Wendell Perumal | 11 Aug 2020 | 5 min read
If you’re like me, you’ve been working from home recently. Take a look around your kitchen. If you purchased your appliances at the same time, it’s possible that they were all built by the same manufacturer.
On the other hand, you might have a kitchen full of appliances from different manufacturers. A best-in-breed approach could mean you own a Bosch oven, a Miele dishwasher and a Samsung refrigerator. Aesthetically, they don’t quite match, but you know that the best oven manufacturer doesn’t necessarily make the best microwaves on the market.
If you’ve taken the best-of-breed approach, in effect you have built yourself a kitchen “tech stack”, or technology ecosystem.
This article will explore the trend away from a single system that aims to do it all, towards digital ecosystems that feature best-of-breed point solutions, sometimes working hand-in-hand with a core legacy platform.
The digitisation of procurement technology has moved through three stages, each building on the one before.
Increasingly, organisations are adopting this best-of-breed mindset. According to Gartner, the days of end-to-end procure-to-pay suites are coming to an end, with only 59% of respondents in the 2019 Magic Quadrant indicating that they use a sole solution for procure-to-pay processes.
Similarly, Forrester has declared that the ERP era is over: “The ERP model of a single integrated suite to handle every process for every division within the enterprise [does] not work, for many reasons. [Instead], leaders need a new, eclectic strategy based on a handful of modern, open, smart, flexible SaaS platforms”.
Of course, the big ERP vendors have large installed bases and plenty of resources for product development and acquisition. It would be wrong to count them out. But the next decade is shaping up to be one where ERPs, bolt-ons and deeply functional best-of-breed solutions not only coexist, but integrate and complement each other, giving users the flexibility for the first time to build the procurement ecosystem they want.
To put it bluntly, every specialist software provider worth its salt knows that for the product to be a success, it will need to integrate smoothly with other parts of the procurement ecosystem, including legacy systems. Integration drives visibility, and the flow of data, workflows and processes. It’s now a lot easier, faster and cheaper than you might think to achieve secure connectivity between systems.
Gartner points out the risk that organisations will end up with “a jigsaw puzzle of hundreds of applications” in their technology ecosystem. The answer is to have a stable foundation or core which acts as the hub, while other parts of the ecosystem are the spokes. This approach helps allay concerns around complexity and removes the need to juggle between several applications during a sourcing event. In practice, this simply means that communication and data-sharing between parts of the ecosystem take place in the back-end, with everything accessible via a single platform.
Procurement is not alone in this transformation journey – a similar trend is playing out in #fintech, #marketingtech, and #HRtech, all of which are shifting to the digital ecosystem or tech-stack approach.
Wherever you are on your digital transformation journey, moving to an ecosystem approach will enable a robust, interconnected system for procurement that is capable of continuous and sustainable development.
Whether it’s your Source-to-Contract ‘hub’ that talks to point solutions, or is itself a ‘spoke’ in a larger procurement stack, VendorPanel has the flexibility to work with ERPs, bolt-ons, and other parts of the digital ecosystem. In part two of this article we will illustrate VendorPanel’s role and integrability within the digital ecosystem.
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