We've been talking for some time on the different Spend Matters sites about how social media principles and approaches will inevitably make their way into the business and procurement world, yet progress has in reality been pretty slow. The innovative Rollstream has been assimilated into GXS, now itself part of OpenText, and seems pretty low-profile these days. However, there are signs that things are changing. Sourcemap is a more recently established firm that has an interesting approach, including some aspects of supply chain collaboration with a social media slant. Mark Perera, one of the founders of Procurement Leaders, is involved in Old Street Labs, whose new Vizibl platform is in its testing phase (we'll feature it as soon as you're ready, Mark). The platform looks to use some of the core social media principles in a business environment. And now we have LeanLinking starting to make a splash. This Spend Matters Plus research brief, by Peter Smith (managing editor of Spend Matters UK/Europe), looks at what LeanLinking has to offer and which organizations would benefit from the technology.more ▸
GTCR & Opus Global Buy Hiperos: Consolidation Begins in Supplier Management Solution Market (Part 1) [Plus +]
Marketing can have a funny influence on things. Hiperos labels what it enables as “third party management” rather than “supplier management” or “supplier lifecycle management.” But make no mistake. This is a play with words by a clever marketing department and doesn’t mean a different core value proposition. (We think this comes from a sales focus on finance rather than procurement; to the CFO it’s all a bunch of third parties and compliance, and finance just can’t be bothered with terms like suppliers.) When GTCR and Opus Global acquired Hiperos earlier this week and not only kept the current management (one of whom is a major investor) actively engaged in the business but also put them on the broader holding company’s board, they were making a bet on the need to better manage traditional indirect suppliers, staffing companies, consultants, BPOs, and others who serve customers in a contracted way – in their case, typically large financial services clients. In many cases, Hiperos led with a “meet the [fill in the blank] regulatory requirement” value proposition – a message that works, especially for a finance audience.
But what Hiperos and its competitors (Aravo, HICX, IBM/Emptoris, Lavante, Oracle, SAP, and many others) are capable of accomplishing in the sector far transcends simply meeting check-the-box regulations. Done right, the better engagement of suppliers across a lifecycle is a massive undertaking, as it starts with a tailored onboarding process (don’t count on your P2P or e-invoicing provider to touch more than a few bases in this area) and carries through to supplier engagement, performance management, development, risk management and eventually off-boarding (by PO, assignment or overall) at both the SKU and overall vendor level. And it’s an undertaking that can transform procurement and finance outcomes spanning all non-employee resources and T&E-related spending (which represents a massive portion of the business). For this and related reasons, we believe that in 2015 (and perhaps sooner) we will see more consolidation in this market. In this three-part Spend Matters Plus research series, VP of Research Thomas Kase and Managing Director Jason Busch consider the backdrop and rationale behind the expected consolidation and offer predictions for what moves to watch. Our analysis today begins with why this market is becoming more strategic to customers.more ▸
Earlier today, GTCR and Opus Global Holdings collectively announced they had acquired Hiperos, the supplier (and other third-party) management vendor. Hiperos is originally a supplier performance management (SPM) focused provider from Southborough, Mass. It has since expanded to deliver a broad range of third-party data collection and supplier lifecycle management solutions – and will now operate as a business unit under Opus Global. Opus Global in turn is a JV between GTCR (a private equity firm from Chicago) and Doug Bergeron. Bergeron was until 2013 the CEO of VeriFone and is now the CEO of Opus Global. GTCR and Bergeron go back to VeriFone – which Bergeron (together with another investor) had bought from HP for pennies on the dollar ($50 million for an asset which HP has paid $1.3 billion). When Bergeron resigned after 12 years as CEO, the company had a market valuation of $3.5 billion. (We thought Bergeron’s long-term ownership and patient growth focus background is important to note.) Note also that Bergeron’s background is from the financial services industry – where Hiperos has a strong presence. In this Spend Matters PRO analysis, VP of Research Thomas Kase and Managing Director Jason Busch take a closer look at Hiperos (including a detailed SWOT analysis), private equity/buyout implications, the prospects for the supplier and third-party management market, and what the acquisition means for customers, prospects, and competitors.more ▸
This is the second in a two-part Spend Matters Plus series by analyst Thomas Kase. Recently we wrote about the business case for building a suite offering, a topic that sprung out of the Selectica/Iasta deal. The case for suites – and the case against, mind you – is an important one to flesh out. So continuing this line of thought, how does supplier management fit in with the suite vs. non-suite concept?
What are the benefits from having SLM integrated with a suite (comprising sourcing, P2P, contract management, etc.), as opposed to running SLM as a stand alone – perhaps from someone like Aravo, CVM/Kroll, HICX, Hiperos, just to mention a few of the more well-known point providers? When does it make sense to make do with a less capable in-suite SLM solution versus investing in a best-of-breed point solution with greater capabilities? What are the single data model/platform integration advantages?more ▸
Recently we wrote about the business case for building a suite offering, a topic that sprung out of the Selectica/Iasta deal. The case for suites – and the case against, mind you – is an important one to flesh out. So continuing this line of thought, how does supplier management fit in with the suite vs. non-suite concept?
