Deem: A B2B Phoenix Rises Once Again

This is Part 1 of a multi-part series on Deem. Spend Matters Founder and Managing Director Jason Busch and Vice President of Research Thomas Kase will begin by taking a firm look at the history of Deem and begin analyzing its spend analysis and contract management modules. Stay tuned for future installments of this PRO series. 

Deem is a B2B phoenix. Leveraging a platform-as-a-service (PaaS) strategy a decade before anyone knew what PaaS was, Deem rose to fame but succumbed to the lures of custom development – in part by accident, as its customers and board members coerced it in this direction – on its platform along with unexpected legal nastiness following an acquisition (Ketera). Today, having risen from the ashes and refocusing on the end user with a proven corporate travel product (best known through private labeling to date), increasing P2P capability and a broader set of procurement technology assets that tie back to the original PaaS vision, Deem is poised to inject both new competition and ideas into the SMB, mid-market and enterprise markets in 2015 for managing, directing and controlling corporate spending. This Spend Matters PRO essay and analysis provides history and context behind Deem’s challenges in the market and how it tackled them to bring its current suite of spend and expense management products to market – including the evolution of the acquired Ketera product set. We begin by sharing the history of Deem in the procurement sector and exploring its spend analysis, contract management and sourcing products.

Don’t Bet Against Patrick Grady

Patrick Grady is one of the most stalwart personalities that we’ve met in the procurement tech sector over the years. When most executives dig themselves into a hole within a sector, the vast majority quietly shovels out a new trench to find a quiet exit and move onto their next venture. Not only did Patrick find himself in 2 major holes for Deem (formerly Rearden Commerce) over the years as founder and CEO, but he then managed to climb out of both of them – on his own. Ninety-nine percent of CEOs would have abandoned ship. Patrick stuck it out.

The first hole Patrick found himself in was when he took on significant funding and fees from large banks in exchange for essentially doing custom development for travel, rewards and related bank offerings on top of the original Rearden platform. This was a means for Rearden (before it rebranded itself as “Deem”) to raise hundreds of millions of dollars during a time when B2B technology solutions had lost their venture capital luster. It got Patrick and Rearden some great business and Silicon Valley press, but it also forced the team to commit resources toward bank-scale development projects.

During this time, the capitalization and even management structure of Deem became complicated, and its bank partners and investors became more active shareholders, impacting R&D-level decisions to support its own needs. Ultimately, Patrick and his team were able to recapitalize and eliminate the bank custom development burden, but these “whale” customers and investors nearly succeeded in drowning the original vision of Rearden Commerce and what ultimately became Deem.

The second major hole Patrick (and Deem) found himself in was after acquiring Ketera, and then, for reasons that actually had little to do with Deem but rather other individuals who were involved (outside of Rearden), getting embroiled in a nasty legal entanglement with Ariba, which sued Ketera (and Deem following the acquisition), and made it difficult for Deem to sell any of its newly acquired assets to customers. The silver lining in this is that it gave Deem 3 years to invest in the IP built by Ketera over the years and tie this to Deem’s broader suite capabilities, while at the same time continuing to respond to Ketera customers’ requirements and needs.

Voila: Deem’s Spend and Expense Management Solutions

Fast forward to today. While the Deem suite now includes a range of offerings for buyers and sellers – including new P2P capabilities that include negotiated contracts/pricing much like a GPO for small- and medium-sized businesses, as well as the ability for sellers to target specific offers to buyers – nearly all of the core procurement IP of what Deem is delivering today (outside of P2P and T&E) is based at least in part off what Ketera had previously developed.

Deem describes this part of its procurement solutions suite as “Deem Spend.” It comprises 4 separate modules:

  • Deem Spend Analytics (SA or spend analytics)
  • Deem Contract Management (CLM or contract management)
  • Deem Sourcing (sourcing)
  • Deem Catalog Management (catalog)

We will offer a quick comparative overview of each of the first 2 modules in today’s analysis:

Spend Analytics

Deem Spend Analytics provides a core spend analysis offering to customers. The current spend analysis market is still often dominated by older generation products (e.g., BravoSolution, with its VerticalNet-derived product, Emptoris/IBM, but wait for the revamp likely available later in 2015, Ariba, etc.). The Deem SA tool was originally released in 2007 and features many of the same capabilities of its market peers that developed products around the same time or earlier.  It includes data acquisition, cleansing, classification and enrichment capabilities – table stakes for spend analysis solutions today. The Spend Matters team counts former Ketera Spend Analytics customers among its members, and we found the solution economical and effective when using it in the past. It is as undifferentiated as most of the tools from its competitors and does the basic job, at the right price and can be a suitable solution for building basic visibility into spending.

deem_spend_analytics

Contract Management

Deem Contract Management is a surprisingly full-featured contract management system that also does a commendable job covering the basics – and is likely to be more than sufficient from a procurement perspective for middle-market companies and even certain larger procurement organizations that do not want to purchase a separate best-of-breed contract management tool. While Deem CLM tool lacks capabilities to compete against contract management specialists (e.g., clause usage scoring that ties back to clause libraries to flag at-risk contracts for higher level legal review, support for buy/sell side contract integration, advanced Word integration, etc.), it does include both authoring and repository capability and can support the full lifecycle of engagement with suppliers. As with Deem's SA tool, it is comparable to many suite vendor products, but not specialists. It does the job, but doesn't wow you with bells and whistles.

deem_contract_management

As our analysis continues, we will explore Deem’s sourcing and supplier enablement products.

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