A Resolution to the Classic End-to-End vs. Best-in-Class Debate
- Procure to Pay
- Source to Pay
I’ve been working in the IT industry for 20 years and one of the recurring themes continues to be the “end-to-end” versus “best-in-class” saga.
Everyone seems to have an opinion, but until recently, you couldn’t love both.
End-to-end versus best-in-class is an argument that lately came to the fore in procurement, where end-to-end solution means a complete suite across your entire procurement spectrum, from source-to-pay.
The alternative is to select and invest in a best-in-class software (sometimes referred to as a “point” solution) to do each particular task or process on the spectrum, and then attempt to piece them all together.
Spend Matters provided their insight into this debate. You can read more from them here!
Procurement software is a major investment, and you will need to work with your IT department, possibly an external consultant to help you to make the right choice.
You should take into account what you have now (your legacy systems) and upcoming investments in other areas and functions of the business.
Consider the total cost of ownership, not just the upfront investment.
When to go for Best-in-Class
The main benefit of a best-in-class software solution is the depth of its functionality. Think of it as an inch wide and a mile deep.
Because best-in-class software is hyper-focused on one area it offers robust capabilities and features to address specialized needs. That means it is absolutely essential that it should be capable of easy integration with other systems.
The promise of vendors of best-in-class software solutions is that you can custom-build a software suite with exactly the solutions each area of your business needs, with focused functionality in every area.
This is why they are often loved by end users. What they see is what they want. “I work in sourcing, so I want a sourcing solution.”
On the other hand, depending on your organization and your industry, it’s possible that you may end up paying for mile-deep functionality when you really only need to dive down ten feet.
A further argument in favor of best-in-class is that you can expand capabilities on your own terms.
They are scalable so you can start with the software that addresses your most pressing area of need and then add additional capabilities when the time is right.
For example, once you have sorted out sourcing, you look for the best specialist provider of contract management software.
Rather than buying everything up front, you can incorporate other best-in-class solutions as your business’s needs change and your budget allows.
However, integration becomes more of an issue because each best-in-class system has its own data dictionary, data formats and other sources of incompatibility that can make seemingly simple integrations, difficult.
And when it comes to several systems, the problems multiply.
It’s likely that you will need to employ a specialist firm of systems integrators to make it work, and even then, the solution may be unstable, processes may not be streamlined, and visibility across all systems rather limited.
When to go for End-to-End
An end-to-end solution can fulfill every operational need for a specific business function, in this case procurement.
Typically, this is thought of as a ‘mile wide and an inch deep’, but this isn’t really the case anymore.
A study from Spend Matters shows that many end-to-end suites offer as good functionality or better than best-in-class providers!
Companies that choose end-to-end solutions should pay attention to overlap in what the full-service solution offers compared to the solutions they already use.
For example, ERP systems may already offer some limited procurement functionality that can be shifted to a source-to-pay implementation.
A further advantage of an end-to-end solution is the avoidance of disputes between various point system vendors when things break down or go wrong, perhaps because there is no clean transfer of data between the contracts management system and the procurement system.
With a source-to-pay implementation you only have to deal with one support desk, no jumping around for fragmented answers.
End-to-end software solutions should therefore be used when there is an obvious solution that can streamline processes and provide global visibility through the use of shared data.
And that is increasingly the case these days as organizations seek to manage source-to-pay functionality holistically and seek to gain insights through spend analytics software to enable continuous improvements.
End-to-end solutions can also be useful even when there is functionality overlap with existing solutions when the end-to-end software adds more value than existing point solutions or legacy systems like ERP.
The Best of Both Worlds, and Finally, a Winner
Since the advent and development of SaaS suites, you don’t have to choose between the two extremes.
If you aren’t ready for the whole shebang, look for an end-to-end, source-to-pay but modular software solution, and invest in the modules that best suit your immediate needs.
You can then expand your system horizontally, from the same supplier, so there are no integration issues.
Some vendors, including JAGGAER, offer strong functionality and depth of expertise across the entire source-to-pay spectrum, often even better than the “best-in-class” providers.
At the end of the day. What’s important is that you find the right solution for your organization’s needs. Doing your research and figuring out your long-term strategy is key.
In my mind this debate has a clear winner, but you don’t have to take my word for it. You can read more in this free white paper from Spend Matter’s on the topic!