (the range depends on the amount of the total telecom
spending). TEM provides deeper insight into total telecom spending across multiple providers and
geographies, and provides better service for procurement.
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Mature mainstream
Sample Vendors: ProfitLine; Quickcomm; Rivermine; Symphony Services; Tangoe
Recommended Reading: "Magic Quadrant for Telecom Expense Management"
"Toolkit: Best-Practice Terms and Conditions for TEM Services"
"Toolkit: Telecom Expense Management SLA Guidelines"
Travel Expense Management
Analysis By: John E. Van Decker
Definition: Travel expense management (TEM) solutions address the automation requirements of
employee-submitted expense reports, as well as the coordination of the approval, accounting and
reimbursement activities across the business process. Today, many TEM offerings can be viewed
as commodities, as there are no material differences among them. A typical ERP-based TEM
solution is similar to ERP-based solutions from other vendors, as is the case with software-as-a-
service (SaaS)-based solutions. TEM functionality includes:
Web-based processing with disconnected user capability (the ability to enter expense reports
without being online)
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Exception processing
Multilanguage/multicurrency processing
Value-added tax
Imaging to automate the paper flow and reduce the need for organizing reports and receipt
copies in a central location
An embedded analytics tool to understand compliance issues and what is being spent with
each vendor
Control of monitoring solutions, such as an access control list, that can help analyze trends in
TEM and provide additional postreport analysis to understand potential compliance issues
Payment via central payment processes with credit card vendors and direct deposit for out-of-
pocket expenses, which are important options
Position and Adoption Speed Justification: Early expense management attempts were typically
centered on Excel, where a fixed-format spreadsheet was used to accumulate expense information
and route it for approval. Many organizations have replaced, or are in the process of replacing,
these solutions with commercially available software. Those that have implemented multiple
solutions, either by unit or geography, are now seeking to consolidate their approaches into a global
financial management process. In some companies, travel management reports are merged into
purchasing or HR, but the same global process requirement is at play.
The majority of software selection in the TEM market is ERP-based or SaaS offerings. During the
next two years, 95% of companies selecting TEM solutions will choose an ERP vendor, a large
SaaS vendor (such as Concur and IBM), or a solution integrated with a procurement suite (such as
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Ariba). The market has favored ERP and large SaaS vendors. If there is a standard ERP preference
for TEM transactions, then an ERP solution, such as SAP or Oracle, will be selected over a SaaS
solution. If other factors are at play, then most of the current selections seem to be around Concur
and IBM, with Concur getting the bulk. This has increased Concur's penetration during the past
year, and it will most likely be mainstream in 2011.
User Advice: First and foremost, take a commodity approach to TEM, implementing solutions with
minimal, if any, customization. Leverage best practices inherent with the business application, using
standard configuration capabilities, rather than customization. When choosing a technology, favor
ERP and SaaS offerings. If there is a standard ERP in place, consider the solution from the ERP
vendor. However, if there is a multi-ERP environment, or even a common ERP with different
releases/instances deployed, look to a SaaS vendor for a common global TEM process. Best-of-
breed, license-based solutions are rarely pursued, because cost models for SaaS offerings are
increasingly attractive for most organizations.
Although this list is not exhaustive, we recommend that SaaS solutions be considered in situations
where organizations:
View TEM as a commodity solution and see no value to keeping the software in-house.
Want to enter the SaaS world. TEM represents a good candidate for this initial foray, due to its
relatively uncomplicated functionality and compartmentalized processes. SaaS may eventually
lead to business process outsourcing arrangements, such as IBM and Concur (via its Gelco
acquisition), if the organization also wants to consider outsourcing the corresponding auditing,
payment and document management functions.
Have a heterogeneous ERP environment (that is, multiple ERP solutions such as SAP,
Lawson and Oracle are used in the same company), but want a consistent, global process
and solution in place for TEM. This is often seen in companies that have grown through mergers
and acquisitions, and want common solutions for this process.
Have a single ERP application, but with multiple instances, and do not plan on moving to a
common platform in the near future.
Use legacy applications such as Lotus Notes-based tools, client/server and Excel-based
solutions that need to be replaced quickly due to end-user dissatisfaction or broken
processes.
