Cortera — A New D&B Competitor in the Supply Risk Content Market(Part 2)
Categories: Spend Management |
In my first column tackling Cortera, a new upstart that provides supply risk content that competes against D&B, Equifax and others, I examined their potentially disruptive business model. Today, I'll continue this analysis digging into how Cortera has thought about building the next generation of supply risk (and credit) content, leveraging a traditional third-party/bureau scoring model as well as community-based approaches to ranking the financial viability of suppliers, not to mention providing additional demographic information.
But first, I thought I'd share a rather humorous anecdote. Sherry Gordon, with whom I'll be speaking at ISM next year on the topic of supply risk technologies and content, decided to give Cortera a try yesterday after my initial post. She suggested I search under some companies in the sector including Emptoris to see what came up (Emptoris is a great proxy as supply risk goes because they're a relatively small ($50+- million range) organization, the type that D&B would traditionally offer poor information on). In searching under Emptoris, I discovered, as Sherry did, that she is currently their CEO. This was news to her (even though she did sell her last company to the supply management provider). How ironic, I thought, given that we both spend far too much time investigating the supply risk area, including content.
This example highlights how you often get what you pay for with free information. But I'm guessing that the paid reports in the industries where Cortera claims to have their best information (i.e., manufacturing, distribution, retail and transportation) might prove to have more accurate information. Perhaps to make sure they're covering all the basics first, this is why Jim Swift, Cortera's CEO, told me that they've opted to initially provide single business profiles for sale on companies rather than tailoring specific supplier or credit offerings.
In his words, "our product philosophy has been keep it concise and general" which his why "we don't call them credit or supplier reports -- they're just business profiles." Further to this end, one of Jim's goals is to "zero in on the great need for better information about smaller companies". The challenge here is that we know "demographic data is difficult to get on private companies -- they don't want to give up financials". However, "the expectation around this is different than with trade credit," an area where it's easier to get information on companies.
Jim shared with me that while credit information is certainly a key driver of companies coming into the site, "we do see customers that come to us looking for supplier information". To fulfill the needs of companies looking for this type of information on smaller business, Jim is looking to drive his organization to "find ways of getting contributed data from smaller businesses," better than in the past. But to target financial intelligence on smaller suppliers and businesses, Cortera is also looking for ways to serve information to organizations that are "too small to contribute a trade tape" through community and other approaches. They plan to do this by creating a point-to-point marketplace angle that delivers a fundamental platform for organizations to share this type of information.
So far, Cortera has decided to focus first on serving up supplier and company information on the North American market. However, those who choose to access this information might very well be global in nature. Regardless of location, one thing Cortera believes it has in its favor with both of its models (i.e., proprietary reports and community-based content) is that Jim suggests more sophisticated risk and credit management organizations always like to have multiple sources of information and different data sources. In other words, "matching the right type and set of data to the specific business decision," is key. Such a strategy might dictate that a company uses D&B and a second source like Cortera for certain decisions. Or it might suggest using a provider like an "Equifax which is strong in Canada" and or regional markets.
So far in the early going, Cortera's combination of new and old models appears to be working, at least as early traction signals might indicate. Over 1,000 companies are now paying subscribers to the Cortera service. And the site receives 1,000,000+ visitors every month, often to the free demographic and community profile information. What is in store for Cortera next? I suspect if they can get the word out to the procurement, supply chain and finance communities that they're either a complement or alternative to D&B and others, that they could develop a strong niche in at least this one market area (partnerships and channel relationships with Spend Management providers will also be critical in this regard). But any long-term success will depend, of course, on the quality and accuracy of their content. Which is something I look forward to digging into after talking to reference users in the near future not to mention analyzing the subscription company profiles myself. In the meantime, I've asked Sherry if I can work for her at Emptoris. No word back yet ...
- Jason Busch