InterSources: an European eSourcing Outsider

While a growing number of eSourcing technology vendors are outsourcing their originally in-house consulting services to focus on ASP technology services and becoming pure technology vendors, InterSources is one of the very few that has choosen the totally opposite-path since its launch in 2003. Good move indeed, as InterSource is now benefiting from a global market trend to sub-contract e-Sourcing consulting services to an outstanding consulting specialist.

More than a unsignificant side-effect market-change, the meaning of this move is bold:

  • the eSourcing ‘ASP-or-not’ market long-term value is proven,
  • it has rationalised and materialised its virtual concepts,
  • The market has reached an essential level of transparency – although not sufficient – about price and proven-added-value services (it is not the far-west any more…sig!) that enhances competition and forces vendors to deep specialisations on one-or-all of the following process automation: Supplier Management (Pre-qualification, performance, CSR or relationship), Spend Management, RFx and auction Management, Contract Management.

Initially, in the late 90, eSourcing providers were proposing leading-edge and innovative solutions with new releases every quarter. They were communicating like hell conceptual capabilities, announcing sky-high-priced high-value services and a full-suite of Source to Pay ‘non-existing-yet-but-promissing’ services that no consulting company was able or ready to support; more-over, the eSourcing providers, still exploring the market, were not ready neither to share the potentially-huge benefits of their market-positionning.

3 to 5 years later, it turned-out that the trees are not climbing to the sky and that the expected short-term market explosion will never occur. From a consulting perspective, it appears that, apart from the support needed to implement the eSourcing tool, client didn’t consider valuable and flexible enough the purchasing-oriented consulting services of a vendor: not enough know-how, no robust commodity management knowledge, no change management experience, not enough resources for large project etc…

If you look back at the eSourcing vendor market since 2000, most of the providers have been proposing both services: Technology and Consulting. Consulting in most case were representing 40 to 50% of a vendor turnover.

Time has changed. Everyone realised that consulting and technology were two very-different businesses where you have just to be the best to survive, as in any business. So had – or have- they to choose. As a matter of fact, the trend now is strong pushing vendors to get specialised: Procuri, Perfect, VerticalNet started early to do so, Synertrade initiated the shift last year. I’m expecting others to follow and to make a choice.

InterSource bet in 2003 on a somehow risky niche market – at that time it was not the trend – and is now about to grab the fruits of its lean and crystal clear strategy, unless the big consulting firms specialised in strategic sourcing decide to invest on this now-proven market and to use their highly-visible brand, their global presence and broadband consulting services to marginalise InterSource kind-of-companies and conclude efficient partnerships with core eSourcing vendors. I think however this will not happen as this Euro 1 billion market – personal estimation – is still really busy, fragmented with numerous players and expensive to get it.

Below are some information I gathered from InterSource web-site:

Unlike other purchasing services providers, Intersources does not restrict itself to the use of a single software tool underpin its services. In order to ensure maximum flexibility, Intersources is capable of rendering its services using most existing software tools. To this end, partnerships with the leading suppliers of e-sourcing and e-procurement software have been concluded. This means that you, as a buyer, can make use of internally available software solutions, whilst benefiting from the in-depth commodity and market knowledge of a trustworthy external partner.InterSources concluded partnerships with following vendors: Emptoris, Oracle, SAP-FrictionLess, Procuri, Ariba, cc-hubwoo.

2006 proved another great year for one of Europe’s most successful procurement solution providers.

Year on year revenues improved by a third and Intersources continued to expand its operations throughout the world.
Intersources have now established practices in the US and in India as well as the core operations throughout Europe.

Intersources CEO Jan Van Roy commented:

“Intersources has had an outstanding 2006 and is ready for an ambitious growth plan in 2007. We have a very talented team of procurement professionals who support an innovative set of service solutions. Our operation is now truly global and operating 24 hours a day supporting a growing number of client’s sourcing, procurement and supply chain objectives”

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