Achieving Agility and
Speed with Concurrent
Leveraging Best-in-Class
Contract Management to
Drive Faster, Safer and More
Strategic Sourcing 2
Research from Gartner:
Don’t Assume You Have
to Use an S2S Suite to
Digitalize Procurement and
Sourcing 6
About Icertis 11
Contract-centric Sourcing
Welcome Letter
Contracts represent the ultimate In the following pages, we explore the
output of every sourcing event. advantages this approach offers in
Therefore, any digital transformation conjunction with Gartner’s insights into the
project for sourcing, procurement and broader advantages offered by best-in-class
supply chain must put contracts at the Contract Lifecycle Management systems, and
core to avoid pitfalls that come from conversely the drawbacks of sourcing suite
only addressing derivative projects. deployments.
At Icertis, we are working with
customers like Airbus and Daimler
to put contracts at the center of their
sourcing processes. Contract-centric
sourcing is a new paradigm that
leverages Icertis’ best-of-breed
contract management platform
to accelerate business, protect
against risk and optimize business
relationships.
Vivek Bharti, Icertis General Manager,
Product Management
 Leveraging Best-in-Class Contract
Management to Drive Faster, Safer
and More Strategic Sourcing

By Vivek Bharti Contracts Are the Foundation of Commerce

Executive Summary
Contracts are the foundation of commerce, governing every dollar in
and out of a business.
Many sourcing suite vendors include contract management software
as part of their offerings in an effort to accommodate the necessity of
contracts in the buying process. However, the functionality of these
contract management solutions is often too rudimentary to handle the
complexities of a company’s real-world requirements.
Paradoxically, this means software suites dedicated to sourcing
have relatively poor solutions for buy-side contracts. Poor contract
management functionality puts companies at risk of seeing their
tech deployments fail or at best give them marginal, cosmetic
improvements. And it prevents companies from pursuing
improvements in how sourcing organizations handle these
foundational documents.
By contrast, the Icertis Contract Management (ICM) platform is a best-
in-class Contract Lifecycle Management (CLM) solution with deep
sourcing functionality. The ICM platform is so powerful that it enables
an entirely new approach to procurement: Contract-centric sourcing.
Contract-centric sourcing is an approach embraced by leading
companies to accelerate and optimize the buying process while
reducing risk—meaning buyers no longer have to choose between
speed, cost, and risk mitigation.
According to researchers at the British Library, the written word
dates back to the fourth millennium B.C.E., when contracts between
buyers and sellers became too complex to recall simply by memory.1
That contracts gave rise to writing itself speaks to how central these
documents are to commerce: they define the value, the risks and the
opportunities of a commercial relationship, and just as it was in 4000
B.C.E., the terms of these agreements can be quite complicated and
hard to remember!
In today’s sourcing environment, every dollar, good or service into an
enterprise is governed by a contract. Indeed, contracts are the only
concrete output of the sourcing process, in which all proceeds for
each party are rooted.
In recognition of contracts’ centrality, many sourcing organizations
are investigating how they can digitize the contracting process. A
recent study sponsored by Icertis found that 68% of Chief Procurement
Officers surveyed said they planned to invest in contract management
software in the coming 12-18 months2; Gartner has reported that
inquires around Contract Lifecycle Management (CLM) are robust:
“Customers’ interest in CLM is stronger than ever and is a leading
topic raised by users of Gartner’s client inquiry service.”3
In an attempt to meet this demand, many sourcing suite providers have
folded contract management capabilities into their service offerings. For
sourcing organizations hoping to move fast in their digital transformation,
these solutions may be the intuitive choice for a CLM solution. After all, they
are provided by companies that focus on sourcing.

