Leaders Already Come Out On Top In A Young Procure-To-Pay Market

Over the past two decades the procurement process has undergone significant change, transitioning from a paper-based order process to a strategic business function. The tools of procurement have also changed, reflecting the larger acceptance of technology and computerization in B2B relations overall. Beginning with the development of e-purchasing and catalog management, e-procurement tools have matured with integration of e-invoicing and invoice automation, creating whole procure-to-pay (P2P) suites. The software is gaining traction, whether in response to regulation – such as electronic public procurement requirements – or due to industries experiencing high degrees of cost-reduction pressure, like the automotive industry.

In an effort to better understand the growing P2P market and gain insight into products offered, technology researcher Gartner developed a set of criteria to compare today’s P2P vendors. The recently released “Magic Quadrant for Procure-to-Pay Suites for Indirect Procurement” evaluated – software providers, categorizing these vendors as leaders, visionaries, niche players and challengers. Evaluations were based on qualitative assessments of the services based on surveys of the vendors and their customers. Rankings were calculated using two main factors: ability to execute and completeness of vision. Product and service weighed heavily in execution scores, though Gartner took into account the youth of the P2P software industry and the ongoing search to define best practices and user needs. Still, scores weighed innovation and market knowledge heavily.

The four vendors classified as leaders – Basware, Ariba, Coupa and SciQuest – all received high scores for customer satisfaction and their offering of a robust set of tools covering the four core functions of P2P (e-purchasing, catalog management, e-invoicing and Accounts Payable Invoice Automation). Additionally, the leaders all maintain a global client base across various industries. The report cites the regional nature of choosing a P2P provider, as many organizations prefer to work with vendors in their home country. Gartner expects global scale will be a marker of leadership in the space over the next several years as vendors establish themselves as global leaders with the ability to support large P2P deployments in multiple countries.

P2P tools can also help bridge the gap between procurement need and finance teams. Linking procurement and finance functions in one holistic approach benefits both teams, the Gartner report pointed out. Previously, procurement and finance teams would select individual tactical tools to assist with e-procurement and e-invoicing, while a single P2P solution could fulfill both needs.

There is one area where Niche Players, Challengers and Visionaries can upend leading P2P providers. A point of weakness, Gartner found, is the ability for P2P software to manage multiple distinctive work streams. Gartner showed the current “poor support” of many P2P vendors of the work-stream-specific categories. To speed mass adoption, P2P will need a way to support businesses and industries where goods, services and the ordering process all have different characteristics. The knowledge of Niche Players with specialized knowledge of particular industries or regions can provide intelligence on how to design specialized solutions.

Future leaders in the P2P space will capitalize on technological innovations, according to Gartner. Cloud-based software and mobile capabilities have changed how and where work is done. Advantages of cloud-delivered tools include fast implementation times, ease of supplier collaboration and onboarding and the ability to introduce improvements and innovations quickly and easily. Mobile integration is now a basic requirement for successful software as the workforce becomes increasingly mobile.

Gartner’s evaluation of the P2P landscapes highlights the need for both vendors and customers to take an end-to-end approach. Leaders in the space aim to offer holistic approaches that are global and industry agnostic. As best practices and user needs change, vendors must stay nimble to adjust as needs change.