The Dawn of Integrated Source-to-Pay Suites
The release of Gartner’s first integrated Source-to-Pay (S2P) Magic Quadrant marks a pivotal moment in procurement technology. The new report covers ten leading vendors who meet Gartner’s revised criteria for providing modular but natively integrated S2P platforms spanning sourcing, contracting, purchasing, payments, and analytics. This development reflects a significant shift from evaluating separate “Source-to-Contract” and “Procure-to-Pay” solutions to a more holistic view of S2P suites. This shift responds to the growing need for unified platforms that provide end-to-end process visibility, essential for global corporations seeking to streamline their procurement operations.
Gartner’s New S2P Magic Quadrant – The Winds of Change are Blowing in Source-to-Pay Technology
Gartner’s revised evaluation methodology has reshuffled the deck of legacy S2P leaders and emerging players. While vendors like Coupa and Ivalua retain their leadership in this new landscape, there is a tangible slide in their position within the quadrant. The notable shakeup comes for vendors like SAP Ariba and GEP, which no longer feature in either the leaders’ or the visionaries’ quadrant.
This shift underscores the industry’s move towards integrated platforms over standalone modules. Fragmented workflows, scattered supplier information, and lack of full source-to-payment traceability are no longer acceptable.
The results reveal some dramatic shakeups from legacy player rankings, suggesting the winds of change are blowing in terms of market leader positioning for enterprise spend management technology.
The Need for Comprehensive S2P Solutions
Modern enterprises require S2P solutions that cater to complex, global operations. The fragmented approach of cobbling together best-of-breed solutions often results in data synchronization issues and a lack of seamless process flow. Integrated S2P suites, therefore, are not just a preference but a necessity for achieving efficiency and visibility in procurement processes. Vendors like Zycus, while retaining their Visionaries segment, have, in comparison, further solidified their position by leveraging on its cloud-native architecture and a focus on holistic connectivity to meet the evolving needs of large global organizations. This “solidification” indicates a market preference for solutions that offer comprehensive functionality and ease of integration.
Balancing Innovation with Usability
While the focus on innovation is paramount, usability remains a critical factor in the success of any S2P solution. The ease of use for both internal stakeholders and external suppliers is crucial. Vendors like Coupa and Ivalua, alongside Zycus, are noted for their user-friendly interfaces and efforts to simplify the complex procurement process.
The Role of AI, Gen-AI, and Advanced Analytics
Advanced analytics and Gen-AI are becoming key differentiators in the S2P space. Vendors are investing heavily in these technologies to provide smarter spend management solutions. Zycus’s Merlin AI suite, now powered by Open AI (Generative AI), is an example of this trend, offering capabilities like predictive analytics and intelligent automation. This trend towards “smarter” spend management solutions lays the foundation for rightsized innovations like parallel AI development pipelines that accelerate time-to-capability without hindering core product enhancements.
Other vendors like SAP and Oracle are also investing here, albeit by relying extensively on 3rd party partners/ vendors to drive innovation in areas like AI while tackling much-needed UX facelifts. Their approach will be tested over time based on the feedback from actual customer adoption.
The Importance of Effective Change Management
Transitioning to an integrated S2P suite is not solely a technological shift but also a cultural one. Effective change management is essential to ensure smooth adoption. Here, the role of vendors extends beyond providing technology solutions to assisting organizations in managing this transition.
This ability to bridge business aspirations into technical possibilities will separate winners from laggards in the S2P space as perennial integration and upgrade struggles give way to AI-powered simplicity.
Evaluating Vendor Roadmaps and Future Potential
For procurement leaders, understanding a vendor’s roadmap and alignment with their organization’s specific needs is critical. It’s not just about the current capabilities but also about the vendor’s vision for the future and its innovation ability. CPOs buying an S2P solution are not just solving for today; they are solving for the future. They need to invest in a partner that has demonstrated agility and commitment to constant innovation. It is through this commitment that vendors like Zycus, with their focused R&D in AI and cloud-native platforms, draw attention.
SAP’s reliance on 3rd party vendor products for critical capabilities like CLM and supplier management and Coupa’s recent change of ownership to private equity are some red flags that need to be kept in mind.
The Diverse Landscape of S2P Solutions
The S2P market is rich with diverse solutions. Each vendor offers unique strengths, whether it’s Zycus with its visionary approach, Coupa and Ivalua with their legacy leadership positions, or legacy providers like SAP Ariba and Oracle. According to Gartner, “Ease of use for internal users and external suppliers is imperative as implementation fees continue to grow, making successful user and supplier adoption critical.”
Organizations must carefully assess these options, considering their specific requirements, existing infrastructure, and long-term strategic goals.
A Balanced Approach to S2P Solution Selection
As the S2P technology landscape continues to evolve, organizations must navigate this complex market with a balanced approach.
The revised Magic Quadrant methodology rightly forces established players to reimagine their vision and earn leadership in the integrated S2P world through execution excellence versus inherited perceptions. It may stoke difficult pivots for some, while others who bet early on connectivity stand ready to reap the rewards.
Either way, the winds of change in procurement technology are clearly blowing in a fresh direction. As Gartner puts it, “Increased process automation, prescriptive analytics insights, and turnkey integrations will heavily influence vendor selection in coming years.”
