SAP to Source Risk Data From Cortera, Endorsing an Upstart Content Enrichment Provider (Part 1)

Earlier today, SAP announced that the Cortera Risk Data and Reporting solution had become an "SAP-endorsed business solution." SAP customers will now have the ability to easily integrate Cortera supplier risk content into SAP's BusinessObject Spend Performance Management application through the SAP BusinessObjects Data Enrichment and Classification OnDemand solution. A mouthful, I know, but essentially SAP has partnered with Cortera to allow the virtual OEMing of data that competitors such as Ariba and Oracle are "sourcing" from D&B (although clients actually contract on Cortera's paper, not SAP's, in this particular case). This whole content partnership thing can be a bit confusing however, since in general, it's possible to integrate any type of risk enrichment data from any provider into any spend visibility or supplier management toolset, even if your vendor does not have a partnership with the provider you want to use. In fact, in some cases, companies might have credits with D&B and others from another piece of the business (e.g., trade credit, sales) that they can apply on the supplier risk side of the equation.

Still, when a vendor endorses a content provider, data integration usually becomes more seamless and appending a risk enrichment file to a vendor record can be just as easy as signing on the dotted line and flipping a switch. Yet SAP has stopped short of being a true OEM for Cortera. Given this, just what is an SAP-endorsed solution? According to the news, "Solutions endorsed by SAP are complementary to SAP software offerings, are developed in accordance with SAP development guidelines, and provide additional choices and flexibility for businesses running SAP applications." Moreover, "as part of the agreement between Cortera and SAP, both companies will share technology and product roadmaps."

We'll cover Cortera's pricing and approach to supplier risk data in general in a follow-up installment to this column -- including the specific information Cortera is providing in the context of a record in SAP's Spend Performance toolset -- but it's safe to assume that Cortera's pricing is among the lowest in the market, speaking in general terms. Stifel Nicolaus, a boutique investment bank, covered Cortera in a recent sell-side note (NB, Cortera is privately held), that Cortera could be a threat to incumbents because of its price points. To wit, on the credit side of the house, "Cortera charges $2.50- 5.00 per credit report versus Experian charging $29.99-$49.99 and DNB charging $59.99-$179.99. In competitive situations with DNB, Cortera commits that total spend will not add up to more than 50% of what DNB is currently charging."

Despite price points that are all over the place, it's difficult to compare particular reports and scores on an apples-to-apples basis in this market. Moreover, the reseller and grey market for content makes direct price and contextual comparisons all that much more challenging. Still, the general risk score numbers and related enrichment data (e.g., D&B SER) that companies license in bulk as part of a spend analysis or supplier management risk enrichment program tend to be materially discounted from the above numbers, especially in arrangements based on quarterly, monthly or more frequent refreshes. And as many data insiders know, it's been possible in the past to buy credit and risk data from resellers at prices that are often less than what either OEM or direct sales models would charge (although content providers have closed many if not all of these loopholes).

Regardless, it's our view that as Cortera becomes a more familiar face in supplier risk content, that added competition will do two things to D&B and other incumbents: 1) it will force the innovation hand (of incumbents) to bring out new offerings that stand out from the crowd; and 2) it will potentially put price pressure on offerings that are currently perceived as substitutes for each other (in a Porter context) even if they're not directly comparable. Perhaps most important, the SAP endorsement should help provide more credibility to Cortera, a vendor rarely considered for supply risk content enrichment programs today.

Stay tuned for additional coverage on this news and how Cortera has packaged its offering with SAP (as well as some insight on trends in the risk market from Cortera's latest trending analysis). In the meantime, for past Spend Matters coverage of Cortera, see the following articles here and here.

Jason Busch

Discuss this:

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