The role of procurement department in organizations has been growing significantly over the past few years from being transactional to a more strategic function. Organizations today understand the potential areas where procurement can make an impact and bring value to the table. However, to become a strategic driver of business initiatives, procurement needs the right technological capabilities that would allow them to harness their optimum potential and provide answers to questions like: “What am I buying?”, “From whom am I buying?”, “How much am I spending?”, and so on. That’s why organizations need to switch from ERP procurement modules and tactical purchasing automation solutions to Strategic procurement solutions. Strategic Sourcing empowers businesses to find answers to these questions and develop optimal strategies for procuring goods and services – be it direct or indirect. So, what are the best strategic sourcing solutions for small to mid-sized businesses today?
When you think of an end-to-end procurement solution, the only name that comes to your mind is probably SAP Ariba. But how affordable is the solution to mid-market and growing companies looking for a strategic sourcing solution is a question here. Today, the mid-market is full of emerging industry players and rapidly growing start-ups that need procurement technology and processes to help scale and manage their growth. So, in this blog, we bring to you a list of alternatives to SAP Ariba which are worth considering and allows organizations to leverage strategic sourcing at a more affordable cost.
Essentially, mid-market companies are at a significant disadvantage when compared to larger corporations, when it comes to sourcing and procurement function with challenges across two main areas – Resources and Technology. They might not have the luxury of hiring top notch talent with skills for strategic sourcing and category management and most technology solutions might not align with their business size and budget. For them the chosen technology has to provide the answers to their procurement needs while being affordable and scalable.
Thankfully, there are a number of vendors in the Strategic Sourcing Solutions marketspace, apart from big players like SAP Ariba and Jaggaer, offering full suites complete with spend analysis, e-sourcing, contract life cycle management, supplier management and P2P functionality. However, the depth of functionality across the modules varies considerably across these providers. Choosing the right solution would mean identifying your specific needs and evaluating your options to identify the one that offers the best fit for the specific functionalities that you need the most.
Here is a list of Strategic Sourcing Solutions that is worth considering if you are looking for a procurement solution for your mid-sized business and a solution that fits your budget. These solutions have been picked based on user review in sites like Capterra, G2 Crowd, Gartner Peer Insights, etc and analyst reports like Gartner Magic Quadrant for Strategic Sourcing Solutions, Gartner Critical Capabilities Report for Strategic Sourcing Solutions, Spend Matters Solution Map, etc. You can refer the above review sites for more user reviews.
Basware, founded with a focus on finance and accounts payable (AP) automation, has now expanded into a complete procurement suite offering source to pay solutions. Basware suite is a suite best suited for managing indirect spend but can also support services and direct spend. It offers solutions for Strategic Sourcing, Supplier Relationship Management, Contract Management, Requisition approval and Management, Purchase Order Management, Invoice Receipt and Processing and Payment Management.
Basware’s solution is delivered as a multitenant cloud solution. Basware’s strength however is its P2P solutions with strong accounts payable invoice automation. This makes it highly attractive to customers that require a high level of invoice automation and regulatory compliance on a global scale.
The direct procurement features for Basware are not very strong, and if you are seeking advanced functionality for direct materials procurement, Basware might not be the right solution.
Coupa, with its origins in the P2P space, has recently expanded into strategic sourcing application suites through some acquisitions and native development in the past few years. Coupa’s solutions include Strategic Sourcing, Supplier Management, Spend Analysis, Contract Management, eProcurement, Invoice Automation and Payments. Coupa’s solutions are best suited for indirect spend management and services procurement. They have only focussed partially on direct material procurement till date.
However, with their recent acquisition of LLamasoft solutions, they now offer Supply Chain Management solutions as well. This possibly indicates that Coupa is trying to expand capabilities for direct spend management in the future and trying to fill white spaces.
Medius started off as a provider of invoice automation software and it acquired Wax Digital’s integrated procurement solution. Thus, from sourcing and contracting with suppliers to placing orders, as well as matching, processing and paying invoices, the acquisition of Wax Digital transforms Medius from a market-leading accounts payable-focused solution into a comprehensive suite with full source-to-pay (S2P) capabilities.
However, the core strength of Medius is still Procure to Pay. The Strategic sourcing solution offer most of the features to create and run sourcing events and select suppliers but lacks depth and configurability to fine-tune them. As per Gartner reports, it also scores below average for direct materials and services.
MeRLIN is an integrated sourcing solution to manage direct & indirect procurement needs with its features for Supplier Relationship Management, Category Management, eSourcing (RFx and eAuctions), Contract Management, Requisition Management, eProcurement and Planning augmented by Advanced Analytics.
MeRLIN is a solution designed to meet the strategic sourcing needs of mid to large size enterprises and enable them to effectively fill the white spaces in direct sourcing and procurement in ERPs and other procurement solutions.
MeRLIN has very strong features for direct material procurement like engineering collaboration using PLM and CAD integrations, configurable response templates to gather details like part cost breakdown, volume discounts, etc to make the best sourcing decisions and establish strategic relationships with suppliers.
