What Will 2008 Bring in the Metals Markets? Earlier today, Lisa Reisman and Stuart Burns penned a thoughtful and lengthy post over on Metal Miner offering up their predictions for the metals markets in 2008. Among the metals categories they take their crystal ball to, the two examine where steel, stainless, nickel, aluminum, copper and zinc prices might be headed to on a global basis. In the same article, they also tackle the impact of a falling dollar and rising oil prices on global metals sourcing. What are some the assumptions driving the forecasts they present in their post? According to the metals blogging dynamic duo, “In the face of a slowing US economy, a mixed position for the European economies and a still strong Asian market, it is a particularly tough call this year to judge where prices will go. Our call is the US will teeter on recession. Europe though restricted by high ECB interest rates will still enjoy some (if reduced) growth providing the Euro/US Dollar exchange rate does not strangle exports. Asia in general and China in particular are still enjoying robust growth. China may well drop from the double digit growth of the last 5 years to high single digit figures but that is still a very significant driver for the world economy and particularly the world metal markets.”

Reading Stuart and Lisa reminds me about how much domain knowledge really counts in analyzing and covering specific commodities markets. Call me biased -- yes, I am married to one of the authors -- but relative to the price alerts and regurgitated crap that only mildly passes for journalism that the trades put out on metals, there's no substitute for the type of coverage that only true industry experience can bring to the table. Seriously, do we really want to know that the sky is falling and copper is up today, or do we care about why and where it might go tomorrow -- and what to do about it from a sourcing and trading perspective?

- Jason Busch

With all of the news and posturing about the Ariba / Procuri deal this week, it would be easy to overlook another acquisition in the sector. And this deal, of course, was Versata's acquisition of Nextance, a contract management vendor perhaps as well known for its innovative marketing as its functional strengths. Even though I had a couple of trusty colleagues and contacts tip me off to the acquisition before hand, I was too heads down to cover it. This, I admit, was mistake, as they deal shows that there's life left in them there contract management hills.

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A few months back, Source One, a consultancy, introduced free reverse auction software on their Why Abe Platform. The best part about the software is well, it's free (in practice, its functional depth is quite limited). Still, I believe that basic applications like this have the potential to put pricing pressure on the lowest end of the "paid" e-sourcing market (i.e., vendors like HedgeHog). Not one to rest on its laurels, Source One also just rolled out basic contract management capability as well. This feels smart to me -- and it's in-line with the strategy of at least one traditional vendor who told me that they planned to provide basic contract management capability along with the rest of their offerings as a free ad-on because it is such a logical extension of sourcing capabilities. Will Source One's free Contract Management catch on? I’m betting it will.

- Jason Busch

Two weeks ago, in the Spend Matters comments section, a reader suggested that they were curious "to hear about Upside's supposed success." This reader was "in the CLM business" and had "not seen them in a deal in way over 6 months". He then continued that my post was "one nice little story but I think there needs to be some fact checking here. Perhaps they have a large Pharma but I suspect the bulk of their deals are either in Canada or the really extreme low end of the market."

I responded to that reader in a subsequent series of comments, so I won't rehash the argument again here. But to prove that the rumors of Upside's demise were greatly exaggerated, I will point out a recent press release that shows that Upside is now the preferred solution for Blue Cross Blue Shield Association's 39 member organizations (CMSI previously had the upside with the Blues). I hate reprinting vendor press releases or even citing them (especially about customer wins), but I think it's important to note this for the record here.

According to the announcement, "BCBSA undertook a rigorous evaluation and selection process that sifted through numerous software providers and after careful due-diligence, which included financial reviews, selected Upside Software as their preferred provider." Now that says it all, especially considering the complexity of healthcare and insurance contract management. What's the upshot? If you're looking at Nextance, Emptoris, Ariba, Procuri, SAP, Oracle or others for contract maangement, you should also open up your search to include Upside, too.