1
The New Yorker, “The Next Word: Where will predictive text take us?” 14 October 2019, John Seabrook
2
Connecting the Dots: Navigating Procurement Automation, WBR Research, August 2019
3
Gartner Inc., Market Guide for Contract Life Cycle Management, 17 December 2018, Kaitlynn Sommers, Patrick Connaughton

Achieving Agility and Speed with Concurrent Contract-centric Sourcing is published by Icertis. Editorial content supplied by Icertis is independent of Gartner analysis. All Gartner research is used with Gartner’s permission,
and was originally published as part of Gartner’s syndicated research service available to all entitled Gartner clients. © 2020 Gartner, Inc. and/or its affiliates. All rights reserved. The use of Gartner research in
this publication does not indicate Gartner’s endorsement of Icertis’ products and/or strategies. Reproduction or distribution of this publication in any form without Gartner’s prior written permission is forbidden. The
information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. The opinions expressed herein
are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used
as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner’s Board of Directors may include senior managers
of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and
integrity of Gartner research, see “Guiding Principles on Independence and Objectivity” on its website.

2
But such organizations should beware.
As Gartner reports in the enclosed report, “Don’t Assume You
Have to Use a Source-to-Settle Suite to Digitalize Procurement and
Sourcing”: “Even within the spend categories that are covered (at
least theoretically) by these suites, organizations with advanced or
industry-specific needs are struggling to make them work. This is
because no suite has enough functional depth across the board.
In order to be able to position their solutions as source-to-settle
suites, vendors have been very busy plugging the holes in their
offerings. Focus has been on breadth of functionality over depth of
functionality. All suites on the market today have their stronger and
weaker modules, and it’s often obvious where the vendor’s origin
lies. There are, for example, few suite vendors that started in supplier
management or contract life cycle management and, in these areas,
functionality is often very limited.”4
These contract management capabilities are often not natively
developed but acquired, leaving serious questions about how well-
integrated contracts, the ultimate source of truth for business, are
with the rest of the systems. Gartner reports: “Many of the S2S suites
in the market are the result of acquisitions. Others were originally
designed as stand-alone modules and have been integrated at a
later stage. This means that you cannot assume that data is being
reused and made accessible across modules, even if they are sold
as part of a suite.”5
As a result, contract management capabilities within the suites are
not as advanced as other offerings. In Gartner’s 2018 report “Critical
Capabilities Assessment for Strategic Sourcing Application Suites,”5
contract authoring and negotiation capabilities had, across the 12
vendors evaluated, the second-lowest average score among all
functionalities graded.6
The outcome of poor contract management capabilities are
many. In general, Gartner projects that suite solutions will see
widespread failures because they are not up for the task: “By 2022,
more than 50% of S2S suite deployments will have failed to meet
business expectations due to lack of functionality and rushed
implementations.”7
4,5,7
Gartner Inc., Don’t Assume You Have to Use an S2S Suite to Digitalize Procurement and Sourcing, 24 April 2019, Magnus Bergfors
6
Gartner Inc., Critical Capabilities for Strategic Sourcing Application Suites, 8 October 2018, G00351194
Furthermore, poor contract management capabilities preempt
sourcing organizations from finding improvements in the contract
management process. Instead, the modules reinforce old approaches
and thus entrench longstanding inefficiencies—namely, the practice
of leaving contracts for last in the buying process.7
According to a forthcoming report by Spend Matters: “Just as product
quality can’t be ensured by slapping on a quality control process at
the end of a manufacturing line, contract quality can’t be ensured by
having a sequential contracting process executed at the end of the
sourcing process. In both cases, there is waste, rework, delay, missed
dates, and higher costs.
“Unfortunately, this is the current situation within the sourcing process
– and with existing software applications.”
The Cost of Leaving Contracts for Last
To explore further, let’s consider the typical process followed by many
sourcing organizations today. A sourcing event begins with the buyer
issuing an RFx. The company then evaluates vendors who respond
on two criteria: technical and commercial capabilities. The vendor’s
technical capabilities relate to whether they will be able to truly fulfill the
buyer’s needs. Commercial capabilities relate to whether the vendor’s
price for its products or materials fit into the buyer’s profit models.
Once bids are in, the buyer ranks the proposals based on technical
and commercial capabilities and chooses a supplier. Only then, once
the supplier is chosen, do contract language negotiations begin. By
leaving contracts for last, these companies are introducing a huge
source of risk and delay at the very end of the buying cycle. When the
contract comes up for negotiation, any number of issues can arise to
delay the deal.
Legal, for example, may demand changes to the contract based on
which jurisdiction the supplier operates in. Since it is a contract, these
clauses will have to be negotiated with the vendor, who may respond
by changing the commercial terms of the contract. This back and forth
can dramatically slow or even derail the deal.
