No Prix Fix Here: A Consolidator's Menu (Part 1)

Those that work with me know that I tend to be skeptical of technology acquisitions, given the fact that so many fail to live up to expectations and guidance from an integration and / or a financial synergy perspective. And in virtually all cases, broader roll-up strategies bring with them increased business risk relative to organic growth. But for would-be consolidators in the Spend Management sector of late, there appear to be a number of opportunities that might be too good to pass up. If the likes of Ariba, Emptoris, Oracle, SAP, or Procuri decide to dine out, I'd expect the following items to be on their menu.

To start, the amuse bouche. What better a way to start the meal than by improving customers' visibility into their spending data? The last remaining stand-alone spend visibility powerhouse is Zycus, a vendor with strong classification, analysis, and services capability (not to mention a good story to tell for SAP customers). With a before dinner drink, Zycus would go down nicely, especially for those providers which still need to enhance or build their visibility capabilities (especially SAP, Oracle, and Procuri). If the appetizer turns into the full meal in itself, then perhaps we might see one of the more aggressive vendors decide to get into the data side of the spend visibility game by picking up an Austin Tetra or someone similar (but this is much less likely, as the content business is entirely different from software).

Once everyone's appetites are whetted, a quartet of appetizers to share seems appropriate. Waiting to be divided up between dinners here are such critical market morsels as contract management, On-Demand sourcing, supply risk management and supplier enablement. On the contract management side of the menu, Nextance would appear a logical course waiting for a larger vendor to order-up. When it comes to On-Demand sourcing, a number of prospects are left on the table, many of which have branched out far beyond their sourcing roots, but I'll still them serve them up on the same plate for the sake of clearing out the walk-in. These include Hedgehog (a "fast-food" variant for this course), Global eProcure, Iasta, and Verticalnet. Unfortunately, even a Michelin-starred restaurant might have to send out for supply risk management, as much of the available stock was gobbled up when D&B bought Open Ratings. Still, others such as Vendor Mate, JV Kelly, and at least a few other services-driven providers are developing some capabilities in this area. The good news is that there are far more available items on the menu when it comes to supplier enablement and supplier management, especially from a catalog perspective. This last area is unfortunately overlooked, yet absolutely critical when it comes to getting the most out of eProcurement implementations.

Given the stature of some of the folks who will be dining with us tonight, it would be embarrassing to order chicken for the main course. So check back later in the week to see what exotic options show up on the table next.

Jason Busch

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