Supplierforce Enters Voluntary Liquidation — Background and Implications

Supplierforce, a Dublin-based supplier information management provider, has entered voluntary liquidation. You can read past coverage of Supplierforce on Spend Matters here, here, here and here (it should also be noted in full disclosure that Supplierforce is an Associate Sponsor of Spend Matters UK/Europe). Spend Matters had the chance to speak with Supplierforce's founder and CEO Declan Kearney about the liquidation filing on Monday afternoon. He shared with Spend Matters that the funding of Supplierforce "has been impacted by the economic issues of the past year". As a result of this situation, the company has gone into voluntary liquidation, a process in Ireland which "enables the appointed liquidator to realise value, on behalf of creditors and shareholders, through the sale of the assets," according to Declan.

This leaves Supplierforce in a situation where "the liquidator will now sell the business as a going concern, that sale to include the Intellectual Property of the business and customer base". Declan told Spend Matters that "there is strong commitment to the business from stakeholders (staff, creditors and shareholders)" and that "a number of parties have expressed strong interest in acquiring the business" over a process which will take 3 to 4 weeks to complete. Other interested parties should reach out to Supplierforce immediately to be included in the process.

What does the future hold for Supplierforce? Declan suggested to Spend Matters that "the recent process has enabled the business to review its strategy" and that "under new ownership and investment (with a focus on marketing, sales and technology), the business will be capable of focusing on its key strengths: Supplier Information Management, Performance and Risk Management" and "a fully integrated approach with strong capabilities in Sourcing and Contract Management".

Spend Matters is not familiar enough with the regional Irish procurement market to comment on market conditions and user adoption relative to the rest of the EU, but our own research suggests that Supplierforce was ahead of its time in Europe in pursuing the supplier information management market. However, in contrast to Xcitec, which has developed a strong capability and reputation in supplier management software through penetration in the German market, Supplierforce never developed enough critical mass and profitable adoption of its software tools. It also pursued a hybrid services/software model at one point in recent years that might have played a role in directing company focus away from exclusively growing software revenue.

Spend Matters believes that these challenges contributed to Supplierforce's business shortfall but ultimately, the primary cause of the filing was due to the firm being caught up in an investment climate and funding environment in the Irish market that has been more challenging than most owing to the financial crisis in the region. Still, companies considering investments in other supplier information management technology from best of breed vendors (e.g., AECSoft, Aravo, Biznet, CVM Solutions, Hiperos, Rollstream) should conduct financial due diligence on their potential vendors in the wake of Supplierforce's filing, as the voluntary liquidation represents a single -- if inconclusive -- data point suggestive of the continuing need for this market to prove long-term, stand-alone viability (which it has not yet done).

Spend Matters believes the winners in Supplierforce's demise are providers such as Achilles, Ariba, D&B, Emptoris, Oracle and SAP, all of which offer supplier information management / supply base management capabilities and the customer perception of greater stability through size and diversification of revenue. However, potential and existing supplier information management customers of the smaller, best of breed vendors listed above -- not to mention others also competing in this market -- should note that at least a subset of the providers maintain solid balance sheets and are realizing profitable growth.

Spend Matters will continue to cover the outcome of Supplierforce's voluntary liquidation filing in the coming weeks.

Jason Busch

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