The way businesses evaluate and buy software is beginning to evolve, and the vendors positioned to win in this new wave are those that embrace a mantra of customer-centricity, agility and “openness.” They create customer value by building an ecosystem of not just their own proprietary application suites and underlying technology but an integrated ecosystem of other tools.
For decades now, organizations assessing potential technology solutions have restricted themselves to mutually exclusive, collectively exhaustive (MECE) categorizations oriented toward functional heads and process owners — process-centric applications and suites that meet strict criteria for being called “S2P,” “P2P” or “SVM” (or whatever your chosen acronym is). This ‘lingua franca’ of technology evaluation, however, is becoming increasingly insufficient. This is because what businesses need in this volatile, unpredictable, complex world is something that is less well-defined and “off-the-shelf,” but more flexible and able to meet this complexity with evolving “orchestration” capabilities that:
- Accommodate existing applications and external data/intelligence sources alike
- Empower business users and IT to dynamically reconfigure and extend their workflows and make them more intelligent through embedded analytics and on-demand digital services (e.g., via app marketplaces)
- Provide underlying data governance and platform integration to securely orchestrate this broader ecosystem without “application anarchy” and “shadow IT”
For procurement leaders and their peers in supply chain, finance and IT, this means a procurement technology architecture that emphasizes “and” rather than “or” — that is, the ability to combine multiple types of solution into offerings greater than the sum of their parts rather than having lose-lose battles between an ERP-only CIO and a best-of-breed-centered CPO. We find that top-performing procurement groups are consistently those that are best aligned with enterprise-level goals and stakeholders but are also aligned in adopting enterprise software that runs adjacent to or in parallel with traditional ERP and S2P application suites to meet unique needs for various industries, geographies, cross-functional processes (e.g., managing contracts or ESG performance), spend categories and supporting intelligence.
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