Editor's Postscript: While Upside now has the largest number of contract management deals with the "Blues" and has the "upside" as I joked, I was just informed that Procuri (CMSI, noted above) still has a number of BCBS relationships.

- Jason Busch

A couple weeks back, I had the chance to catch up with Upside Software's Ashif Mawji. It had been a while since we had spoken, and it's a good thing we chatted because I was not aware of Upside's recent successes -- not to mention some of the more innovative uses of contract management technology their customers have deployed.

Ashif is a bit of a character if you go by the bio on his website. It begins, "Ashif has been an entrepreneur since he was 12 years old, when he sold watches at trade shows." But the man cuts straight to business when describing the growth of Upside Software in recent years (although one could argue that moving from hawking imitation Swiss watches to enterprise software is a big step down). According to Ashif, between 2001 and 2006, Upside has grown to over 140 employees and has increased revenues by 3000% and profit by 400% over the same period. And like Emptoris -- and unlike many of the other software providers in the procurement and supply chain world -- they've also had success selling through the SIs and other VARs, such as CGE&Y, Bearing Point, and niche resellers in specific geographies and industries.

Obviously, a rising contract management tide lifts all vendor boats. But Upside appears to be benefiting disproportionately from the growing market. Ashif shared that they're currently seeing triple the number of RFPs relative to the year before and a number of prospects and customers are beginning to look at combining and integrated sourcing and procurement into their contract management efforts (using one or multiple vendors). Some are using UpsideForms, essentially a spreadsheet on steroids, to further round out their contract and sourcing analysis efforts. Others are closing the loop on the billing side as well.

We all know the basic value proposition for contract management, so I won't rehash that here. But some of Upside's customers are getting quite innovative with how they use the technology. One is using Upside to manage services-related contracts and is tying Upside into their Remedy service management system to track vendor service levels. This user is also using a scorecard system as a survey mechanism to gather both factual and anecdotal data to not only negotiate better pricing with suppliers, but to come to terms with tying contracted price to specific service levels. In other words, Upside is enabling true lifecycle total cost management for service-related contract activities.

Another Upside customer, a Fortune 50 life sciences company running eight instances of SAP along with Siebel and Ariba Sourcing, is using Upside to manage workflow for the contracting process to ensure that users are buying off of a master contract (which was previously not enabled with other technology). The system is tied back into SAP to present pricing and catalog information, orchestrating an integrated contract management approach to ensure that the entire organization is taking advantage of the hard work that the sourcing and procurement teams have already done. This on-premise deployment -- Upside also offers On Demand capability as well -- took six months to implement with the customer's other enterprise applicaitons. This is not bad considering that the Upside workflow engine is the glue that cements the procurement lifecycle across a complex, heterogeneous systems environment.

So when it comes to contract management, ask yourself: what's your upside? If you don't have a great answer, I know of at least one vendor who would love the opportunity to offer their perspective.

- Jason Busch

Over on Supply Excellence, Tim Minahan penned a useful blog last week that discusses some of the "soft" factors to contract management success. While there's at least one gratuitous plug for his employer, almost all of Tim's content is useful and technology agnostic. The post cites advice from Qualcomm's Debbie Adams, who played a key part in rolling out her employer's contract management system.

What are some of the more useful pieces of advice? Establishing an independent program management team not tied to a single division and mentoring power users are among the suggestions. The succinct post should be required reading for anyone tasked with rolling out a contract management capability. And it's further proof that Spend Management technology is merely an enabler -- the rest is up to the organization.

- Jason Busch

If you've not already checked out David Bush's predictions for 2007 over on E-Sourcing Forum, I'd suggest giving them a cursory glance. A number are concepts and themes that I've talked about on these virtual pages for quite sometime, while others are not. From a technology / vendor perspective, one which I would agree with is David's concept of the "triple crown of supply management" which he describes as Spend Analysis, Strategic Sourcing, Contract Management. David predicts that "aside from some obvious projected acquisitions, there should be more stand alone solutions banding together to compete against broad suites. These will come in the form of announced (and unannounced) alliances and cross-selling." Fascinating stuff, David. I await these deals, especially considering that most of the sourcing-driven suite vendors have quite average contract management capabilities relative to some of the best of breed offerings, at least in my book.

