As a veteran observer of the procurement technology landscape for three decades, I’ve witnessed numerous waves of innovation sweep through the industry. The advent of AI is perhaps the biggest yet, and changes everything for what is possible in the procurement space. The recent Forrester Waveâ„¢ report on Supplier Value Management (SVM) Platforms for Q3 2024 captures the changes in this landscape that all CPOs need to be aware of and leverage as a part of their transformation agenda.
The Evolution of SVM: More Than Just Cost Savings
Before diving into the vendor landscape, it’s crucial to understand how the SVM space itself has evolved. According to Forrester’s report, SVM has transcended its traditional role of cost-cutting. Today’s SVM platforms are expected to enhance the purchasing process, optimize supplier management, drive sustainability, and transform procurement roles to ensure successful business outcomes.
This shift reflects a broader trend in business: procurement is no longer just a back-office function but a strategic contributor to organizational success that aspires to be a profit center for the organization at large. As Forrester notes, “Organizations now integrate sourcing and procurement with their strategic vision at the highest levels, making SVM technology a must-have alongside CRM, enterprise resource planning (ERP), and human capital management (HCM).”
The Changing of the Guard: New Leaders Emerge
The Forrester Wave report has revealed a reshuffling of the deck in the SVM space. Traditional heavyweights are finding themselves in unfamiliar territory, while innovative players are surging to the forefront. The secret sauce and main differentiator seems to be how well AI capability is harnessed to enable SVM success for the enterprise.
The New Top Trio: Zycus, Coupa, and Ivalua
The Forrester Wave report highlights a new triumvirate at the forefront of the SVM space: Zycus, Coupa, and Ivalua. Each of these vendors brings unique strengths to the table, reshaping the competitive landscape.
The report really paints Zycus ahead of the pack, and it’s clear that their leadership position lies in their headway in innovation, and particularly in the realm of artificial intelligence. The Merlin AI suite, was launched in 2019, long before the AI hype began. Merlin AI, which is now powered by Open AI (Generative AI), is touted by the report as pushing the boundaries of what’s possible in business spend management. Zycus interestingly is the first amongst equals on the horizontal axis of the Forrester Wave, indicating a strong position in terms of strategy and innovation. Its forward-thinking approach and investments in cutting-edge technologies have positioned it as a visionary in the leader’s space.
Coupa has been a long-standing leader, maintains its strong position with its comprehensive platform and focus on user adoption. However, they have experienced a precipitous fall in rankings and performance since the 2022 Forrester Wave report, indicating perhaps greater focus and innovation needed in the AI and SVM space. Yet, the company’s emphasis on community intelligence and spend optimization continues to resonate with many enterprises.
Ivalua rounds out the top three with its flexible and scalable solution suite. The company’s strength lies in its ability to cater to organizations which require highly customized deployments and have the patience with the longer implementation timelines that such customizations require.
While all three vendors demonstrate solid capability and leadership, it’s clear from the report that Zycus’s momentum in innovation and AI is what gave them their pole position ranking in this analysis.
Legacy Players: Adapting to New Realities
Interestingly, some of the industry’s long-standing giants like SAP Ariba and Oracle have found themselves edged out in the ‘Contender’ category. This shift speaks volumes about the pace of innovation in the SVM space and the changing priorities of procurement leaders. Possibly, these IT behemoths are strongly focused on their core business of ERP solutions and SVM remains as an afterthought in their strategy. However, it’s worth noting that these companies still have a significant market presence, and their market position could change over time.
The AI Revolution: More Than Just a Buzzword
Artificial Intelligence isn’t just a feature anymore; it’s the cornerstone of modern SVM platforms. AI capabilities need to be seamlessly integrated across the entire SVM suite. From automating routine tasks to providing predictive analytics, AI is redefining what’s possible in procurement. While AI is crucial, the human element remains irreplaceable. The most successful SVM platforms strike a delicate balance between cutting-edge technology and user-friendly interfaces. In reading the report, Zycus’s Merlin AI capabilities seem to best embody these enterprise capabilities that CPOs need for their procurement transformation agenda.
Customer-Centricity: More Than Just Lip Service
In my conversations with CPOs around the world, one theme consistently emerges: they want a technology partner, not just a vendor. The Forrester Wave report seems to echo this sentiment, with customer satisfaction playing a crucial role in the rankings. While analyst reports are invaluable, nothing speaks louder than customer feedback. The report highlights positive customer feedback for several vendors, underscoring the importance of real-world value delivery.
