Source-to-Contract Solutions

An In-Depth Guide

What are Source-to-Contract solutions? 

Source-to-contract (S2C) solutions suites are for automating upstream procurement processes, which include spend/supply analytics, sourcing (sourcing strategy and e-sourcing execution), buy-side contract management and supplier management. In other words, S2C suites automate non-transactional procurement processes that create the majority of procurement value. S2C is about managing and increasing spend under management (SUM) to broaden a company’s ability to deliver value.

How Source-to-Contract solutions factor in the source-to-pay process:

S2C platforms are layered on top of ERP systems so that a singular strategic technology platform helps maximize commercial value before deploying the execution to procure-to-pay (P2P) systems.

An S2C solution offers technology that supports each of the categories outlined above and may also support adjacent areas, such as Risk Management or Carbon Emissions. 

What kinds of organizations should consider a Source-to-Contract solution?

An S2C solution can benefit a wide range of organizations, but it is particularly advantageous for those experiencing challenges in their upstream, spend under management procurement processes. Here are some types of organizations that should strongly consider an S2C solution:

• Large enterprises with multiple locations and diverse suppliers: Managing a vast supplier network, multiple internal stakeholders and transactions and activities can be overwhelming without automation and without breaking silos.
• Organizations seeking enhanced process maturity: Organizations aiming to kickstart continuous process improvement and overall procurement maturity through the adoption of technology would find value in S2C integrations.
• Companies with high procurement spend: Automating the sourcing, CLM and supplier management processes can lead to significant cost savings through improved efficiency, reduced errors and optimized supplier relationships.
• Companies in highly regulated industries: An S2C solution can help ensure compliance with regulations and reduce the risk of fraud, as it ties together contacts, spend and supplier management. 
• Businesses seeking to optimize procurement strategies: Advanced analytics and reporting features in S2C solutions can provide valuable insights into spending patterns and opportunities in your supply chain. 
• Teams drowning in manual tasks: A digital approach to S2C can bring efficiencies through collaboration.

Specific Industry Examples

• Manufacturing: Managing complex supply chains, controlling costs and ensuring quality.
• Healthcare: Compliance with regulations, managing a variety of suppliers and controlling costs.
• Retail: Fast-paced environments with fluctuating demand and numerous suppliers benefit from streamlined and end-to-end processes.
• Government agencies: Complex procurement processes, compliance requirements and budgetary constraints make S2C a valuable tool.

How technology supports S2C – Top 4 capabilities

The Top 4 capabilities are the highest-weighted critical capabilities that are central to the displayed solution market benchmark. They have been developed by the Solution Intelligence analyst team and refined by procurement users in tech-selection projects using our market-proven SolutionMap benchmarking dataset and associated TechMatch decision-making tool.

These Top 4 critical digital capabilities stem from the TechMatch workbench, derived from a larger number of requirements scored in the SolutionMap solution benchmark.

Top 4 Source-to-Contract tech capabilities

1. Analytics

The ability to provide a single view into all historic, current and planned supplier spending in order to improve that spending through better sourcing, compliance and demand management.

On average, buyers should expect a vendor to include out-of-the-box report builders (drag-and-drop models), reporting dashboards and descriptive reports of all S2C metrics. Top performers have deeper analytics capabilities that support the identification of opportunities, such as market intelligence through community data and AI/ML-enabled actionable analytics.

Some of the top performers have actionable analytics for benchmarks, process KPIs and user KPIs, as well as predictive and prescriptive analysis to guide users during their S2C activities, achieving a greater contribution from all stakeholders and generating greater value for the business.

2. Contract Lifecycle Management

The ability to automate the authoring, negotiation, execution, implementation, monitoring and renewal of B2B contracts (with an emphasis on supplier contracts).

Contract lifecycle management (CLM) functions as the final concrete step (not including regular/ongoing supplier management) of the S2C process. With CLM, organizations increase the speed and quality of the contract drafting, negotiating and ongoing repository-based management processes.