It’s also worth noting that these scenarios cause friction within the
organization, with finger-pointing between sourcing and legal on
who’s to blame when a deal goes sideways.
3
Using Contracts to Transform Your Sourcing Process
But if the above is an unideal state, it is an unideal state precipitated
by the fact that contracts have been difficult documents to manage as
truly digital assets, with data locked in dense blocks of copy that few
outside the legal department could understand.
What’s the alternative?
Major companies with complex supply chains including Daimler and
Airbus are addressing the above challenges with a new paradigm:
Contract-centric sourcing. Contract-centric sourcing leverages the
power of the AI-infused ICM platform to introduce contracts at the very
beginning of the sourcing process and makes contract compliance
a third pillar by which vendors are evaluated, next to technical and
commercial capabilities.
A buying scenario under a contract-centric approach goes as follows:
As part of the RFx, the buyer presents prospective vendors with all
the contract language they would like the vendor to agree to, along
with the typical specs for what product or service they need provided.
Along with pricing and technical specs, vendors submit proposed
redlines to the contract as part of the bid. This allows buyers to weigh
contract redlines during the selection. What’s more, the AI capabilities
also help the buyer and legal assess the impact of redlines on
their entitlements or simulate vendor obligations in the negotiation
process. With this approach, the contract becomes the natural output
of the sourcing process, rather than a troublesome coda.
Contract-centric sourcing is an approach enabled by technology.
Where contracts have long been confined to paper and filed away,
these valuable documents can now be digitized for real-time analysis
and collaboration. Online collaboration portals allow vendors and
buyers to work together across the globe on redlines and approvals;
with Artificial Intelligence (AI) trained on contract language, buyers can
quickly evaluate how submitted redlines will impact the commercial
outcomes of the deal.
Daimler’s outcomes have been striking. Using ICM to manage
relationships with 500,000 suppliers, the automaker has seen
contract turnaround time go from five weeks to one week and
improved compliance.
8-9
Gartner Inc., Don’t Assume You Have to Use an S2S Suite to Digitalize Procurement and Sourcing, 24 April 2019, Magnus Bergfors
4
“From sourcing to contracting we have gained speed, and it has
made us safer,” says Ulrich Ochmann, product owner, contracting,
NPS, Daimler. “We have our risks transparent, we have our process
transparent, and our buyers like the software. It’s easy to use. The
software guides the buyer through the process so the user always
knows what to do next.”
Why Suites Stand in the Way of this Vision
One may assume that a software suite focused on sourcing would
be able to facilitate a contract-centric approach—perhaps even
excel at it. But in fact, to return to the theme of our paper, the contract
management capabilities found in these suites are too rudimentary to
handle these requirements.
As Gartner puts it in the pages to follow: “If you use predominantly
standard, cross-industry processes, you might be able to leverage not
only [procure-to-pay], but also the e-sourcing and contract repository
modules of a single suite provider. Theoretically, if your organization
has no need for differentiating capabilities, you could digitalize
procurement and sourcing operations with one source-to-settle suite
as a system of record.”8
The inverse, of course, is: suite solutions will not accommodate the
differentiating capabilities required for a contract-centric approach.
What to Look for in a Contract Management Platform
So how should a company approach buying contract management
software? Gartner provides this guidance:
“As with all technology, the value you get from your investment is
directly correlated to the adoption of the solutions. In order to drive
adoption, you should focus on finding solutions that fit your buying
organization’s needs as closely as possible. This means that, in many
areas, it makes sense to consider alternative specialist solutions to
replace or — in some cases complement — the suite offerings. This is
particularly true if you have industry-specific or differentiating needs.”9
Icertis is focused on delivering the vision of contract-centric sourcing to
clients. Features of the ICM platform include:
• Deep supplier functionality: While we are focused on the
shortcomings of suite players here, it should be underscored that
among stand-alone CLM providers, supplier contract functionality
varies. Icertis offers sourcing-specific solutions in concert with the
flexibility to handle any type of contract in the enterprise.
• Customer pedigree: Every company will learn from its customers.
Icertis’ experience with Daimler, Airbus, Transurban and others
have provided a playbook for others to follow.
