Smart Cube – avoiding puns is tough, but we’ll try…

When Jason Busch from Spend Matters US was last over, we met with Guatam Singh, one of the founders and directors of Smart Cube. They’re a firm I’ve known about for some time, and bump into at conferences, without really getting to grips with the nature of their core business. So it was good to hear that directly from the boss (a very impressive character, incidentally). Here is his overview of Smart Cube’s proposition.

“We provide organisations with customised,  outsourced procurement research services. So typically an organisation gets us to carry out tailored research into some of all or their spend categories”.

They’re obviously doing something right, with 120 of the global 500 top firms counted as customers, growth rates of 30% + and revenues now in the order of $20 million annually.

So digging into the business model – how do clients pay Smart Cube? What’s the pricing model? Is it a day rate type engagement?

“No, generally the client agrees a number of units of work as an annual subscription, then we discuss with them where they want us to put our efforts. That is key – we are not producing generic research, but output that is matched to each client’s particular needs. Typically we are testing hypotheses for the category manager and coming back to them with insight and learning”.

The advantage to the client is three-fold. Research related tasks are taken away from category managers who can focus on higher added-value work. Smart Cube also have developed a deep expertise in executing this sort of research, so the quality may well be better than firms could do themselves, with very deep category knowledge on a global basis. And finally there is a labour arbitrage in that most of the Smart Cube work is carried out in India.

But what I particularly liked about the model as Singh described it is that there appears to be strong engagement through the process between the client and Smart Cube. So it is not just a piece of research that is ordered appearing on the desk some weeks or months later – the research team engages regularly with the category manager and their work is tailored and flexible to what may well be changing client needs over time.

Some clients have gone so far as to say that they don’t want their category managers to be doing any research work. They perceive that the value from the expensive category managers should come from areas such as negotiation and deal making, internal stakeholder management, supplier performance improvement and management work.

In terms of competition, Beroe are possibly the closest research  rivals, and the Procurement Intelligence Unit (within the Procurement Leaders set-up) is another somewhat similar model. Various consulting firms might also offer similar services, and there is some overlap with procurement outsourcing solution providers. But Smart Cube appear to have carved out a new market sector here really.

Singh positions his firm in those three spaces, but he believes they have a quality / price advantage over the major consulting firms; can be more customised then most outsourcing firms and can act as the independent “arbiter” when it comes to research.

So, an interesting success story, and another proposition for CPOs to consider. As we’ve said before, there has been an explosion in the types and numbers of solution providers that procurement leaders can choose to work with to support their goals – and here’s another worthwhile and impressive option to consider.

First Voice

  1. Dan Quinn:

    Thank you for the positive review Peter, if any of your readers would like a free copy of our ‘Cubisms’ magazine (Insights into Procurement & Supply Chain, Strategy, Finance & Data Analytics) it can now be downloaded from our revamped website; http://www.TheSmartCube.com or drop me a note to Daniel.Quinn@The SmartCube.com best regards, Dan.

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