Analyst observations in SxM and Sourcing Fall 2022 SolutionMap

Twice a year, Spend Matters analysts work hard to further deepen their understanding of procurement tech (and services) solutions at a granular level by analyzing vendor-based RFI requirements across 11 source-to-pay tech categories and reviewing anonymized customer references. The 73 providers that participate in Spend Matters SolutionMap are benchmarked and ranked in this way to give users an accurate update of procurement tech functionality that is data-driven to help them make informed choices about their software partners.

From cycle to cycle (Spring and Fall) each year, our analysts observe market conditions, trends and movements among the solution provider community. This might include new entrants to SolutionMap or vendors that started in one solution map category expanding into another because they grew their offering. All of this gives a more complete picture of the market at every cycle. But it’s not just about changes at scoring level for vendors in a particular field. The observations are also about the scope covered by a vendor and the scope we cover at Spend Matters.
For example, in the cycle from Spring to Fall this year, we have seen:

The addition of Efficio to Sourcing and SxM, Fairmarkit to Sourcing, State of Flux to SxM, Trust Your Supplier to SxM and Risk.

We have seen new carbon management providers or existing SolutionMap players with added CO2 elements: BCG, Carbmee, Certa, Coupa, EcoVadis, GEP, Ivalua, Simfoni and SupplHi (also with Risk).

In terms of wider scope we have seen:

• Greater focus on category management: Simfoni, following the merger with EC sourcing, shows that spend analytics/sourcing are working better together than before
• More AI guidance and granularity in RFx and SxM (also tied to CatMan) from GEP
• Improvement in collaboration on the network of ‘n’ buyers/’n’ sellers from graphiteConnect

Looking at Fall ’22 vs Fall ’21 we have observed an evolution in:

Evolution in approaching ESG reporting requirements

“There has been a marked evolution in the way providers are approaching ESG initiatives, in terms of product updates, functionality and focus. During this cycle, this hasn’t drastically changed how they are positioned in our SolutionMap — yet — but there is an obvious trend on the provider side toward matching the expectations, demands and needs of the consumer side. Creeping up directly behind ESG movements, we see Risk as a big differentiator facing providers. Increasing numbers of providers are offering more and more capabilities not only to identify but define risks. And while there are numerous dimensions to risk, the defining factor is that of business continuity. And these two observations have become much more prolific in the past six months.

“Providers including, but not limited to, Jaggaer, Ivalua and Coupa are enriching their solutions with ESG- and risk-related capabilities. One example lies in the third-party data they are leveraging for risk scenarios or human labor visibility in the supply chain.”

Spend Matters is looking more deeply into supply chain human labor violations and we recently published a series titled “Enabling supply chain transparency to combat forced labor and modern slavery” in three parts as part of our PRO membership  service.

The regulatory landscape is changing

One of the main motivators behind this drive towards ESG, modern slavery, human rights and sustainability compliance is, of course, regulation.

Tougher regulations are coming. The Corporate Sustainability Reporting Directive (CSRD) in the EU introduces more detailed reporting requirements in 2023 and will require large companies to report on their sustainability policy and performance, including environmental rights, social rights, human rights and governance factors. In Germany, also next year, the Supply Chain Due Diligence Act will enter into force to improve compliance with human rights and standards of environmental protection in supply chains. And while ESG reporting is still largely not mandatory in the US, that is also set to change. This year the US Securities and Exchange Commission (SEC) proposed climate-risk disclosure requirements, which would expand the annual reporting requirements of publicly traded bodies. Regulations like these continue to move the dial on ESG reporting from voluntary disclosure to mandatory.

“In tune with this,” says our analyst, “providers, both suite and best of breed, are responding with added capabilities like templates and third-party data provision to enable customers to manage the evolving regulatory landscape.”

Spend Matters is also responding to this increased need for, and awareness of, ESG capabilities in the procurement tech on the market by introducing a CO2 component to our buyer decision-making tool, TechMatch for Carbon Management, which quickly prioritizes and translates business needs into technical requirements to gain a shortlist of best-fit providers for your organization.

“When it comes to CO2 measurement provision in the past year,” our analyst says, “within the SxM and Sourcing categories, Coupa, GEP and Ivalua stand out as examples that are taking action, especially on the supply-side, to add functionality to their offerings. But they aren’t alone; we must also start to think about the Analytics providers launching insights into ESG for regulation compliance, like Sievo and Simfoni, that also factor into the CO2, ESG, sustainability monitoring and compliance agenda.”

Why should tech users care?

The ability to monitor and report on CO2 emissions throughout the supply chain (for Scope 3 emissions), as part of the wider ESG responsibility, is an area that until relatively recently hasn’t been given a lot of attention or had momentum.

What it means for users, according to our analyst, is that “whenever they need to make a decision to select or work with a supplier, they need to make their decision with all the cards in their hands. And this is where it becomes more complex, because the buyer now needs so much more intelligence and power to make those decisions that their hands may not be big enough. You now have to take into account risk and the many dimensions around ESG and CSR performance. This is why the solution providers, and especially the suites, are expanding their scope; they recognize that users require so many more, and new, elements.

“So the user, when making any tech selection decision, must take into perspective all the elements of new requirements and trade those off against price delta. And this is where it’s important to grasp the totality of those elements, to make informed decisions.”

Other evolutionary trends

Looking back at the historical cycles of SolutionMap data and scoring, our analysts have observed another major trend outside of the ESG mandate – category management. They observe that Jaggaer and SAP Ariba in particular have made, and are currently making, significant progress in that area to offer forward-looking (and not just backward-looking so-called category 360° views) capabilities to support strategization. (Look out for more Spend Matters coverage on that to come.)

Another observation has been the rise in focus on ‘direct’ in the sourcing and SxM space.

“Even given our current economic business climate of inflation, supply and geo-political influences,” says our analyst, “providers in the direct materials market would appear to be the more advanced providers in terms of tech enhancements. The likes of GEP, Ivalua, SAP and Jaggaer are more weighted towards intelligence. That means they are continuing to enhance their capabilities to support direct with the ability to analyze and slice prices and costs in greater detail than ever before to proactively manage price revision and identify untapped opportunities for optimization.”

“The whole evolution of attitudes toward ESG, risk, compliance and other trends is an indication that the providers are taking it all very seriously. Overall, the need for more and more outside-in insights has created a trend in sourcing and SxM for providers to integrate with market/category intelligence providers like Beroe and The Smart Cube.”

And of course the evolution in the topics of ESG regulatory compliance and risk also ties in with contract management – look out for the trends we’ve seen in that field from our analyst Nikhil Gaur on that to come.

Here are the vendors Spend Matters covers in SolutionMap and on Spend Matters PRO in SxM and Sourcing, including new entrants this cycle. 

More information about our full Fall SolutionMap update 2022 can be found here:

Spend Matters Fall 2022 SolutionMap and TechMatch rankings for 73 procurement technology solutions