Choosing procurement software
Procurement software, purchasing software and e-procurement system are labels for very different tools. Anyone who has to choose must first know which task is to be solved.
This page sorts the categories, suggests an order for introducing them and names the criteria in which systems for corporations and large mid-sized companies actually differ. It also says what Ovenca is not the right tool for.
On this page
- Which software solves which task
- In which order to introduce it
- Nine selection criteria with questions
- Suite or specialised solution
- When Ovenca fits and when it does not
- Checklist for vendor meetings
What procurement software is and what it does
Procurement software is a collective term for systems that handle a company's purchasing electronically: from an employee's need through approval and purchase order to invoice and analysis.
No single product covers all of these steps equally well. Behind the same term are catalog and ordering systems, supplier portals, tools for tendering, contract administration, invoice processing, and suites that bundle several of these tasks.
E-procurement systems are the part that runs the operational ordering process: electronic catalogs, shopping cart, approval and the handover of the order to the ERP. Selection therefore does not start with a vendor comparison but with the question of which step causes the most work today.
Benefits by stakeholder
- Departments
- Order directly from approved assortments and see the status of their request.
- Purchasing
- Is relieved of routine orders. Negotiated terms are used because they are in the catalog.
- Finance
- Knows commitments before the invoice arrives and receives invoices with a purchase order reference.
- IT
- Keeps the ERP as the leading system and operates defined interfaces instead of special cases.
- Internal audit
- Finds approvals and changes documented.
Which software solves which task
Eight categories cover purchasing. They solve different tasks and are used by different people. The last column shows which of them Ovenca covers.
- Tendering and sourcingTendering
- Contract managementContract
- Supplier portalCatalog
- Catalog and ordering systemCatalog, Order
- ERPOrder, Goods receipt, Invoice
- Invoice processingInvoice
- Spend analysisAnalysis
- Integrated suiteTendering, Contract, Catalog, Order, Goods receipt, Invoice, Analysis
- Tendering and sourcingSourcing
- Contract managementContracts
- Supplier portalOvenca: Vendor Portal
- Catalog and ordering systemOvenca: Catalog Management and Catalog Shop
- ERPERP: purchase order, goods receipt, invoice verification
- Invoice processingInvoices
- Spend analysisAnalysis
- Integrated suiteSuite: several of these tasks from one vendor
- Ovenca
- ERP, stays in the lead
- Further tools
| Category | Task | Typical users | Included in Ovenca |
|---|---|---|---|
| Catalog and ordering system (e-procurement) | Employees find items in approved catalogs and order them. The order is handed over to the ERP. | Requesters in the departments, operational purchasing | Yes, with Catalog Shop and Catalog Management |
| Supplier portal | Suppliers submit their catalog data, keep it up to date and correct errors themselves. | Suppliers, catalog owners in purchasing | Yes, with the Vendor Portal |
| Tendering and sourcing | Request, compare and award quotations. | Strategic purchasing | No |
| Contract management | Administer contracts, terms and deadlines. | Strategic purchasing, legal department | No. Contracts stay in the ERP and come from there. |
| Supplier management and risk | Qualify and evaluate suppliers, administer evidence, classify risks. | Strategic purchasing, compliance | Partly. The Vendor Portal collects information from suppliers through questionnaires. Ovenca does not include a risk assessment. |
| Invoice processing | Capture incoming invoices, check them against purchase order and goods receipt, and approve them. | Accounts payable | No. Invoice verification stays in the ERP. |
| Spend analysis | Analyse spend by product group, supplier and company. | Head of purchasing, controlling | No. Ovenca shows reports on orders, search behaviour and catalog usage, but does not replace spend analysis. |
| Integrated suite | Several of these tasks from one vendor, usually from tendering to invoice. | Companies that want to source as many purchasing functions as possible from one vendor | No. Ovenca is not a suite. |
Where Ovenca stands in this overview
Ovenca belongs in the first two rows: catalog-based ordering and the connection of suppliers, in front of the ERP. It consists of four modules that are used individually or together: Catalog Shop, Catalog Management, Vendor Portal and admin area. Tendering, contract management, invoice processing and spend analysis are not functions of Ovenca. For these you need the ERP or a further tool. If you are missing a function, talk to us. Onveda develops Ovenca itself and extends the product according to its customers' requirements.
What to introduce first
Hardly any company introduces all categories at the same time. The following order is a rule of thumb: each step supplies the data the next one needs.
Start where most transactions occur
As a rule this is the ordering process for indirect needs that suit catalogs, such as office supplies, safety equipment or laboratory supplies. Many similar transactions mean that the benefit is visible early and many employees get to know the system.
