February is Black History Month, a time of remembrance for the contributions that African Americans have made as well as their plight and struggle to overcome slavery and later organized discrimination throughout much of the country's history. Black History Month is not a new concept. In fact, according to Wikipedia, it had it "beginnings in 1926 in the United States, when historian Carter G. Woodson and the Association for the Study of Negro Life and History announced the second week of February to be 'Negro History Week'. This week was chosen because it marked the birthday of both Abraham Lincoln and Frederick Douglass."

In the spirit of Black History Month, I thought it might be interesting and engaging to start a discussion among Spend Matters readers on the topic of how far supplier diversity programs should go to promote equal opportunity. What is the line between preference and discrimination? Are there certain places where clear examples of past discrimination should result in an extra level of preferential treatment today (e.g., Federal, state or local contracts)? How should we measure and report on the results of programs?

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No sooner had the national NMSDC supplier diversity conference in Atlanta ended before I was told of a new technology entrant -- ConnXus.com -- into this category.

ConnXus is a recently funded start-up with a solution focused on delivering a marketplace where small, woman- and minority-owned companies participate in bids from Global 2000 companies -- supplier diversity broadly defined. Their online marketplace solution makes me think of MFG.com with a dose of Ariba's supplier network in the way it matches qualified suppliers with bid opportunities and permits buyers to search for the right vendors -- except in a diverse format, and spanning a long list of spend categories. The company is closing in on a combined supplier and buyer count of 1,000, so it is still a relatively small but ambitious initiative. Despite the company's short time in production, they are off to a good start with around $75 million in bid opportunities posted to the site since launch last December.

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Spend Matters welcomes a contribution from Lead Analyst Thomas Kase.

My earlier post on SciQuest -- after the NMSDC conference -- led to a follow-up discussion with SciQuest around their product strategy and activities in the supplier diversity field. The acquisition of AECsoft USA at the beginning of this year gave SciQuest a new range of products (in the fields of supplier management, including supplier diversity, as well as e-sourcing and contract management) and a slate of new Fortune 500 clients outside SciQuest's traditional hunting grounds in higher education.

From discussions with SciQuest's team earlier this week, I have learned a few things. The first thing is that the company is moving away from professional services -- a common approach among software providers who have gone public, or are aiming to otherwise satisfy external investors, and need to polish their business valuation. Witness Ariba's shift away from professional services as perhaps the clearest case of this approach.

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Spend Matters is pleased to welcome an inaugural Friday Rant from our lead analyst, Thomas Kase.

...and we're not talking Kim Kardashian here. This is about SciQuest and their acquisition of AECsoft USA, which took effect on Jan 1 this year.

Per SEC filing on Oct 31, Tom Ren, one of the founding partners in the dynamic duo behind AECsoft (the other being his wife Lily Xiong) has now left SciQuest to pursue other interests. Tom clearly left on good terms, as SciQuest agreed to remove the revenue-based performance clauses (aka earn-outs) from his contract -- likely in return for a lengthy lockout period. Tom is also agreeing to make himself available as a pro bono fractional consultant (10 hours per month) to SciQuest in case his services are needed.

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I've become a believer over the years in the notion of fostering a diverse set of smaller suppliers. Not only as a better means of connecting with diverse communities that represent potential customers, but also because of the innovation that smaller suppliers can introduce into the procurement value equation. Granted, I do find Federal reporting for diversity an absolute waste of time and I personally think our government's only goal in procurement should be focused on lowering costs -- since any time government workers attempt to "measure value," it costs tax payers far too much in bureaucratic analysis. Yet in the private sector level, factoring diversity in sourcing, supplier development and supplier innovation initiatives makes good business sense, at least as I see it from my vantage point.

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