This is the first of a three-part column series on procurement software. Jason Busch is Principal Analyst at Spend Matters. His contributions are based on Spend Matters Compass research,which examines a range of procurement and supply-chain technology solutions and trends.
When evaluating spend management software, it's obviously necessary to weigh all of your options and choose the best fit for your company. In this series, we'll compare Oracle and SAP's spend management tools, with particular interest paid to spend visibility.
Oracle Spend Classification organizes spend into multiple taxonomies across disparate categories and internal coding (e.g., corporate, business unit, regional, facility). It relies on an extract, transform and load (ETL) process to pull data in from both Oracle and non-Oracle systems (Excel imports are also an option) across all transaction types. Once in the system, Oracle Spend Classification lets users classify spend data using three different classification modes. All three allow users to classify spend based on an accuracy threshold that the user can define.
Oracle Spend Classification also includes an assisted model, which permits end users to provide feedback into the classification process to increase matching confidence. Finally, Oracle enables users to classify spend on the fly during a one-time buying situation at the point of requisitioning if a particular good or service has never been recorded in the data set (provided the organization is running Oracle financials and an Oracle procurement application).
But remember that you will still need an analytical tool to slice and dice data in addition to Oracle Spend Classification. Both Oracle and other vendors offer a range of business intelligence tools that enable the analysis of cleansed and classified spending data.
Moving into the realm of SAP, SAP’s Spend Performance Management product allows companies to acquire information from heterogeneous source systems, cleanse and classify spending information, enrich spending data and analyze information with an intuitive user interface. For spend data acquisition, SAP has moved past its former problems with gathering data from multiple systems. It now enables users to acquire data through a combination of SAP extractors for ECC and SRM, as well as a data integration ETL capability for non-SAP systems. It also provides support for integrating third-party data feeds.
SAP presents a full range of standard spend analysis capabilities (e.g., reporting), as well as differentiated capabilities that incorporate an array of supply risk elements into the spend analysis equation at the line item level. For example, companies can understand specific risk factors for distinct parts, components and services.
In other words, users can rapidly drill into supply risk at the category, supplier and item level (all from a single launch screen). What’s unique about this approach is that SAP leverages a one-two punch of third-party data enrichment combined with a given company’s own information to provide a more accurate and complete view of different risk factors in the supply chain -- all in the context of what they’re actually buying, versus only who they are doing business with on an aggregate level. The combination of being able to look at line item spend details and either roll-up or roll-down a combination of financial, operational, performance, legal and other risk factors is unique.
Also consider that SAP Spend Performance Management is an entirely new product from SAP. It includes the ability to use existing data enrichment information -- in cases where companies have already purchased it -- or information provided by SAP from multiple parties (e.g., D&B).
Overall, we recommend both spend visibility products for inclusion -- and even prioritization -- on a vendor shortlist. SAP, however, comes out slightly ahead at this stage (relative to both Oracle and even perennial best-of-breed vendors in the sector, including Ariba).
Look for the next column in this series, where we’ll explore the relative supplier information management capabilities of both Oracle and SAP.
For a comprehensive look at this subject and other comparative procurement application research, download our Compass Research Paper, An ERP Outlook: Are SAP's and Oracle's Spend Management Capabilities a Fit With Your Own Technology Plans? Part 1.
If you’re interested in learning more about spend visibility solutions in general, download our latest Compass research on the subject.