Earlier this week week, cc-hubwoo announced a deepening of its relationship with SAP. Specifically it added support for SAP's E-Sourcing solutions. As part of the terms of the deal, cc-hubwoo will host its own instance of SAP E-Sourcing and provide on-demand sourcing software and services for its customers leveraging the infrastructure and event-based execution expertise it gained when it acquired Intersources earlier in the year. In effect, this represents a doubling down of cc-hubwoo's corporate strategy of focusing entirely on SAP users, selling SAP solutions. At this point in my post, I know what you're thinking -- this is just another of a hundred plus solution providers who will offer to run sourcing events for you. But the cc-hubwoo/SAP relationship is in fact quite significant for the market, at least as I see it. Here's why.
First, the relationship is all about business, not about marketing. Clearly, this is no Barney deal. SAP reps will be compensated and get quota credit for selling cc-hubwoo's solutions (including E-Sourcing). Even though some of these solutions are directly competitive with SAP's own licensing -- and even sourcing event hosting -- offerings, the venerable ERP giant has realized that embracing a broader partner ecosystem outside of the large SIs will be critical to reach the mass market for its SRM and sourcing products (especially after the 6.0 SRM G/A cancellation).
Second, speaking of the SAP SRM product delays, it's no surprise in my book that the timing of this deal came so soon after the announcement a few weeks back that SAP customers would have to wait until 2009 for the release of the next generation SRM product. In the meantime, the new shared economic relationship with cc-hubwoo gives SAP something to sell to customers on the procurement side until their next product is ready (granted it's an older version of SAP SRM, but at least it's something which can be implemented relatively quickly). I'd still probably argue that Ariba and Ketera -- and possibly even Coupa, depending on the situation -- are better hosted eProcurement bets than cc-hubwoo until SAP goes G/A with SRM 7.0, but there are some customers who are clearly so oriented to SAP that they'll accept lesser functionality and capability today for what they believe will be a more seamless upgrade path tomorrow (which is debatable).
The third and final reason I find this announcement fascinating is because of the powerbase that the BPO group within SAP appears to be building. Bernd-Uwe Pagel, a Senior Vice President at SAP, and head of his firm’s BPO service line, is on the Board of Directors for cc-hubwoo. Clearly this was a deal that Pagel was able to push through an organization which has a long reputation of committee-based analysis paralysis relative to its well-known, fast moving Redwood Shores competitor. So might this deal in fact signal a faster-moving, more nimble SAP, especially in the SRM and sourcing arenas (and possibly a sign of a shift of power within the SAP SRM group back to Germany?) Possibly, but it will take more than a single deal like this for us to know.