Gartner’s Magic Quadrant: The Next Bold Step?
Gartner’s Magic Quadrant for Strategic Sourcing Application Suites has long been a cornerstone of procurement technology evaluation. Last year, Gartner took a courageous step by streamlining their leadership quadrant, which had previously been crowded with five vendors. This bold move saw several long-standing players relegated to lower quadrants; a shift now mirrored in Forrester’s recent Wave report. It was a commendable effort to realign their analysis with the rapidly evolving SVM landscape.
However, the industry doesn’t stand still. The question now on everyone’s lips is: What’s next for Gartner’s Magic Quadrant?
Having spoken with dozens of CPOs in the wake of the Forrester Wave report, there seems to be a growing consensus that the next logical step is recognizing the new leaders who are shaping the future of SVM. Particularly, there’s considerable buzz around Zycus’s position. Many industry insiders are wondering if keeping Zycus out of the leadership quadrant truly reflects the current state of the market.
As someone who has closely followed both Gartner and Forrester over the years, I’ve noticed that Forrester often serves as a leading indicator of market shifts. Their willingness to shake up the status quo in this latest Wave report suggests that we may be on the cusp of a broader industry reassessment.
Gartner now faces a challenging decision. On one hand, they’ve shown they’re not afraid to shake things up, as evidenced by last year’s restructuring. On the other hand, elevating new leaders to the top quadrant is no small feat, especially when considering the potential pushback from established players with significant legacy presence and formidable marketing budgets.
The key question is: Will Gartner continue the trajectory they started last year? Will they take the next bold step in reshaping their Magic Quadrant to reflect the new order in SVM?
It’s a delicate balancing act. Gartner must weigh market realities, customer feedback, and vendor capabilities while maintaining the integrity and relevance of their analysis. As an industry observer, I’m keenly awaiting their next move. Will they bite the bullet and potentially ruffle more feathers? Or will they take a more conservative approach?
One thing is clear: the SVM market is watching closely. Gartner’s next Magic Quadrant could either confirm the shifting tides indicated by Forrester’s Wave, or it could present a contrasting view that would certainly spark intense debate in procurement circles.
As we await Gartner’s next publication, one can’t help but wonder: Is there more than meets the eye in their evaluation process? Or are we on the cusp of witnessing another bold step in creating a new order in the SVM space?
Whatever the outcome, it’s an exciting time for the SVM market. These analyst reports, with their agreements and disagreements, ultimately drive the industry forward, pushing vendors to innovate and improve. And in the end, that’s a win for procurement professionals everywhere.
Looking Ahead: The Future of SVM
As we look to the future, several trends are clear:
- AI and machine learning will continue to be major differentiators
- Integration and unified platforms will become the norm, not the exception
- Cloud-native solutions will dominate the landscape
- Customer-centricity and ease of use will be key decision factors
- Sustainability and supply chain resilience will be increasingly important
A Word to the Wise
For CPOs and procurement leaders evaluating SVM solutions, my advice is clear: don’t be swayed by past reputations alone. The market is evolving rapidly, and yesterday’s leaders may not be equipped to solve tomorrow’s challenges. Look for vendors that are investing heavily in innovation, particularly in AI and cloud technologies, while also delivering on the fundamentals of usability and integration. Remember, with SVM, you are not looking for a quick fix for today’s problems; you are paving way for competitive advantage at least for the next decade.
The Bottom Line
The latest Forrester Wave report isn’t just another analyst evaluation; it’s a wake-up call for the entire industry. We’re entering a new era of Supplier Value Management, one where innovation, integration, and customer-centricity reign supreme. Vendors that have positioned themselves at the forefront of these trends are poised for continued success.
As for other industry analysts, including Gartner, the writing is on the wall. The market has spoken, and it’s time for evaluations to reflect the new reality of the SVM landscape. The leaders of tomorrow are already here today, and they’re reshaping the future of procurement technology.
In this dynamic environment, one thing is certain: the only constant is change. And those who embrace it will be the ones who thrive in the new world of Supplier Value Management, navigating the journey to transform the procurement function into a value-added center of profit for the enterprise.
