Gartner Magic Quadrant for Sourcing Application Suites – A Reaction

See this link on Spend Matters for the story on Gartner’s 2008 Magic Quadrant for Sourcing Software My comment was a bit too lengthy for a comment on Jason’s post. So here it is, below:

First a disclosure: I lead the product development for TradingPartners. TradingPartners provides eAuction services. Very similar to what FreeMarkets pioneered all those years ago with their “Full Source” offering. We don’t sell software licenses, let alone software suites, so wouldn’t fall into Gartner’s analysis but we are considered competitors with a number of the companies mentioned in the Gartner Sourcing Magic Quadrant report. You can make up your own mind to what degree the comments below are self-serving or not.

I’m not keen on the name of the report. Despite all disclaimers the report is titled “Magic Quadrant” which implies that there is one “magic quadrant” that buyers should look at, i.e. the top right. And when I look at the vendors in the graphic the relative ranking seems fairly arbitrary. Certainly it’s not clear from the report why Quadrem should be better able to execute than BravoSolution.

The best part was the overall 10,000ft view of what is happening in the market. In particular:

  1. The distinction between strategic sourcing and tactical sourcing. “Organizations should expect to eventually deploy two separate sourcing solutions or two configurations of a single solution: one for tactical sourcing (for example, querying a contract fuel vendor for this week’s price per liter) and one for strategic sourcing (such as simultaneously negotiating rental car contracts across multiple vendors for service for the next three years and in 10 countries”.
  2. The summary of the consolidation in the sourcing software space (gone are Freemarkets, B2eMarkets, Frictionless, Mindflow, Procuri, Verticalnet).
  3. The recognition that wrap-around sevices are of paramount importance in strategic sourcing initiatives. “[E]ffectively leveraging different auction/event types for the best results requires a knowledge that can be gained only be using strategic sourcing applications. Furthermore, enabling suppliers to register online and providing customer service to troubleshoot their issues requires a significant effort that a procurement group will not be able to support without advanced planning and incremental staffing”.
  4. The recognition that strategic sourcing tools don’t require ERP integration. “They function nicely as standalone tools, because the trigger to commence a strategic sourcing event is the initiation of a project, and prospective vendors do not need to be in the vendor master unless they win the bid. The output of an event tends to be a contract. The unstructured nature of strategic sourcing lends itself to solutions that are architected as project management and document repository tools”. Here Gartner calls strategic sourcing unstructured. I would prefer to call it BRP (in contrast to ERP).
  5. The recognition that, in reality, buyers are still sticking to Excel rather than fully automating the sourcing process. “Requirements should be specified in the sourcing tool at the line-item level to fully evaluate and document the resulting bids using the application; however, in practice, many companies simply attach the specifications and record the resulting proposals at the header level, and analyze the results offline.”

Some parts of the report I would take with a pinch of salt:

  1. Including forward auctions in the debate. They are a red herring. Sure from a technology point of view they are similar to reverse auctions but in practical business terms they are of little relevance to most buyers.
  2. Cautioning that some suppliers are buggy. Without any meaty supporting arguments I’d assume all software is equally equal in this regard
  3. Come to think of it, a lot of the “strengths/weaknesses” seem cursory. E.g. Ariba is praised because it “offers varying scales of its sourcing product so customers can consume functionality as gradually as desired”. And Ariba is criticised because its “customers tend to use sourcing to solicit bids from local vendors”. 


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