Just a couple of days ago, Gartner published its Magic Quadrant for Strategic Sourcing Suites, February 2015. We are proud to note that we have been recognized by Gartner as a visionary in the latest report moving from the leader’s quadrant into the top portion of the visionary quadrant, we take into account our adjustment from the previous report in July 2013. The elimination of many other vendors from the pool should also be noted.
Embracing procurement contracts.
One could argue the changes in the quadrant landscape over the course of a year may be dramatic. We at Selectica/Iasta see this as a unique opportunity to accelerate “our vision” by focusing on the two areas, contracts and supply management. It’s clear technology leadership is still truly needed to create a tighter link between the two. The reason for this is more compelling than ever.
Consider the following:
The classic way of addressing contract management has often been from a pure savings perspective. For instance, according KPMG, on average, companies are realizing less than half of their negotiated savings on purchases. In this regard, improved contract compliance is needed. Deep integration of contracts with spend analysis and procure-to-pay ensure contract compliance from a transactional perspective. However, contract management must look beyond the transactional view alone.
To this point, Tim Cummins of the International Association for Contract and Commercial Management (IACCM) notes that while contracts are being used to drive longer-term outcomes, they must continue to evolve from transactional documents focused on obligations and potential penalties into instruments for business and relationship management. It will only help to ensure supplier performance and oversee ethical and regulatory standards to assure value is delivered.
Procurement contracts: driving compliance.
A 2014 survey done by ProcureCon Europe notes that 59% of respondents feel managing both contractual and supplier risk are necessary to achieve “best practice” contract management in the procurement function. Moreover, according to Gartner, it is expected that by the close of 2017, contractual complexity and audit scrutiny are predicted to drive a 40% or higher increase in CLM solution adoption.
Given the reputational and financial impact of suppliers on organizations, it is clear organizations will increasingly look to contract management, not only for improving the facility to identify savings within procurement, but also for avoiding broader supplier risk. This, from our point of view, is one of the main drivers corporate enterprises are re-examining in their approach to contract management, and why they are looking for “leaders” that can truly bridge and manage their contract management needs—from a procurement perspective to a wider corporate view in managing governance, risk and compliance.
Taking this theme forward, you can watch an on-demand webinar on this very topic that took place on February 18, 2015. The presentation, Collaborative Contract Management: Procurement’s Role in Enhancing Compliance and Mitigating Risk, featured recognized analyst Andrew Bartolini of Ardent Partners.
A parting thought:
Our merger with Selectica six months ago unites two pioneers in enterprise technology that combines best-of-breed enterprise solutions. The value we bring to the market from our newly expanded company is significant. We believe analyst research along with increased demand strongly supports our approach focused on enterprise contract lifecycle management integrated with supply management.