Earlier in the week, I spent the better part of ninety minutes catching up with Emptoris' CEO and Founder, Avner Schneur, on a range of areas. The two of us go back a ways to the early days of the sourcing and procurement technology market. I first met Avner when his company was in a very early stage -- at that point, it was a sales guy and a good demo. That might not sound like much, but I can tell you that it was better than what FreeMarkets had when it came to e-sourcing software at the time!
Since our first meeting, I've always found our discussions have been quite lively to say the least. I initiated the call this time around to get Avner's "on the record" perspective on a few issues which have been top of mind of late. Today, I'm posting my notes from our discussion about his view on the role of Open Source within the Spend Management ecosystem as well as his take on SAP, and their place in the sector. Later in August, check back as I post the rest of our discussion about broader consolidation trends in the market, and what the next 12 months will hold.
Like many other executives in the Spend Management world I've spoken with lately, Avner believes that Open Source has tremendous potential and is a "phenomenal thing" on the tools side. The market, in his view, has embraced Open Source components and applications throughout the middleware tiers. In short, it has "institutionalized" these offerings. Emptoris embrace Open Source internally and makes use of Open Source throughout its applications in various areas, including a charting tool. These areas, which Avner refers to as "gadgets which everybody uses" are institutionalized by the fact that they work so well in a great many applications. The more application-oriented ones which have traction are most often used on the departmental level for specific areas such as bug tracking.
But when it comes to the business application level, things change. Emptoris believes that these levels of applications are more specialized by nature, and companies are wiling to pay for a complete package based on total value and out of the box usability. In this regard, Avner told me that Emptoris evaluated an Open Source CRM tool, but in the end choose to license SalesForce.com because it was a better, lower-risk fit. And when it comes to Spend Management specifically, Emptoris has looked at what an open source e-procurement vendor offered in the space, and came away with the view that the open source vendor’s current release serves as a basic, entry-level eProcurement application. At this point, they do not believe their customers -- many of whom tend to be in the innovator and early adopter camp -- would consider this type of implementation. Perhaps it might work on the departmental level, but company wide, Emptoris believes that the more traditional eProcurement applications offer a more advanced feature set at this point which justifies the cost. In addition, many enterprise prospects, they feel, would also be turned off by the risk factors of going with Open Source on the business applications level as well.
Next, our conversation turned to SAP, and whether the Frictionless acquisition was just a stop-gap or part of a broader series of strategic moves. In Avner's mind, the acquisition is certainly a stop-gap, as Frictionless' On-Demand focus is in marked contrast to SAP's overall installed SRM strategy. If you look at how SAP is selling Frictionless today -- as a stand alone hosted solution -- this becomes even more apparent. According to Avner, the fact that SAP now has a sourcing solution with some credibility puts another milestone or checkpoint into some sales processes in SAP shops, but is not causing them to lose competitive deals. In addition, Emptoris has a solid counter to SAP's Frictionless solution. To wit, Emptoris can claim with a straight face that their solutions run on SAP better than SAP's own capabilities run on SAP, owing to their range of NetWeaver credentials, and the fact that "SAP SRM is still on the old platform". But more important, Emptoris' goes deeper in its integration capabilities with SAP than does Frictionless, or SAP SRM for that matter, they argue. As the only company in the space to offer NetWeaver XI (Exchange Infrastructure) integration, Emptoris provides certified closed loop business process and data integration with SAP procurement solutions. Avner believes this deeper integration capability supports a closed loop process that stretches from upfront spend analysis and supplier qualification through sourcing, contract management and requisitioning, ensuring day-to-day procurement operations align with the sourcing and contract strategy. And this is an offering they'll put up against SAP's own internal solution any day.
Spend Matters would like to thank Avner for taking the time to share his views. Stay tuned for the second part of this discussion later in August.