Taulia: Prospect/Customer Recommendations and Summary Analysis

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[This post was originally run on June 12, 2012.]

For our five-part survey series on Taulia, please click the following links (all are open access on the regular Spend Matters site): Part 1, Part 2, Part 3, Part 4, and Part 5.

Based on our analysis of the Taulia product and our cursory (but deep) discussion with one of their larger customers, Spend Matters believes the Taulia solution is one of the most logical discounting solution options for companies with SAP back-end environments (the fewer the number of instances and versions, the better). However, with the recent announcement of SAP's pending acquisition of Ariba, we would encourage further diligence of Ariba's discounting solutions and capabilities as well based on current capabilities that will be made available through SAP.

However, Taulia's native SAP integration, track record and solution flexibility greatly reduce the risk of working with a vendor that is technically still a relatively early stage start up. In fact, one could argue that Taulia is a lower-risk solution than much larger and established providers in the discounting and e-invoicing sector for SAP environments, specifically. Given this, it is our view that AP, procurement and treasury organizations should consider Taulia under the following circumstances:

  • Consolidation or standardization on an SAP back-end environment has occurred (or is in the process of occurring) and procurement, AP and treasury are aligned around the value that dynamic discounting programs can bring and/or wish to switch (or augment) e-invoicing in way that is financed by a discount program
  • Organizations (with a back-end SAP environment) are not satisfied with the percentage of discount capture they are realizing with other supply chain finance and discounting solutions in the market based on penetration across suppliers
  • Regardless of whether or not the organization has deployed and existing e-invoicing solution (or is evaluating deploying capabilities in this area)
  • Finance is looking towards AP and procurement to achieve a specific set of objectives (e.g., reducing supply risk through low APR-based early payment, making better use of fortress balance sheets with limited or no risk, etc.)
  • Procurement and AP are looking to achieve a relatively "quick win" when migrating from third-party P2P solutions (e.g., Ariba) to SAP where there is likely to be a few missed beats in the transition and where tangible success stories in tangential areas need to surface as quickly as possible (note, we suggest this takeaway point without yet knowing the post-merger product planning and integration pipeline at SAP/Ariba, provided the deal does close)

Despite our solid endorsement of Taulia, we urge potential customers (and partners) to consider the following points in their evaluation as well especially relative to Ariba:

  • Taulia may enable more control to buying (and AP) organizations than Ariba/SAP when it comes to the range of discounting capabilities offered by Ariba (including direct access for suppliers into The Receivables Exchange through the Ariba network). For example, procurement and AP teams that do not offer discounting options to suppliers on the Ariba network open themselves to having suppliers auction receivables (which can increase supply risk based on the market-driven APRs offered while reducing general supplier transparency)...
  • ...however, Ariba currently offers a stronger value proposition to suppliers than Taulia through its integrated supplier portal that provides access to receivables and discounting options across all customers using the Ariba network. Taulia, in contrast, takes a one-to-one portal approach (which requires suppliers to log-in to multiple customer portals, cut and paste information and conduct manual cash forecasting analyses and evaluate discounting options across customers independently vs. in one location)
  • We believe that SAP will prioritize building/acquiring Taulia-like integration capability after the Ariba transaction is closed since such capability is critical to expand the value proposition of the Ariba network to capture additional high-margin fees. Ariba, today, offers linkages into SAP financials and other ERP systems, but Taulia is "SAP native" in its overall environment (including UI) and back-end hooks
  • While Taulia can, in their words, theoretically support a many-to-many network architecture for discounting from a supplier facing perspective, the fact this capability is not enabled and suppliers working with Ariba/SAP can more easily manage their cross-customer discounting and receivables opportunities in a single portal – with greater funding options than Taulia – may create pressure on Taulia to not only deploy a similar capability, but attempt to built the scale that only a network-driven approach can bring (potentially through partnerships). This could take Taulia's eye off the innovation ball as Ariba/SAP prioritize new developments in this area
  • Spend Matters believe there is a greater than 30% potential that Taulia will be acquired by SAP or another provider in the next 18 months. Potential customers should protect themselves by focusing extensively on contract terms, conditions and clauses that can protect their interests – including forced migration for certain aspects of the solution – in a change of control situation. Installed CD deployment approaches can help provide additional insurance against an eventual forced migration (provided companies protect themselves with the right contract language as well). Organizations considering Taulia in a SaaS deployment that believe Ariba/SAP is a logical suitor should pay particular caution as Ariba has a track record of eventually sun-setting acquired solutions (e.g., Procuri sourcing, contract management, FreeMarkets QuickSource, etc.) and requiring customer migration to their own tools

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- Jason Busch

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