Earlier in February, CombineNet announced it had partnered with Spend Radar and Upside in spend analysis and contract management. When we initially heard about the news, we were intrigued for a number of reasons. First, by partnering with third-parties in areas where it doesn't compete today (although one could argue data acquisition and line-level classification is fundamental to doing large scale sourcing and optimization right), CombineNet tacitly acknowledged that the advanced sourcing/sourcing optimization market where it competes is not an island, and that it must have closer linkages with other parts of sourcing suites that are more than batch-based hand-offs. This is an assertion we haven't entirely bought into given the fact that much of the CombineNet user base today is already using other vendors (e.g., Ariba, SAP) to cover other aspects of the source-to-pay automation lifecycle.
But perhaps more important is the question of "buy" vs. "build" -- or in this case, partner. When it comes to contract management, the partner scenario makes a lot of sense to us. Upside is without question one of the top -- if not the top -- player in the space. Replicating what they have in terms of capability and IP, even if it were possible, could take a decade or more. By having a native integration with Upside now as part of its own contract management offering -- CombineNet shared with us that their contract management offering is a CombineNet-specific configuration of Upside Contract (full) V7 Software deployed as Cloud offering using Upside's technology base, and will include best practice workflows for CombineNet's customers and prospects -- they'll have a good story to tell against other sourcing providers who don't compete in Upside's contract management league.
These other providers include Ariba, BravoSolution, SAP, Oracle, Iasta, Zycus and more. In fact, Emptoris/IBM is just about the only vendor that also has sourcing capabilities that can be directly compared to Upside on the contract management front. Spend Matters research suggests that the market for more advanced contract management capabilities within procurement, including more closely linking authoring, clause libraries, approvals, etc. into the immediate post-sourcing process or as a direct outgrowth of it, is a very significant opportunity with very limited penetration today. And only CombineNet/Upside and IBM/Emptoris are in the pole position to truly take advantage of what companies on the vanguard of sourcing, contracts and transactional procurement integration are after.
Still, this advanced sector of the market represents only a small piece of the whole. Indeed, most companies that have deployed contract management capabilities that procurement leverages have taken advantage more of vault/repository-type features to manage current agreements through to expiration and renewal than the actual authoring. Moreover, Upside's direct integration into direct purchasing and P2P environments to truly thwart any type of maverick purchase (including a "sub" maverick purchase such as unnecessary extended warranty, incorrect payment terms, etc.) presents a much enhanced compliance value proposition for procurement to link negotiation/contracting systems with transactional buying and approvals.
For specific integration contract management and sourcing use case integration, CombineNet shared that "CombineNet ASAP and Contract Management will have direct integration to initiate the contract creation process in Contract Management using sourcing data from ASAP -- supplier data, item data and pricing data. Customers can run their e-sourcing event, conduct optimized bid analysis, negotiate prices and terms with suppliers (and then update bids, capacities, other price and non-price information in ASAP), and create a final award allocation in ASAP, and then push this data into Contract Management as contract meta data to begin creating contracts."
As with Upside, CombineNet customers can contract for Spend Radar directly with CombineNet on a single sheet of paper. CombineNet will also support these offerings with their own resources.
Stay tuned as our analysis continues in Part 2 of this post, where we'll examine the relationship with Spend Radar more closely, as well as broader aspects of the partnerships and what they mean for CombineNet customers and prospects.