Sourcing Solutions Deliver Edge-of-the-Enterprise Business Benefits

Recent Yankee Group research reveals that companies have shifted IT dollars from core or internally oriented technologies to edge-of-the-enterprise technologies. In fact, 71 percent of the companies we surveyed increased investment in edge-of-the-enterprise technologies in 2003. During this period, the portion of the budget allocated for these technologies grew by 75 percent on average, while the overall IT budget grew only 3.7 percent (see Exhibit 1). Sourcing solutions are high on the list of technologies being deployed at the edge of the enterprise.

During the 1990s, companies invested in internally focused finance, human resources and materials management solutions. Today, companies are investing in customer-facing and supplier-facing solutions at the edge of the enterprise to better serve customers and improve supply flow. Well-engineered sourcing technology from vendors such as Ariba, FreeMarkets, SupplyWorks and Emptoris provide significant supply-flow benefits by delivering spend visibility and automating sourcing activities. Enterprise resource planning (ERPERP) vendors including SAPSAP, OracleOracle and PeopleSoft, which are known for internally focused ERP software, also offer sourcing solutions. Alles zu ERP auf CIO.de Alles zu Oracle auf CIO.de Alles zu SAP auf CIO.de

Few enterprises were technically or organizationally prepared to embrace sourcing technology during the height of dot-com mania. Similarly, established ERP vendors could not offer financially viable edge-of-the-enterprise solutions. Client/server ERP and supply-chain management (SCM) applications made it too technically challenging and financially unacceptable to extend processes and functions to the edge of the enterprise.

Much has changed. The costs of integrating internal applications and coordinating partner activities are declining. Various protocols and standards reduce the cost of integration and customization. Vendors have responded to customer demands and are making it easier for purchasing teams and suppliers to access purchasing data, inventory levels, order status, and forecast information, making it possible for them to act on this spend visibility.

Trend Impact

Before a company can control spending, it must first determine how much it is spending. With the help of spreadsheets, business intelligence tools, ERP systems, consultants, purchasing applications, or a combination of tools, companies must gather and analyze purchasing information to understand what they buy and how they buy. As shown in Exhibit 1, these spend-visibility exercises help companies make sense of confusing data and processes so they can take advantage of savings opportunities at the edge of the enterprise.