Nothing to Bristle At: SAP’s Spend Analysis Partner Bristlecone

Even though I've spent a good -- and much deserved -- amount of time recently beating up on SAP around some areas of eProcurement and the SRM 7.0 launch, I've not given our favorite German ERP provider the positive attention they deserve around spend analysis. Part of the credit for their recent spend analysis field success should most certainly go to Bristlecone, SAP's preferred spend analysis partner (in Bristlecone's words), who has been involved in 100% of live deployments so far. Bristlecone is also an SAP development partner in the area of spend/supplier performance management as well. But spend analysis is where they're getting some material traction today, as they are currently involved in the great majority of SAP spend analysis deals (85-90% they claim) and all SAP spend analysis proof of concept exercises. Bristlecone is also servicing all of Analytics, Inc.'s legacy customers.

In total, Bristlecone is working with SAP to manage $73 billion in spend within the SAP spend analysis customer base. According to Bristlecone, these users are "processing 1.4 million suppliers and 23 million transactions on an annual live basis" and are using their services "for initial implementation and ongoing refresh (managed services) both in a hosted and on-premise deployment model". While there are fewer than a dozen new customers to date for the new SAP spend analysis, the joint pipeline is looking "quite strong".

While I often discount vendor pipeline claims, I have no reason to doubt that SAP spend analysis is resonating well within the SAP customer base given that for the first time, SAP has a product that can address spend from heterogeneous environments where SAP is one of only a number of back-end technologies -- and where data is dirty, unclassified and waiting at the singles bar for an enrichment partner to come along. Of course I would argue that SAP's product is not superior to offerings from Zycus, Ariba, Emptoris, BravoSolution and other best of breed providers that cover end-to-end spend analysis. But for the first time, it has given an ERP provider an offering that is at least somewhat competitive in deal situations in current form.

So far, according to Bristlecone, most SAP spend analysis customers are opting for a hosted environment (at a ratio of approximately 4 to 1). Hosting tends to cost less than on-premise because the specific deployment environment and customization can create additional costs. In Bristlecone's words, "with an on-premise environment, policies and procedures can add" to the total cost of the deployment. In my view, the fact that SAP is now offering a lower-cost hosted deployment for a core spend analysis toolset marks a significant shift in the strategy of the organization. It also shows that SAP has been able to carve out a role for key partners and SIs like Bristlecone in the deployment and implementation process -- something best of breed vendors have not done a good job of mastering in an on demand world, leaving consulting partners hungry for new revenue streams and in some cases, creating tension between providers and consultants.

I suspect as 2009 progresses, we'll continue to hear good news from both SAP and Bristlecone regarding spend analysis customer wins, deployments and success stories. Regardless of how the SAP SRM 7.0 launch goes, spend analysis is one area where SAP -- from both organic development and the Analytics, Inc. acquisition -- has a chance to be a serious market contender. But assuming the set of capabilities and functionality make sense on a case-by-case basis, customers will still need to do the math around whether an SAP / Bristlecone spend analysis deployment is an economically viable alternative versus working with a best of breed provider for both the software and enabling services. After all, when it takes two to do the spend tango, you better expect to pay for some extra dance lessons along the way.

- Jason Busch