Alert — PurchasingNet Customers Should Evaluate Other Options

Following the announcement of Versata's acquisition of PurchasingNet last week, I had the chance to catch up with Mike Williams, a general manager at Versata responsible for its Nextance (contract management) and newly acquired PurchasingNet (eProcurement) assets. In the column that I wrote following the announcement, Versata Buys PurchasingNet -- A Spend Management Roll-Up Strategy?, I suggested that it appeared Versata was serious about investing in the PurchasingNet solution and keeping the majority of the customer- and solution-focused employees in the firm. This information was based on what Mike Williams had told Spend Matters. Now, having further explored the details of the deal by speaking with a number of individuals close to PurchasingNet, it appears that either Versata's statements were incorrect or Versata changed its stated plan for PurchasingNet less than a week following the announcement of the deal (I've seen both situations before in this market -- anything is possible).

Spend Matters has learned through a number of sources that a material portion of the PurchasingNet team (including key sales and implementation specialists) will no longer be with the firm by the end of Q110. Given this, it appears likely that Versata will follow the same path it has with previous acquisitions, going down a well-paved roll-up path of slowing innovation, and focusing on preserving or increasing maintenance, support, and upgrade revenue streams from current accounts. Spend Matters findings are in marked contrast to what Versata suggested in the acquisition announcement, in which Tim McEneny, founder of PurchasingNet, said, "We expect our customers to benefit from the accelerated pace of product improvements and technology innovations that PurchasingNet can now deliver."

It also runs counter to what Mike Williams suggested in the press release when he noted, "We look forward to building on PurchasingNet's award-winning customer support while advancing the product and solution set to increase business value." Just after this announcement, Mike Williams echoed this statement to Spend Matters, suggesting that Versata planned to keep the team in place. Last week he told me that Versata's goal "is to acquire companies and run them as stand-alone entities." Moreover, they are looking to leverage Versata's global footprint to help regional/national providers like PurchasingNet "expand globally, leveraging the deeper resources of the parent company." At the time, Mike also told me that "Versata plans to keep the management team of PurchasingNet in place (which is not what they did with Nextance, mind you), and focus on accelerating the product-release schedule and bringing new innovation to their solutions -- not to mention moving upmarket, potentially, as well." (Emphasis mine.)

At this point, given Versata's rapid change in strategy following the acquisition announcement, Spend Matters advises current PurchasingNet customers to develop and evaluate other options in the market. Given the indications that a significant portion of the team will be gone (I heard from one source that less than a half-dozen team members would be left, although I did not confirm this particular statement by enough sources to consider it credible), it is highly unlikely that Versata will maintain what's often referred to as the "tribal knowledge" of a company and a solution that were over twenty-five years in the making. Moreover, even if Versata is able to keep up the same levels of services and support throughout the transition, their recent actions suggest that they will most likely not follow the product-investment path that they claimed in the press release or suggested to Spend Matters, at least not with the experienced PurchasingNet team.

Spend Matters therefore believes that PurchasingNet customers, with this new knowledge in hand, should immediately develop alternative options before negotiating with Versata over their agreements in the coming weeks and months, or should simply plan to move off of PurchasingNet entirely at the appropriate time. That is, unless Versata can prove to them that it plans to maintain and enhance the product with a new team. An incomplete -- but hopefully useful -- shortlist of alternative eProcurement vendors with experience in the middle market (and smaller Fortune 1000 companies) includes: Bellwether, Enporion, Coupa, Verian, SciQuest, Ariba, Proactis, ePlus, Ivalua, Perfect, Global eProcure, and Ketera.

Jason Busch

Discuss this:

Your email address will not be published. Required fields are marked *