• APIs: The advantage suite solutions can claim is that all their
systems work seamlessly together (an oversold point in cases
where suites have been compiled through rapid acquisition of
niche players). Connectivity is vital, especially so for stand-alone
providers. Icertis’ robust APIs have provided it a strong track record
of integrating with ERP, P2P, and other buy-side systems.
Conclusion
As those first scribes knew six millennia ago, contracts are the
foundation of commerce. Just as they developed new technology
(writing) to take their contracts further, sourcing organizations today
must think hard about what technology can allow them to do.
Contract-centric sourcing is a tech-enabled paradigm that we at
Icertis believe will become a dominant model in sourcing, and
underscore the competitive advantage offered by a best-of-breed
CLM, as explored further in the whitepaper below.
Source: Icertis
5
 Research from Gartner
Don’t Assume You Have to Use an S2S Suite to
Digitalize Procurement and Sourcing
Interest in source-to-settle suites continues
to grow as vendors increase marketing and
sales efforts. But for most organizations
a single end-to-end suite strategy is not
realistic. Application leaders for procurement
and sourcing should use this research to
inform their application strategies.
Key Challenges
• Despite aggressive marketing, no vendor
offers a full source to settle (S2S) suite that
is best in class across all modules. This
means that deploying a full suite requires
significant willingness to adopt ways of
working within built-in best practices,
and/or willingness to compromise on
functionality. If too much compromise is
made, you could end up with a solution
that doesn’t fit your needs.
• Advanced and mature procurement and
sourcing organizations struggle to find a
single suite that meets their requirements.
Functional gaps and poor flexibility risk
causing low adoption.
• Organizations deploying multiple
applications struggle to overcome
integration challenges. Nonintegrated
stand-alone solutions cause duplicate
data entry, issues with data consistency
and poor visibility across the different
solutions.
Recommendations
Application leaders support procurement
and sourcing should:
• Automate nondifferentiating core
procurement capabilities by deploying
broader suites.
• Support differentiating capabilities by
selecting and implementing best-fit
solutions to maximize adoption.
6
• Minimize integration issues by leveraging
the general integration capabilities
your organization already has in place,
as well as the integration capabilities
of your procurement and strategic
sourcing vendors. This will help achieve
better visibility and transparency across
solutions, ensure compliance and drive
savings.
Strategic Planning Assumptions
By 2021, the major source-to-settle
providers will all offer extensive APIs and
rearchitect their solutions to provide unifying
“platforms,” rather than one-size-fits-all
solutions.
By 2022, more than 50% of S2S suite
deployments will have failed to meet
business expectations due to lack of
functionality and rushed implementations.
Introduction
Digital procurement is a hot topic, and
digitalization of procurement and sourcing
have become increasingly hyped. A quick
google search on “digital procurement”
provides 172 million hits, and the market is
fragmented with hundreds of application
vendors. But consolidation has started
and almost all major vendors are now
offering end-to-end source-to-settle suites.
These suites combine strategic sourcing
capabilities like e-sourcing and contract
management with transactional procure to
pay (P2P).
Even so, we are seeing few organizations
of any significant complexity that have
fully digitalized their spend management
processes, especially using a single suite. In
fact, in our research for the “Magic Quadrant
for Procure-to-Pay Suites,” only 59% of the
references use a single P2P suite. And of
those that do, most (64%) only use it for a
single region or country.
There are several reasons for the lack of full
suite adoption, including:
• Lack of support for multiple spend types:
Almost all the source-to-settle suites that
are available in the market were originally
built for indirect spend only. While a few
are increasingly able to manage direct
spend, most are not. Complex services
procurement is another area that is poorly
managed by these general-purpose
source-to-settle tools. For example, a
contingent workforce management
application needs to be able to manage
time reports and often also has to support
variable payments (like overtime) and offer
regulatory compliance to employment
laws. This has created a separate market
for applications specifically designed
for freelance management, contingent
workforce management and statement-
of-work procurement.
