Today, we continue with Part Three of our focus on Hubwoo, the supply management solution provider and operator of one of the world’s largest business (or B2B or supplier) networks with a review of the recent upgrade and re-launch of the its network, “The Business Network.” Part One is here and Part Two is here.

As a reminder, this “Provider Profile” series is a sneak preview of the kind of supply management technology market coverage you will start seeing on CPO Rising in 2013. Click to learn more about our plans for CPO Rising in 2013 and click to learn more about Ardent Partners’ plans for 2013.

Readers who are interested in learning more about Hubwoo should read this article first.

Ardent’s Analysis

Until this spring, Hubwoo had been “all-in” in its relationship with SAP, relying on SAP’s product and sales heft to drive a majority of its commercial activity. There is no doubt that SAP’s announcement to acquire Ariba was both a shock to Hubwoo’s system and a major disappointment. The “good” news, ultimately, for Hubwoo is that it forced the company to pivot quickly and immediately pursue a new strategy. Less than six months after the SAP announcement, Hubwoo has emerged with a strategy and one that for the first time in years, is focused solely on its own IP and built around “The Business Network.”

Hubwoo’s new strategy borrows from the playbook of other B2B network providers but it also includes several unique components that show it is thinking progressively about the evolution of its network. It also has a proven expertise in integrating to SAP back-end systems and a plan to sell into this market. Some aspects of Hubwoo’s offering like its rules-based intelligent invoicing and its new vendor master management feature are innovative and compelling, while others, like the new “public” supplier rating features are unproven in a B2B context and others still, like the public tendering integration with other sourcing “marketplaces” are proven but will require strong execution and follow-through to succeed. Above all else, it is continued network growth (defined as increases in network participants, transactions, and collaboration) that will be the key to Hubwoo’s ability to deliver a truly “next generation” network. To get there Hubwoo will need to:

• Convert a significant number of passive network registrants into active network participants
• Develop and grow partnerships with other providers with eProcurement and ERP “on-ramps” to the Hubwoo network to ensure a steady flow of new buyers and sellers
• Drive a level of organic network growth via its own IP and “on-ramps”
• Continue to develop its collaborative infrastructure
• Continue to offer new solutions that deliver value to buyers and suppliers alike and are competitive with those available from other networks.

While the bullets listed above are pretty straightforward, accomplishing all of them will be no small feat. It should be noted that these are also, by and large, the same things that the other network providers must do to grow their networks.

To succeed, Hubwoo will obviously have to win some head-to-head deals without the support of its longtime partner. Ironically, while Hubwoo plans to compete aggressively against SAP/Ariba in the marketplace, the success of its largest competitor will also benefit Hubwoo since SAP/Ariba will be focused on driving greater awareness and adoption of networks within Hubwoo’s target customer base. Hubwoo will also benefit from the general growth of the B2B network market.

Ardent Partners believes that there is room in this marketplace for more than one business network to succeed and that there is no reason to bet against any of the largest providers today, Hubwoo included. [Sidebar: while it is too early to predict with any real certainty, we believe that the B2B networks market could evolve into one that is similar to today’s credit card market where there are several large providers and many issuers or resellers].

The reality is that while today’s B2B networks are significantly more advanced than they were a decade ago, we are still in a formative age for these solutions. While no company has solved the riddle of the B2B network, Ariba’s acquisition price will ensure that more and more companies will invest in trying to do so. As currently priced, we believe that Hubwoo is an undervalued company that should be under consideration from a few select buyers today; if it can win more network deals in 2013 and execute on its strategy, we believe that Hubwoo could be acquired in 2014 by a larger network or a solution provider looking to jump start its presence in an increasingly important market. We expect the different network providers to continue to experiment with new approaches and services while also continuing to improve their back-end technology. All in all, the next few years in the B2B network space should be very interesting .

Tagged in: Ardent Partners Research, Networks, Solution Providers, Technology