Ketera Joins the Free eRFX Fray

Last week, Ketera announced a new free eRFX offering designed around connecting buyers to suppliers. There's nothing overly novel in the approach of providing a free forum to connect buyers and suppliers -- MFG.com, Ariba's network, and others already offer similar free capabilities -- but it's quite interesting that Ketera is tying this to its nearly free sourcing tool, which provides expanded e-sourcing capabilities. Moreover, this public-marketplace notion builds on an already accepted supplier-identification and research model that's been around for quite some time (which suppliers usually end up paying for in some form of advertising).

What's specifically included in this new service? According to Ketera, the free eRFX tool includes "Requests for Information (RFI), Requests for Quote (RFQ), and Requests for Proposal (RFP)" as well as a direct connection "to the Ketera Network online business community at no charge" to help companies identify suppliers in particular categories. The business model here is clearly based on providing opportunity to suppliers on the Ketera Network. This approach presents a potential win/win for companies looking for a quick and inexpensive way to find suppliers and engage them in first-round negotiations, and for suppliers looking for an online channel to new business. However, outside of MFG.com in the metals and textiles arena, there have been few success stories about others being able to build and scale commercial revenue and traction with similar models. At least, not yet.

As a final aside, in the announcement, Ketera's CEO, Steve Savignano, taunts Ariba and Emptoris, asking, "Why would anyone pay many thousands of dollars for a sourcing solution from providers such as Ariba and Emptoris when they can get a proven solution for less than $40 a month per user?" I'd respond that there's actually a number of reasons why companies would pursue more expensive alternatives, including stronger technology and process integration, more advanced negotiation formats and market mechanisms, etc. But with its new sourcing offerings -- both the free eRFX marketplace version as well as the private, low-cost e-sourcing tool -- Ketera is clearly threatening to shake up the status quo. We all owe it to Ketera to at least check out what it has. At the every least, it might cause traditional providers to sharpen their pencils.

- Jason Busch