The document discusses how new developments in ePurchasing technology can help procurement go beyond low-hanging fruit. It outlines how procurement leaders face conflicting priorities in rationalizing costs while expanding competition. Four trends are driving business technology: empowered employees/customers, everything-as-a-service, the app internet, and big data. These trends are beginning to impact ePurchasing through supplier risk management platforms that integrate internal and external data on suppliers. The document recommends that procurement convert traditional supplier relationships to collaborative communities to better leverage new technologies.

1. 1 © 2011 Forrester Research, Inc. Reproduction Prohibited

2. ePurchasing Technology Drives New
Economics For Commerce
Duncan Jones, Vice President, Principal Analyst
January 17, 2012
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2009

3. New developments in
ePurchasing technology
can help Procurement go
beyond the low hanging
fruit
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4. Agenda
Procurement faces conflicting priorities in 2012
Four trends drive business technology developments
We’re beginning to see their impact on ePurchasing
Summary recommendations
4 © 2011 Forrester Research, Inc. Reproduction Prohibited

5. Agenda
Procurement leaders face conflicting priorities in 2012
Four trends drive business technology developments
We’re beginning to see their impact on ePurchasing
Summary recommendations
5 © 2011 Forrester Research, Inc. Reproduction Prohibited

6. Global disruptions have become common news
6 © 2011 Forrester Research, Inc. Reproduction Prohibited

7. Economic volatility can disrupt your supply chain
Whether prices are
going up or down
Source: www.financial-portal.com
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8. Sourcing’s Goals Pull Us In Two Directions
Number of
Rationalize Expand
Suppliers
 Aggregate demand to Costs  Expand the bidder pool
get economies of scale to increase competition
 Dump financially weak  Diversify, multi-source to
Risk
vendors reduce over-dependence
 Focus vendor  Introduce new blood to
management’s
Performance combat complacency
attention
 Search for new
 Create tight strategic Innovation sources, anywhere in the
partnerships world
Answer: Do Both – create tighter partnerships in some areas while
increasing competition in others
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9. Collaboration: working more closely with its key
suppliers helped Ford reverse its decline
Ford rose to 5th
in JD Power’s
quality ranking,
above Toyota
and Nissan
Source: Planning Perspectives, Inc
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10. Suppliers’ willingness to co-innovate correlates with
other measures of the relationship’s strength
5
4.5
4
3.5 Honda
Toyota
3 Ford
Nissan
2.5 GM
Chrysler
2
1.5
Willingness to Willingness to Working Supplier trust OEM Is
invest in new share new Relations Index of OEM Preferred
technology technology Customer
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11. Supplier classification example
Business Value
Timescale/ Cost To Replace
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12. Relationship classification example
Spouse
Close
Relative
Facebook
Social Value
Friend
Child@
LinkedIn
University
Connection
Timescale/ Cost To Replace
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13. Agenda
Procurement faces conflicting priorities in 2012
Four trends drive business technology developments
We’re beginning to see their impact on ePurchasing
Summary recommendations
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14. Figure 2. CIOs need shift budget from steady-state to
new initiatives
May 2011 “Forrsights: The Software Market In Transformation, 2011 And Beyond”
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15. Forrester has identified four broad themes driving
business technology trends
 Empowered employees and customers energize leading
organizations.
 Everything-as-a-service (XaaS) offers new technology acquisition
and consumption options.
 The App Internet connects mobile users to near-limitless
information.
 Big data extends our digital horizon and changes the way we do
business.
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16. Businesses cannot, and should not, get all their
technology innovation from one source
Self-
provisioned
iApps
Key business
applications New supplier
search
Core
Collaboration Systems
SRPM
ERP
eSourcing
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17. Beware of IT colleagues who want to prevent self-
provisioning and prohibit specialist solution providers
Prevent
Legacy
Core
Systems
Repl
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18. Agenda
Procurement faces conflicting priorities in 2012
Four trends drive business technology developments
We’re beginning to see their impact on ePurchasing
Summary recommendations
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19. Important management information is distributed
across multiple silos
ERP
eSourcing
Contracts
EDI
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20. The technology giants have misled us several times
 “Implement one ERP product everywhere”
 “Consolidate to a single instance”
 “Build a data warehouse”
 “Buy a spend analysis project”
 “Buy a supplier assessment project”
 So why should we believe them now?
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21. Supplier managers need to combine internal and external
information sources into a formal risk analysis process
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22. Forrester named this emerging category “Supplier
Risk and Performance Management”
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23. SRPM is more than data gathering and reporting
Performance
Risk optimization
management
Performance
monitoring
Supplier
Information Action needed Process management
Searching for insight
Self-
registration
One supplier master
Basic data collection
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24. Most enterprises still have a buyer-centric
approach to ePurchasing
Ptolemy
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25. The network-centric approach is better
Copernicus
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26. But a universe of discrete networks is costly
for suppliers, and less effective for buyers
Gallileo
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27. We’re now seeing the emergence of global
communities of buyers and sellers
Einstein?
•Scale and reach to be effective
•Unstructured collaboration, not merely transactions
•Sharing information with your peers
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28. How can you make use of these forms of
unstructured collaboration?
 Idea forums that include key suppliers
– Users’ problems, suppliers’ ideas, voting on which ones to take
forward, workspace for project teams to share information
 Engineering change process
– Consider the impact of proposed modifications before they are put into
effect
 Community performance rating
– Aggregate objective and subjective data from your peers to evaluate
prospective suppliers
 Urgent problem resolution
– Creation of ad hoc teams, live web conferencing, asynchronous
messaging
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29. What can you do now?
If you’re just starting out… If you’re further along…
• Don’t wait until you have a • Use technology to work even
disaster to create the more closely with your key
business case for SRPM suppliers
• Convert Ptolemaic or • Focus SRPM attention based
Copernican supplier on importance, not just
collaboration initiatives into spend
community programs • Automate analytics
• Start somewhere • Manage improvement
important, but doable processes
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30. Thank you
Duncan Jones
+44 7920492913
djones@forrester.co.uk
www.forrester.com
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