Friday Rant: Yet Another One Hops on the SIM and Supply Risk Bandwagon

One of the major product enhancements that Emptoris introduced at Empower this week was an entirely new module release dedicated to helping companies collect, manage and ultimately analyze disparate forms of supplier information. Part and parcel of this announcement is a new supply risk solution that Emptoris suggests will help its user base who opt to expand their product licensing/subscription portfolio to take a more proactive risk stance. I've been angling to actually look at the product and hope to do so later today during a scheduled demonstration, but from what I can tell from screen shots and architectural sketches up to now, the solution seems a near mirror image of what Ariba released earlier this year (and what half a dozen other point solution providers unveiled last year).

Now there's nothing wrong with this -- and in fact there are some clear points of differentiation around the Emptoris supplier management solution pertaining to both supplier performance and soon, analytics and reporting. But does the world really need another player hopping on the SIM and risk bandwagon? Seriously, I can count almost ten providers now claiming to do virtually the same thing (albeit in certain cases there are significant advantages to some solutions over others). But to get back the question at hand, I believe that perhaps it does -- another solution tied to a suite might make sense. However, it depends on your view as to whether this area should carve itself out from the rest of the Spend Management technology arena
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In some cases, I think there's an argument to be made for basic supplier management requirements, it's important to tightly integrate information management into the core sourcing and supplier management suite -- incorporating spend analysis, sourcing, P2P (I include services procurement as a category focused subset of P2P), contract management and performance management. Why? For example, tight integration of supplier performance data with supplier information management facilitates a new perspective on supply risk. On balance, operational risk factors are often the very best leading indicators of supplier financial challenges. Moreover, having a readily available (i.e., throughout the application suite) single data model for supplier information that essentially becomes your non-transactional supplier system of record / vendor master as the foundation for all externally facing supplier process interactions can introduce vast amounts of new information throughout the Spend Management life-cycle -- helping to make better decisions, from up-front sourcing strategy development to contract award decisions to contingency planning scenarios.

There are, too, arguments against this. For one, SIM, at its core, is really a workflow and data collection tool rather than a decision support or transaction processing one (which brings an entirely different set of requirements and needs to the forefront). Likewise, I have yet to see a suite-based SIM provider offer a true supply risk management solution that allows for proactive insight into supply risk with enough early warning to allow companies to take action (all of their standard licensing agreements with content providers, so far as I'm aware, do not provide real-time alerting within the application for supplier status changes, but rather are batched-based unless the buying organization strikes a custom agreement and invests in customized enhancements to the product). There are also many, many nuances to the supplier registration, data collection and overall credential/certification management process that I think, so far, become lost on those suite providers who have not been doing this with years of experience behind them. Perhaps they'll catch up, but there's no substitute for the school of information hard knocks and refining a workflow and data collection model based on market feedback.

I'll handicap this market today by saying I suspect that folks like Ariba and Emptoris will be able to sign-up 30-40% of their customers that are looking for SIM and supply risk solutions. The rest will head down the best of breed route and potentially more users will sign up for multiple solutions (e.g., supply risk from a content provider, broad-based supplier management from another). What's the wild card here? ERP, that's what. Through a smart acquisition -- or some seriously fast product development, although this is unlikely -- SAP and Oracle could stake a solid claim to this market. After all, we are dealing with a new type of system of record here -- even if it is outside the four walls. Given this, shouldn't ERP and IT have something to contribute?

Jason Busch

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