Want to stay current with industry best practices and operate globally on one version of the
software. For SaaS solutions, particularly where there is a multitenancy model in place (for
example, Concur) and the vendor operates on a single instance of the software, it is easier for
that vendor to keep up with industry best practices and leading functionality. This is also the
case for legal and statutory compliance requirements.
Want an easier-to-use graphical user interface for travel expense report entry.
Want a rapid, low-cost deployment not requiring any IT involvement or internal hardware/
infrastructure with little or no customization.
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Business Impact: Businesses can achieve cost reductions, legal and statutory compliance, and
fraud management and have happier employees (through faster reimbursements) by implementing a
Web-based travel reimbursement product. TEM solutions provide an important opportunity to drive
costs out of expense report processing, and the upgrade to Web-based technologies has been a
natural progression, delivering improved access and facilitating global deployment. After salaries,
travel and expense is the second-largest controllable expense for many enterprises, and project
initiatives in this area are often led by the finance office. TEM license-based, on-premises and SaaS
applications have enabled companies to reduce processing costs, check/bank fees and cash
advances (via quicker reimbursement), and to have focused spending with key suppliers (by
employing stricter travel policy enforcement).
The mere introduction of an automated expense reporting tool will provide benefits and may be the
right first step toward improving TEM. To maximize business value and effectively integrate
technology with business processes, organizations desiring more control over rising travel costs will
ensure that implementation effectively embeds current best practices in travel procurement, travel
policy compliance, spending analytics, expense processing and regulatory compliance.
Benefit Rating: Moderate
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Ariba; Concur; CyberShift; IBM; Infor; Oracle; SAP
Recommended Reading: "Q&A for Travel Expense Management Software Selection and
Implementation"
"Travel Expense Management: Best Practices Yield Success"
Gartner, Inc. | G00217670 Page 57 of 61
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Appendixes
Hype Cycle Phases, Benefit Ratings and Maturity Levels
Table 1. Hype Cycle Phases
Phase Definition
Technology Trigger A breakthrough, public demonstration, product launch or other event generates
significant press and industry interest.
Peak of Inflated
Expectations
During this phase of overenthusiasm and unrealistic projections, a flurry of well-
publicized activity by technology leaders results in some successes, but more
failures, as the technology is pushed to its limits. The only enterprises making
money are conference organizers and magazine publishers.
Trough of
Disillusionment
Because the technology does not live up to its overinflated expectations, it rapidly
becomes unfashionable. Media interest wanes, except for a few cautionary tales.
Slope of
Enlightenment
Focused experimentation and solid hard work by an increasingly diverse range of
organizations lead to a true understanding of the technology's applicability, risks
and benefits. Commercial off-the-shelf methodologies and tools ease the
development process.
Plateau of
Productivity
The real-world benefits of the technology are demonstrated and accepted. Tools
and methodologies are increasingly stable as they enter their second and third
generations. Growing numbers of organizations feel comfortable with the reduced
level of risk; the rapid growth phase of adoption begins. Approximately 20% of
the technology's target audience has adopted or is adopting the technology as it
enters this phase.
Years to Mainstream
Adoption
The time required for the technology to reach the Plateau of Productivity.
Source: Gartner (November 2011)
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Table 2. Benefit Ratings
Benefit Rating Definition
Transformational Enables new ways of doing business across industries that will result in major shifts in
industry dynamics
High Enables new ways of performing horizontal or vertical processes that will result in
significantly increased revenue or cost savings for an enterprise
Moderate Provides incremental improvements to established processes that will result in
increased revenue or cost savings for an enterprise
Low Slightly improves processes (for example, improved user experience) that will be
difficult to translate into increased revenue or cost savings
Source: Gartner (November 2011)
Table 3. Maturity Levels
Maturity Level Status Products/Vendors
Embryonic
In labs
None
Emerging
Commercialization by vendors
Pilots and deployments by industry leaders
First generation
High price
Much customization
Adolescent
Maturing technology capabilities and process
understanding
Uptake beyond early adopters
Second generation
Less customization
Early mainstream
Proven technology
Vendors, technology and adoption rapidly
evolving
Third generation
More out of box
Methodologies
Mature
mainstream
Robust technology
Not much evolution in vendors or technology