Forrester SVM Wave, a holistic take on Source to Pay: Specialist vendors break out from the ERP pack

Posted on March 25, 2022


(Forrester’s SVM (Supplier Value Management) essentially corroborates to “Source to Pay”, which is the more commonly used terminology amongst procurement practitioners).

From an analysts’ research point of view, the Source to Pay segment has had a huge strategic coverage void. While most analyst firms produced reports on specific parts of the S2P cycle (e.g., S2C, P2P or CLM), none of the analyst firms, including Gartner & Forrester, has had a report or analysis for the entire source to pay suite in totality.

The first edition of the Forrester Wave™: Supplier Value Management Platform report, which was recently published, makes waves across the industry. It is the only holistic view of the entire Source to Pay segment. It is also very timely as CPOs have a growing consensus that a single unified suite delivers far superior value to the company than cobbling together point solutions.

This analysis should help the C-suite narrow down the technology partners they should be looking at while evaluating a potential partner.

Here’s a quick detour for those unfamiliar with the Forrester Wave work.

In continuation of my previous write up, “Gartner P2P MQ 2021 is a great equalizer; AI is the key differentiator,” this is my analysis of the Forrester Wave SVM. You will notice quite a few parallels between the two reports.

Single S2P suite- The way forward?

While Forrester has taken the lead in understanding that CPOs and CTOs are increasingly looking for a single suite player with a modular approach than a niche player, it’s about time other analyst houses realize the need for an analysis covering the source to pay suite comprehensively.

Here are my key takeaways and highlights from the report:

Firstly – Forrester has pruned the cluster with a clear Top 4

I had highlighted a similar trend from Gartner’s P2P GMQ, where the top 4 vendors were clustering together.

Secondly: When you glean through the write up of all the vendors on the Forrester Wave, four key trends emerge:

  1. AI innovation:

With feature parity in core SVM functionalities, and procurement teams having to do a lot more with less, AI has emerged as a driver of incremental value. In other words, the market no longer sees AI as “good to have” but a core expectation from both analysts and customers. It is a matter of time before AI capabilities would be evaluated rigorously during the RFP process as well. Gartner had highlighted in their P2P MQ that Zycus is a distinct leader when it comes to AI. It’s interesting to note that Forrester has similarly highlighted Zycus’ AI capabilities calling it an “SVM AI innovator”. Other vendors, including Coupa, SAP, Jaggaer, have also initiated investments in AI.

  1. ERP players drifting into SVM and out of the radar:

The specialist S2P vendors, including Coupa, Zycus, Ivalua, and GEP, have broken out from the pack of ERP vendors like SAP, Oracle & Workday. ERP players that also have S2P offerings are clearly falling behind on product offerings and innovation with their primary focus being on upgrading their customers to their cloud ERP releases.

ERP players will be investing in S2P; however, it will be a catchup game as the leaders in this space have a head start and dedicated focus on innovation and AI capabilities.

  • Ease of use and a clean UI:

Clean UI, Ease of Use, and User-friendliness have been important focal points for procurement practitioners. Coupa and Zycus have noteworthy mentions for their User Interface. With Coupa’s acquisitions and inorganic growth, watching how they maintain seamless integration and consistent UI across various modules will be interesting.

  • Risk management, ESG & Resilience:

Unpredictability continues to reign high, with the pandemic now firmly in its fourth wave and the geopolitical developments in Eastern Europe adding to supply chain disruptions, high commodity prices, and imminent threat of stagflation. CPOs now have a set agenda in place. They need better software to address these strategic imperatives, including improving ESG performance and real-time supplier risk management that empowers the procurement users.

Finally: The SVM market grew in double digits in the pandemic year

Reeling from the pandemic, the market for SVM grew at a rate of 13% in 2021. To mitigate supplier risk and with changing strategic imperatives, the CPOs were forced to replace obsolete enterprise resource planning (ERP) modules and homegrown applications with specialist SVM products which led to the meteoric rise of the SVM market.