Daily Archives: March 5, 2010

Gartner’s Quadrant for Strategic Sourcing Application Suites: Magic or Tragic?

There’s been a lot of hullabaloo about Gartner’s new “Magic Quadrant” for Strategic Sourcing Application Suites, including a lot over on Spend Matters in we report, you read, and we all decide and clarifying a few questions, and with good reason. As one of the two publications that are supposed to “define” the strategic sourcing space, the other being the Forrester Wave, there are a large number of expectations that it will be fairly complete, mostly correct, and useful to the client base. But considering that only 14 vendors made “the final cut”, that one of those was an “exception”, that up to 3 more appear to have slipped in on “technicalities”, and that, depending on your viewpoint, up to a dozen other suite providers were excluded for no immediately apparent reason (including some you would expect to slip in under “technicalities” as well), it really makes you go “hmmm”. Especially when, upon diving in, you encounter a number of statements that make you go “huh?” and leave you with the nagging feeling that the report was as rushed as the survey process itself, which upset a large number of vendors, as you can see from the comments to Gartner’s Two-Week Fire Drill and Too Little Time In The Oven? over on Spend Matters.

Before I start ripping it to shreds, which you know by now I’m going to do, I should point out that I thought this was better than some of the previous quadrants because it was clear to me that, with respect to the criteria used, 10 of the vendors definitely deserved to be there. (Not that I agree with all of the criteria or definitions, or the final rankings. However, it’s reasonably clear that Debbie made a conscious decision to define criteria, as arbitrary as some of them seem to be, and stick to them.) Furthermore, most of the information about the included vendors was correct. (I thought it was better than Mickey’s 5th piece on Reaching Sourcing Excellence, Sourcing Technology Is a Commodity With Short Time to Value and Immediate ROI, that was released around the same time. Though her article was well written and made a number of valid points,   it, unfortunately, contained a poorly-constructed “Category Profile and Qualification Table” that attempted to rate the capabilities of 27 vendors across 12 capabilities.   This, in my opinion, ruined what was otherwise a pretty good piece.  But that would be another post in and of itself)

So what didn’t I like? In short the criteria — as some of them didn’t make any sense; a few of the definitions — as some are non-standard and confuse the issue; the implied and unwritten technicalities that resulted from the criteria and let some vendors slip in when there are others who were left out who are bigger, have a better reputation, and/or, in some cases, are more innovative; the amount of notice vendors were given — which may have resulted in a number of exclusions; and the results. I’m sorry, but when you ask me who the “visionary leaders” are in the space, I’m not going to say SAP, Emptoris, or Ariba. SAP is, as it’s always been, a slow lumbering giant in this space. It’ll get there, but not before just about everyone else. Not only does Emptoris have a history of acquiring most of its innovation, but up until it’s recent acquisition by Marlin Equity Partners, it spent the better part of two years downsizing and outsourcing all of its development and most of its support (to India), and you can clearly see the lack of innovation that resulted with respect to other companies in the market. And while Ariba, like Emptoris, is still a “leader” from a market size and solution footprint perspective, they’re still, in reality, dealing with the long-term effects of the Procuri acquisition and trying to fully integrate the code-base and capabilities into their platforms, some of which they still need to integrate and normalize separate from the Procuri acquisition.

Stay tuned for a more in-depth discussion and expose.

To Russia with Hope?

A month or so ago, I asked North American Nearsourcers is Brazil in your future, referencing a special report on business and finance in Brazil in the Economist that noted that, for the first time in modern history, Brazil is democratic, experiencing economic growth, and realizing low inflation.

Today, I’m asking European Nearsourcers if Russia is in theirs? In a recent Harvard Business Review article on The Promise and Peril of Russia’s Resurgent State (subscription required), we are told that there is money to be made in Russia, as long as companies play by the rules imposed during Putin’s tenure as president and that it is just as promising as other members of BRIC; it is no more corrupt, violent, or prone to institutional upheaval. Furthermore, the recent high oil prices have helped to propel economic growth, which has been strengthened by improved tax administration and energy company taxes, and resulted in recent fiscal surpluses.

Of course, with the good come the bad. The Kremlin’s apparently infinite appetite for power represents a growing threat, as do the complexities of doing business in Russia. The current fluctuations in commodity prices, of which Russia is largely dependent on, can make things uncertain as well and Russia isn’t rising to the centre stage in the same way that Brazil, India, and China are. And it’s current president has warned time and time again that Russia will be doomed unless both the economy and the society modernize, hand-in-hand.

But balancing everything out is the fact that Russia’s economic situation will improve with the economy, when oil prices again stabilize (in the $80+ range according to most projections). (European) Energy companies have no choice but to invest in Russia. Inflows will surpass $100 B annually, the nouveaux riches will devour luxury products, and the middle class, that will have an average income of $16K, will expand. During the eight years Putin was President, he did everything he could to enforce the Kremlin’s power to achieve his goal of developing a market system and integrating Russia into the global economy — including the creation of a prudent macroeconomic management policy. (In Putin’s government you did not get involved with politics, did not buy politicians, and paid your taxes. If you were a business who played by the rules, everything was fine, and you were free to get rich if you could. If you didn’t, you were in trouble.) And Putin’s handpicked successor, Dmitry Medvedev, has repeatedly said that tackling remaining corruption is his top priority. Plus, dealing with Russia’s state led capitalism is often easier than coming to grips with China’s single party, multi-level authoritarianism or India’s multi-party, chaotic democracy.

Anyone have any thoughts to share?

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