What are the benefits from having SLM integrated with a suite (comprising sourcing, P2P, contract management, etc.), as opposed to running SLM as a stand alone – perhaps from someone like Aravo, CVM/Kroll, HICX, Hiperos, just to mention a few of the more well-known point providers? When does it make sense to make do with a less capable in-suite SLM solution versus investing in a best-of-breed point solution with greater capabilities? What are the single data model/platform integration advantages? These are the core questions that analyst Thomas Kase addresses in this Spend Matters Plus two-part series. This is Part 1.more ▸
At a recent ProcureCon Marketing event in London, many agencies and buyers opined that “agencies need to make a fair return” from their work with clients. Speakers suggested that collaborative, strategic relationships were unlikely to be developed and sustained if the buyer is continually attacking the agency's margin. One impressive speaker said, "There’s nothing wrong with an agency making profit margins of 10 or 15 percent, just as a major FMCG (fast moving consumer goods) client with strong brands would look to make." This leads up to the sixty-four million dollar question - what exactly is “fair”? Peter Smith, Executive Editor of Spend Matters UK/Europe, discusses the subjectivity of the definition of fairness and how it plays into supplier management.more ▸
The supplier management technology and solutions market has been one realizing quiet success over the past 18 months. But it doesn’t get the same level of attention from procurement executives, investors, and the media that truly “hot” areas like P2P, supplier networks, and e-invoicing do – despite the fact it’s arguably a much more important area to invest in first. More important because it is a foundational issue that enables much of all the other initiatives.
One of the challenges of the market that we wrote about in the Spend Matters PRO research brief Supplier Management Forecast: 2014 Customer Recommendations and Vendor Shortlists is that “there is not a single ‘supplier management’ market. Nor is there simple supplier/vendor landscape segmentation. The marketplace is highly fragmented, as can be seen in our market growth analysis report … [across] functional areas that rely on supplier information in order to meet other business needs, as well as in focused point solutions and suite modules that are designed just to manage supplier information.”
Aravo is a key player in this emerging landscape, and while the company has been relatively quiet on the marketing side, it continues to innovate on the solutions front and manages some of the most complex supplier management deployments for Pharmaceutical/Healthcare, CPG, and diversified manufacturers and high tech companies. In Part 2 of our spring/summer 2014 update on Aravo, Managing Director Jason Busch and Research VP Thomas Kase explore Aravo’s latest capabilities and emerging roadmap items, and provide recommendations to customers and partners.more ▸
By our records, Aravo was the first supplier management vendor, in existence even before the sector – and before Aravo associated itself with the concept. Yet Aravo’s marketing has been relatively quiet over the past few years as the company went through a management transition and focused on execution. It has not hurt Aravo, however, as the provider has witnessed material double-digit CAGR growth in the period, significantly outpacing the forecast CAGR of the supplier management market based on Spend Matters estimates. During this time, Aravo has continued to execute on its supplier management platform strategy, albeit with some adaptions which Spend Matters believes are reflective of general shifts in the market. This Spend Matters PRO brief, written by Jason Busch and Thomas Kase, provides a look at how Aravo has evolved since it helped launch the original supplier management and supplier information management market. In Part 1 of our analysis, we review the Aravo solution set and explore solution direction and strategy (e.g., Aravo’s conflict minerals approach). Part 2 will feature a look at some of Aravo’s latest capabilities, their new user interface, and emerging roadmap items, and provide recommendations to customers and partners.more ▸
This topic has been brewing for a while. Back in 2006, I presented a simple version of this topic at an Ariba Live event. It was well received (and was how I got introduced to a long-time client who is now a CPO at “Top 25 Supply Chain” CPG firm) and is still relevant today. Procurement can be a full contact sport, but in the world of the Global Business Services (GBS) model for enterprise service delivery, it is also a services business. As such, procurement organizations need to adapt best practices from the CRM world to manage their diverse stakeholders. In this first part of a multi-part series, I will explore over a dozen CRM segments and begin to lay out how companies are applying CRM principles and practices to the “business of procurement.” Note, CRM for “supply” and suppliers is not the buy-side of “SRM” or supplier management – it’s a much bigger, hairier, and more encompassing beast. It’s also not just about tools and technology.more ▸
Every semester, I give a guest lecture on economics at Columbia College in Chicago. As I was driving to class yesterday, I tried to put supplier fees in context of a core economic construct: externalities. But it’s not a perfect concept to slot supplier fees into. A true economic externality is one that tangentially exposes or affects an outside third-party – or parties – to a decision or transaction in which they have not participated, such as a consumer who must spend more for a given item based on the consequence of legislation aimed at reducing greenhouse gas emissions. Narrowly defined, an economic externality is “a consequence of an economic activity that is experienced by unrelated third parties.” So the supplier fees that are imposed and paid to a network are not a perfect externality given that a supplier is party to the transaction. Yet, the supplier has no say in the matter and is required to pay these fees, even in cases where a relationship with an end customer pre-dated the supplier network fees via a third-party being imposed. So by extension we could argue that the consequence (i.e., fee imposition) is an externality, at least loosely. But externalities can be both positive and negative. This Spend Matters Plus brief will provide examples of positive and negative externalities based on the imposition of supplier network fees.more ▸
When is the best time to fire a non-performing service provider? Should we take action as soon as serious problems become evident? Once they've had a chance or two to sort out the issues (but have failed in those initial attempts)? Or only as a very last resort, after a lengthy period during which they can try to rectify errors? There are a number of key issues to be considered here. Read on for what these are, as well as for supplier management lessons that can be extracted from soccer clubs and their hiring and firing of managers.more ▸
Earlier today, Coupa announced it was partnering with Alibaba.com, a company that was once really just a directory service for global suppliers. It has since become as diverse in its holdings (if not more so) than eBay. The purpose of the partnership seems straightforward, but Spend Matters has found that Alibaba overplays its own usefulness in the Fortune 500 as it markets to Chinese suppliers. Alibaba’s supplier listings, catalogs, and directories might be more useful for smaller buying organizations. Potential users of integrated search services connected with source-to-pay applications would do well to consider a number of factors to gauge the actual usefulness of the relationships. Read on for these recommendations, as well as our detailed analysis of the deal.more ▸