Late last year, European Leaders in Procurement asked me to contribute a feature length article to their January 2007 edition. I was happy to oblige, though I believe I warned them that they'd be lowering their standards to introduce a blogger -- and a US-based blogger at that -- into the mix! Nevertheless, I decided to write the article on the emergence of free Spend Management technology models and downward pricing pressure on more traditional application suites.
Why is this so important today? Given the emergence of a number of "free" -- or at least free to procurement organizations -- software models, I thought it was a topic that all practitioners should get more conversant in so that they can make the best possible technology decisions. If you don’t subscribe to the print version of European Leaders you can read the article in its entirety on their website as well (registration required).
In the essay, I begin by noting that "during most polite enterprise conversations, it passes without argument that price points for applications almost always go down over time, not up. If we look back at the history of sourcing and procurement technology as one isolated area of the broader market, this certainly holds true. But what are the actual limits of downward pricing pressure? With the emergence of open source and new advertising -- and supplier-paid pricing models -- many people are beginning to wonder whether "free" models are the way of the future. To understand whether or not free will take hold and for what segments of the market -- in addition to whether or not it is right for your organisation -- it is critical to first understand where the industry has come from."
Following the intro, I give a brief history lesson on the downward price pressure of full-service sourcing providers in the late nineties, as well as the significant erosion in e-sourcing suite price points in the following years as well. The rest of the piece goes into detail on the Coupa, Why Abe, and MFG.com business models and the current solution capabilities of each technology provider (in far more detail and better expository prose than I've given it on these virtual pages). If you're curious about whether "free" might be right for you, I'd strongly suggest checking out the article in full. And perhaps most important, if I missed anyone that I should have mentioned in the article (i.e., if you are a technology provider with a free or Open Source solution in the Spend Management world) please get in touch. I'd also welcome the opportunity to hear from practitioners who are using free solutions as well.