Please click here for Part 1 of this series.
Continuing our analysis of CombineNet's new partnerships with Spend Radar (spend analysis) and Upside (contract management), we'll begin with exploring CombineNet's rationale for structuring these agreements using a partnership approach (rather than building or acquiring technology). Spend Matters asked CombineNet, "why partner vs. build (especially in spend analysis given the strategic importance of data acquisition)?" Here's how they responded:
CombineNet: "Our strategy is built upon the delivery of best-of-breed functionality and performance in e-sourcing technologies with clear technological differentiation and added value. As we extend this strategy into additional functional areas within sourcing and procurement, we've elected not to build native solutions to deliver spend analysis and contract management solutions, but instead to focus offering tailored configurations and integration with providers who have spent significant investment in developing advanced feature sets in those areas. We see Spend Radar and Upside Software as delivering differentiated, best of breed functionality."
CombineNet: "CombineNet's solutions offered therefore benefit from the focus of those two respective companies, leveraging their core competencies and technological innovation for driving exceptional value in their areas of domain expertise, while providing for improved process flow and data integration between the applications. This allows CombineNet to continue to invest internally in product development that expands the features of our core offering, CombineNet ASAP for e-sourcing."
In other words, CombineNet is sticking to its best-of-breed guns by staying a core development course in sourcing, opting to integrate fellow best-of-breed technology around the edges. It's worth noting that this strategy is in contrast to CombineNet's most direct competitor, Trade Extensions, which has opted to build its own data acquisition, spend reporting and contract management capabilities (which while fully integrated into the Trade Extensions suite, don't compare to Spend Radar and Upside).
Trade Extensions' decision to "build" vs. buy/partner was certainly a cleaner one. In the case of partnerships, there are always open questions. Like, which reporting software will be used in the case of cross-suite reporting (the core vendor's or the partner's)? We put this question to CombineNet and they did not mince words when we asked, "will you be standardizing on the same reporting front-end (for event, category and related data) as Spend Radar?"
CombineNet responded, "the reporting functionality implemented by Spend Radar is an exceptional reporting tool. We will continue to evaluate the most effective way to enhance and enable reporting capabilities from each of the three
solutions now available from CombineNet."
No doubt, "exceptional" is not light praise, but it still leaves open the question over cross-suite reporting and when queries might touch on more than one area, and where and how they will appear based on a standard reporting configuration when both modules are selected.
In general, with spend analysis and sourcing, integration touch points are not as concrete as with contract management. As CombineNet shared with Spend Matters, "automated data integration between spend analysis and sourcing is not as straightforward as sourcing and contracts. Many of our customers have internal master data management schemas for sourced items and suppliers which may require subset data from spend analysis be accepted with an API interface structure. CombineNet will continue to evaluate tighter integration opportunities, which support process improvement and enablement of best practices. Additionally, we will continue to assess integration opportunities at a reporting level to provide greater project visibility and actionable insights across all three applications."
Outside of technical integration in partnerships, there's also commercial integration. We've heard from at least one of Spend Radar's other partners over the years that there have been circumstances where both organizations were competing for the same account (with or without knowing it) before coming to terms on who "owned it". In terms of how channel conflicts will be handled, CombineNet shared that "Our customer base and market focus is aligned strongly with that of both Spend Radar and Upside Software, thereby making these highly complementary channel partnerships. Great care has been taken in formulating both of the agreements and partner relationships to minimize the potential for channel conflict. In both relationships we have developed an integrated process for opportunity identification and registration of opportunities to minimize potential conflict as early as possible."
We would politely nod our heads in response to this answer, but having served in a variety of corporate and business development roles over the years before Spend Matters, our entire team knows the challenges inherent in channel situations. Still, we commend CombineNet for taking the leap and identifying two partners who share in their overall best-of-breed philosophy. And even more important, we are supportive of the fact these new relationships appear to be anything but simple reseller agreements. It's clear all parties involved thought through the business, technical and process integration steps that span the sourcing, contracting and procurement lifecycle and how an integrated solution should work.
At the same time, however, as with all cases of agreements including third-party licenses as a component (or at least third-party components of the software which play a material role on the workflow and UI level), we would encourage all potential CombineNet customers that will use Spend Radar and Upside to have a thorough attorney review process of the contract. It's our guess that one (or more) of the three best-of-breed providers in question in this relationship will fall into the hands of a third-party as part of an acquisition at some point in the coming years. Best to make sure you're protected in the case of cross-licensing deals given change of control or other scenarios.