Companies like D&B, CVM Solutions, Panjeva and AECSoft (especially around what they're doing in China) excite me. That's because when it comes to procurement software, good code is a commodity. Look, for example, at how the e-sourcing marketplace has become commoditized in the past five years, driving price points down to levels that are less than many executive's expense accounts. But content-based solutions are different. Content is hard work. It not only requires finding and gathering it, but making sure it's accurate. Then, of course, layering on analytics to help customers make sense of -- and navigate -- its implications.
But even more important, in today's economy, supply markets content provides the type of intelligence necessary to take action decisively. Whether it's taking pre-emptive action to avert a supplier bankruptcy or identifying at risk suppliers based on banking relationships, customer concentration or other criteria, good supplier and supply markets content can help companies make decisions at the speed of the business -- not at the speed procurement has traditionally functioned.
CVM Solutions has a goldmine of information, especially in the area of supplier diversity, but also in non-diverse supplier content including spend data such as usage by company, usage by industry, scorecards, revenue by industry, etc.]. Their diversity content, however, gives them a unique handle on how the largest corporations spend their money in general -- with whom, on what, in what amounts and the trending levels. In fact, thanks to the diversity and related enrichment programs that CVM carries out for customers, they probably have one of the best aggregate pictures of North American spending data of any provider -- including both diversity and non-diversity suppliers. They obviously hold this close to the chest for privacy reasons, but what's potentially most valuable by both industry and supplier is that the information is aggregated.
The key becomes what you do with this data. Going forward, I suspect we'll see CVM Solutions branch out into additional content offerings as well as create new software capabilities based upon combining this level of third-party intelligence with procurement process knowledge to help companies reduce supply risk, improve supplier performance and optimize their set of suppliers based on an internally selected set of criteria (e.g., diversity/non-diversity, on-shore/off-shore, geographic location, green/sustainability, etc.)
Granted, many of these complete capabilities are probably at least a year away. But in the interim, I believe we'll see CVM Solutions continue to build out its supplier portal and supplier management capabilities, closely linking their content offerings to these capabilities. In addition, CVM will continue to play a central role in helping companies manage their supplier master data. For example, they are currently managing the supplier add/change process for a number of large Fortune 500 companies, helping to improve both internal proces and spend compliance. Still, CVM and Aravo will not be alone in their quest to take a large share of the market at the intersection of supplier/supply markets content and Spend Management software. D&B is also gunning for this space. In addition, I suspect 2009 will also see Ariba begin to talk about the value of their network in terms of supplier content and insight as well. So far, much of this effort has been offline (e.g., Supply Watch), but it's easy to imagine that Ariba will begin to better leverage the aggregate information gleaned from the hundreds of spend analyses clients it has combined with sourcing and supplier network information.
Regardless, CVM won't be alone. But their broad customer reach given their relative small size ($10-$15 million in revenue by my rough estimates), the level of customer satisfaction that I've personally observed, influence in the supplier diversity sector and overall understanding of how supplier content plays throughout the Spend Management lifecycle will give them a unique angle on the market. The question, given the rapidly changing competitive landscape, is the extent to which they'll be able to exploit this edge.
- Jason Busch