This post is part of our 2016 Year-End Procurement Tech Review, in which we offer procurement practitioners a bird’s-eye view of some key vendors and their solutions in select categories. This week, we’re highlighting companies in the sourcing (including e-sourcing) and supplier management spaces.
The market for direct materials-centric procurement technology is just beginning to take off in North America and the Middle East. Yet POOL4TOOL is one of only a handful of technology vendors developing specialized solutions for procurement manufacturing environments. The Vienna-based procurement solution provider has extensive experience working with manufacturers across the source-to-pay continuum in direct materials.
- Founded: 2001
- Headquartered in Vienna, with American headquarters in Detroit, Michigan
- Has nearly 150 employees
- Annual revenue: More than $15 million (2016)
- Expecting to grow by at least 20% year-over-year for the next few years
- Provides services, including technical integration, installation, configuration and customization, as well as process consulting and direct material sourcing
Background & Overview
As a procurement technology vendor, POOL4TOOL is unique in that it is the only company that has maintained a direct focus on procurement throughout its history. However, it has evolved considerably from its early focus. What started as an upstream set of technologies (e.g., sourcing, total cost modeling, supplier management, analytics) centered on direct material supplier relationship management and e-sourcing now offers a broader footprint that supports for the full procurement lifecycle.
POOL4TOOL is privately held, though it received a minority investment from Amazon Web Services funds in 2013. It has a considerable share of the German market (middle market and larger organizations), and it has been expanding throughout Europe and Middle East. The vendor offers a flexible delivery model that includes cloud-based licensing and deployment models, single-tenant “ASP” hosting and behind-the firewall on-site software, and supplier connectivity solutions that can replace or augment existing electronic data interchange (EDI) capabilities. POOL4TOOL is based in Vienna, but it is making strategic investments in North America by expanding its Detroit office, investing in U.S.-specific sales and marketing, and making strategic hires.
The company’s e-sourcing platform has the majority of functionality that you would expect from a sourcing provider, as well as functionality that stands apart from most competitors. The e-procurement platform has all of the functionality you would expect and a lot more than you would even think of, because of the more stringent requirements of direct materials procurement. In short, the POOL4TOOL solution represents a true end-to-end direct procurement platform that starts at the RFP phase and manages spend, suppliers and direct material production inputs through sourcing, procurement, materials receipt and use.
- Fullstep (in Europe and Latin America)
- SAP Ariba
Commentary & Summary
There are two ways to look at POOL4TOOL and the direct materials-centric procurement technology market within which it competes: as believers and non-believers.
The first approach would suggest POOL4TOOL is a truly unique procurement solutions vendor that has a both a broad and deep application with unique capabilities not found in typical procurement applications designed for indirect sourcing and procurement alone (with few competitors). From this vantage point, Spend Matters sees a considerable uptake of this solution as more diversified manufacturing, automotive, aerospace and other companies that have sophisticated direct procurement needs realize what such a solution can provide.
The second approach would suggest that outside of Germany and Austria — both countries with unique procurement cultures and a strong manufacturing base — that POOL4TOOL and its competitors that focus on direct materials procurement are a sideshow in the broader procurement technology applications area. If looked at from this vantage point, POOL4TOOL and its competitors will find little growth outside of very specific markets (geographic and industry-based) that embrace the need for a highly targeted manufacturing procurement solution.
Having spoken with many POOL4TOOL customers and with those of competing solutions, we believe the former scenario is the most likely one to play out in 2017 and 2018. The unique capability this provider brings to an industrial procurement environment is simply too valuable to overlook as a novelty.
For a more comprehensive analysis and guide for procurement organizations looking to understand whether they should consider adding the provider to their shortlists for consideration, please head over to Spend Matters Plus.