It's always refreshing to see a company not only come back from the edge, but then take a true leadership role in a market that can create immense and unique value for procurement organizations (in a targeted area that has few true vendor options, mind you). The transformation that's taken place at CombineNet in the past 12 months following their acquisition by a private equity firm is nothing short of remarkable, given where they were not too long ago. Since we last met with CombineNet in 2010, the company has added 17 new employees, including three in the development area. Customer growth has almost kept pace with employee growth. In Q4 2010, CombineNet added 14 new customers and 12 existing customers became users of their self-service sourcing platform in the final six months of the year.
Growth like this suggests that CombineNet is succeeding in its vision to drive more aggressively into self-service, SaaS sourcing and optimization software, thereby addressing a larger portion of company spend while continuing to support the solution requirements for complex and advanced categories with a broader, services-driven delivery model. Many of the customers CombineNet has added include some of the biggest names in the consumer goods and retail area. Yet what is most characteristic of CombineNet's customer traction is not which industries companies are coming from, but their overall sophistication. Using our proprietary procurement and technology sophistication database, a quick analysis of recent customer wins and upgrades CombineNet shared with Spend Matter suggests that roughly 70% of their customers fall into the "innovator" or "early adopter" camp -- a very high number.
Yet will CombineNet's products ever prove, within the confines of a majority of procurement organizations, a replacement for an Ariba or SAP Sourcing type product -- especially in less sophisticated procurement environments? Despite some of the moves of early adopters of CombineNet ASAP, their self-service sourcing platform, to bring a much larger percentage of spend under sourcing management for companies using the tool, I believe it's unlikely we'll see many rip and replace scenarios. But I do believe that CombineNet could potentially exploit a large market niche, while sitting alongside traditional sourcing suite products.
The best way to look at ASAP is as a BIQ for sourcing. Yes, I can hear the rotten tomatoes about to be thrown, from multiple directions. "Sourcing is completely separate from spend analysis," you want to scream. And you're right. But just as with BIQ, which presents a powerful if not pretty environment to analyze complex datasets with ease and often sits alongside other broader spend analysis toolsets and/or BI platforms that can draw pretty charts and automatically export spiffy reports, CombineNet ASAP is a great complement to other sourcing products -- and potentially a replacement in certain circumstances for those looking to drive new levels of data gathering, formula building, market feedback and related scenario analysis in complex negotiation environments where apples-to-apples comparisons simply aren't possible.
In the next post in this series, we'll dig into some of the highlights in the latest release of CombineNet ASAP that help separate it out from the run-of-the-mill e-sourcing crowd.