The Middle Market Ain't Easy
Namely, middle market procurement organizations often are looked upon as highly tactical functions. In fact, in many middle market companies, procurement reports up through two or three layers before getting to the true executive ranks. This means budgets are typically small -- unless you can go in above the heads of the typical practitioner -- and it's easy to get a run around in the sales process (just try selling "Helga" or "Marge", a self-proclaimed "expert negotiator" but "buyer" in title, anything that is not budgeted). And if you add on top of this that middle market deals are built largely on relationships -- rather than sales calls -- then it becomes even clearer that penetrating this segment can be rough regardless of how good your value proposition is.
Will Ariba succeed in realizing its middle market ambitions with Procuri? Only time will tell, but personally, I think there are easier ways to make higher margin dollars in the Spend Management solution world. I do hope, however, that they -- along with other vendors with similar middle market ambitions -- prove me wrong. As a side-note, there was some irony to the timing of this announcement, given that it coincided with SAP's launch of their new middle market solution (more news on that next week).
- Jason Busch
One way out of the dilemma is to outsource to a third party (this could be a software vendor, a consulting firm, or a BPO provider) who already licenses the software and is trained to use it. You are (effectively) adding resources, typically more than if you had tried to staff up. Quick results can be achieved without a long ramp-up and without a long commitment. You can always buy the software yourself once its value has been established.
Some outsourcers haven't historically been interested in small deals, but this is changing. Outsourcers are increasingly willing to entertain modest, targeted engagements, and some are even "renting" individual offshore analysts on a short-term basis.
Every big company was once a smaller business. Many large companies are made up of several mid-market companies. They all want the same advantages of getting the best value from the COGS investment they make. Jump down out of your ivory tower Jason. I think the smog in China is getting to you!
I don't know what your personal beef is with me, but to suggest that I've not "carried a bag" or that I'm in the ivory tower is absurd. I've run a growing, successful, firm -- selling to both providers and practitioners in this market -- for the past four years. And I’ve been responsible for every penny of revenue. You're entitled to your opinion, but I find your rhetoric and style of attack showing of your clear lack of knowledge and experience in the middle market, and some greater issue with me. If you have any insights to share, I welcome them. But don't reduce the conversation level on this blog and hide your personal attacks behind a pseudonym. If you think I'm full of it, tell it to my face, and let's have a debate on the issue. Perhaps we'll both find the information exchange worthwhile. I'm back in the states this week and can be reached at 773 525 7406.