A recent Gartner research report – their “magic quadrant” – looked at firms offering Strategic Sourcing Application Suites. That was defined as solution providers who can offer clients integrated solutions covering sourcing, contract management, and analytics capabilities.
The big change this year compared to last was that Gartner focused their attention on fewer, larger firms. So in 2014, there were 29 software providers covered, but this time there were just 14. They are all businesses with a significant client base already and a reasonably broad geographic base too. Not surprisingly, pretty much all of them are firms that Spend Matters knows well across our own wider geographic base.
Whilst we could propose a number of weaknesses in the Gartner methodology, it remains a useful guide at least for prospective buyers. But care must be taken; for example, a firm can be marked “down” if they do not have global coverage. Yet to a prospective customer in Europe, for instance, it really does not matter if our supplier is not strong in North America! So it is important to read the full details, not simply look at the positioning in the quadrant.
The report was good news for a number of firms we know well, including Vortal, who work with us as sponsors of this website. The firm was well placed, pretty much in the centre of the chart, with some positive comments from Gartner –customer satisfaction is strong, references said that the product is easy to use, and authentication and data security capabilities are strong.
The main “cautions” from Gartner included a “lack of traction” in the very biggest organisations and “outside target markets” – hence our comment above about the need to understand the ratings. However, Vortal have had relatively recent contract wins in Colombia and the Dominican Republic, well outside their Iberian heartland.
We spoke to Miguel Sobral and Javier Fernandez from the firm, and building on the Gartner report, we asked whether the EU mandate for contracting authorities to use eProcurement was having an effect in the market for this type of product?
“We are currently seeing the first movements in the market. Public entities have realized that eProcurement will be mandatory sooner than later. We have already received many contacts of European public authorities looking for a solution that helps them to comply with the New Public Procurement Directives”.
What factors are those buyers really looking for?
“We strongly believe that the technology in itself won’t be the most important aspect when choosing one or another provider. The wider expertise of the solutions provider, the support both for buyers and suppliers, the community management – in the end, the capacity to make it happen will be what makes the difference. We have done it before in several countries and we are ready now to face this challenge at the European level”.
What high-level decisions do countries need to make if they are not well advanced with eProcurement currently?
“In the end, countries have to decide if they go for a market with certified players, or for a concession to a commercial off the shelf solution. Both of them have pros and cons but, from our point of view, when time for the implementation is getting limited, some companies have developed a very high specialism in this area that can be very helpful for contracting authorities who need to move quickly”.
Are SaaS solutions becoming dominant in your opinion – and is the market getting more competitive in that space?
“It has been demonstrated that a SaaS approach is faster, more efficient, and cost effective to implement. Apart from that, the dynamic and competent market that we see for these solutions benefits the whole community. Vendors like Vortal are forced to improve their solutions continuously, and also they have to provide an extraordinary support if they want to keep their market share. eProcurement implementation is not only a technological challenge, if we are not able to deal with the change management, both buyers and supplier will not accept the change and the implementation will probably fail”.
Thanks to Miguel and Javier for providing those insights, and the point about this being as much around change management as it is technology is particularly important, we believe. It is clear that contracting authorities have to ask themselves several questions before making their technology choice, and some of the key issues are covered in the white paper we produced called “Implementing the EU eProcurement Mandate -Technology Choices and Key Decision Factors” . You can download that here free on registration.
And of course Vortal are not the only potential choice for public sector buyers – other firms who come out well in the Gartner report also have considerable public sector business around Europe. We would also recommend that buyers do a lot more than just read such reports when selecting a software provider – most will (quite rightly) run a formal selection process, talk to other clients of the firms, etc.
But as more contracting authorities and wider government decision makers respond to the EU mandate to introduce eProcurement, the firms that are featured in the report are going to be well placed to grow their market share over the next couple of years.