A New Rumor: Open Ratings and D&B

The rumor this morning China-time is that D&B has picked up Open Ratings. While there's not a press release out yet, I've gotten a few emails already from Spend Matters readers letting me know about the announcement in the past couple of days. But until it's officially confirmed from a party on either side of the deal (I've not been able to reach anyone live here from China, despite trading voicemails with some Open Ratings folks), consider this news in the "strong probability" rumor category. Also, please feel free to comment on the deal as well below with your own thoughts. I wanted to get something posted before heading out to visit a supplier here in China this morning.

In my opinion, D&B's rumored acquisition of Open Ratings is a bit of a mixed bag. For me, Open Ratings is at the convergence of a number of critical procurement and supply chain challenges, and if it had stayed the course, it could have built itself into a large ISV by evangelizing and building its own marketing segment: supply risk management. In other words, I'm partially disappointed that they did not stick it out. My other issue with the deal is the acquirer's seriousness about the Spend Management sector. D&B is known as a slow moving organization that up until now, despite significant investment, has not really come up with anything terribly useful in the Spend Management market. Many might disagree with this statement, but to me, I've heard from inside prior D&B staff that historically the supply management group has been treated more like a rounding error than an investment focus.

Honestly, I'm worried that Open Ratings might get lost in their supply management group, and fail to thrive in the same way it could have independently or as part of another vendor who really gets Spend Management to begin with (e.g., Ariba, Emptoris, Verticalnet, Frictionless, etc.). As a last nit, I constantly hear from procurement organizations that D&B has mediocre data at best -- often outdated - which makes it difficult to use when making informed supplier selection decisions. Their database is built around information on the credit sales (i.e., for sales organizations and CFOs to determine customer and credit risk). Procurement is different, and while Open Ratings collects information from dozens of other data sources in addition to D&B, I'm worried that there is a risk that its reputation will be pulled down by D&B’s less than stellar track record for providing high-quality data in the procurement space. This is a marketing risk, not a product risk, but it is something they'll have to pay attention to.

On the plus side of the deal, hopefully Open Ratings will finally get a large sales organization and the marketing dollars to really evangelize the supply risk management sector on a global basis. To date, Open Ratings has done everything it can with a limited budget to build a new market.Jim Lawton, Open Rating's marketing VP, has been a huge proponent and advocate of supply risk management, and has almost single handedly helped to define the sector in the eyes of many. In my book, keeping Jim will be critical if D&B is going to make a big stir with its newly acquired supply risk solutions. Along the same lines, if D&B is willing to roll the dice and invest hard dollars in sales and marketing in the sector -- which in my book would be a wise move from an investment perspective -- they will now have a great foundation to work with, and their investments could pay off tenfold. If they succeed, supply risk management could become -- as it should -- a top issue with executives across the globe. But only time will tell if D&B puts the money and focus on the sector that it deserves. If not, the acquisition of Open Ratings will go down as a tragedy given what it might have achieved on its own or as part of a vendor with a stronger, proven passion for evangelizing Spend Management. Let's cross our fingers on this one. Like many out there, I want this deal to work for the betterment of the overall market. But let's hope that D&B recognizes the value of the Spend Management pearl that it has in its hands.

Jason Busch

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