E-sourcing market evolves rapidly

The e-sourcing market is rapidly evolving and promises a robust opportunity for both software and service vendors, according to IDC, which has forecast that combined e-sourcing/supplier management/e-procurement service revenues will increase to 20 per cent of the total supply chain service market in 2004 -- up from four per cent in 1999.

E-sourcing is emerging as a foundation for the success of an e-procurement implementation. Because of the complexity of procurement business processes, companies are turning to both service providers and software vendors to get a combination of strategic business advice, implementation services, and powerful software tools that enable them to rationalise, automate and manage the up-front sourcing process, IDC analysts explained.

According to IDC, the major benefits of e-sourcing are its abilities to address the difficulties of strategic sourcing assessment, automate most routine tasks, provide spending and category management visibility and control, maintain sourcing history, and transfer best practices into everyday purchasing operations. In the near term, IDC expects not only management consulting but also Internet services and e-marketplace services providers to include strategic sourcing analysis and implementation of e-sourcing tools in their offerings because their clients will increasingly realise that to derive maximum value from e-procurement, they need to conduct sourcing analysis.

As the e-sourcing market rapidly evolves both software and services firms should develop joint offerings and go with a single solution to market, IDC believes. Achieving competitive advantage and market share in the e-sourcing market will require creativity and sound partnerships. e-sourcing tools alone have limited value if not backed up by sourcing and industry expertise of consultants.

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