Despite my travels in the fall, I often have the good fortune to encounter Forrester's Duncan Jones during this busy season of conferences and speaking events. Duncan and I both cover this sector closely and although our views are not always identical, I always respect his analysis (which, in person, is often dished out with a creative sarcastic punch line every 20 minutes or so). In a recent guest post on Procurement Leaders, Duncan shared a few thoughts on SAP's recent acquisition of Crossgate (you can read our analysis here, here, and here). In this post, Duncan raises the question about "one aspect [of the acquisition] that warrants deeper consideration is whether the acquired employees will be able to influence SAP's approach to the important issue of how buyers and suppliers work together, or whether SAP's culture will prevent any significant change." This is important because today, SAP has largely taken what Duncan refers to as a "buyer-centric approach" that "forces suppliers to connect separately with each of their customers."

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I've long respected Andrew Reese, the former Editor in Chief of Supply and Demand Chain Executive. Andrew recently left Supply and Demand Chain Executive after spending a decade covering the broader supply chain and procurement sectors. In that time, I saw Andy transform himself from a generalist journalist to someone who not only knew his stuff, but was also passionate about the key areas he covered. I first learned of Andy when I was at FreeMarkets, and looked forward to reading his publication's dispatches on our firm. Flash forward a decade and after catching a Sox game together in 2010, I heard Andy speak at Corporate United's Synergy event on CSR reporting requirements and standards.

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Bob Ferrari recently penned his usual insightful commentary in a post that turns his introspective lens to focus on whether supply chain groups should take ownership of software applications (rather than IT). I should note that the inspiration for Bob's post and observations comes from another column, by Gartner's Jim Shepherd, titled "Do You Really Need an IT Department Anymore?" When it comes to supply chain areas, Bob takes what appears to be a skeptical view of the ability of supply chain groups to fully manage technology on their own. Consider, for example, that "many firms continue to struggle in overcoming supply chain wide functional stovepipes in strategy formulation and goal alignment. Before taking over the keys to IT, should teams first achieve some form of organizational alignment?"

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If you look at the graphs provided by the US Energy Information Administration, regional regular gasoline and diesel fuel prices have traversed an almost perfect 45 degree upward slope since this time last year. The average pump price/gallon was about $3.00/gallon a year ago and has just leveled off at just under $4.50/gallon. But don't celebrate just yet.

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Spend Matters would like to welcome a guest post from Pierre Mitchell, Director, Procurement Research and Advisory for The Hackett Group.

As I wrap up our inflation study closing this Monday, April 4 (it's a quick study; 10-15 minutes, confidential; custom readout; etc.), I've been looking at the interim results and there are definitely some interesting insights, of which I'll share a few.

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Duncan Jones recently authored Forrester's latest eProcurement Wave (which we'll dissect and analyze in more detail soon). Ariba and Basware have licensed the report and made it available for free, if you're interested. I've suggested before that exercises in graphical vendor comparisons are always bound to get analysts in trouble, even if they carry out their research in a manner as thorough and objective as possible (as I sincerely believe Duncan did in this case). In my view, the Forrester ranking methodology, generally, does a better job than Gartner because it provides better transparency into the criteria that contribute to a ranking on each axis. If subscribers want to model the impact of a score change for something that is less relevant than the product itself -- or the offering, for that matter -- such as corporate strategy, installed base or financial resources to pursue strategy, they can.

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Spend Matters welcomes another guest post from NPI, a spend management consultancy focused on delivering savings in the areas of IT, telecom, transportation and energy.

In last week's post, I discussed the impact that rising fuel costs will have on supply chain spending in the coming months. While you may not be able to control the cost of fuel, companies can offset the impact of higher costs by tightening spend in areas of shipping where they do have control. Here are a few tips:

Enforce Compliance. The average enterprise shipper loses hundreds of thousands of dollars a year (if not seven-figure sums) by failing to identify carrier mistakes and recover refunds appropriately. Make refund recovery a priority by first understanding the contractual obligations for each of your carriers in detail, then auditing your monthly shipment invoices for service delivery failures. The results may surprise you.

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Right around the time of its quarterly earnings news, Ariba also announced it had also closed its acquisition of Quadrem (See coverage here and here) less than three months from the announcement date last November. Spend Matters considers the Quadrem acquisition a smart move not only because of the revenue arbitrage factor (i.e., taking Quadrem's lower valuation shared services revenue and repositioning it as network/cloud revenue as part of Ariba) but also because of the vertical/industry expertise Ariba gained from the deal. On its recent earnings call, Ariba continued to hint that other acquisitions might be in the cards as well. They did note, however, that there were "no immediate plans" for any announcements. Still, Ariba did suggest on the call that the "first priority" in future acquisitions would be to use its balance sheet cash to acquire potential vendors. We've mentioned many providers in the past that we believe would be a good fit with Ariba and won't spend further time analyzing that area now. It's our best guess that we'll see another acquisition announcement sometime this quarter or early next.

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Judging by the Wall Street reaction to Ariba's quarterly performance (the quarter ending December 31st, 2010), it seems that the vendor could do no wrong -- taking its place on the podium of B2B turnaround success stories. If you were to only look at Ariba's financial situation, it appears to those not on top of the procurement software market deal flow that the vendor continues to distance itself from others in the market (a hypothesis that does not hold up in a competitive context, in absolute and relative terms both in the overall source-to-pay arena and also from a solution specific perspective, but we'll get to this in a minute). Total revenue came in above guidance at $90.4 million for the quarter (including $50.2 million in subscription software revenue). Maintenance revenue came in at $100K over guidance at $15.6 million, and the services/other hit $24.6 million, roughly $3 million above the mid-range of guidance. Moreover, Ariba is now sitting on a war chest of nearly $300 million in cash, restricted cash and investments. Following the close of the Quadrem acquisition, Ariba is now forecasting a 146% growth in network revenue fees to a $101 million, including 44% organic network growth (more on this in Part 2 of this post, tomorrow).

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