• Time to implement: It takes many years
— far longer than vendor marketing
suggests — to fully implement an
end-to-end-suite when taking change
management and process transformation
into account. When implementing a full
source-to-settle suite, or the equivalent
modules, you need to create a three- to
five-year plan since you should focus on
implementing one module at a time. Six
months to a year should be planned for
each module. For example, as per our
research for the 2018 Gartner “Magic
Quadrant for Procure to Pay Suites,”
the average implementation time is 7.8
months for a P2P suite. But we need to
consider that only 21% of the respondents
had deployed in multiple countries.
If your organization is complex, the
implementation is likely to take much
longer. This complexity could be defined
by the range of countries, having several
business units with different requirements,
the number of ERP systems in scope, and
many other factors.
 7

• Lack of functional depth: Even within the
spend categories that are covered (at least
theoretically) by these suites, organizations
with advanced or industry-specific needs
are struggling to make them work. This is
because no suite has enough functional
depth across the board. In order to be
able to position their solutions as source-
to-settle suites, vendors have been very
busy plugging the holes in their offerings.
Focus has been on breadth of functionality
over depth of functionality. All suites on
the market today have their stronger and
weaker modules, and it’s often obvious
where the vendor’s origin lies. There are,
for example, few suite vendors that started
in supplier management or contract life
cycle management and, in these areas,
functionality is often very limited.
• Poor intrasuite integration: Many of the
S2S suites in the market are the result
of acquisitions. Others were originally
designed as stand-alone modules and
have been integrated at a later stage. This
means that you cannot assume that data
is being reused and made accessible
across modules, even if they are sold as
part of a suite.
Regardless of whether you use a suite or a Analysis
specialist approach, you will probably need
to integrate your ERP solution as well. This Use a Broader Suite for
is necessary to make sure master data is Nondifferentiating Procurement
consistent, and that relevant financial data is
Capabilities
reported. ERP solutions also support some
There is obvious value in using suites
basic procurement functionality, so this could
that natively support bigger parts of your
be viewed as the most basic building block of
procurement and sourcing processes.
your procurement and strategic application
There are fewer integrations, a single
architecture (see Figure 1).
user interface to relate to, and data can
be reused across the suite. However, as
This research will help application leaders
mentioned above, the broader the suite
create a digital procurement and sourcing
becomes, the less likely it is that it will meet
application strategy that combines the
your requirements in every area.
benefits of a suite with the more advanced
capabilities of specialist solutions.
Figure 1. A Suite Approach Limits Functional Depth and Flexibility

• Existing solutions: In some areas like

accounts payable invoice automation,
organizations might already have made
software investments, meaning that there
is no business case for ripping out and
replacing existing applications with a full
suite. The same is true for many of the
strategic sourcing modules as well.

Only buying organizations with basic

requirements will be able to satisfy their
needs with a single source-to-settle suite.
If yours is a more advanced and complex
organization, you will struggle to digitalize
procurement and sourcing operations using
one end-to-end suite. You will need to create
a strategy combining multiple solutions
and balance this against the increased
complexity of integrating multiple solutions.

7
In order to understand where these broader
suites are applicable, buying organizations
need to identify what business capabilities
can be standardize using a commercial
of-the-shelf application. To help with this
pace layering can be used. Pace layering
is a methodology to support application
strategy design by identifying the level of
differentiation of the different business
capabilities (see Figure 2, and Note 1 for
our definition of pace layering, and “What Is
Gartner’s Pace-Layered Application Strategy
and Why Should You Use It?”).
In this model, the new “core procurement
suite” system is a system of record. Its
processes are not differentiating to the
organization. For most organizations, P2P is
a good candidate for being a standardized
system of record. Few companies have
unique requisitioning and invoice approval
processes, but even so, if you have complex
invoice management requirements, you
might find that many of the P2P suites will
struggle to meet your needs.
One example of complex invoice
requirements could be aggregated invoices
that need to be allocated to multiple cost
centers. Another example is the ability to
match multiple invoice lines against a single
purchase order. Additionally, many P2P
solutions (especially those with origins in the
e-procurement space) are only designed
to manage invoices where the purchase
order has been created within the suite.
This means that they are not suitable for
organizations with multiple purchase order
source systems. Finally, organizations
with needs like budget checking and/or
commitment control, and that encumber
based on requisitions, might require tighter
integration to an ERP or financial system. In
these cases, the e-procurement capabilities
of your ERP should be considered.
