Amidst a flurry of activity thus far in 2008, one of the most interesting highlights in the Global Supply Management sector to date has been the launch of the Zycus Spend Management Suite 5.0 . . . .

1. © 2008 Aberdeen Group. Telephone: 617 854 5200
June, 2008
Lights, Camera, Action: Zycus Takes the
Sourcing Stage
Amidst a flurry of activity thus far in 2008, one of the most interesting
highlights in the Global Supply Management sector to date has been the
launch of the Zycus Spend Management Suite 5.0 and its two new
modules, Zycus iPlan and Zycus iSource, respectively. The latest Zycus
release builds upon its strong spend data management legacy to offer broad
strategic sourcing capabilities and is a bold move into the highly competitive
world of e-sourcing. According to the January, 2007 Advanced Sourcing and
Negotiation Benchmark Report, enterprises that employ advanced sourcing
strategies are driving innovation and building stronger supplier relationships
by making better, more-informed decisions. And they are certainly saving
money (Table 1).
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Table 1: E-Sourcing Benchmarks
Impact of Zycus' New Release
Zycus' offerings are a welcome
addition to a sector of the
marketplace (e-sourcing) that
has seen significant contraction
and consolidation in recent
years. Enterprises currently
considering an enterprise-level
e-sourcing solution should
consider Zycus iSource and
iPlan. Zycus should already be
on the short-list of providers
for enterprises looking for
spend analysis solution.
Performance Area Average Result
Formal sourcing processes established 72%
E-sourcing application in current use 64%
Percent of spend that is e-sourced 20%
Average identified savings (per event) 11.9%
Average realized savings (per event) 9.4%
Source: AberdeenGroup, January 2007
Introducing Zycus Spend Management 5.0
Zycus' latest release broadens its Spend Data Management solution
footprint by introducing two new Strategic Sourcing modules, Zycus iSource
and Zycus iPlan. Zycus iSource is an e-Sourcing platform that offers e-RFx
processing, supplier bid evaluation, and multiple e-negotiation techniques.
The module also utilizes Web 2.0 technologies, interactive graphical
displays, and a collaborative workflow to present a usable and intuitive
interface. Zycus iPlan automates the strategic sourcing planning process
with a toolbox of features to help sourcing professionals profile categories
and determine the best sourcing strategy.
E-Sourcing: Impact and Performance
Considering the benefits seen by the average e-sourcing program, it is
surprising that more than one-third of all enterprises (including 20% of all
large enterprises) do not currently utilize e-sourcing. Early challenges in
developing and maintaining an enterprise-wide e-sourcing program were
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Zycus' Spend Management 5.0
Capabilities offered by the
modules in the new Zycus suite
to enable the identification,
planning, and execution of
strategic sourcing
opportunities:
√ Zycus AutoClass - Spend
data classification module
√ Zycus Actionable Analytics -
Spend analysis and reporting
module
√ Zycus iPlan - Sourcing
strategy and planning module
√ Zycus iSource - e-Sourcing
module
driven by change management issues and the inherent complexity of some
early solutions. Today, the primary challenges that limit e-sourcing adoption
(Figure 1) include a lack of process expertise, poor spend visibility, and
limited resources which help to impede procurement's ability to engage
stakeholders.
Figure 1: Top Challenges for E-Sourcing
22%
23%
27%
29%
31%
41%
Poor spend visibility
Inefficient processes and limited
sourcing automation
Limited resources to support e-
sourcing
Lack of process expertise
Lack of executive support
Inability to engage stakeholders
Source: AberdeenGroup, January 2007
Lights: Achieving Spend Visibility
As detailed in the August 2007 Spend Analysis Benchmark, spend analysis (and
the resulting visibility into spend) provides the necessary foundation for
procurement organizations seeking to make better, more informed sourcing
decisions, and results in higher savings rates from sourcing initiatives.
Aberdeen research also shows that spend analysis programs can also have a
significant impact in placing more spend under management and improving
contract compliance rates. Zycus' legacy is in spend data management and
its flagship spend analysis solutions combine auto classification, supplier
normalization capabilities with a spend analysis and reporting module that
enables sourcing professionals to identify savings opportunities, as well as
provide real-time spend visibility in 22 languages.
This same Spend Analysis Benchmark found that the main drivers to
implement spend analysis technology are rooted in the ability to identify
savings opportunities (47%) and prioritize spend categories (29%), two
automated capabilities that are included in Zycus' Actionable Analytics
solution (Figure 2).
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Figure 2: Top Pressures Driving Focus on Spend Analysis
23%
27%
29%
47%
Improve negotiation
leverage
Increase spend
under management
Prioritize spend
categories
Identify savings
opportunities "We consider Zycus to be an
excellent provider of spend
management technology. They
are very responsive; it’s an
effective product and
technology solution. They
agreed to enter into a
development partnership which
gives us the ability to steer
product functionality and be a
beta user."
