SAP has finally disclosed the date of its next eSourcing release cycle as Q3 2009, when it intends to deliver better usability (shouldn’t be too hard!), support for complex pricing structures and finally to release dutch auction capability. 

After this, don’t expect any major improvements until well into 2010 – always assuming that SAP sticks to its own roadmap – when a further release will focus on coupling process integration between eSourcing and the overall Business Suite. 

For the next general release, SAP users out there will have to wait until at least 2011 when SAP, with more functional enhancements including the tight integration of SAP PLM and SAP SCM as well as industry specific business processes.  

The big issue for purchasing teams looking to (or saddled with) SAP isn’t really addressed by any of this however. Namely, whether the various SAP modules that compete in this space – such as SAP eSourcing and SAP sourcing within the SRM module – are ever going to be truly integrated and free of overlapping functionality. How SAP eSourcing users (and data) will interact with the sourcing capabilities resident in SAP SRM, especially the complex operational sourcing and bidding capabilities SAP SRM 7.0 remains an unanswered question. 

Could be time to look elsewhere?

Everywhere you turn at the minute, forecasts for the world economy in the next 12-24 months keep on getting progressively worse.

And while there is always a danger of the world simply talking itself into recession, what can’t be denied is that the effect of a downturn, perceived or otherwise, is significantly compounded by rapidly rising commodity prices.

The Times today reports that petrol prices are expected to reach more than £1.12 per litre next month as service stations feel the effects of the latest surge in global crude prices – in truth it’s a price point I’ve already experienced on the high road.

Manufacturers, particularly in the USA, are talking of a ‘perfect storm’ where the credit markets, tax calls, oil and raw material prices have all hit costs at one end of the business and driven down consumer spending power at the other end.

As a result we have already seen organisations focusing even more closely on procurement practices and the supply chain, as cost reduction becomes a seriously pressing issue across all direct and indirect spend categories.

There has been a noticeable upswing in what are effectively hedging events, with businesses running electronic sourcing events – typically eAuctions – with a view not necessarily to make big short-term savings, but to secure a price point for the kind of goods and services most affected by commodity price rises.

Recent examples include carrier bags and courier services, both highly sensitive to fluctuations in oil prices, as well as events that run straight to the heart of the matter to secure a price for the supply of millions of litres of diesel.

The key win here (on top of the real savings that were realised in every case) is a period of certainty in uncertain times. And that’s simply priceless.

In my last post I reported on the EU’s target for broadband penetration and now, hot on its heels, telecoms regulator Ofcom has revealed this week that broadband access for UK homes and business could literally be going down the drain.

According to Ofcom, which has been studying the most financially viable ways of replacing the existing copper networks, high speed fibre might be laid in sewer ducts to help drive the rollout of super fast broadband.

The speed offered by fibre optic cable - up to 100Mb - is much faster than broadband speeds of existing copper networks, and is able to deal with multiple high-definition video streams and near-instant music downloads.

Ofcom CEO Ed Richards launched the review, saying: "Super-fast broadband - next generation access and networks - are crucial to the UK's future. These networks form part of the critical infrastructure of the country's economy."

As a provider of on-demand technology, availability and speed of internet access is clearly a matter close to our hearts and it is an undeniable fact of life these days that countries jockeying for position in the economic growth stakes can make clear comparisons between broadband penetration and commercial impetus. 

Underlining this fact, a recent report from news agency Reuters tells that the European commission wants broadband penetration within the EU to reach 30% by 2010 in order to drive economic growth. Viviane Reding, information society commissioner at the EU, remarked that only 8 of the 27 EU member countries are currently in competition with the US in terms of broadband penetration rates, with Denmark, Finland, Sweden and the Netherlands leading the charge. 

Despite the fact that the UK, Belgium, Luxembourg and France also have a higher broadband penetration ratios than the US, penetration for the EU as a whole stands at just 20%, compared to the 22.1% rate set by America. 

In what is now truly an internet economy, failure to drive the commercial highway that broadband represents could do more damage than any number of over-zealous bankers and hegders.

Much has been written on the subject of procurement outsourcing in recent years, and the tide had appeared to be shifting inexorably in this direction, but in the last 12 months we have seen a considerable movement the other way – with many organisations that had experimented with outsourcing choosing to insource again.

