A Recap of Spend Matters 4 Part lasta Series

Over the past couple weeks Jason took a deep dive into Iasta's development and growth. Here is a quick recap of the key points and themes from the 4 part series:

Iasta Morphs and Grows (Part 1)

  • When Iasta first entered the market they competed primarily on price, but as its features and capabilities grew, they started to win deals on more than just their willingness to undercut FreeMarkets, Ariba, Emptoris, Procuri and others. In fact today, they're often among the pricier options in certain deals. But they continue to win more than their fair share of deals in the areas in which they compete (primarily e-sourcing, spend analysis and optimization).
  • How did three guys from Indy create a thriving business in the Spend Management world without outside investment and with little or no initial knowledge of how the sector worked? They listened to customers, that's how. In fact, starting out in 2000 through 2002, they followed their customer's requests to focus on fully managed auctions. Then in 2003-2006, they rode the SaaS e-sourcing wave. And more recently, they've grown through both customer and solution diversification, in addition to pushing a core sourcing platform that continues to garner accolades from users.
  • Iasta has realized a trailing three-year growth rate of 256%. This includes 77% growth in 2008. In Q2 alone, they saw 121% growth between the 2008 and 2009. And they've signed 32 new clients year to date. Moreover, 27% of the recent quarterly growth has come from software license sales (which represent what over 90% of the time amounts to a perpetual annuity).

Iasta Morphs and Grows (Part 2)

  • Iasta, that niche Indianapolis sourcing vendor, is competing against the Accentures and AT Kearneys of the world in the area of procurement transformation. And they're doing so successfully.
  • One of the secrets of their model is maintaining a relatively small full-time consulting team. In fact, nearly all of their team members are contractors with excellent reputations from past roles as consultants at major firms. Iasta is giving them far more autonomy and marking up their services significantly less than what other firms tend to do.
  • They're looking to define and bring to market offerings that, in their words, can help "new customers who aren't in a position to successfully use our software for 12 months until we can get them up to speed".
  • They'll also do more traditional opportunity and organizational assessments and follow through with customized programs designed to bring companies up to the next level of maturity (interestingly on this note, a number of other services providers in the market use Iasta as their sourcing platform and I suspect they might begin to see Iasta as potentially competitive -- the same problem that Ariba has had with its channel partners in the sourcing area).
  • Iasta is embracing the term "cloud sourcing" ... that includes what they're calling strategic initiatives in the form of energy sourcing and management, green supply chain consulting, MRO transformation and procurement outsourcing. But they're also productizing other cost reduction services based around what they're terming Zero Budget impact programs. These are, in Iasta's words, "8 indirect categories that are difficult to source and are not conducive to auctions".

Iasta Morphs and Grows (Part 3)

  • A large company using Iasta might spend as much as $150K to $200K with everything included (on a global, yearly basis, including training, roll-out, configuration, etc.) But smaller customers with more targeted deployments might spend as little as $50K to $75K depending on the situation (per year). To gauge what comes with these price points, it's important to note that Iasta no longer offers just e-sourcing. These prices include their entire suite (minus spend analysis) which is comprised of e-sourcing, optimization, contract management, supplier management and supplier performance management.
  • Iasta has recently decided to offer two versions: professional and enterprise. The Professional version covers more than enough territory for most users and includes the ability to run allocation and limit constraints. But the Enterprise version adds to this by allowing much greater capabilities around custom constraints (including qualitative constraints), discounts and freight brackets.
  • Release 8.0 includes, for example, a supplier management component that lets users collect information and documents from suppliers, manage supplier profiles, assign tasks/questions to suppliers, etc. In other words, Iasta is bundling supplier information management capabilities into its core suite.

Iasta Morphs and Grows (Part 4)

  • In this final post on Iasta, Jason examines the provider's product roadmap as well as how Iasta stacks up in the market today from a competitive standpoint.
  • Iasta's supplier information management capability is directly connected into its contract management module, letting users capture supplier information once and leverage it across the supplier and contract management lifecycle (not to mention the sourcing lifecycle as well).
  • Iasta will finally début a new contract creation capability in 2010, as well as a broader performance management and score-carding capability in the same timeframe. Iasta prioritized these product enhancements based in large part on customer requests.
  • Based on these customer-driven requests, Iasta is prioritizing a number of other product-related enhancements in SmartSource as well as SmartAnalytics. By the end of 2009, for example, Iasta will include Dutch auction capabilities in its negotiation toolset.
  • How does Iasta stack up in the market? Based on significant feedback I've gotten from Iasta customers in the past 12 months, I'd say pretty darn well. I have my own opinions -- and have used an earlier version of their toolset to run an event myself -- but I think the best gauge of the quality of their solution is that they've become what I believe to be the dominant supplier to consulting firms, outselling Ariba and Emptoris, among others.
  • In summary, for any company considering sourcing or optimization software and services, it would be absolutely criminal to not put Iasta on your shortlist of providers -- it's clear to me that Iasta is a company people like to do business with.

William Busch

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