MeRLIN also offers advanced analytics out-of-the-box for suppliers, spend, savings, etc as well specific analytics for direct procurement like PPV analytics, BOM analytics, BOM waterfall chart, etc.
MeRLIN does not offer invoicing automation and payment features at this point and Supplier Risk Management features are limited. Contract Lifecycle Management module is a bit limited. However, Contract Repository, Milestone Management, Authoring and Digital Signatures are available in the product.
Promena, is a SaaS-based procurement software offering Supplier Base Management, eSourcing, eProcurement and Spend Analysis. The solution offers an intuitive platform with all the basic features to run and execute sourcing events – Request for Proposal (RFP), Request for Information (RFI), Request for Quotation (RFQ), and eAuctions.
However, the analytics solutions from Promena are not very strong and lack of custom dashboards. This is one of the major drawbacks of the solution as per customer reviews. It also lacks features for direct spend management. But it is a good option for small to medium sized businesses looking for some basic sourcing and spend management capabilities to handle their indirect procurement.
Allocation is a best of breed Strategic Sourcing and Supplier Management solution. It was recently acquired by QAD and rebranded as QAD Allocation, formerly called as ASTRAS. The focus of the solution is mainly on direct procurement and intends to help manufacturers with their complex direct procurement projects.
They provide solutions for Supplier Management, eSourcing, eAuctions and Direct Procurement Collaboration. The solution however does not have spend analytics module and payment features.
Scanmarket is a Source-to-Contract solution. It offers solutions for eSourcing -RFx, eAuction, Supply Base Management, Spend Analytics, Sourcing Project Management and Contract Management. Scanmarket’s top rated feature is its Auction Management module with support for multiple types of auctions and ease of use.
Scanmarket is yet another Strategic Sourcing Solution that does not offer a native P2P solution. It does not offer any feature for eProcurement. Scanmarket is best suited for mid-market companies who need an easy-to-use solution with strong eSourcing capabilities. However, Scanmarket’s modules for Contract Lifecycle Management and Supply Base Management are less mature. Features in areas of supplier performance management, supplier risk management, contract authoring and negotiation, or post-signature contract management are very basic and limited.
SynerTrade is an independently operated subsidiary of Econocom, offering strategic sourcing capabilities as part of its Accelerate Source-to-Pay suite. It is capable of supporting both direct and indirect spend categories.
According to the Gartner’s critical capabilities report for Strategic Sourcing Solutions, SynerTrade is very strong in Supplier Management (supplier information management, supplier performance management, supplier relationship management and risk management), Contract Creation and Direct Sourcing and Collaboration. However, as per the same report it scores quite low for capabilities for advanced sourcing optimization for large scale sourcing events including thousands of line items and ease of usability.
Vendorful is a vendor management and eSourcing tool ideal for small to medium sized businesses looking for a procurement solution to manage their eSourcing needs. It has features for RFP/RFI/RFQ, Reverse Auctions, Sourcing Project Management, Spend Analytics, Supplier Information Management, Supplier Scorecards and Performance Management and Contract Administration and Lifecycle Management.
Vendorful is mostly used by mid-market organizations in industries, such as retail, financial services, and higher education. The tool doesn’t offer features required for direct spend management.
Vortal is a cloud-based collaborative marketplace comprising of a supplier network and discovery technology, along with full eSourcing capability. While initially based in Portugal, VORTAL is expanding globally
Their focus is mainly on Indirect spend management and public sector space within EU. However, nowadays Vortal is expanding its presence to the private sector space as well. Vortal’s solutions include Category Management, eSourcing, eAuction, eCatalogues, Supplier Relationship Management, Spend Analytics, Contract Management and eInvoice.
According to the Gartner’s critical capabilities report for Strategic Sourcing Solution, VORTAL received high scores for eSourcing, Contract Management and Supplier Information Management. However, according to the same report, its capabilities for spend analysis, direct sourcing and collaboration, supplier relationship and risk management are received low scores.
How Should Mid-Market Companies Choose the Best Sourcing Solution?
Automation of Strategic Sourcing can be felt across a company – process efficiencies, better spend visibility, better supplier relationships and reduced operational costs are some of the major benefits to name a few. Automation of demand consolidation, requisitions, RFx management and Catalogues embedded with analytics helps you reduce procurement costs through effective planning, budgeting and procurement decisions. The choice of a procurement solution depends on business requirements, allocated budget, and so on. As we have seen here, each of the vendors listed here have their own strengths and weaknesses. Say, if you are a manufacturer and most of your spend falls under direct spend, solutions like MeRLIN, QAD Allocation and Synertrade would be the best fit for you.
Apart from the business needs, there are a few more important things worth considering while choosing a procurement solution vendor – Integration with other software, ease of use, configurability, implementation time and ROI. The bottom-line is procurement technologies for mid-market companies should be able to adapt to their business needs quickly while offering a scalable procurement solution with functionality that can aid faster and more profitable growth.
Still confused on choosing your procurement solution? Contact us to know how a Strategic Sourcing Solution can help your business.