Friday Rant: There's a Problem With the Procurement Technology World if SAP is the Most Innovative

In the next few weeks, we'll begin to profile SAP Supplier InfoNet, a solution SAP officially launched late this Spring that takes the original OpenRatings concept (i.e., mash-up supplier operational data from source systems with third-party insight and enrichment data) into the social enterprise computing era. It's the most revolutionary approach to managing supplier financial, operational and quality risk that I've seen to date. Supplier InfoNet would be remarkable coming from a start-up in the procurement and supply chain arena, but it's even more so coming from SAP, which tends to move as quickly as a government bureaucracy in many product areas. It's the type of product that entrepreneurs in residence at venture capital firms should be dreaming up when they consider how best to capture a meaty chunk of the growing procurement applications pie. Yet, again, this product was entirely dreamed, conceived, prototyped and deployed inside SAP. Does anyone else see the problem with this picture?

When SAP is the most innovative company in the procurement and operations technology sector, I find it representative of a broader and much more serious problem. Start-ups and established best of breed vendors alike have all but abandoned true innovation in this sector. You can see it across the map in the behavior of the non-ERP incumbents. Ariba conducts n-tier analysis that would make BCG pricing experts proud about how much they can bleed suppliers in exchange for transactional connectivity/network access without causing permanent scarring, rather than building innovative technology or acquiring inspiring early-stage concepts. Emptoris goes down the PeopleSoft path of customer intimacy, cross- and up-selling an expanding (through acquisition) solution set in a conservative roll-up scenario. BravoSolution specializes in the core areas of making sourcing and analysis better without modular expansion to push customers in entirely new spend directions. And Zycus continues to treat UNSPSC as the last words from G-D when it comes to classifying spend. The list goes on. And every vendor of any size in the sector is guilty, except, perhaps, the services procurement specialists, but they're in a class of their own.

You could even argue in emerging areas, like supplier management, that upstarts behave like incumbents twenty times their size, fighting it out on feature/function rather than vision and true, across-the-board solution differentiation (GXS/Rollstream is, perhaps, the one exception here based on its embrace of social networking UI concepts in managing an extended supply base). It's just shocking to me in this regard how Hiperos has won some recent deals over Aravo, as one example, and vice versa. In fact, Aravo has had three recent competitive wins to the two I know of with Hiperos. But that's not my point. The two providers, which both have a more than solid footprint and capability, are competing against each other by selling functional features and capability as if they were SAP and Oracle beating each other up in attempting to win a middle-market company for core financials. It's not supposed to be this way, people! Small upstarts are supposed to be about vision, about passion, about selling the afterlife of technology. They should not be about getting mired in hand-to-hand combat at so early a stage in their lives. It's like two pre-adolescent boys fighting with bayonets. What does this say about the parents?

But as the parental units, we've reduced the vendors we guide and nurture to this. Perhaps the procurement profession is the real guilty party here, forcing our vendors toward a standardized sameness so we can evaluate them in a tidy request for quotation, enabling as close to an apples-to-apples comparison as it gets in software. Yes, we're definitely guilty, no doubt (and we're even guilty here at Spend Matters in some selections we've done in lining up vendors feature by feature, capability by capability). Clearly, at the end of the day, when SAP is the most innovative vendor by a mile -- not even by a length -- in bringing an entirely new idea to market (not just a new module or new solution extension), something is terribly wrong.

The question is: what are we going to do about it? And to the vendors reading this: feel free to throw virtual rotten tomatoes at me but I challenge you to show true innovation and risk-taking in new product areas and modular extensions that introduce something new. I'm just not seeing it in general. But to encourage, surface and highlight innovation, I have an idea -- let's introduce the Spend Matters Procurement Technology Breakthrough Awards. I'm thinking we'll offer awards and vet submissions in the following categories: sourcing, P2P, services procurement and supplier management.

Let's think out loud here. Should we do this? What would be the most useful for readers as an output? Should we confine submissions to specific solution categories, as above, or should we get more creative in our intended means of structuring different categories of awards. I'm all ears.

Jason Busch

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