8
Figure 2. The Gartner Pace-Layering Model
If you use predominantly standard, cross- Support Differentiating Capabilities
industry processes, you might be able by Selecting and Implementing
to leverage not only P2P, but also the
Best-Fit Solutions
e-sourcing and contract repository modules
As with all technology, the value you get
of a single suite provider. Theoretically, if your
from your investment is directly correlated
organization has no need for differentiating
to the adoption of the solutions. In order to
capabilities, you could digitalize
drive adoption, you should focus on finding
procurement and sourcing operations with
solutions that fits your buying organization’s
one source-to-settle suite as a system of
needs as closely as possible. This means
record.
that, in many areas, it makes sense to
consider alternative specialist solutions to
To determine how much of a suite that is
replace or — in some cases complement —
suitable to deploy, it is critical to inventory
the suite offerings. This is particularly true if
your business capabilities, and define where
you have industry-specific or differentiating
you are willing to standardize. The more you
needs. In the case of strategic sourcing
are willing to standardize, the more of a suite
applications, there is also a good case to be
you are likely to be able to use. Given the
made for using more specialized solutions.
uneven capabilities of most suite vendors,
however, you might need to make sure that
Specialized solutions could include:
any specific solution meets your needs. This
is true even if you are willing to standardize
• Spend analytics: Until your organization
your processes. Just because you are willing
has standardized your P2P process on
to standardize your processes doesn’t mean
one platform, and the vendor can deliver
you should be willing to adapt them to a
functioning real-time analytics, using a
specific vendor’s inbuilt best practices.

stand-alone spend analytics solution
is often a better option. The specialists
typically have better capabilities to extract
and upload information from multiple
systems, and usually offer additional add-
on capabilities and/or services. Specialists
in the spend analytics area include a
choice of vendors ranging from advanced
solutions like Sievo, SpendHQ or AnyData,
to more affordable options with basic
capabilities like Spendency.
• E-sourcing: These solutions have been
around for more than 20 years. Despite
that, we have seen surprisingly low
levels of adoption. This is partly due
to a lack of commitment to e-sourcing
from the buying organization, but is also
the result of the poor ease of use and
inflexibility of many applications. In the
last few years, however, new sourcing
providers (like ScoutRFP and Bonfire)
have attracted clients with their focus on
ease of use. Some organizations need
a more advanced sourcing optimization
solution, for complex sourcing categories,
alongside an easier-to-use general-
purpose solution. Examples of complex
sourcing categories include packaging
and logistics. However, the need for
multiple sourcing solutions is likely to
change over the next two to three years.
Progress in advanced analytics and
artificial intelligence (AI) will enable a
single solution to support both basic
and more advance sourcing scenarios
that require optimization without
compromising on ease of use.
• Contract life cycle management (CLM):
The CLM space also has its unique
conditions. Many organizations are
looking for solutions that can serve as
enterprise CLM systems in that they are
required to manage all types of contracts.
These could include sell-side contracts,
employment contracts, and every other
type of contract used by the organization.
This is not something that the CLM
modules built into S2S suites do well.
9
Additionally, stand-alone CLM solutions you might need to be able to exchange
typically have stronger contract authoring information around forecasting, capacity
capabilities. planning and quality, for example.
• Supplier management: In the supplier Leverage Existing Integration
management space, you are likely to Capabilities
need multiple solutions since this is a set
One of the main reasons that buying
of processes that no single solution covers
organizations are attracted to the full suites
well. The broader suites typically have
is to minimize integrations. While this is
decent support for supplier information
understandable, it can’t be prioritized over
management, but there are more
having the right solutions.
advanced solutions in this space. These
are more flexible, are better suited to
Ideally your organization has integration
serve as supplier master data system,
specialists and a capability-led integration
and are often used to improve — and
strategy. You should work with the
sometimes outsource — the supplier
integration strategy empowerment team
onboarding process. There are also
(ISET) to make sure your requirements are
solutions that are focused on various
supported by the integration strategy. You
types of supplier risk management
should also craft an integration strategy
beyond what a suite can offer.
