Supplier Networks: Sure They Matter, But Just How Much is Questionable …

Even though supplier networks continue to dominate a disproportionate number of P2P headlines owing to a range of factors, I personally don't think they've yet changed the basis of vendor competition -- or the general value proposition of eProcurement or invoice automation -- in the market yet. But not everyone agrees with me (at least on the key relevance part, but hold that thought for a minute). In a recent column over on Supply Chain Brain, ChainLink Research's Bill McBeath posits that "Supplier Networks will be a hot topic for 2011" even though "vendors will not necessarily make a lot of money off these networks in 2011 (Ariba will make some)."

Bill continues, "We expect in 2011 to see the battleground shaping up among the supplier networks -- the land grab to see who can acquire the largest and most functional/information-rich supplier network. 2011 could be a very important year, perhaps the decisive year, in this battle to become the dominant supplier network." Yet I'm not quite buying it, at least from an in the trenches practitioner perspective. In fact, even though Ariba and others continue to tout the value of networks as one of the fundamental value propositions of SaaS/cloud P2P environments, most customers in the market for solutions in the area that I speak with view networks as secondary (except when the costs exceed the benefits). Rather, they're looking for specific solutions to challenges that networks may solve including supplier enablement, PO/ASN/invoice document exchange, catalog/content management and most recently, supply chain financing.

But there are also common workarounds on the network front. There are lots of vendors in the P2P sector that only have partial "network" solutions to overcome some of these challenges, but are realizing strong growth and adoption regardless -- and growing at a faster clip than other network-driven models. Coupa is the quintessential provider that comes to mind in this regard. Consider how Coupa's growth on the new customer front significantly outpaced Ketera's in the P2P area in the past year -- probably by a factor of at least two (Ketera pushes a network-driven model while Coupa sells a solution first and foremost). If anything, this speaks to my fundamental argument that while networks are valuable on their own today -- and networks of the future that will combine many-to-many environments across a range of additional areas, including supplier information management, will be even more so -- the simple fact is that practitioners are buying the best solutions for their needs today, regardless of the underlying connectivity business model(s) supporting them.

For a forward looking view on what the network of the future might look like, you can check out one of my recent rants on the subject.

- Jason Busch

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