Middle Market Lessons From Borat

Lisa Reisman is middle markets editor of Spend Matters and our resident direct materials and global sourcing Spend Management expert. In full disclosure, Lisa is married to the editor of Spend Matters, Jason Busch.

There might not be too many lessons but a few laughs never hurt anyone. I'm wondering what Borat might say to software vendors who are seeking to deploy spend management solutions to the lower middle/middle market.

Again, for reference sake, we consider the lower middle market under $200m in revenues, the middle middle market $200-499m in revenues and anything over $500m as the larger middle market.

So Borat has been in the US for a little while and stumbles across SpendMatters ...

Borat: What kind of dog is this?

SpendMatters: It's SRM (Supplier Relationship Management).

Borat: Is it a cat in a hat?

SpendMatters: No ... it's an advanced sourcing tool used to monitor supplier performance.

It never ceases to amaze me how many software vendors announce their intent to go after the "middle market". We know why they say it -- they need to grow and the middle market affords them an "untapped opportunity". Though there are certainly some exceptions, Borat's first question, "What kind of dog is this?", is probably a more accurate question reflective of how middle market companies think of SRM technologies.

Seriously, these are companies that don't even regularly use supplier scorecards, or if they do, they might deploy them quarterly or yearly at best. That is not to say the middle market doesn’t need technology -- it does -- but software vendors really don’t know how to position their solutions for this market.

Borat: Spend Visibility! I no find you attractive anymore! ... NOT!

SpendMatters:OK, let's take the case of Spend Visibility (which is certainly no Pamela Anderson, although most lower middle market companies badly need it). My question is simple. Which vendor’s solution is most likely to meet the needs of this market? The answer: virtually no one's. And that's because middle market companies will never "outsource" the data to a third party who runs it through their UNSPSC taxonomy for a fixed fee per line item. The winning Spend Visibility tool for this market will be a very simple do-it-yourself model with a very low subscription fee for unlimited use. Always on – to be used anytime.

Outside of visibility, there are some very interesting solutions from sourcing vendors like Apexon with their APQP and PPAP automation solution. I believe that lower middle market companies would most definitely benefit from these types of applications, particularly when they are offered at $80/month per user. Providers like MFG.com also understand the middle market. Their "free" tools and supplier search capabilities make a lot of sense for manufacturers, particularly for categories such as machinings, fabricated parts and castings.

Borat: These are very niiice ... very niiice -- make sexy!

Lisa Reisman is Managing Director and Co-Founder of the Direct Materials Sourcing Advisory Firm, Aptium Global.

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