More on SAP acquisition of Crossgate from Spend Matters US

We commented here on the SAP acquisition of Crossgate, and last week Jason Busch at Spend Matters US published further analysis which we'd commend if you're a SAP, Crossgate or Hubwoo user (or prospective user) - or indeed if you're just interested in the market and product dynamics in the P2P and supplier network space.

In this post, he analyses customer and product implications.  Jason sees the development as generally positive for clients.. "relationships involving two partners are always better than those involving three" he says, the two now being SAP and Hubwoo.   Buyers will be able to treat Crossgate like any other SAP package, rather than a separate deal and supplier to be managed.  And he sees it as opening up some interesting future opportunities for SAP and clients:

.... with Crossgate and other internal technologies, SAP has a potentially next generation capability around getting systems on either side of the equation to talk together to enable entirely new insights that far transcend just a cursory P2P handshake to consummate a buying/selling transaction.

Then, in his final post (so far) on the topic, he's looking at the competitive picture.

Spend Matters believes that in the next decade, the space that exists between buyers and suppliers -- not to mention the connectivity intersections of multi-tier supply chains -- is going to get a heck of a lot more interesting. And shockingly, given their historic slow track record of innovation over the past decades (until recently), there's a chance that providers like SAP could easily lead the show with new offerings ...

Jason believes that even current market leaders like Ariba, Basware and SAP are going to have to evolve or other new entrants may steal their thunder. But in the shorter term, he sees the SAP / Crossgate deal as putting pressure on Ariba to innovate within their network if they hope to maintain price premiums over other networks.

The acquisition may also persuade Oracle to develop or acquire to boost their "old" network offering, while smaller operators, especially in Europe, will face "an increasing threat to their core business". But reduced valuations might actually drive further consolidation, potentially led by firms like Ariba and Basware.  EDI providers are also likely o face an increasing threat from SAP and "will need to respond accordingly, offering new types of innovation to stay relevant (e.g., GXS' purchase of RollStream)".

And here's Jason's final paragraph, which sums things up nicely. What seems clear is that this won't be the end of interesting developments and consolidation in this market, and that is likely to have at least as much impact on European customers and providers as it will in the US given the European heritage of providers such as SAP, Hubwoo, Basware and others.

Overall, Spend Matters believes that the competitive implications of the SAP/Crossgate acquisition are likely to drive further innovation and consolidation -- yes, the two can happen at the same time -- in the market. Moreover, it is important to realize that if looked at from a forward-looking vantage point, the network market is not a zero-sum game like the EDI market where vendor growth essentially requires taking market share from a competitor. New business models and offerings (e.g., supplier management, supplier search, transactional analytics, predictive risk modeling, forecasting) will undoubtedly create additional opportunities, increasing the size of the overall network pie for those that push innovative approaches.

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