End-to-End Versus Best-in-Breed: What’s Best for Procurement?

Authored by: Christian R. Sponsored by: Raj Bajaj , Robert Fuhrmann

It is rarely easy to choose the right technological solution. But profound change and urgency make it especially difficult to do.

This is certainly what procurement organizations are experiencing today. Procurement and the supply chain continue to reel from waves of disruption. Price volatility, rising inflation, materials and labor shortages are included in this. This establishes a critical demand for the supply network to be more resilient.

Diversity, equity, and inclusion (DEI), and greater sustainability across the supply chains are being emphasized by our changing global dynamics. Pandemic-driven changes in customer expectations are here to stay. Chief executive officers increasingly want procurement to contribute more to the enterprise than simply managing costs and risk.

Our procurement organization is pressed to transform the overall procurement process. This pressure creates alignment that positively reinforces the supply chain to become more resilient, efficient, customer-centric, and sustainable. This change is driven by technology.

According to Gartner’s February 2023 report, the digital transformation of procurement is accelerating despite negative market conditions and inflation.[1]

But the question that begs to be answered is: What’s the right technology to help procurement?

Pros and Cons of Two Different Technology Routes

Procurement needs to think strategically about the technology it needs to position itself and the broader supply chain. Our procurement leaders will inevitably confront two different technology routes they could take to excel in this new world.

• End-to-End (E2E): a legacy style of procurement software that supports most of the procure-to-pay process with standard ways of working.
• Best-in-breed or niche: which involves using (cloud-based) specialty tools that are hyper-focused on a small, discrete part of the E2E process.

Let us look more closely at these two options, each having their advantages and disadvantages.

E2E, single-vendor solutions

Digitization in procurement is nothing new to us. Companies like Ariba, Coupa, Vivant, and Oracle have been leaders in the digital procurement movement since the late 1990s. Their solutions are familiar to most procurement leaders.

 We receive enormous benefits from these single-vendor solutions, especially in procurement. They centralize functions such as planning, buying, and sourcing in one location for us. It provides ease of consistency when using procurement sub-functions. These solutions provide powerful data access and visualization at our fingertips without any data silos across functions. We can deploy them at scale in a single effort. Reduced complexity helps their functionality by establishing a unified user experience (UX). Allowing easy training, simple navigation, cross-functional collaboration (even in specialized fields), and a sole source of truth.

However, there is a downside. If you do not have the correct roles and rights assigned to you, UX can be restrictive.

Furthermore, E2E solutions can be confusing to non-specialists because they are designed for procurement professionals like us. This creates a level of difficulty for them to navigate the tool to find what they want to buy.

Performing certain tasks often requires “bolt-on” specialty modules with such solutions. These modules may not be available unless they are requested by many users.

Best-in-breed/niche tools

Using multiple best-in-breed tools to custom-build “stacks” of solutions is an alternative to deploying an E2E solution. The SaaS has a variety of these solutions that closely meet a company’s needs. Companies are taking this avenue of approach, and we see this trend growing.

 According to Gartner, SaaS spending is projected to grow by 15% to 20% annually. Large organizations typically support an average of 125 different SaaS applications[2] and spending an average of $1,040 per employee.[3]

There are two big reasons for this growth. First, as mentioned, more is expected of procurement today. And as procurement moves beyond its traditional focus on cost savings to become a strategic player helping to advance corporate agendas such as sustainability, DEI, and resiliency, it needs specialized solutions it hasn’t historically needed. Second, procurement organizations are looking to accelerate their digital transformation so they can more effectively use data to make faster, and better, business decisions. Saas is a key driver of this speed.

There are many best-In-breed tools to choose from, so a company can pick what’s right for its business and workflow. These leading-edge, typically elegant solutions are built on the most advanced, modern technology and are tailor-made for specific tasks that solve a single problem or pain point. And because they’re usually cloud-hosted, they’re quick and easy to deploy; are generally more secure and don’t disrupt other processes with downtime or updates; and incorporate open APIs so they easily integrate and communicate with each other.

The few disadvantages of best-in-breed solutions center on cost and complexity. They can be more expensive than E2E solutions to build a comparable “stack” across procurement processes. They involve many systems, vendors, integration points, data silos, and training programs—making them potentially more difficult to manage. They typically generate a lot of data, which may be too much for some companies to manage. And from a user’s perspective, a lack of a unified UX means continually logging into many different systems and having to become proficient with multiple interfaces.

The Best Solution? The Middle Ground

Like life, individual procurement solutions are rarely, if ever perfect. But that doesn’t mean a company is forced to live with limitations. In our experience, the best technology route for most procurement organizations is the hybrid approach that incorporates both E2E and best-in-breed solutions. With this model, a procurement organization can optimize its processes with a leading E2E provider of best practices while enjoying best-in-class support, training, and pricing. At the same time, the organization can flexibly add a layer of customizable best-in-breed solutions where needed to fill capability gaps. Importantly, according to Gartner,[4] when pursuing the hybrid approach, these are the areas to focus on.

