This week’s featured event was hosted by SciQuest and featured Spend Matters Lead Analyst Thomas Kase and a case study by German Torres of FMC Technologies, a $6B oil and gas company. You can view the event on demand here or register to download the accompanying white paper.
The procurement function is going through a time of expanding expectations and responsibilities in most organizations. Depending on the structure of each company and industry, the move may be into supply chain, inventory management, finance, or raw materials management. In order to meet the challenges this presents, we need solutions that offer expanded capabilities.
Over the last twelve months, there have been several high profile acquisitions in the supply management space. These acquisitions were aimed at integrating the source-to-settle process into other corporate systems and processes. As these large players became subsets of less specialized solution providers, the opportunity was created for new solution providers to fill the need for dedicated solutions offering the right combination of breadth and depth.
One company seizing the opportunity to increase their solution footprint and fill the void is SciQuest (NASDAQ: SCI), a provider of on-demand strategic procurement and supplier management solutions. For several years they have been adding to their portfolio through the acquisition of specialized players within spend management. In December 2010 they acquired AECsoft USA, a provider of provider of Supplier Information Management (SIM), supplier diversity and sourcing solutions. Then in July of 2012 they acquired Upside Software, a Contract Lifecycle Management (CLM) solution.
Their latest acquisition is Spend Radar, a spend analysis solution provider. Although this brings them closer to having a complete end-to-end solution, the key to their success will be in their ability to integrate their acquisitions without sacrificing the flexibility or performance of any one solution. When asked about this part of their strategic plan, Eric Zoetmulder, SciQuest’s Director of Product Marketing, told Buyers Meeting Point, "It is true that we have grown our offering through acquisitions; we have been very selective, believing that any large or mid-size commercial business should now consider SciQuest as a prospective solution partner, whether they are looking for a point solution or one that spans the entire source-to-settle process."
SciQuest’s ability to harness the forward-looking creativity of the Spend Radar team will determine their ability to maintain the reputation Spend Radar has worked to build when compared with other spend analysis solutions. In July of 2011 Buyers Meeting Point interviewed Brian Daniels, former CEO of Spend Radar, now VP of Spend Analytics at SciQuest, and we were struck by his desire to expand the capabilities of spend analysis beyond reporting and analytics to performance management – providing visibility into savings realization. "We recognize that savings realization and compliance are key to the value proposition of a spend analysis solution,” said Daniels. “It is impossible to provide spend teams with actionable data on suppliers and pricing if you can't also provide them with fast, frequent, automated, and high-quality refreshes."
There is no indication that plans to enhance this part of their solution roadmap have been altered by the acquisition. If anything, SciQuest recognizes the competitive advantage this will represent once available, and wants to be sure the new relationship between the two organizations does not jeopardize it. To this end, the leadership team at Spend Radar has been left in place, and the brand will not be altered.
We look forward to seeing the future potential of this collaboration come to fruition, and how yet another provider consolidation impacts the other solution providers in this space.
This week’s eSourcing Wiki-Wednesday topic is Metrics for the Rest of Us – an article that breaks metrics down into Cost Avoidance and Reduction, Process Improvement, Operations, Customer Service, and Asset Utilization.
The last of the Cost reduction and avoidance metrics, “Spend Under Management” is defined as:
Total Spend Under Management / Total Spend.
As noted in the eSourcing Wiki, this is a straightforward calculation. The problem is not with our ability to divide one number by another, but in defining the inputs to the equation. Total spend should be easy, although your department may use either total annual spend or total addressable spend (which is likely to exclude taxes and salaries). The real question is to decide what spend is designated as being ‘under management’.
The old adage is "Learn from the mistakes of others. You can't live long enough to make them all yourself". This was a quote from Eleanor Roosevelt. How true that is but many of us want to do it ourselves anyway! I know I have had the opportunity to lead several spend analysis initiatives including finding the right provider. We made a selection and it turned out we had not asked all the right questions.