Provider Demand is Looking Good

Along with one or two of the analysts I know in the sector, I sit in a rather unique position, talking everyday to practitioners, vendors and consultants (the consulting perspective is probably the most unique vantage point when combined with the other two). And to be candid, despite the wretched economic news hitting the headlines by the hour, things are looking pretty good when it comes to the investment activity going on in the sector, at least for Q4. I thought I'd share a few examples and anecdotes below.

A few software and solution vendors that I've spoken to are expecting their Q4 sales to be quite strong overall. There does not appear to be significant concentration or exposure in any one sector, but companies are not putting off investments. This is holding true for some providers in single areas (e.g., sourcing, spend analysis, etc.) as well as those who have somewhat broader solutions. I know based on customer discussions and other interactions that I'm not being snowed here -- companies really are spending money on Spend Management software despite reductions in overall capital and software budgets. One small to moderately sized company, in particular, hit its yearly stretch revenue goals (and Q4 targets) earlier in November.

A number of consulting firms are shaping up to have some of their strongest quarters ever. Large and small companies are aggressively trying to take cost out of their business. Practice strength does not appear concentrated in any one area. Even when I spoke with two well-coifed strategy partners from BCG who would never touch our area (because it is beneath them) at one of my kid's class dinners a couple of weeks back, I came away with the impression business was solid. But some of the biggest benefactors from this are clearly the specialized boutiques that focus on procurement/supply chain and the turnaround firms building operations practices (e.g., Alvarez and Marsal).

When it comes to getting the word straight from the customer's mouth, I'll cite the case of a few technology investment projects that I've either been privy to or have advised in the past month. And these are going full-steam ahead. Specifically, there's even interest in downstream areas right now that do not lead to the type of rapid, hard-dollar savings that such investments as sourcing and invoice auditing can provide. All, in all, I'd observe the marketing is doing surprisingly well, despite the investments that some technology and services projects require. What do you think? Are you seeing the same thing?

Jason Busch 2008-11-19 03:11:00 Provider-Demand-is-Looking-Good

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