Data before automation
An ordering system is only as good as its catalogs. Clarify who supplies catalog data, who checks it and how suppliers make corrections themselves. Automated processes on unchecked data multiply errors.
Clarify roles and approvals
Who may order what, who sees which assortment, who approves from which value? These rules must be decided in-house before a system can map them. If the old process is rebuilt unchanged, the lead time stays unchanged too.
Connect invoice processing
Invoices can only be checked largely without queries once there is a structured purchase order for them. This step therefore follows the ordering process and not the other way round.
Add sourcing, contracts and analysis
Tenders and contracts concern few transactions with a high individual value and few users. Analyses are only reliable once orders are recorded consistently with product group and supplier.
When a different order is right
The order is a rule of thumb, not a law. If your biggest bottleneck today is in tendering, in expiring contracts or in incoming invoices, start there. What matters is that the first step solves a problem that is already seen as a problem in-house.
Selection criteria: where systems differ
Feature lists look alike for most vendors. For corporations and large mid-sized companies these nine points decide. Each comes with the question you should ask every vendor.
| Criterion | Where systems differ | Question for every vendor |
|---|---|---|
| Operating model | On-premise, private cloud with a dedicated instance or public cloud on a shared platform. Some systems exist in one model only. | In which operating models is the system available, and who decides when updates are installed? |
| ERP integration | Which system holds contracts, material numbers and master data, and by which routes documents are exchanged. | Does our ERP remain the leading system, and does the integration work without modification in the ERP? |
| Catalog and punchout standards | Supported import formats such as CSV, Excel and BMEcat, and punchout via OCI and cXML, including search in external catalogs. | Which formats and punchout standards do you support, and to what extent? |
| Supplier connection | How suppliers submit and correct their data, and whether fees arise for them. | Who bears the cost of connecting suppliers, and do our suppliers pay network or transaction fees? |
| Roles and approvals | How finely roles, visibility and approval rules can be set per company and site. | Can our approval matrix be mapped, and who can change it without the vendor? |
| Security and data location | Location of data storage, sign-in via your own identity management, logging and the data processing agreement. | In which country is our data stored, and who has administrative access? |
| Licence model | Billing by users, modules, transactions or order volume. The model determines how costs grow with use. | What is billing based on, and what does it cost when the number of users or the order volume rises? |
| Vendor and support | Who develops the system, who operates it and who can be reached in the event of a disruption. | Who is our contact in operations, and is there a reference of comparable size? |
| Migration path | How catalogs, users and permissions are taken over from the previous system and whether parallel operation is possible. | How does the switch from the previous system work, and how do we get our data back at the end of the contract? |
Suite or specialised solution
Both routes work. Which one fits depends on the ERP strategy, the system landscape and how much change the organisation can carry at the same time.
| Criterion | Integrated suite | Specialised solution around the ERP |
|---|---|---|
| Scope | Tendering, contracts, ordering process and invoice processing from one vendor. | One tool per task. The ERP remains the leading system for purchase order, goods receipt, invoice and payment. |
| Data and analysis | One data model and one interface across all steps. End-to-end analyses without integration work of your own. | Data is held in several systems. End-to-end analyses require maintained interfaces. |
| Introduction | Usually a larger project across several modules. | Step by step, starting with the biggest bottleneck. |
| Integration | Not needed within the suite. The connection to the ERP is still required. | Interfaces between the tools must be defined and operated. |
| Operating model | Usually set by the vendor, as is the release cycle. | Selectable per component, as far as the respective vendor offers it. |
| Vendors and contracts | One contractual partner for licence and support. | Several vendors and contracts. Process responsibility across system boundaries must be settled. |
| Fit of the functions | Not every module fits your own process equally well. | Each tool is chosen for its task. What is missing has to be provided by another system. |
A suite is the better choice when
you want to renew several purchasing functions at the same time, prefer one contractual partner, your processes are close to the standard and the vendor's operating model matches your requirements.
A specialised solution is the better choice when
the ERP is to remain the leading system, a clearly defined bottleneck is to be solved, several ERP systems are in use or there are requirements for the place of operation and data storage.
The functions of the ERP are sufficient when
few trained people place orders, hardly any catalogs are involved and suppliers do not need to maintain their data themselves.
When Ovenca fits and when it does not
Ovenca is not the right system for every company. This overview shows whether a conversation makes sense.
Ovenca fits when
Ovenca is a product of Onveda GmbH. LANXESS AG has been working with Onveda since 2014.
- you are a corporation or a large mid-sized company
- SAP or another ERP is the leading system and is to remain so
- the focus is on indirect purchasing via catalogs
- you need your own instance on-premise or in a private cloud hosted in the EU
- suppliers are to maintain their catalogs themselves and pay no network fees
- you want to start with one module and extend later
Ovenca does not fit when
In these cases a different kind of solution serves you better. A separate page explains when SAP Ariba remains the better choice.
