From an adoption standpoint, the supplier information management (or supply base management) market remains an enigma to me. Companies need it on so many levels -- and continue to pay for solutions they only use in one place but could repurpose in others (e.g., supplier diversity portals and diversity management) -- yet we have not seen the market take off in software like it should (still, double-digit growth is nothing to shake your spend stick at, yet starting from zero is easier than starting from a nine-figure base). Now, I'm not complaining too much. I argue we're still seeing low double-digit growth in supplier management software at the moment amidst what's been even healthier growth in the demand for related supplier content and enrichment in the past eighteen months. I'd also argue that the platform side of the market is still not breaking out and becoming as important as sourcing, P2P, contract management, etc. as it should. RollStream, however, is one provider that appears to have cracked the code on selling supplier management capability into other areas of the business who think of it as something different entirely.
I recently caught up with RollStream co-founder Nick Parnaby in Chicago, fresh out of a day of sales meetings and ramping a new sales resource in the region. Even though I owe RollStream a much more detailed product write-up (which I'll get to this fall), I thought it would be useful to relay how they've been successful at positioning what's essentially a supplier information management platform -- they call it supplier/enterprise community management -- around specific compliance related issues. By learning how RollStream has been successful positioning around the compliance issue, I think procurement organizations will be able to easily garner interest, support and budget for investing in an area that benefits so many different interests in the business.
RollStream's platform for supplier management is tailor made for managing supplier compliance (although, like others, it lacks capabilities to do it at the item or part level). For this reason -- and because they've gone deep into the consumer products area -- they've been able to position the use of their tool around enforcement of company operational policies, legal and regulatory mandates, quality certifications, risk and ethical sourcing related issues. In many cases, some deals "get done because of a compelling event" that leads up to them, according to Nick. One example of this is the enforcement of the Consumer Products Safety Act (CPSA), including related fines.
Interestingly, many of RollStream's customers have already done a solid job with the basics of procurement and sourcing. Based on the customer name dropping, many of the current off-the-record accounts Nick shared with me are ones that our research suggests are clearly in the innovator or early adopter camp when it comes to sourcing, eProcurement, spend analysis, contract management, etc. But when it comes to supplier management and what RollStream describes as "community management and knowledge worker/supplier connectivity," few companies have invested in much (if any) automation and collaborative capabilities.
Even though it's possible to use RollStream as a true virtual vendor master, pushing and pulling supplier information to/from ERP vendor masters and other systems of record and updating information in a single repository, only a handful of customers are actually using the application this way today. In fact, Nick suggested that only 15% of their customers are to this point -- and it takes on average over two years to get a new customer up to this level if they start with a single basic initiative. Nearly all opt to focus on one compliance issue as the initial charter for such a program before going broad.
Stay tuned for Part 2 of this post to learn more about how and why customers are taking targeted approaches -- and who is actually pulling the trigger on these investments. They're clues in here that I think we can all take away for how to sell supplier information management internally within our companies.