Musing on Spend Management Price Points

I often get asked by practitioners, vendors and consultants what prices solution providers are getting for their products. The answer is never easy, considering what is often a large delta between list and floor prices (not to mention the added pricing complexities when vendors bundle or throw in additional services, seats, information, etc. as part of a deal). But in general on an anecdotal basis, I'd say that price points appear to be holding firm throughout 2008. I have not seen any impact, for example, of Ariba raising price points in the overlapping areas from the Procuri acquisition (probably in large part because other vendors are keeping them honest in deals -- not to mention the typical procurement organization is well versed in hammering down prices in general). In fact, as recently as a few months ago, I heard at least two other providers claim that Ariba was undercutting the market in some deals in the sourcing area (so much for using size and breadth to get premium price points, I suppose!).

When it comes to the procure-to-pay arena, prices are harder to compare to the past, since there are so many more hosted/on-demand deals than there were even a year ago. And it's not just because of Ariba's foray into this revenue/technology model -- it's also due to the fact SAP is working more closely with channels to sell hosted versions of its procure-to-pay solutions. Ketera, Coupa and Workday are also hoping for a share of this growing segment and are all contributing to keeping this nascent market honest from a pricing perspective. If you have any questions on pricing that you'd like me to take a closer look at on Spend Matters or would like to share any anecdotes (not for attribution, of course), please drop me a line: jbusch (at) spendmatters (dot). Com.

- Jason Busch

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