Amex Does EIPP
American Express' rumored acquisition of Harbor Payments is great validation for the nascent EIPP market. And it also shows the sector is up for grabs, with many hands jockeying for position to capture dollars from it. One group with a strong position to lay claims to EIPP gold are software providers such as Xign and Ariba who position the sector as a logical application bolt on -- obviously with improved business processes baked in as well -- to procurement suites and A/P modules within ERP (Harbor was in this camp as well before the Amex deal). Another segment of the market are banks and financial institutions -- like American Express -- who can also logically offer solutions that streamline the invoicing and payables function as well, often targeting the treasury function who they already serve. This financial EIPP ecosystem also includes more focused supply chain finance providers such as Prime Revenue who sell direct to banking institutions. These types of capabilities take dynamic discounting offerings of broader EIPP providers a step further by allowing banks to capture a share of the early payment spread.
So who will win the EIPP race? Besides customers -- for whom EIPP should be a no brainer -- it's too early to say. I doubt, though, that we'll see too many best of breed providers survive on their own for long. One reader emailed me this morning that he thought that it might make sense for JP Morgan Chase to pick up Xign (given their Vastera acquisition, the concept is not that far fetched). But I could just as easily argue that the real opportunity here is transforming A/P rather than simply focusing on the finance component of EIPP (which is where the banks and financial institutions are most interested). And in that case, it's more of a software and business process opportunity than just a financial services one. Only time will tell, but regardless, American Express’ move will certainly get others in the market thinking about their next steps as well.
- Jason Busch
So who will win the EIPP race? Besides customers -- for whom EIPP should be a no brainer -- it's too early to say. I doubt, though, that we'll see too many best of breed providers survive on their own for long. One reader emailed me this morning that he thought that it might make sense for JP Morgan Chase to pick up Xign (given their Vastera acquisition, the concept is not that far fetched). But I could just as easily argue that the real opportunity here is transforming A/P rather than simply focusing on the finance component of EIPP (which is where the banks and financial institutions are most interested). And in that case, it's more of a software and business process opportunity than just a financial services one. Only time will tell, but regardless, American Express’ move will certainly get others in the market thinking about their next steps as well.
- Jason Busch
Couple of points of clarification, if we might...
First, we at PrimeRevenue do work directly with banks, but we work directly with buyers and their suppliers too, as our platform lies at the nexus of all three players. Saying we "sell direct to banking institutions" is a bit of a misnomer as we have discussions with everyone in the supply chain (as we'll be talking about today and tomorrow at Aberdeen's CPO Summit here in Boston (shameless plug #1)).
Second, we have heard rumblings too about the company you reference becoming involved in the Supply Chain Finance (SCF) space - whether there is any truth to this is one thing, but the tom-toms we hear and you reference certainly validate the fact that companies are paying attention 'big-time' to financial flows in their supplier communities.
Finally, our view is that there is a 'perfect storm' brewing around financial flows in the supply chain that, well, to be frank, go way beyond "mere EIPP" provision. I know that'll tweak people the wrong way (no doubt many of your readers too), but EIPP is more of a document/transaction management solution than it is a true solution aimed at addressing underlying issues in the supply chain around money flows. At PrimeRevenue we're concerned mostly about addressing financial flow inefficiencies (commercial paper to SCF) whereas we see players like those you reference in the EIPP realm (including ERP vendors) as fixing document/information flow inefficiencies (paper to XML). Within corporates, that involves treasury and supply chain which are groups that don't often have reason to share meeting space. What it does mean is this goes way, way, way beyond EIPP (or even ERP for that matter, which is why the Oracles and SAPs of the world really rightly (and thankfully?) lie at the periphery of this market.)
Thanks for shining the spotlight on the Amex rumour though - I don't know where you get all this stuff, but keep up the good work!
Look forward to meeting some of those whose nose I've tweaked here at the CPO Summit in Boston (shameless plug #2).
Great to hear from you. My mistake on the banking sales strategy. Guess I misinterpreted. In any event, I look forward to seeing you guys -- and others -- at the nexus of this perfect supply chain finance storm. Huge opportunity for all!