A recent study published by the Everest Research Institute bears up this trend, highlighting the fact that fewer procurement outsourcing deals were struck in 2007. In the group’s Procurement Outsourcing Annual Report Katrina Menzigian, vice president, wrote “Buyers are able to ‘experiment’ with procurement outsourcing as they potentially migrate towards a full Source-to-Pay (S2P) strategy.”

“This phase-in approach is allowing the opportunity for testing of synergies, scaling up operations, developing industry-specific capability which, in turn, delivers better results and savings.”

The shift in global business sentiment over the course of just the last 4 months has been such that Forrester Research now predicts that global spending on IT goods and services will grow only six per cent in 2008 (to a total of $1.7 billion).  Back in December the self same organisation was backing a nine per cent rise, so the confidence factor has dropped by a full third in a very short space of time. 

"Historically, there has always been a very strong correlation between the economy and technology spending," said Andrew Bartels, author of the Forrester report.

"Our forecast is premised on a mild recession in the US economy in the first two or three quarters of 2008, caused by a shrinking housing sector and tapped-out consumers reining in their purchases due to higher interest rates, energy costs and consumer debt services.”

And when the US coughs…

Despite cost estimates for the Olympic aquatics venue for London 2012 currently bobbing near the £250 million mark, in comparison to the original price of £75 million, the Olympic Delivery Authority (ODA) remains confident that it will stay within its procurement budget.

Given the ODA’s total budget of £6.09 billion announced by the Department for Culture, Media and Sport in December, there is definitely some wriggle room, but the team’s purchasing practices will have to get and stay very keen to stay this side of some serious financial and political fallout if things don’t go to plan.

The aquatics venue was designed by Zaha Hadid (whose dreadful website can be found here) and is being put together by Balfour Beatty, who fell into the contract after French firm Eiffel and German construction company Hochtief controversially withdrew from the process.

Part and parcel of most purchase-to-pay solutions we deliver is a big piece around supplier adoption, collaboration and communication. From orchestrating tailored seminar programmes to distributing email broadcasts and hosting webinars, Wax Digital is often heavily involved in promoting the step-change in the way that buyers and suppliers work together as part of our wider solution delivery remit.

French supermarket giant Carrefour has recently taken this process to its ultimate conclusion with the launch of a new global supplier website, as part of a strategy designed to improve communication between the company and its 62,000 suppliers across the world.

It's exactly the kind of initiative that we promote, delivering a single central point not only of order to invoice management, but also for displaying KPI's, allowing participation in tenders and auctions, and delivering a channel for news, updates and information.

It’s often easy to get wrapped up in the buy-side of the purchasing equation, acting as we do for the purchaser most of the time. However, it’s critical to remember that there are two sides to every trading relationship and the procurement solutions we put in place are designed to deliver benefit to supplier too. Often one of the key benefits revolves around process efficiencies that deliver big reductions in stopped and blocked invoices, ensuring that suppliers get paid more quickly and with fewer costly manual interventions.

However, whilst a joined up eProcurement or purchase-to-pay solution can bring major process efficiencies to bear, it isn’t always the case that the benefits are passed on to the supply chain and the Institute of Credit Management have recently published a league table charting the time every single UK public limited company takes to pay its bills – see the FT article here for full details.

At the top of the tree companies like easyJet and Northumbrian Water score well, with payment in under 10 days, but the worst offender by far is United Utilities, where suppliers have to wait an average of 99 days for their bills to be paid. Of the 350 large and medium-size companies listed on the FTSE 100 and FTSE 250, Aga Foodservice Group, the manufacturer, was shown to take 81 days on average to pay invoices, while Carillion, the construction company, takes 80 days. Some of the slowest payers, among Britain’s 11,000 plcs, take more than a year to pay bills!

A recent survey by Supply Management magazine suggests that nearly three quarters of buyers are looking to make cuts to their vendor list and use fewer suppliers.

77 of the 100 buyers surveyed said consolidation would make the supply base more manageable and cost-effective, and while there is no doubt this is true it beholds organisations to make sure they don’t simply take a knife to the vendor list without careful analysis of the risks involved. Supplier rationalization efforts can increase supply risk as well by limiting a company's options and back-up plans if a disruption, quality issue or supplier bankruptcy occurs.

A clear and accurate picture across the supply chain is an essential pre-requisite, which is of course where purchase to pay systems play a significant part, but category expertise can be equally important and companies considering supplier rationalisation should draw heavily on the experience of their eProcurement vendors or advisers.