From my perspective, yes…but not now.
IBX, ranked among top innovators in 2006 by the prestigious Supply & Demand Chain Executive, has acquired Portum last year (2006), you may know or remind. Since then, I didn’t notice any major achievement on that side, apart from – of course – some announcement of client acquisition, but nothing compared to Procuri‘s 56% of growth or BravoSolution’s 40%. As I received IBX last newsletter today and perceived their efforts to ‘bold’ their services and to be recognized as A leading one-stop-shop source-to-pay solution provider promoting their “value assessment study” offering, I couldn’t prevent wondering what the core-business of IBX was: e-Procurement? e-Purchasing Consultancy? e-Sourcing? As the question stands as well for Hubwoo, Perfect, Quadrem and Ariba – all of them combining both e-Procurement and e-Sourcing services but most of them not being profitable – I started wondering if it was an idea as brilliant as it looks compelling on paper, to combine both e-Procurement and e-Sourcing in a unique enterprise offering?
Indeed, the one-stop-shop concept was – and still is – really attractive, especially talking about technology and Global Companies.: Simplifying the IT architecture, application integration and implementing an e-Procurement and e-Sourcing application integrated together with each other AND with a back-end looks is making lot of sense obviously, so much sense that being the leading source-to-pay solution house was in Y2K the most beautiful business to target in the B2B world. So did Eutilia and many others.
7 years later, what do I see? A couple of very interesting symptoms:
- Very few players were profitable when they decided to expand in eSourcing: in general, they expected this less-costly solution (compared to e-Procurement) to be quickly profitable and to improve their bottom-line.
- Leading players are either recognized for their e-Procurement know-how (IBX, Hubwoo, Perfect…) OR for their e-Sourcing know-how (Ariba, Procuri, BravoSolution), never for both… so far.
- The key differentiator between players to win business is almost never their source-to pay capability.
- Players are using two different set of technology with no relations with each other
- Integration of e-Procurement and e-Sourcing applications with each other is poor and most often inexistant. The unique strong link I can see between the 2 is the supplier-network database, but interestingly enough, none players so far are benefiting from this synergy; a couple are now investing in this area (Ariba – Hubwoo)
- Few/None technology providers are good in both area,
- Prices have been dramatically cut down and require best in class practices to survice…
… Those symptoms brought me to following conclusion:
- Expansion of services to e-Sourcing was expected to shorlty compensate/improve the big e-Procurement loss-making. It didn’t work within 3 to 4 years, why to insist?
- there are very limited synergies between e-Procurement and e-Sourcing; much less than expected. Having both offering is not a key differentiator; where is the need to keep them both?
- A Supplier Network database connected to both application could change the picture and bring significant value to a provider having both solutions… if this provider can integrate his Supplier Network correctly with his 2 applications.
As a consequence, I wouldn’t myself keep both solutions, unless I have some plan to roll-down a Supplier Network database. I would concentrate on one all sales and innovation efforts, as there is still so much to do!. Even a ‘loose-partnership’ like Hubwoo – Procuri doesn’t make sense to me: interlocutors for e-Procurement are not the same as interlocutors for eSourcing and in general, nobody likes to hear they have to use a specific application here because they have this other application there. Moreover, I haven’t hear of any success story from both Procuri and Hubwoo on their collaboration…
Source to pay is such a broad process, I feel the technology and content currently available are not ready yet for a perfect and compelling integration. So, bottom line, I believe nowadays that the leading players should focus on becoming the best e-Sourcing OR e-Procurement enabler for their customers, extending their offering with killing-features, merging with other players from the same field to be well above the minimal critical size, and wait for better interaction between procurement and sourcing before expanding further…
Pure fiction: What would you think if something was happening between IBX, Hubwoo, Quadrem or Perfect…
That’s my humble opinion. What about yours?