As an industry analyst, I have been actively tracking the solution providers in the supply management marketplace for years. Over this time, I have worked directly with more than 200 companies and been briefed by more than 100 others. The breadth of my coverage area and the ongoing market research efforts that I also lead have made it difficult to write about the solution providers in the landscape as much as I would have liked. One of my resolutions for 2010 is to write more about the subset of the providers that are making (and/or will make) the greatest impact for Chief Procurement Officers within the Global 2000. I’ll start today with a list of 10 solution providers (in supply management) to watch in 2010.
- Ariba – Ironically, for the average solution provider in the space, Ariba is probably its staunchest rival but also its clearest indication of the market’s overall direction. Over the past few years, Ariba has invested significant time and resources into transforming its solutions from CD-install to a SaaS-based offering and has come very far in what turns out to be an on-going journey. Yet, as more of its customers “subscribe to” versus “install” its solutions, Ariba will face increasing pressure to deliver more value for its customers to ensure high retention rates. With acquisitions in 2004 (FreeMarkets) and 2007 (Procuri), it would appear that Ariba’s three-year acquisition “itch” may need a scratch. The question is whether it will focus on new, faster growth areas or “double down” by buying a direct competitor. I have previously offered my view that an acquisition in the complex services arena would make great sense (click here – subscription required) but there may also be opportunities to improve its network offering through acquisition.
- BravoSolution – While I see BravoSolution in deals and tradeshows in Europe, it has been much less aggressive (and has therefore had much less of a presence) in the US market since its acquisition of Verticalnet (subscription required) two years ago this month than I originally expected. The addition of a few seasoned veterans to its US-based team are an indication that the company will be more focused here in 2010.
- CombineNet – In a solutions market that has been very hard to establish clear product differentiation, CombineNet still has brand value in sourcing optimization. A decade after deciding not to acquire it (my Commerce One Auction Services colleagues and I did not see high enough penetration potential in what was an immature eSourcing marketplace), enough things have changed in both the market and in CombineNet’s situation that an acquisition would help several sourcing service or solution providers compete in new deals while providing up-sell opportunities into its current customer base. Any residual (i.e. non-sourcing) IP could be spun off to a third-party or liquidated.
- Concur – Concur is one of the largest pure-play SaaS providers and focuses its solutions on what it refers to as “Employee Spend Management.” Concur offers a closed-loop suite from travel booking to expense reporting, as well as an e-payables solution that is gaining considerable traction. The $250 million strategic investment made by American Express joined two market leaders in the travel arena and provides Concur with an ability to enter new markets in a significant fashion.
- Emptoris – 2009 was an interesting year for Emptoris, a year of transition. Financial issues (which led to new ownership) led directly to new leadership and a move into complex services that seems more financially-driven than strategic. Discussions with the Emptoris team suggest that its ownership (Marlin Equity Partners) will take a longer view on its investment. But since the owners acquired Emptoris at such an attractive price (i.e. low revenue-multiple), Marlin may not have to add much “value” to be able to flip the company for a tidy profit. On the acquisition front, I think Marlin should look long and hard at CombineNet. Financially, a deal could probably be struck in the Marlin mold. There are also a few companies that I could see acquiring Emptoris in 2010.
- Hubwoo – Hubwoo also had an interesting year, as it grew revenues under newly-appointed CEO (and my former colleague at C1), Greg Mark. SAP’s “BPO” partner (Hubwoo and SAP define BPO differently than most) has the unique ability to offer the SAP SRM and eSourcing solutions (plus its own enhanced services/solutions) On-Demand. SAP has an interest in Hubwoo so with its recent push into the On-Demand market, acquiring Hubwoo would not be an unreasonable way to jump-start its SRM On-Demand strategy. But with what basically amounts to having a call option in its partner, SAP would be more likely to wait until Hubwoo can show it will be consistently profitable.
- Iasta – Iasta is certainly the smallest company on this list, but its sourcing solutions play much bigger than many have traditionally given credit. As this privately-held company approaches an inflection point, new approaches and cultural changes may be needed, but the current management/ownership team seems more than equipped to take Iasta to the next level. Its updated Spend Analysis solution and expanded services show promise and should keep Iasta growing again in 2010.
- Oracle – Oracle quietly made some strides forward in its Procurement Applications suite in 2009, particularly in the areas of sourcing and spend analysis. This move helped it better compete in the larger source-to-pay suite deals and close the gap on its best-of-breed rivals. Oracle has so much heft that it can enter, disrupt, and become a force in any application market it chooses. I would like to see them become more active in the e-payables space.
- SAP – On Day 2 of its Influencer Summit in Boston last month, SAP dedicated a morning to its On-Demand E-Sourcing product and packaging in an intimate setting with a few top customers. From my perspective, one general theme or takeaway from the day could be summarized as “flexibility.” SAP’s pricing and packaging (and partner strategy) are now quite flexible (especially for a company not known for its flexibility) in a drive to tempt current ERP customers to get their feet wet with these solutions. My sense is this solution set, if given a chance, could gain good traction in the SAP customer base. But, for the SAP SRM team, which includes several of my former Ariba colleagues that I really respect, it is a significant challenge for this team to get its message and products out the door and onto the radar of its sales force and customers (something I have noted in the past).
- Zycus – From its initial days as a leader in spend classification and analysis, Zycus now offers a broader strategic sourcing suite including Spend Analysis, eSourcing, and Contract Management. The growth of its customer base and solution footprint has helped the company experience rapid growth in recent years. If the trend continues, the next IPO in the Supply Management market may just happen on the BSE.
