Shall a vendor expand its e-Procurement offering with e-Sourcing solutions?

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:

  1. 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?
  2. 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?
  3. 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?


  1. Max Bleyleben 27 March 2007
  2. jp.massin 28 March 2007
  3. Andrej 28 March 2007

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