All spend is not created equal, largely as a result of the fact that all products and services aren't equal. Companies shell out their investors' hard earned cash buying either goods (raw materials) or services in hopes of converting them into a profitable and salable finished product, but in a world where profit margins are critical, scrutinizing spend is more important than ever.

The varying attributes associated with a company's spend can be further classified into individual categories using taxonomies such as UNSPSC, eClass, or other company proprietary classifications. The reporting, review, analysis and management of this categorized spend is typically done by a procurement professional known as a Category Manager or, based on the size of the spend, an entire Category Management Team consisting of members with specialized skills (market research, data analysis, contract management, supplier performance management, etc.)

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There's more uncertainty in the economic air than there has been for at least 18 months. Yet I believe it'll be more important than ever as we head into 2012 for companies to bring additional category expertise in-house regardless of the upfront and ongoing costs associated with additional, expert FTEs. I'm not alone in this thinking. Take the case of one industrial manufacturer in the Midwest we've observed recently. At this company, we've seen an interest in hiring additional category expertise internally in the metals area.

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In the first rant in this series, I proffered an opinion about how the Spend Management P2P technology landscape might look in 2013. Today I'll turn my attention to the e-sourcing and related category management, advanced sourcing and commodity management software markets. For those who track the e-sourcing market closely, I think you'd agree that the area has seen some seriously good progress in the past five years. I personally remember when most of the tools out in the market (including FreeMarkets own self-service toolset) were pretty pathetic. Less than a decade ago, e-sourcing apps crashed during events on an all too regular basis, had inconsistent features, were somewhat intuitive (at best) and were designed almost exclusively around negotiation itself with far greater limitations for broader category, commodity, data and vendor management. And lest we forget, many companies built business cases for investing in e-sourcing and ended up using tools far less than they ever intended, thereby wasting their money (or at worst, damaging supplier relationships because they relied on reverse auctions alone as a crutch for poor negotiation and vendor management skills).

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Last quarter, I started a series on BravoSolution's approach to spend analysis, supplier performance management and sourcing, and planned to do a final post looking at what they termed "collaborative sourcing" (you can read the initial posts in this series: Part 1, Part 2, Part 3 and Part 4). Today, and tomorrow, we'll officially conclude this series by examining some of the ways Bravo suggests companies effectively deploy overall sourcing strategies and specific constraints and scenario building in data gathering, analysis and negotiation contexts. I hope that by covering BravoSolution's approach -- as well as calling attention to what CombineNet and Trade Extensions have been up in the coming weeks, in a series of subsequent posts -- that more and more procurement practitioners will realize that optimization should become a mainstream sourcing tool for all complex spend areas. Incidentally, I'd also like to invite other vendors or service providers with strong optimization use cases to reach out to us, as we'd very much like to hear what you're up to.

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Note: This article was reposted due to a formatting error.

For all Spend Matters readers, this YouTube video (click "more" below to see it), showing a Chinese J-20 maiden test flight from earlier today, should be a wake-up call that China has graduated from achieving its Bachelor of Cheating degree to a PhD in Advanced Kleptomania. For any company sourcing from China, it's imperative to safeguard your intellectual property, as the J-20 clearly represents a convenient repurposing of US technology (some I've spoken with also suggest some Russian influence). Military technology escalation and rivalry aside, I cannot think of a better poster child than the J-20 prototype stealth fighter to highlight how China is building its manufacturing economy and global might on the backs of an organized effort to steal and reverse engineer Western technology.

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Last week, Spend Matters covered Rearden Commerce's Acquisition of Ketera in three posts:

• Rearden Commerce Acquires Ketera, Creating a New, Broad Spend Management Offering
• With Ketera, Will Rearden Prove a Viable P2P Competitor to Ariba, Basware, Coupa, SAP, Oracle, etc.?
• Rearden and Ketera -- Acquisition Implications for Ketera Customers

After additional discussion in the past week, I've come to believe the deal will either play out in one of two ways -- with little chance of anything in between. If Rearden cuts its cards in one direction, they could very well leverage a significant amount of both the technical and business model assets of the Ketera model (more on this in a minute). But Rearden might also opt to decide there are only limited assets worth salvaging, for reasons I'll get to in a bit. Regardless, Ketera customers should not be concerned, as the legacy technology assets are far more stable with Rearden than Ketera as a stand alone entity in either scenario.

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Note, this is a repost because of a hosting/server error this morning

It's rare that I encounter an absolutely novel idea in procurement technology circles. Most truly innovative companies that I've recently taken a close look at (e.g., Co-Exprise, Endeca, etc.) have focused on extending existing features in new ways or mashing together functional capabilities from different segments into new offerings whose chemical composition looks different than the parent contributors. Yet perhaps once every couple years, something entirely new comes along. Simplifying IT is just such a new vendor, whose value proposition to enhance ERP procurement technology is like nothing I've seen.

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About 45 minutes ago, Ariba announced it was acquiring Quadrem, in what many believe will be the first of a series of potential acquisitions for the "cloud commerce" vendor as it is now describing itself. Quadrem was one of the few successful marketplaces to emerge from the early B2B era in the 2000-2002 timeframe. Focusing on the minerals and mining business (although with some metals exposure as well), Quadrem built out a broad set of capabilties in the sourcing, spend analysis, purchase-to-pay and supplier enablement/network/invoice/connectivity areas. Many of these capabilities were essentially basic or enhanced third-party solutions (e.g., SAP SRM, Emptoris, JCatalog, etc.) that Quadrem customized and built out for the basic targeted industries it served. Quadrem did, however, maintain its own software R&D capabilities as well.

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In a surprise move, Ariba announced this morning that they were selling their sourcing services and BPO businesses to Accenture. At the time of the announcement, it was not clear whether all of these assets would end up with Accenture's BPO group or their consultancy organization (within Accenture, unlike other large hybrid consulting/BPO organizations, the lines between the divisions are somewhat blurry). According to the announcement, "upon the closing of the acquisition, Accenture will take ownership of these assets, which include Ariba's category expertise, sourcing process expertise and strategic sourcing execution resources, strengthening Accenture's position as a leading provider of sourcing and procurement consulting and outsourcing services."

The company press release suggests "approximately 160 Ariba employees are expected to join Accenture upon the closing of the transaction." The deal is not yet closed, but Ariba forecasts closing by the end of the December quarter. Accenture is buying these assets for $39 million up-front, with an additional "$12 million of which is subject to escrow to be released based on the assignment and performance of certain assets." The earn-out that is part of this agreement will no-doubt incent Ariba to refer services business to Accenture, potentially at the expense of other services partners.

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