Zycus Gets Into the Sourcing (and Sourcing Planning) Game

In a press release earlier this morning, Zycus announced its entrance into the e-sourcing market and, as they term it, the sourcing planning sector. The introduction of Zycus iSource marks the first release of a new e-sourcing tool in the market in a number of years. Perhaps the first question on many people's minds might be "why?" Why would any vendor decide to enter such a crowded market space with declining margins and price points which are sliding faster than even the dollar in recent years? The reasons might surprise those who aren't close to the space. But they make sense based on what I'm hearing in the market.

The primary reason Zycus decided to pursue the e-sourcing opportunity is because they saw a growth opportunity by bringing to market a sourcing solution that could logically extend their spend visibility and analytics footprint into the sourcing strategy and execution worlds (not to mention leveraging some of the knowledge from their MDM footprint). But they also saw a chance to expand their market presence by offering an easy-to-use e-sourcing tool that focused not only on reverse auctions, but driving end-to-end automation for all types of sourcing projects. In fact, when Zycus did their due diligence on the market opportunity for a sourcing product, they found that many customers who had licensed other tools used them only for reverse auctions and not for other types of sourcing projects.

Given this finding, Zycus saw an opportunity. To capitalize on it in a reasonable time frame they acquired the rights to the old B2eMarkets platform (owned by Verticalnet), using the proven sourcing and RFX engine as a core from which to build a new sourcing solution with an updated UI, workflow, etc. Having demoed the tool last week, I can see that Zycus has indeed come through with a solution which is extremely easy to use and has, perhaps, the most streamlined template and RFI creation capability of anything I've seen to date.

While I did not look at the reverse auction component, I'm sure it's up to snuff provided they did not change much from the B2eMarket and Verticalnet days. But reverse auctions, as Zycus points out, are a commodity these days -- it's everything else that offers a chance to create differentiation and higher adoption levels inside companies. From a pricing perspective, I would expect Zycus to hit the market aggressively, perhaps acting as an unexpected low-cost spoiler to Ariba, SAP, Iasta and others (who no longer have to compete against Procuri, pressing the nuclear pricing button to buy e-sourcing deals).

I'll save my in-depth comments on Zycus' new iPlan module for a later post. But Zycus' concept with this new module is to provide a solution that bridges the gap between spend analysis and sourcing. Even though at this point iPlan lacks the easy-to-use iSource UI, it does a novel job at walking a user through, for example, the optimal set of tactics and actions in pursuing a demand aggregation approach for IT categories.

Ultimately, Zycus will need to provide a unified experience between analytics, planning and sourcing for users to get the most out of the application. But even until they do, iPlan is original and useful enough that I'm sure they'll find a number of takers in the market for this novel solution which all companies owe it to themselves to check out (if for any reason, just to learn how to better capture, manage and deploy internal sourcing strategy process and category knowledge).

- Jason Busch

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