This is the last installment in a three-part column series on Oracle vs. SAP in procurement. Click here for Jason Busch's analysis of SAP vs. Oracle on Supplier Information Management and in Spend Visibility software.
In the last post of this series exploring the various spend management capabilities of SAP and Oracle, we’ll analyze the relative capabilities of each ERP provider when it comes to the e-sourcing arena.
Oracle Sourcing is available on-premise or on-demand. The latter is a hosted managed service through BPO partners or a sourcing delivery tool by tactical sourcing consultancies. Oracle also delivers a range of sourcing services, including supplier training and buyer education.
The Oracle Sourcing 12.1 release has finally obtained near functional parity with the cadre of best of breed vendors usually contending for business in the market. As with other sourcing products, it supports the basic sourcing lifecycle, starting with upfront supplier identification and information gathering progressing through to RFX, negotiation and award optimization.
Perhaps the most valuable, new “everyday use” feature in Oracle Sourcing 12.1 is an XML spreadsheet format designed for supplier response creation and buyer award analysis.
Within the application itself, cost-factor enhancements allow buyers to model the total cost of products and services based on either unit cost, percentage of unit price or a fixed amount for a line item. From a public sector standpoint, 12.1 includes a new capability designed specifically for government RFQs requiring two-stage negotiations. This capability is essentially a multi-round RFI, RFQ and negotiation designed to separate out technical and commercial evaluation criteria in bidding.
The release adds count/number/quantity-based constraints that enable users to specify award quantity (e.g., in percentages) in addition to award amount. 12.1 introduces a number of core optimization enhancements, including constraint prioritization (saving time and avoiding having the optimization engine churn over null sets). The release also lets category or sourcing managers work with suppliers to get more expressive in their bidding, offering incentives/ preferences based on a specific factor they might propose (e.g., volume).
Remember that Oracle has spent its entire e-sourcing product history chasing functionality that was previously available through over a half dozen other competitors, and has never been at the vanguard of the sourcing market for capabilities and delivery. Current releases bring Oracle up to near “check-the-box” functionality with other vendors in the core e-sourcing area, yet companies looking for close integration with other modules -- especially in a heterogeneous systems environment -- in supplier management, supplier-performance management and spend-visibility areas would be well served by considering other best-of-breed providers in addition to Oracle.
SAP E-Sourcing is available in both single-tenant hosted and multi-tenant (SaaS) hosted environments, the former being more expensive. The SAP Enterprise Sourcing Plus variant, the most expensive version of the application, includes contract management capabilities, vendor score-carding, contract management and spend visibility capabilities. SAP and its hosting partners are running fewer multi-tenant hosting models than most of their large competitors, especially compared to the frequency of single-tenant hosted deployment models. The single-tenant hosted version of SAP E-Sourcing has proved popular because it is the easier of the two deployments models to move back behind the firewall, should an organization decide to do so.
This approach also offers greater flexibility around integration between the hosted instance and back-end systems (and certainly the perceived safety of single tenant data integration and data integrity). In this model, SAP users pay for a perpetual license and ongoing maintenance in addition to an annual hosting fee. This costs more initially than going with a multi-tenant hosting approach, but over the course of three to five years, it actually ends up being a cheaper deployment model. Regardless of deployment model, even though the SAP E-Sourcing platform is based on an acquired architecture (Frictionless), it now offers tight integration into other SAP business applications and back-end SAP systems, including SRM and EBP.
Additionally, SAP will release “Wave 7” and “Wave 8” in 2010. The slow release cycle has not necessarily turned off large companies to the software, however . Typical SAP E-Sourcing users are large SAP shops, especially those that have already deployed procurement capabilities in SAP business-applications and ERP. Still, approximately 50% of SAP E-Sourcing customers have used a sourcing product from a competing vendor in the past.
SAP E-Sourcing has a longer and more proven track record than comparable Oracle products. Yet SAP has lagged the general market by taking many years to add what many consider basic capabilities. (e.g., simple sourcing optimization). Still, the original Frictionless architecture on which the product line is based offers one of the most proven, scalable and configurable SaaS platforms on the market for complicated environments. For customers who prioritize integration into other SAP systems and are willing to accept functionality and integrated suite capabilities that trail best-of-breed providers in key areas (e.g., optimization, performance management, supplier management), SAP E-Sourcing will often prove a preferred platform. SAP customers should also consider E-Sourcing hosted deployments from SAP BPO partners including IBX, Infosys, Hubwoo and Quadrem.
For additional analysis on this topic, please 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.
We hope you enjoyed this series on SAP and Oracle’s spend management capabilities. Check back at SearchSAP.com in the coming months as we take a closer look at SAP’s and Oracle’s relative competitive capabilities in the purchase-to-pay (including eProcurement and invoice automation), catalog/master data management and related areas. In the meantime, if you’re interested in learning more about e-sourcing and related solutions in general, download our latest Compass research on the subject.
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.