Blog Post
March 17, 2022

Bridging the gap between Procurement Suites and best-of-breed providers with hybrid solutions

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Bridging the gap between Procurement Suites and best-of-breed providers with hybrid solutions

The evolution of Procurement technology brought up end-to-end Procurement suites and specialized best-of-breed providers. Both sides claim to deliver superior customer value and are probably both equally right and wrong. If you ask a consultant which one to pick, they are likely to say: “it depends.” We agree with formulating nuanced answers but put our neck out on this one and say: “you need both.”

Here’s the highlights:

· In the head-to-head between procurement suites and best-of-breed, we argue you need both

· While a one-stop-shop is attractive in theory, Procurement suites often sacrifice breadth for depth

· Organizations are slow to adopt a true best-of-breed approach due to lack of maturity or experience

· A hybrid procurement solution allows organizations to flexibly adjust their tech stack to the maturity and needs of their teams

Since the development of procurement suites and specialized best-of-breed providers, each side has built arguments to promote their advantages. While procurement suites cover a broad spectrum of capabilities at the expense of solution depth, best-of-breed solutions sacrifice breadth of coverage for depth of capability. It therefore indeed depends on your organization's maturity, commitment, and vision to determine which approach provides more value.  

Schematic procurement technology and process map

In other words, it’s the difference between shopping at a large supermarket versus going to the bakery, the butcher, the farmers market, and other specialty stores to get your groceries. You can find the main procurement technology terminology to help you discuss the digital transformation in procurement in our previous blog.  

What is a procurement suite?

Procurement suites refer to procurement software solutions that offer services and capabilities across the entire procurement process. The focus is on breadth of capabilities rather than individual depth to ensure a variety of processes can be managed in a single solution. Think of it as a supermarket.

Procurement Suites cover a broad spectrum of capabilities

This approach sounds extremely attractive as most Procurement organizations crave the one-stop-shop that solves all their needs in one place. Not because they are lazy but because the idea of having a single place to manage all your information, tasks, and processes sounds highly appealing and efficient.  

The Germans call the concept of piling more and more requirements on a “eierlegende Wollmilchsau” (basically one beast to serve all your needs – google some pictures for inspiration). And procurement suite providers have worked hard to nurture this dream.  

The reality of Procurement suites often looks a bit less rosy and often leaves users unsatisfied and disillusioned. As suites sacrifice depth for breadth, more mature users or organizations quickly realize that their specialized needs can’t be met by their suite and that the process flow isn’t so seamless after all. This allows best-of-breed providers to make their case.

What is a procurement best-of-breed solution?

Best-of-breed procurement software solutions are focused on solving a specific challenge or pain point in the procurement process in depth rather than a variety of issues. This focus means that they can provide more detailed capabilities within a confined focus area (e.g., sourcing). Think of it as a specialty food store like a bakery.

Best-of-breed solutions provide deep functional capabilities

To cover the entire source-to-settle process, organizations could pick the best solution for each capability and provide superior functionalities that meet all their user needs. While this sounds attractive in theory, it could result in some inefficiencies at best or Frankenstein’s Procurement Monster at worst.  

As far as we know, nobody has implemented a true best of breed approach so far. The main reasons include  

  • digital maturity of the procurement teams
  • fear of having multiple separate user interfaces
  • solutions provide overlapping capabilities
  • limited connectivity between providers
  • lack of experience with managing multiple providers

While a best-of-breed approach is superior from the perspective of an individual capability, the lack of maturity or experience with managing multiple technology relationships makes this approach an unlikely candidate for most procurement teams.

Gaining flexibility with hybrid procurement solutions

A hybrid procurement solution refers to the approach of enhancing a procurement suite with one or multiple best-of-breed solutions to address the increased need for solution depth in areas that can create high value for the organization. Think of it as shopping at supermarkets but getting specialty items elsewhere.  

Hybrid solutions adjust to the maturity and needs of Procurement teams

In a hybrid model, organizations can flexibly adjust their technology stack to the growing maturity and needs of their teams. It allows Procurement to have basic functionalities where it lacks the time or maturity to go deep and advanced functionalities where it can deliver superior value for the business.  

While this approach sounds like a no brainer, it is rarely found in practice. Procurement Suites are closed loop systems that aim to keep organizations within their environment. Suite providers have limited incentives to provide access to their customers to external parties (think of Apple). Nevertheless, the future of sourcing & negotiations is clearly pointing towards the connection and use of specialist microservices.

The power of Procurement technology ecosystems

The idea of ecosystems and partnerships in the procurement space is fairly young and immature. Suite providers have historically acquired promising providers and more or less integrated them into their offering. Only in 2021 have SAP and Coupa opened themselves up for innovative solutions to enhance or augment their internal capabilities by launching app stores.  

When contemplating hybrid approaches, organizations quickly ask about integrations to create a seamless flow of information or a harmonized user interface. While we’re comfortable with using different apps for different tasks on our smartphones, we aim to browse the web, shop online, read the newspaper, and do online banking in one powerful app.

Combining suites with best-of-breed capabilities results in hybrid technology landscapes

Considering the current state of digital maturity in Procurement, organizations and solution providers must be careful not to turn this question into a chicken or egg kind of problem. A seamless flow of information is key to deliver holistic decisions, but not all integrations provide value for users in practice. An open discussion on the real needs between the relevant partners can help to get a clear perspective on opportunities and challenges.

The question is not if procurement suites or best-of-breed solutions are superior, but which approach is right for the current level of maturity and the business priorities. The real power of Procurement technology ecosystems lies in the flexibility it offers to organizations. Hybrid solutions tap into the best of both worlds and allow Procurement to grow their technology stack alongside their digitalization needs and maturity. It requires vision, commitment, and patience to bring a hybrid procurement solution to life. But the result will be a more impactful user experience.

Learn more about the Procurement technology landscape and explore our "Practical introduction to Sourcing Optimization".

Pioneering thoughts on data-driven sourcing