that is based on the capabilities required
to satisfy not only your current and near-
On the P2P side, there is often a need for
term business needs, but potentially
complementary specialized solutions. Tax
your longer-term needs as well. Further,
engines and local e-invoicing support is
Gartner recommends the use of the
sometimes necessary to ensure compliance
hybrid integration platform (HIP) capability
to specific local regulations. There is also often
framework for determining how to support
a need for additional support for scanning
these requirements.
documents and optical character recognition
(OCR) interpretation of paper invoices, since
Decide, in concert with your ISET, who is in
not all suppliers are ready to send electronic
charge of the integration delivery. It could
invoices. This means that you have to ensure
be the ISET itself, or it could be the sourcing
that your P2P solution either supports these
and procurement implementation team. The
needs, or can offer third-party solutions or
first approach is likely to be more “efficient,”
services that meet your requirements.
but it may take longer than you would like.
The second is likely to be more “agile,”
Some specific spend categories also require
but it requires you to learn the integration
functionalities beyond what most P2P suites
methodology and how to use the HIP
offer. One example, services, is often one of
the biggest spend categories, but is typically
To avoid a tactical approach and assist the
not well managed by a general-purpose
ISET, you should first create a table of your
P2P (or source-to-settle) suite. Here you don’t
integration needs that includes:
necessarily create a purchase order, but
rather match the invoice against a calculated
• The name of the project and a
cost based on a prenegotiated rate and
description.
an approved time report, for example. This
means that it might be necessary to deploy a
• The integration scenario: The types
specialized solution for services procurement.
of systems requiring integration; for
example, application-to-application
Direct materials is another spend category
(A2A), B2B, cloud service, mobile app and
with more complex requirements. Here
IoT integration.
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• Business priority: Working with integration
leaders, agree on the overall priority of
this project with respect to the others in
the backlog.
Second, you should elaborate each of
the projects to understand the integration
capabilities that will be necessary. Do this
by identifying the integration flows, and
augment each flow with the integration
pattern required to implement it.
The three common patterns are:
• Composite application
• Multistep process
• Data consistency
In some of the cases, you should leverage
your vendor’s integration capabilities.
More modern applications, especially the
specialists, are built with integration in
mind. This means that they are architected
with APIs that enable simplified integration
with other applications. And since they are
almost exclusively delivered as multitenant
software as a service, vendors can create
and maintain these integrations on behalf
of their clients. We are already seeing the
major vendors rapidly building up their
ecosystems of preconnected partners. But
use of these “out of the box” integrations
should be agreed with the ISET to make sure
they do not break security or compliance
policies. The ISET should also monitor
these prepackaged integrations from a
performance perspective, and from life cycle
management perspective, to make sure they
are upgraded/updated when needed.
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This creates a conflict of interest for S2S suite
vendors. Since they offer end-to-end suites,
there is an obvious reluctance to integrate
competing products into their suites. This
has led to most of the preintegrated partners
being complementary rather than alternative
solutions. If you are evaluating a suite, you
should include the ability to integrate the
solutions of your choice as a key decision
criterion. This will put pressure on vendors
to support and manage these types of
integrations.
Evidence
The insights in this report are based on
more than 3,000 inquiry discussions
on procurement and strategic sourcing
applications between March 2017 and
March 2019. Additionally, research from
two Magic Quadrants for P2P Suites and
two Magic Quadrants for Strategic Sourcing
Application Suites was also leveraged.
Note 1
Overview of the Three Pace Layers
Systems of Record
Usually found in well-understood
business capabilities with a clear focus
on standardization and/or operational
efficiency.
The rate of change is low, because the
processes are well-established, common
to most organizations, and often subject to
regulations or recommended practices.
Systems of Differentiation
Typically related to business capabilities
that enable unique company processes or
industry-specific capabilities (these sustain
the company’s competitive advantage).
They have a medium life cycle (one to three
years), but need to be reconfigured frequently
to accommodate changing business
practices or customer requirements.
Systems of Innovation
These are new applications that are built
on an ad hoc basis to address emerging
business requirements or opportunities.
These projects typically have short life
cycles (up to 12 months) that involve an
experimental environment for testing new
ideas, and that identify the company’s next
competitive advantage. Once the experiment
is proved useful, it is pushed into the systems
of differentiation.
Source: Gartner Research, G00385357, Magnus Bergfors,
24 April 2019
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