Within S2C, CLM is especially useful when it is fully integrated. For example, a sourcing event can automatically create a new contract within the platform. Top solutions for CLM will go beyond cross-functional/module collaboration and offer deep configurability, guided authoring, suggested clauses, clause-level risk scores and more.

3. Sourcing

Solutions and supporting content and services for managing sourcing strategies (including category strategy), execution (e.g., RFx management and e-auctions) and portfolio/performance management.

Average-performing vendors enable customers to manage moderately complex sourcing events that partially leverage the other modules of the suite (SxM and CLM). Top performers can better cross-fertilize processes, bringing more data into the sourcing process to enhance key steps like supplier invitations and bid analysis/evaluation by providing users with a bigger picture and the means to perform more complex scenarios. They also have more capabilities to bring outside-in intelligence, enhancing strategizing and execution. 

Some leading performers use AI to automate the sourcing process and augment sourcing professionals with recommendations on when to launch events and what to do when managing an event.

4. SxM

Supplier-centered applications that not only orchestrate user experiences between suppliers and employees across S2P but also augment sourcing/contracting and P2P solutions with capabilities to optimize supplier-related information, performance, relationship, quality, risk and compliance management.

The average-performing provider supports customers in managing the complete supplier lifecycle and feeds other modules and systems with supplier-related information. The differences between average and leading providers reside in the breadth and depth of managed and verified information and configuration capabilities.

Some leading providers help customers tackle data quality issues by leveraging various capabilities (network, community, AI/ML, etc.) and ensuring that every supplier interaction managed in the suite is the occasion to review/update data. These leading solutions also foster bi-directional collaboration.

Why selecting the right S2C solution can be difficult

Every procurement organization needs an S2P digital strategy, but choosing between a full-footprint S2P suite, a combination of S2C and a P2P suites or best-of-breed vendors can be difficult. 

Roadblocks include:

• The suite vs best-of-breed debate: There are numerous benefits and tradeoffs to consider when choosing between S2C mini-suites, large S2P suites, niche solutions and platform-based approaches. This lengthy, in-depth process can lead to cross-functional friction, dissatisfaction and delay/cost. 
• Blueprinting needs: Many companies find themselves stuck in a cycle of ‘throwing apps at the problem’ without first fully understanding and blueprinting their needs. This lack of digital procurement strategy should be addressed before any tech selections, which should consider not only platform capabilities but also search for best-in-class architecture. 
• Objective council: It can be difficult to find objective technology information in the market, especially from consultants that have biased vendor-specific S2C/S2P implementations practices or have poor intelligence on the broader market.

How The Hackett Group^® can help you select Source-to-Contract technology

The Hackett Group^® specializes in procurement technology diligence. In addition to projects and advisory, we offer Procurement Technology Intelligence Program Membership, the only membership community and technology comparison tool of its kind, with access to SolutionMap vendor rankings dataset combined with independent, zero pay-to-play, brutally honest coverage of solution providers, market developments and trends affecting procurement, finance and supply chain. 

We can help you find a solution that can:

• Establish the core digital infrastructure for procurement beyond process silos of sourcing, contracting and supplier management, but also stakeholder/demand, performance/value and project/program management, opportunity/risk analytics, market intelligence integration and other areas. 
• Support robust category management that spans, segments and optimizes all upstream processes (beyond category strategy formulation and sourcing event design), ‘guided’ category management, community intelligence, etc.
• Support complex, multi-organization and multi-system environments. In other words, find a solution that fits into any IT landscape.
• Flexibly deploy suites modularly that can support scalability and embrace whatever entities or processes needed/support changes in processes and entities over time.

Discover Source-to-Contract vendors

These are the vendors we cover today (or will do very soon). Visit their vendor directory pages  for a quick vendor overview, demographic information and relevant articles, including vendor analyses.