Microsoft and Hubwoo Partner: Dynamics, Business Networks and P2P

Earlier this week, Hubwoo and Microsoft announced a partnership designed to add additional procurement and e-invoicing / AP capability on top of the Microsoft Dynamics ERP solution set by integrating Dynamics’ customers to the Hubwoo Business Network. On the surface, the initial phase of the partnership is targeted at enabling Microsoft Dynamics AX users (the segment of the Dynamics customer base oriented to larger enterprises – typically greater than $400M in revenues) to use the Hubwoo network to take advantage of its P2P transactional services.  These include content/catalog management and PO exchange on the buy-side – as well as supplier enablement and e-invoicing integration on the sell-side.

But our initial take is that underneath the surface the deal appears to provide a somewhat stealth means of closing procurement and P2P gaps in the Dynamics solution set (regardless of the network positioning). The solution should help give Microsoft a leg up on other middle-market ERP players that lack a comprehensive indirect procurement capability (including catalog management and supplier connectivity / enablement).

It’s equally as important that if Microsoft and its value added resellers (VARs) truly get behind the deal with strong marketing support, it could be very significant for Hubwoo and Microsoft customers combined, potentially offering a substitute approach for Dynamics users to avoid implementing a separate third-party P2P solution such as Coupa, Ariba, SciQuest, Verian, Basware, GEP and others.  It’s also obviously important for Hubwoo to align itself with large application providers as “on-ramps” to the Hubwoo network given SAP’s recent acquisition of Ariba.

Reading through the press release lines on this one is not easy for those outside of the sector. But in today’s supplier network/connectivity environment, where transactional capability and routing occurs (and even shopping/requisitioning/workflow exists) in the cloud can have blurry lines as supplier/business network and app-based cloud solutions can contain overlapping capabilities.

We’ll offer more detailed analyses of the news on Spend Matters and Spend Matters PRO once we’ve had the chance to talk to more folks involved in the relationship and explore the Dynamics strategy in greater detail with the Microsoft team. But in the meantime, here are some additional summary snippets and positioning elements to consider:

  • The stated goal of the partnership is to offer a “step change in spend compliance and accounts payable automation” for Microsoft Dynamics customers according to the announcement
  • For Hubwoo, the partnership could bring significant additional volume and traction onto its network, providing further enticement to suppliers participating to sign-up for additional fee-based services (note, suppliers do not pay fees for transactional connectivity on the Hubwoo network)
  • The initial phase of the partnership “ is focused on customer savings in spend compliance and accounts payable business processes” while “Phase II will address additional processes such as customer relationship management and accounts receivable automation among others”
  • Hubwoo will start to enable larger AX customers in the initial phases of the partnership, but in the future, this could also include smaller Dynamics enterprises (on both the sales/receivables side and the procurement/AP side)
  • “Hubwoo will develop adapters that will allow Microsoft Dynamics AX customers to connect their accounts payable, procurement, customer relationship management, and accounts receivable processes”

 

More broadly speaking, where does this leave Hubwoo? The company is telling the media and analysts that it will continue to support “its existing customers on SAP platforms and recently renewed its SAP BPO agreement to continue to sell and support SAP applications” and that the Hubwoo “network continues to have certified integration to SAP systems.” However, owing to the Ariba acquisition, “Hubwoo and SAP have no go-to-market partnership around networks.”

Stay tuned as our coverage and analysis continues.

Voices (5)

  1. Gurjeet:

    This is a refreshing development for Microsoft Dynamics customers now have alternate solution to third-party P2P solution. It would be interesting to know further details of this collaborative solution with so called ‘plug-in’ approach.

  2. Stef Clarion:

    I am not sure that “Suppliers do not pay fees for transactional connectivity on the Hubwoo network”. As far as I know, Suppliers pay a fee on the PO value (for sure in Europe, need to check in N-America). You are right though that some Buying organizations have an agreement where their suppliers dont pay. The Hubwoo Supplier fee has been to my opinion one of the main issues in the early 2000s, as their competitors’ pricing model like Ariba was much simpler for Suppliers – more automated & self service – and less costly for both the Suppliers and Hubwoo itself. Hubwoo had to adapt its (buying) Customers requirements in almost case by case approach and some of them (at least in Europe) wanted their suppliers to contribute indirectly to the “eProcurement/eConnectivity project” through Hubwoo fees as they considered the benefits would be shared, which was certainly true in the long run – but not perceived this way at the beginning.

    1. Rinus Strydom:

      As clarification to Stef Clarion’s comment-
      Hubwoo’s go-to-market model is 100% buyer-paid subscriptions. Sellers pay no taxes (value-based fee) nor tolls (flat fees) to receive PO’s or invoices. Suppliers only pay for optional value added services such as context sensitive advertising or public catalogs. This “no tax on commerce” strategy has significantly acclerated the supplier onboarding speed at Hubwoo as there is no barrier for suppliers to approve and sign a monetary contract.

      By the way, this buyer-funded transactional fee model is significantly less expensive than Ariba’s buy side subscriptions – even before you layer the supply chain costs of Ariba’s supplier tax model.

      Hubwoo does have some legacy contracts under a split-funded model where both buyer and supplier pay. Those will continue to be honored.

  3. Maverick:

    “sadly, the best practices for REAL invoice process automation lies beyond the capabilities of procurement players…” really? people said the same of Ariba years ago. It’s like saying that Basware will never have REAL eSourcing functionality. Sorry, it’s invoice automation – not rocket science.

  4. Toby Thorsen:

    While this may seem like a good idea at first sight – and I believe many will be blinded by the shiny brightness of supplier/buyer connectivity aspect of the deal, the real problem facing procurement and AP cooperation lies far from the capabilities promised by the procurement led business network kingpins. Whilst supplier and catalog enablement may seem a big deal to indirect procurement professionals, it hardly matches up against the broad needs for invoice capture, validation, 2/3/4 way matching, approval, exceptions management, invoice reporting and archiving that are the focal point for most AP-functions.

    And sadly, the best practices for REAL invoice process automation lies beyond the capabilities of both procurement players such as Hubwoo (or Verian, IBX, Coupa, et.al for that matter) as well as Microsoft Dynamics ERP.

    So anyone with their eyes on the full procure-to-pay process will still come up empty handed with this partnership and probably – I believe – levitate towards the more AP-centric players such as Basware (or even capture players such as ReadSoft, who just released an AP-process in the cloud for Dynamics).

    Much of Basware’s success owes to its strengths (and reputation) in AP, who in the bigger scheme of things holds the better cards and are thus more likely to get the attention of the stakeholders who will eventually foot the bill.

    So to call this partnership a way to “avoid implementing a separate third-party P2P solution” is a bit of an overstatement – even with this partnership in place, AP will still need a third-party solution to enable the capture, validation, matching, exceptions management and general invoice workflows necessary to secure full p2p automation.

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