In last Friday's first rant, I shared some thoughts and anecdotes about the role contracting can play in helping companies more quickly realize identified savings. In this rant, I’ll focus on some of the roles contracting can play in identifying additional savings and risk-reduction opportunities from a business perspective versus just a legal one. Perhaps the biggest mistake companies make with contracting is that they treat it as a process separate from supplier negotiations. In my view, the two should be intrinsically linked. Consider the following examples of how companies can apply contracting approaches in the context of the sourcing and negotiating process to improve results:

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Earlier in the week, I dodged snowstorms and headed to Philadelphia to meet with ICG Commerce. My visit included a two-hour tour of the facilities, and I also spoke with a number of specialists from sourcing, contracting, supplier management, data acquisition/MIS, continuous improvement, and procurement/sourcing execution teams. My tour started with a quick discussion and interview with two services sourcing specialists in the legal and accounting areas. The category processes they shared from a sourcing standpoint (e.g., benchmarking, direct negotiation, etc.) reminded me of my FreeMarkets days, when we'd apply a similar process and rigor. ICG Commerce is engaged in these processes at the more senior levels, garnering spend from CFOs and general counsel directly, including global audit and matters management (not categories you'd usually expect a company to trust third parties to manage on their behalf). The more interesting stop on the tour, however, came when I met with the leader of ICG Commerce's contracting team.

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I know that many readers of this blog represent both service and solution providers in addition to practitioners; so here's one for you in particular (but also of interest to procurement folk). It has the rare combination of real business interest, with some entertainment on the side!

Last week, Mr Justice Ramsey in the High Court in London decided that EDS had given "fraudulent representations" to BSKyB, the UK's largest satellite broadcaster, and held it liable for damages. EDS was engaged by BSKyB way back in 2002 to provide a new customer service- system. The project was supposed to run for 2 years, but there were delays and cost overruns. The relationship between the companies broke down, and BSkyB finished the project itself in 2006, spending £265 million rather than the £50 million contract value.

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'Tis the season of the holiday spirit -– and vendor-ranking comparisons -- in the Spend Management world. As many readers know, I've been around this space far too long not to put coal in analysts' stockings when they deserve it. And most analyst rankings have enough flaws -- or at least a lack of transparency -- to warrant someone tossing in a bag of the non-environmentally-friendly stocking filler. But occasionally, analysts get things right, or they at least make a valiant effort at getting at some form of comparative vendor truth. Such is the case with a recent AMR Research analysis of contract-management vendors. Sure, I could point to numerous areas about which I have questions (e.g., the relative rankings of one large Spend Management vendor relative to those of other best-of-breed providers are too close in the functional comparison areas, in my book). But in general, the format, approach, and qualitative components of the analysis make it a useful tool as an initial scan in better understanding the vendor landscape for contract management.

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Earlier this fall, I had the chance to get a regular business and solutions update from Zycus. Then, a few weeks later, I caught up with the Zycus team along with one of their customers in Chicago. Zycus' reference customer, from a well-known medical device company, was using their solution to drive a hybrid procurement/lean transformation within their organization, a story I'll look forward to sharing in December. For some, all this interaction might feel like oversaturation. After all, how much is there really to come up to speed on with a single provider in the sector -- especially one without end-to-end analyze-to-pay capability? The answer, in Zycus' case, is quite a bit. In fact Zycus, like Iasta, has successfully transformed itself from a one-trick Spend Management pony into a provider with ambitions to serve all areas of the Spend Management market. And they're leveraging strong customer relationships, a tenacious sales and marketing approach and a constantly expanding product and services footprint to get there.

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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