Shared Marketplaces Increase Procurement Power
August 21, 2009By Scott Walls
Organizational marketplaces are either dedicated or shared. Dedicated marketplaces provide purchasable content to one SRM application, whereas shared marketplaces provide the same purchasable content to multiple SRM applications (regardless of vendor – SAP, Oracle, PeopleSoft, etc.). Dedicated marketplaces have long been the standard, but newer, shared marketplaces are allowing consolidated purchasing organizations to negotiate cross-organizational purchasing content and broadcast that pre-negotiated content to all sub-organizations simultaneously. For example, the State of Georgia negotiates contracts at the state level and uses SciQuest’s Spend Director to broadcast that content to its 123 agencies across many different applications and instances (4 major instances of PeopleSoft alone).
Dedicated Marketplaces
Organizational marketplaces being accessed by a single SRM application are referred to as “dedicated marketplaces”. In fact, the term “organizational marketplace” implies a one-to-one relationship between the marketplace and the SRM application accessing it.
All dedicated marketplaces share the following characteristics:
- Instances – accessed by one SRM instance/application.
- Data Mappings – one-to-one mappings of shiptos, suppliers, and contracts between the marketplace and the SRM application.
- Reporting – detailed acquisition reporting comes from SRM application.
- Order Transmission – supplier details stored in SRM application and orders transmitted from SRM application.
Shared Marketplaces
Organizational marketplaces being accessed by multiple SRM applications are referred to as “share marketplaces” (i.e. the marketplace is being shared by multiple SRM applications). Shared marketplaces are a new, more complicated, marketplace model due to the content being synchronized across multiple applications (multiple mappings for suppliers, shiptos, contracts, etc.). This model has been created to support the aggregation of purchasing power across multiple sub-oragnizations. Shared marketplaces allow multiple SRM applications, regardless of vendor, to access the same purchasable content (see Figure 1 below). Best of breed procuring organizations are using shared marketplaces to aggregate/leverage spend across organizations/firms/agencies in an effort to gain dramatic efficiencies.
All dedicated marketplace share the following characteristics:
- Instances – accessed by multiple SRM instances/applications.
- Data Mappings – one-to-many mappings of shiptos, suppliers, and contracts between the marketplace and the SRM applications.
- Reporting – detailed acquisition reporting comes from the marketplace (serves as consolidated view across SRM instances/applications).
- Order Transmission – supplier details stored in marketplace and orders transmitted from marketplace.
NOTE: smaller organizations/agencies who do not have traditional, open architecture SRM applications may view the purchasable content via the marketplace’s “window shopper” mode.
Figure 1 Shared Marketplace Model
One Virtual Marketplace Being Shared by Multiple SRM Applications
About SRM Plus
SRM+ is a boutique procurement business consulting firm. We provide procuring organizations with the strategic and tactical consulting services required to dramatically reduce operational expenses, create revenue streams (1 million per every 200 million in spend), and decrease their Cost Of Goods Purchased (COGP). Whether defining a strategy, creating measurable objectives, designing / deploying solutions, or creating a continual improvement framework, SRM+ wants to turn your cost centers into cash centers. Visit us at www.srm-plus.com.
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