Therefore, choosing a vendor should be based on a comprehensive evaluation of their current capabilities, future potential, and alignment with the organization’s specific procurement needs. Does your organization have plans to modernize source-to-pay capabilities? Share your views on the evolving technology landscape. Which vendors seem ahead of the curve in enabling your future procurement goals?
30
Procurement Insights 
Gary Hare
February 1, 2024
Despite all they hype around AI and other new innovations, none of the S2P vendors offerings have changed much over the years when it comes to supplier integration, especially regarding SMB suppliers. A full integration with Amazon or Grainger for sourcing, collaboration, catalogs, sales transactions, etc. isn’t a tremendous accomplishment – they have the resources and expertise to support it. SMB suppliers not so much. Do any S2P vendors offer integration packages with the commonly used web store and fulfillment platforms used by their suppliers such as Oro, Netsuite, Salesforce, Adobe Magento, etc.? Most S2P vendor supplier portals are still manual – load catalogs, email quotes and POs, invoice flips, etc. – and also proprietary to each S2P vendor (you can’t use the Coupa Portal for a Zycus customer.) I’d be curious to find out what percentage of POs in these portals are still emailed! In cases where SMB suppliers are fully automated with their customers, I can100% guarantee a third party vendor like Tradecentric, Vurbis or Logicbroker; or an agency or specialty consulting firm is involved. Supplier integration is probably the #1 issue holding back ROI in S2P implementations, but the S2P vendors still haven’t committed to making participation frictionless for the suppliers. What a win it would be for the market.
piblogger
February 1, 2024
I think we are on the same page supplier engagement being critical, especially as we get into Scope 3 tracking which requires significant interaction with Tier 2 and 3 suppliers.
That said, I think you will find an earlier post here interesting regarding supplier engagement. The title is “Are you chasing solutions or solving problems? (Part 1 of 3)” – https://bit.ly/3FBnFRr
piblogger
February 2, 2024
You are spot on, Gary.
To underline the point you make, I will reshare my response to Stefano in this same discussion stream:
“What about reverberating impact beyond procurement’s traditional metrics to include other stakeholder metrics and vice versa?
Check out this post/case reference, and then ask yourself two questions:
1. Beyond procurement, what is the extended impact of my objectives, processes, and policies on individual agents within and external to the organization?
2. Conversely, what is the impact of both individual and collective agent objectives, processes, and policies on the procurement department?
Here is the link – https://bit.ly/3FBnFRr”
We need to finally stop using equation-based approaches to digital transformation – including the introduction of AI, and start using the agent-based model approach.
Stefano Sollazzo
February 2, 2024
I sincerely observe all this development and innovation with interest, but the thing that I find, as in the past, weak and dangerous for the real success of these innovations is the part relating to the quality of the data. data is already an enabling factor for any software, but for GenAI it becomes even more crucial because without it, the answers and scenarios created could be plausible but not necessarily true… and this is nothing but the antechamber of ‘disaster’.
piblogger
February 2, 2024
You make an excellent point, Stefano.
Let’s carve out the following excerpt from my post:
“This shift underscores the industry’s move towards integrated platforms over standalone modules. Fragmented workflows, scattered supplier information, and lack of full source-to-payment traceability are no longer acceptable.”
In response to Rich Sains post on LinkedIn post where he states “Procurement has a great story to tell – but often lacks the data to fully articulate it,” here is my response:
“What about reverberating impact beyond procurement’s traditional metrics to include other stakeholder metrics and vice versa?
Check out this post/case reference, and then ask yourself two questions:
1. Beyond procurement, what is the extended impact of my objectives, processes, and policies on individual agents within and external to the organization?
2. Conversely, what is the impact of both individual and collective agent objectives, processes, and policies on the procurement department?
Here is the link – https://bit.ly/3FBnFRr”
Siloed data in any form will undermine the promise of AI as it limits the understanding and accuracy of the individual and collective truth of all stakeholders.
That is why I have always advocated an agent-based versus equation-based model to achieve digital transformation success.
Thoughts?
Gary Hare
February 2, 2024
Jon – great post, so true. Trying to force-fit the technology to the problem is a losing proposition. In my experience (you and I are in the same age demographic), successful practitioner companies understood their organization, their issues and directed the vendors. The failed practitioner companies brought in the vendors, jammed in the technology, and when it failed, blamed the vendor (I’ve been that vendor.) Then brought in another vendor – rinse and repeat (been this vendor too.) And things like Scope 3 tracking and AI are completely different animals. The market hasn’t fully mastered the supposed simple stuff like catalogs, sales transactions, supplier master info yet – so how can they move to the next level required for these? As Stefano noted, the answer’s in the data, or more specifically, the data quality, which in many cases is a derivitive of a proper application of the technology, which only the elite practitioners have pulled off. The good news? Today’s technology stack (microservices, apis, etc.) is conducive to low cost, minimally invasive system to system integration, which vasty improves data quality in the long run. Clean up your data, I’ll clean up mine, and we’ll share. Simple right, haha?
piblogger
February 2, 2024
Your comment brought back memories of my dBase II programing days – you know, the one where if you added new line code or changed existing line code to add a feature, it would cause a previously working line of code to bug out.
The ability of Composable AI to introduce new “composable” procurement apps that address operational or functional system/user requirements on a modular basis independent of the main source code is a game changer.
This speaks directly to your point regarding how “low cost, minimally invasive system to system integration,” will “vasty improve data quality in the long run.”