Earlier in the week, I posted a handful of "question marks" that I had for 2006. Rather than tossing out outlandish predictions like every other pundit in the blogosphere, I thought it would be more interesting to consider a list of the open ended issues that will shed the most insight on the evolution of the Spend Management market in 2006. In today's post, I will continue to build on this list.
My fourth question mark for 2006 is whether software as a service (SaaS) continues to fuel growth in the sector, or whether installed Spend Management platforms from vendors such as Emptoris, Oracle, and SAP will fuel a rebirth of the installed market. Personally, I don't think that it is an either / or question. The two models can co-exist (even within a single vendor). But the mix of SaaS / installed Spend Management deals will certainly be interesting to watch throughout the year.
Perhaps my biggest question mark for 2006 is whether the Spend Management outsourcing / BPO market heats up. I've already posted a few blogs on the subject which you can find here and here (scroll down to read the post). But up until now, the Spend Management outsourcing market has been a nascent space to the say the least. With a trickle of deals each year, there's not been a critical mass, let alone a dominant vendor. But 2006 might change this. To quote a previous blog of mine on the subject: "It will be fascinating to observe whether traditional outsourcers like IBM and Accenture can continue their momentum compared with functional experts like Ariba and ICG Commerce -- who could argue that their category knowledge should result in even greater sourcing-based savings from outsourcing efforts than their generalist peers. In any event, procurement outsourcing should be a fascinating Spend Management market to watch in 2006 as IBM, Accenture, Ariba, and others battle for the pole position in this nascent sector."
Another question mark that I know a lot of vendors and consultancies are thinking about is whether Spend Management growth in the small and medium sized (SMB) market will accelerate. Few providers I know of have cracked the code so-to-speak on how best to serve this segment economically, but 2006 might be the year for some to break out. On the smaller end of the services market, I'm obviously pulling for Aptium Global, a firm in quasi-stealth mode that my wife and a long-time business partner started that focuses on the intersection of lean and direct materials sourcing for small and medium-sized industrial companies (heck, maybe I'll be able to retire from my day job and spend the entire day posting blogs on Spend Matters if they succeed in big way). But there's other focused providers like Transpac Access who are also targeting this segment and realizing success. And of course the Ariba's of the world are also interested in going after this market as well -- from both a software and services perspective. At the least, Spend Management in the middle market should see some movement in 2006. The question is how fast it takes off.