Contract-management/ERP pairing putssavings back on the books
By Staff -- Manufacturing Business Technology, 8/1/2006 12:00:00 AM
Boston-based AberdeenGroup estimates 80 percent of B2B transactions are governed by contracts, yet it's been estimated sloppy procedures are costing upwards of $150 billion a year in missed savings opportunities.
Good contract-management controls reduce administrative and material costs, shorten contracting cycle times, enhance procurement decisions, and diminish operational and regulatory risk. Companies that integrate contract-management solutions with transactional systems experience much better contract compliance than those that do not.
That's exactly why contract-management packages that automate and manage contract creation, negotiation, and administration are the current solutions with sizzle—especially when integrated with ERP.
Contract management falls under the supplier relationship management (SRM) umbrella, and vendors have taken note. Most recently, SRM vendor Emptoris bought diCarta for its contract-management capability, and promptly rolled it into Emptoris 6.
With its Powered by SAP NetWeaver status, Emptoris also has an out-of-the-box integration package for Emptoris 6 that will link directly to SAP R/3 procure-to-pay processes, further simplifying contract-to-transaction integration.
"Customers want the ability to source, manage contracts, and analyze spend in a way that is tightly aligned to their ERP systems," says Ammiel Kamon, Emptoris senior VP. "This package gives them that."
Meanwhile, SAP is strengthening its own contract-management offerings with its purchase of Frictionless Commerce.
What this acquisition means for buyers remains to be seen, says Sudy Bharadwaj, Aberdeen VP of global supply management.
"SAP users have been demanding SRM capability, but what gaps and overlaps will there be when integrated with SAP's existing systems, and what is the road map for filling those gaps," he asks.
The acquisition does give SAP a good entry point to the midmarket, adds Bharadwaj, but best-of-breed SRM and contract-management vendors are by no means out of the game. "You always need to be cognizant of large enterprise players in the market, but a pure-play company does have an opportunity here," he says.
Ariba, Procuri, and Ketera all have contract-management modules, and tartet the midmarket with on-demand or hosted solutions. Bharadwaj also expects more ERP vendors to add contract management.
