Overcoming Mediocrity: Supply Excellence Chimes In

I do not dispute that ERP vendors will eventually attempt to replicate (or, more recently, buy) application functionality to fill out their supply chain suites. It's the only natural progression for them to continue to grow. I would be surprised if they didn't try to attack new markets.

I do dispute the logic of basing your argument on analyst predictions. Analyst predictions are only good until their disproven. (As a recently retired analyst, I can say stuff like that.) Gartner also predicted 20,000 e-marketplaces. ERP vendors took a stab at e-marketplaces too...and they're still digging out from that mess.

Also, to suggest that ERP vendors are on the "inside" or have a lock on all verticals and business processes is ludicrous. (And checking your web site, I would venture to guess that you would argue that ERP hasn't solved the spend data management issue.) For the past decade at least, ERP vendors have played a game of follow the innovators. (And, according to many of their customers, they have been slow to do so.)

If it weren't for the likes of i2, Manhattan, and more recently Optiant, the supply chain management software market -- and the supply chain discipline -- would have been starved for innovation. The same holds true for supply management, which would have remained a tactical backoffice function if it weren't for the inertia generated by innovative upstarts in the area of strategic sourcing, spending analysis, contract management, and supplier management.

I took my daughters to an terrifying exhibit on jelly fish at the New England Acquarium last week. Jelly fish are among the most rudimentary and oldest living organisms on the planet, yet they continue to thrive. They follow around fish to various feeding grounds, gobble up all the food supply, and eventually supplant all the fish. This phenomenon has nearly killed off the fish in the Baltic Sea.

This digression provides a good analogy for the supply management software industry. The ERP vendors continue to follow the innovative software (and now On Demand) providers, mimicking their functionality and capturing their food supply. If ERPs do take over as you suggest, business process innovation may go the way of the Baltic Sea. (And, to be clear, the analyst community would also starve. As a former analyst, that's a fate I'd rather not witness in my lifetime.)

I find it humorous when pundits with a clear bias continue to spew these opinions about the clear superiority of best-of-breed solutions over ERP vendors. According to SAP, SRM has been their largest growth engine for 2 of the last 3 years and have a license revenue number that would blow the socks off of any other provider in the market. Oracle has a huge market share and growing. Do we think that customers are so ignorant that they continue to buy awful "transaction-based" solutions from ERP vendors, even though those on the bleeding edge are soooo much better for them? I've heard the refrain again and again about the "potential value" these customers can get if they really apply spend management capabilities and techniques of best of breed vendors. If these were real and truly due to the solution that the BOBs provide, then you would see alot of other companies following.

Hmm, at BIQ we don't run into much competition from the ERP players. Maybe one in 100 prospects believes that their ERP provider gives them what they need in the spend analysis area.