“Il mercato mondiale del software dedicato al procurement e al supply chain management è cresciuto del 7,3% nello scorso anno, toccando 8,9 miliardi di dollari nel 2013.” – Gartner, crescono le soluzioni IT per il procurement 18 Giugno 2014
No I haven’t been taking lessons in Spanish – on a good day I have enough trouble with my native tongue of English.
So why the apparent lesson in multilingualism?
The reason is fairly simple . . . reading the above excerpt from a June 18th, 2014 article from ICT4 Procurement titled “Gartner, crescono le soluzioni IT per il procurement” makes no more practical sense than reading it in English. Oh by the way, the rough translation is Gartner, growing IT solutions for the procurement, in which the article itself talks about the fact that “The world market for software dedicated to procurement and supply chain management grew by 7.3% last year, reaching $ 8.9 billion in 2013.“
Now that you know this why, as a procurement professional, is news regarding market share of any practical value? More specifically, what does it really mean to you in terms of your day-to-day duties whether you are a buyer or a CPO?
Honestly, I have been around a long time and covered this industry from top to bottom, and I still have trouble grasping the relative value of stories such as the one above.
Why should we care that SAP is the market leader with a growth of 24% and 23.9% market share, equivalent to $ 2.14 billion in revenue, or that Oracle is in second place with a 16.3% market share, followed by JDA Software? How is this helpful?
Even the reference to the smaller best-of-class or “BOC” vendors having “grown more than twice the average of the market,” doesn’t immediately clarify why this information is important. Nor does the suggestion of a window of between 12 to 18 months for these smaller players, as a result of the large traditional players consolidating their positions through acquisitions resonate.
So once again, why are articles such as this meaningful?
Does it for example encourage a CPO to champion an SAP procurement solution based on the vendor’s existing market share and its leadership position? Is it an indication that an initiative will be successful, or that there is a growing market recognition that procurement’s importance is exponentially increasing?
Maybe to a certain degree, but so what!
Any knowledgeable CPO is unlikely to, as my father would say, jump off the Brooklyn Bridge just because 23.9% of the market has. And I doubt that the associative revelation pertaining to procurement’s growing strategic importance is going be a big surprise to anyone even indirectly involved with the industry.
Perhaps the answer lies in the fact that there is no point in looking for a intrinsic value from the standpoint of a procurement professional.
According to an old Fast Company post from 2005, Market share is the most important metric that marketers can use in order to judge the effectiveness of marketing campaigns. So it is all about the marketing? The fact that the publication expressed surprise at the number of enterprises who “ignore market share” to focus on “internal metrics like satisfaction, awareness, loyalty etc.” speaks volumes. The problem I have of course is that this raises a serious question; is market share a reflection of true customer satisfaction, or the result of a superior advertising campaign?
Perhaps within the answer to this last question is finally the explanation as to why for so many years the vast majority of all eProcurement initiatives failed to deliver the expected results. Salesmanship and sizzle over true expertise and performance.
Of course everything has now changed with the advent of SaaS cloud-based solutions, in which the heavy up front capital costs associated with the traditional solution providers has been replaced by a pay-per-perform model that ensures rapid deployment over weeks as opposed to years.
In this context, news regarding market share only matters in that it provides an indication as to how long the transformation from the old capital model to the pay as you go model ultimately takes. Now this is news that is worth reading!