- you are looking for a complete source-to-pay suite from one vendor
- you are a small company without an ERP
- you are a public-sector buyer and need a platform for electronic tendering
- your need lies mainly in tendering, contract management, invoice processing or spend analysis
Questions for every vendor
Ask all vendors the same questions and have the answers shown to you in the running system. The list applies to Ovenca just the same.
Scope
- Which of the eight categories does the system cover, and which not?
- Which steps stay in the ERP?
- Can modules be introduced individually?
- How are needs handled that are not in the catalog?
Integration and standards
- Which ERP systems have already been connected?
- Can several ERP systems be connected in parallel?
- Which catalog formats are imported?
- Is punchout via OCI and cXML supported, including search in external catalogs?
Operations and security
- Do we get our own instance, or do we share the platform?
- In which country are data and backups stored?
- Does sign-in fit our identity management?
- What is logged, and who can view the logs?
Suppliers
- How do suppliers submit their catalogs?
- Who corrects faulty data: the supplier or our purchasing team?
- Do suppliers pay fees?
- How much effort arises in purchasing for checking and approval?
Costs and contract
- What is the licence based on?
- What costs arise for introduction and integration?
- What costs arise in ongoing operation, and for whom?
- How do we get our data back at the end of the contract?
Introduction and vendor
- How does the introduction work, and what do we have to contribute?
- Can the old and the new system run in parallel for a while?
- Who develops the system, and who operates it?
- Is there a reference of comparable size and system landscape?
Frequently asked questions about choosing procurement software
In three steps. First, clarify which task is to be solved: ordering process, supplier connection, tendering, contracts or invoices. Second, define the conditions: leading ERP, operating model, requirements for data storage and security. Third, ask all vendors the same questions and have the answers shown to you in the running system. Feature lists alone hardly distinguish the vendors.
There is no single best procurement software. Which one fits depends on which task is the priority, which ERP is the leading system, whether a dedicated instance or a public cloud service is required, how many companies and suppliers are connected and how much change the organisation can carry. A system that is right for a corporation with several ERP systems is too much for a small company without an ERP, and vice versa.
Employees order from approved assortments instead of by email or free text. Purchasing is relieved of routine orders, and negotiated terms are used. Finance knows commitments before the invoice arrives. Approvals and changes are documented. These benefits require maintained catalogs and agreed approval rules. The software alone does not create them.
In everyday usage, usually none. Both terms are used for the same systems. Where a distinction is made, procurement software tends to mean the operational handling of orders and purchasing software the whole of purchasing including tendering, contracts and supplier management. There is no binding definition. So do not ask about the term, ask about the tasks a system covers.
E-procurement systems run the operational ordering process electronically: suppliers provide catalogs, employees search and order in them, and the order is handed over to the ERP. They complement the ERP at the point where many occasional requesters and many suppliers meet. Tendering, contract administration and invoice processing are usually not part of them.
Neither route is better in principle. A suite fits when several purchasing functions are to be renewed at the same time, one contractual partner is wanted and the vendor's operating model matches your own requirements. A specialised solution (best of breed) fits when the ERP is to remain the leading system, a specific bottleneck is to be solved or there are requirements for the place of operation and data storage. The price for this is interfaces that have to be defined and operated.
No general figure can be given. Costs usually consist of licence, introduction and integration, and ongoing operation. They depend on the number of users and roles, the modules used, the interfaces to the ERP and to suppliers, the operating model and the compliance requirements. With some vendors, fees for suppliers are added. Ovenca is quoted individually. There is no price list and there are no fixed editions, and suppliers pay no network fees.
That depends on the scope: on the number of modules, catalogs, suppliers, interfaces and sites, and on how much capacity IT and purchasing can contribute. A suite across several purchasing functions is a larger undertaking than a single component in front of the ERP. For replacing an existing catalog system with Ovenca: as a rule three to six months.
Further pages
Source-to-pay
The whole process from supplier search to payment, and the detailed checklist for the requirements specification.
Digital procurement
Terms, process, benefits and obstacles of digital procurement at a glance.
Ovenca and SAP Ariba
When Ovenca fits and when SAP Ariba remains the better choice.
Successor to SAP SRM
How companies continue their catalog and ordering system after SAP SRM.
Replace your catalog system
How switching from an existing system to Ovenca works.
Catalog data quality
What makes catalog data good and who is responsible for what.
Pricing
What the costs consist of and what they depend on.
Request a demo or a technical discussion
Tell us briefly about your system landscape and what prompted your enquiry. Your contact is Jens Bohl.