If someone pinned me down and asked my opinion about the broadest and most universal trends in procurement in recent years, I'd have to say that organizations of all sizes and sophistication are gaining access to an ever-increasing amount of information to make decisions. That being said, this information may be leading them to make the wrong decisions rather than the right ones. That’s because more information in and of itself isn't necessarily a positive thing. I've seen firsthand numerous examples of data that misleads companies and becomes a negative, disruptive force rather than a positive one. Does this mean that we should all go back to the stone Spend Management ages and continue to make decisions in a vacuum? Absolutely not. We owe it to ourselves, the business, our suppliers, and our shareholders to not only focus on gathering more information, but also to ask ourselves about its integrity, accuracy and how we can best act on it. Consider, for a minute, the following examples of how data can mislead an organization, potentially lending credence to the ignorance-is-bliss argument:

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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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I'm a big fan of collaboration between supply chain financing and procurement/accounts payable to reduce supply risk and enable vendors to access working capable at more reasonable rates. I'm even a fan of The Receivables Exchange, one of the pioneering providers in the space. I'm not a fan, however of its marketing techniques to suppliers, which remind me of the type of pitch that a loan shark or used-car salesman might use if they had access to my email. For this Friday rant, I'll present a string of emails I received from a TRX account rep, and let you draw your own conclusions. I've added my own comments (in caps and brackets). Here goes:

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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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In this final post in this Friday Rant series on what's holding Ariba back (see Part 1 and Part 2 here), I'll continue to delve into the services question that looms large over Ariba's current offerings, future vision, and channel partnerships. I believe this issue remains the single most vexing challenge for Ariba; I also believe it's the largest obstacle to Ariba's double-digit growth prospects as well as stronger partner and customer relationships. In the past few months, I've had the chance to speak to a handful of those close to Ariba's services organization (both current and past employees), and there seems to be near-consensus that Ariba needs to be more deliberate with a definition of its overall strategy in this area.

Nearly everyone agrees that, until it makes its plans clear, Ariba's sourcing services business will most likely see a flat-to-declining (albeit high-margin) P&L. This is tragic given the value that I know this organization is capable of delivering relative to its competitors (as a former FreeMarkets employee, I'm certainly biased here, but I sincerely believe that this group is top notch, from both an expertise and value standpoint). Moreover, this is even more tragic because the essence of the original nucleus of this team remains largely intact. Even though there have been some moderate profile exits since the FreeMarkets years, it's been a gradual exodus. Indeed, much of the original team remains and, without question, it has some of the most efficient sourcing-services delivery arms in the world, thanks to the Six Sigma work of Kent Parker and others over the years.

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This is a rant. I won’t pretend to dig into details of the accuracies, fallacies, and potentially overlooked comparisons in Coupa’s latest napalm drop on Ariba. No, I’ll save the meat of my analysis for a regular post or two next week that takes a more objective look at some of Coupa’s claims in its comparison of its product to Ariba. What I will do, though, in the next few paragraphs is lavish a bit of praise on, well, a truly ballsy marketing campaign. (I'll also examine a few of the risks involved in Coupa's slam job on Ariba.)

First, the basics. For those who have not yet seen it, Coupa, a SaaS eProcurement vendor, this week unleashed a marketing campaign that encouraged direct comparison between its product and Ariba’s. It also has its cartoon mascot, Coupa Sam, talking smack to Ariba’s superhero, Spend Man. This is the most competitive excitement the procurement and supply chain sector has seen since Reagan Lancaster dressed up as Tom Cruise from Mission Impossible at an i2 event, rappelling down a wall and attacking manikins that represented the ERP giants and other software competitors.