~ Director of Procurement,
Fortune 500 Company and
Zycus Customer
Source: AberdeenGroup, August, 2007
More generally, Zycus' AutoClass (spend data classification) and Actionable
Analytics (spend analysis / reporting) solutions help enterprises gain visibility
into corporate spend and develop and prioritize their strategic sourcing
pipelines.
Camera: The Right Focus and Approach to Sourcing
Zycus' iPlan module was designed to be a user-friendly sourcing strategy
development and planning tool that promotes sourcing team collaboration.
The module's planning capabilities leverage embedded enterprise-defined
business rules and internal spend patterns to guide sourcing professionals
and teams in the development of optimal sourcing strategies. iPlan utilizes a
template structure in sourcing plan development to ensure that best
practices are captured and leveraged on subsequent sourcing efforts. The
module also provides new analytical tools to enable total cost modeling,
demand aggregation, and the standardization of category specifications.
Action: Executing Sourcing Events and Identifying
Savings
The Zycus iSource module is an e-sourcing platform that is built upon the
legacy B2emarkets (acquired from Verticalnet in 2007) and updates that
system to combine user-friendly Web 2.0 features and with advanced e-
sourcing capabilities. Since the original B2emarkets system supported more
than 9,000 users and conducted more than 30,000 sourcing events,
prospects and customers should not view this as a "1.0 release." The
Advanced Sourcing and Negotiation Benchmark Report found that these
advanced e-sourcing functionalities are some of the top criteria (43%) for
selection an e-sourcing application (Figure 3).
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Figure 3: Key Criteria in Selecting an E-Sourcing Application
22%
22%
41%
42%
43%
Delivery model
Integration to spend
analysis
Core functionality
Integration to ERP
Advanced functionality
within e-sourcing
application
"We use another e-sourcing
tool and are not familiar with
these products yet. We think
the on-demand nature of these
solutions gives users flexibility
to change providers at a
reasonable cost when
functionality and service are
not meeting expectations."
~ Strategic Sourcing Manager,
Large North American
Enterprise
Source: Aberdeen Group, January 2007
The drag and drop capabilities and dynamic graphical analysis highlight a
series of features designed to drive user adoption. While the ability to "flip"
sourcing planning information from the iPlan module into an iSource e-
sourcing event is a sophisticated approach to the development and
execution of unique category management strategies. Other capabilities in
the e-sourcing application include an ability to design, launch, and manage a
wide-range of e-negotiation types and perform detailed scenario analysis to
optimize award strategies.
Case Study
Amgen, a North American-based biotechnology firm with $14 billion in
revenue, needed to revamp its spend analysis program and general
structure. Their current process resulted in low spend classification
accuracy due to the reliance on manual methods of extraction and analysis,
which often took weeks to perform.
With a project goal of gaining the ability to access on-demand global or local
spend information with high classification accuracy, Amgen secured
executive support for revamping their program and assembled a strong
program team to manage the program design, implementation, and on-going
management. After the implementation of a spend classification solution, the
team was successfully able to generate reports based on data culled from
select ERP sources, enriched supplier data, and P-card and travel card spend
data.
As a result of the deployment, Amgen was able to dramatically improve
spend classification accuracy and cut the global spend reporting cycle time in
half. Noted the project leader, Miguel Miciano, Amgen’s Director of
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Strategic Sourcing and Procurement, “One key to our ongoing program
success has been the dedication of resources to maintain and continuously
improve the system.”
Summary
Zycus' Spend Management Suite 5.0 is a recent release from a best-of-breed
spend analysis provider and a welcome addition to a rapidly consolidating e-
sourcing market. The new offerings will capture the attention of sourcing
teams looking to automate their processes or those struggling to get their
e-sourcing programs to the next-level. While the e-sourcing capabilities
found in iSource are solid and a natural addition to its current product line,
Zycus' iPlan solution represents an innovative approach for enterprises
struggling to develop and then execute strategic sourcing pipelines.
For more information on this or other research topics, please visit
www.aberdeen.com.
Related Research
Strategic Sourcing in EMEA; May 2008
CPO Rising: The CPO's Agenda for 2008;
February 2008
The Advanced Sourcing and Negotiation
Benchmark Report January, 2007
The CFO's View of Procurement;
November 2007
Spend Analysis: Working Too Hard for
the Money; August 2007
Authors: Andrew Bartolini, Vice President & Group Director, Global Supply
Management (andrew.bartolini@aberdeen.com)
Christopher J. Dwyer, Research Editor, Global Supply Management
(chris.dwyer@aberdeen.com)
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