Today it is easier for us to combine an E2E solution with best-in-breed tools, designing a customized procurement stack. Open APIs or other integration capabilities allow many niche players leverage to optimize and augment.

‘Part of the E2E procurement workflow integrates a blend of standardized and optimized processes, cross-functional connectivity, and data visibility. that combined reduce decision and cycle times and result in better business insights.

Here are just a few examples of companies that we have seen successfully adopted the hybrid approach:

• A high-volume semiconductor manufacturer reduced the mean time between failures using a stack of tools. It was layered over the company’s E2E MRO system. Moving edge computing nodes closer to equipment with the extracted data from systems provided visibility on part health. The manufacturer was then able to, with RPA, automate the procurement of new parts before part failure. This resulted in increased uptime, reduced cycle time in ordering, and increased availability and resiliency in the MRO supply chain.
• A large health system with a shared-service supply chain department chose to layer reverse auction technology into its sourcing team. The outcome resulted in reduced long cycle times for sourcing and net 180-day invoice payment. More energy was able to be focused efficiently on managing other priorities. Cycle time was reduced to less than 60 days and a 50% increase in invoice payments paid in less than 30 days. The discounts were shared with participants throughout the supply chain.
• A large consumer media technology company integrated a SaaS-based best-in-breed contract lifecycle management solution and a case management solution. Implementing into its ERP to improve low requestor process/risk compliance. It improved low satisfaction scores with the contracting, legal review, and risk processes in its ERP system. This implementation provided cross-functional teams with a layer of foundation, standardized workflow, and visibility to request status updates. This made it easier for scaled operations teams to manage the agreements.

Is a Single Connected User Experience Possible?

However, despite all the advantages the hybrid approach supports us, there are still some disadvantages. It still does not overcome the best-in-breed challenge of dealing with multiple user interfaces and Sign-Ons across various solutions. However, it is possible to create a connected user experience even with multiple solutions in play.

 Large enterprises with many stakeholders can build a single custom UX across the multiple layers of procurement software. Connecting them with middleware such as Salesforce, ServiceNow, or other case management solutions to bridge that gap. 

This sort of custom UX that spans a high number of systems can help a company in many ways, including:

• Higher satisfaction scores. Better customer experience by reducing the number of systems users must access to complete a task.
• Ease of operating in procurement systems by non-procurement specialists
• Greater requester visibility into earlier procurement “black holes.” It provides more guidance on how to navigate complex procurement processes.
• Creation of “compliance by accident” with custom-tailored process flows that guide users to “do the right thing.”
• More time invested in other troubled areas under management.

Embracing the Best of Both Worlds

For years, procurement organizations wanting to digitize did not have options. Monolithic, E2E solutions were the only game in town. However, we all know technology is always evolving and continuously advancing. Technological innovations have given rise to a whole new universe of specialty tools. These tools are adept at solving specific procurement challenges. Most procurement organizations will find an approach that blends E2E and best-in-breed niche solutions. This enables organizations to find the best way to stack technology to meet their needs. It capitalizes on the strengths of both types of solutions and custom-tailors stacks.

Organizations should first examine what it wants to do. We know that designing the right build procurement stack delivers desired and optimized outcomes. It also needs to examine the current process and technology maturity level, connectivity requirements, and the stack’s target ROI. This prerequisite optimizes goals to assess and shortlist providers of solutions that will help achieve the organization’s strategic imperatives.

With the technology selected, procurement should design and implement a roadmap that maximizes ROI as early as possible. Balancing complex implementations with quick wins, while ensuring end users and stakeholders are supplying consistent input is key. The results we see embrace the best of both worlds.

Finally, agility is critical. As markets and organizational imperatives shift, procurement should continually review its stack providers, functionality, and technology. The outcome maximizes software investment dollars’ impact and positions the organization to react to changes quickly.

The Best for Procurement

The challenges procurement organizations face today are like none they have ever experienced before. We have the technology and tools needed to equip procurement with the ability to help businesses thrive. Choosing the right technological solution for procurement can be challenging in times of change and urgency. Procurement organizations are facing disruptions and increased emphasis on DEI and sustainability. Procurement organizations have more than two primary approaches, E2E and Best-in-Breed.

We offer you the ability of a third choice, a hybrid approach. Successful examples prove the effectiveness of this approach in various industries. While challenges remain, creating a connected user experience is possible, and continuous evaluation and adaptability are crucial for procurement organizations to thrive and contribute to resilience and sustainability.

Technology stacks open doors for new opportunities, even in the federal sector. So come share your success story with us today and see how you can embrace the best of both worlds. 

Sources:

[1] Gartner, “Procurement and Strategic Sourcing Applications Primer for 2023,” published 2 February 2023

[2] Gartner, “Market Guide for SaaS Partners”

[3] Gartner, “IT Key Metrics Data 2022: Industry Measures — Cross-Industry Analysis”

[4] Gartner, “SaaS Market Report”