- Jason Busch

I just saw this announcement that IBM is getting into contract management, at least on a rudimentary level. According the press release, "Contracts OnLine [IBM’s application] provides many advanced functions such as multi-party contract processing (for transactions involving one or more Business Partners, Client and IBM), multi-level document routing (between businesses and within a business), multi-level organizational hierarchy (inter- and intra-organizational structures), multi-tenancy (multiple hosting organizations in one instance), multi-level user access control levels, electronic signature, automatic watermarking, document control and management and business report creation. The application also leverages IBM's leading WebSphere Application Server and DB2 database software."

Now, don't think for a minute that IBM will approach an Emptoris-level of contract management sophistication with this offering, but still, the fact that they've commercialized an application solution is interesting to say the least. Might this just be teaser for IBM, as it considers entering the Spend Management applications world, or is it just a one-off effort? Only time will tell, but this certainly feels like a shift in strategy to me. In fact, the way they've worded the press release makes it sound like they're going to market like Oracle would -- marketing the stack, not just the capability.

- Jason Busch

Emptoris is taking the offensive with its partner / competitor SAP when it comes to sourcing and contract management. Yesterday afternoon, Emptoris announced its new XI-based Integration Package for SAP Procurement Solutions. Following SAP's acquisition of Frictionless Commerce in May, it became critical for Emptoris to come out with a more complete story as to why companies should consider their solution over Waldorf's. Even with next generation contract management capability gained from DiCarta, Emptoris needed a better yarn to spin. And they just might have it now, especially with SAP customers which are open to considering a heterogeneous applications environment. This should not be much of an issue as approximately half of current Emptoris customer run SAP.

Emptoris' current announcement focuses on deep functional and business process integration with SAP. According to Emptoris -- I have not validated this with SAP or others -- the new XI Content Interface provides a deeper level of integration to SAP than even the giant's own SRM offerings. The purpose of this integration is to bridge the gap between strategy and execution by tightly integrating sourcing and contract management with SAPs' eProcurement execution (which lacks full EIPP capability, but at least has a partial story to tell around procure-to-pay). Emptoris provided an example to me about how a Global 50 energy company that uses SAP has achieved, in their words, "total contract visibility with Emptoris with over 30,000 contracts from 47 global business units under management."

This latest announcement makes a compelling case -- especially on the contract management side -- about why SAP users should not just wait for Waldorf to catch up, but should act now. By supplementing SAP's current capabilities with best of breed components from other vendors, companies will not only identify greater savings, but capture and implement the results as well. At this point, I believe hands down that Emptoris has the best story to tell on the contract management side of the Spend Management house. The DiCarta acquisition was a very smart move. Because of it, I reckon that Emptoris will be a thorn in SAP's side for quite a long time. SAP should have moved faster and picked up DiCarta when they had the chance.

- Jason Busch

Aberdeen published their Market Alert on the Emptoris / DiCarta merger earlier today. You can download it for free on Aberdeen's site. In the brief, Sudy Bharadwaj and Vishal Patel argue that "Current Emptoris customers previously considering its fledgling contract management capabilities now have access to a top-notch solution with contract authoring, collaboration, repository, compliance, and analysis capabilities that are steps ahead of Emptoris' prior contract management capabilities." From what I learned earlier today, "steps ahead" does not begin to describe it. The new, integrated solution brings Emptoris from the rear of the pack to the front. It's a massive improvement, and one that has the potential to energize the Spend Management market around compliance. As further background on the potential of contract management, check out Aberdeen's recent benchmark report on the subject.

- Jason Busch