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In the first part of this column from last Friday's Rant, I shared a few thoughts on what I thought was holding Ariba back from even larger growth, from the perspective of solution and customer communications. In the second installment of this rant today, I'll double-click on two related areas that are near and dear to my own experience with Ariba. (Before starting my own firm and Spend Matters, I had previously worked at FreeMarkets, which Ariba acquired, for five years). The two areas on which I'll focus in this rant -- and the final one to follow next Friday -- focus on the subject are Ariba's external consulting and outsourcing relationships, and how it can best maximize its own services and consulting assets. As you read this column, you'll quickly realize that these two questions are very much intertwined; for this reason, rather than examine these areas independent of each other, I'll attempt to tackle them together.

I've come to believe that the fundamental challenge to Ariba's own services capabilities as well as its external partner relationships is a lack of specific identity, cohesion, and consistency. On the one hand, Ariba has one of the strongest and most expert -- not to mention one of the most efficient and profitable -- strategic sourcing groups in the world, including significant category expertise in both direct and indirect materials (and services). Ariba gained this group through its acquisition of FreeMarkets, which had built a business largely on a services-driven delivery model.

But on the other hand, Ariba has struggled to define a broader role and charter for this group almost since the day of acquisition. If you talk to some Ariba reps and channel/partner managers, this group no longer exists. "We aren't in that business anymore," is the second-hand news I've gotten from potential Ariba channel partners who recited what an Ariba business developer had told them. Despite the business development rumors of its death, however, the group is very much alive and Ariba continues to win business in this area, although 2009 was a challenging year as Ariba lost ground to key competitors such as AT Kearney Procurement Solutions.

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With its latest quarterly earnings announcement from last week, Ariba appears to be on a roll. While I plan to examine some of the details from the call and the earnings report in more detail next week along with the yearly and quarterly performance of other providers (the Capgemini/IBX news from this week took priority on Spend Matters), I thought I'd put on my contrarian hat this Friday and offer up a few thoughts on what could still hold Ariba back from building additional momentum. Now, don't get me wrong; Ariba put on a good show with its numbers, and much of the trending was headed in the right direction. But any time I see the general market latch on to a binary (i.e., good/bad) view of a provider, I feel it's worth taking the subject off the pedestal and offering a more balanced viewpoint. So just as I defended Ariba's strengths when its earnings reports and forecasts did not delight investors, I'll offer for consideration a few points on areas in which Ariba still needs to focus to take its performance to the next level.

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Capgemini's recently announced acquisition of IBX got me thinking this week about what it will take for procurement outsourcing to go mainstream. Fortunately, the timing of my analysis (not to mention the deal timing) could not have been better, as it coincided with a last-minute visit from an expert on the subject who happened to be in Chicago the day following the acquisition. I had the distinct pleasure of catching up this week over some firewater with my old friend and colleague, Phil Fersht, of Horses for Sources fame (or would that be offshore infamy?) Phil knows more about trends in the overall outsourcing market than just about anyone I know, and he's got some fairly strong -- even survey-informed -- views when it comes to procurement outsourcing specifically. In a recent post on his blog, Phil spilled the BPO beans on some survey data that sheds some insight on procurement outsourcing.

In his new study, Seeking the New Normal in Outsourcing Delivery, Phil managed to get 1,055 outsourcing executives across customers/service providers and advisors to share their views on outsourcing and their intentions for 2010. In this rant, I'll share some of what he found, and offer up my own perspective on the situation. In Part 2, next week, I'll offer a no-holds-barred prescription for curing what holds back procurement BPO today (and how providers are just as guilty as companies when it comes to getting the sourcing/purchasing/payables outsourcing equation right).

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The President made health-care reform (now known as "health-insurance reform") one of the signature items of his agenda. And in spite of what seemed like a resounding rejection of his health-care approach by the voters of Massachusetts in electing Republican Scott Brown to fill the seat held by Ted Kennedy for decades, he made it clear in his State of the Union address that he remains resolute in moving the plan forward, even if no one really understands it, or knows what is in either bill, or what will really happen if it's passed. For example, both bills appear to create large new government beauracracies with the power to take whatever would pass and turn it into whatever the President ultimately wants. Underlying the push for reform is the belief on the part of the administration and the Democrats that health care is a fundamental right.

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