Even though I think we would all rather be referred to as sourcing, supply management, Spend Management or supply chain professionals than as "corporate buyers", it's not everyday that our sector lands on the front pages of the Wall Street Journal. But that's precisely what happened this morning (registration and subscription required) when the well known business newspaper printed a story noting that "purchasing offices were once corporate backwaters, filled with people who didn't dream of advancing to the top rungs of their organizations. Many buyers saw themselves as industrial bureaucrats, filing purchase orders with the same short list of familiar, mostly nearby suppliers. When possible, they avoided the complex process of assessing potential new suppliers, especially those overseas.”

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While it's not exactly new news -- milk good PR for all it's worth, I say -- Zycus' spend visibility deal with Orkla is fascinating given the multi-lingual, multi-currency environment that its applications are supporting. According to Supply and Demand Chain Executive, the Norwegian company is "deploying Zycus' spend data management solution to gain view of all purchases made by individual units across geographies, languages, and currencies across its operations in 13 countries ... [The solution] is classifying enterprise-wide data for both direct and indirect spend originating from around 40 diverse purchase order (PO), materials management and accounts payable (A/P) systems in 13 languages, including Norwegian, Danish, Swedish, Czech, Estonian, Finnish, German, Latvian, Lithuanian, Portuguese, Polish, Russian and Romanian."

Increasingly, even smaller organizations engaged in global sourcing and trade must begin to think about the deployment Spend Management solutions that are global in vision and execution from the start. While visibility across disparate systems and environments is key -- and all spend visibility solutions worth their salt enable visibility in complex, heterogeneous systems environments -- global language and currency support from an information access and analytics perspective is increasingly critical as well. As more procurement and operations teams begin to invest in analyzing and understanding both global risk exposure and savings opportunities, I reckon that these types of deployments will become even more ubiquitous. For now, Orkla might be a global spend visibility pioneer. But I’m guessing that they'll be joined by hundreds more in their ambitious deployment model in the coming years.

- Jason Busch

Oracle's acquisition announcement of Hyperion -- especially coming on top of SAP's Pilot Software acquisition -- last week signals a number of things for the overall analytics and business performance management market. Above all, enterprise application and lower-level stack providers are becoming increasingly interested in also dominating the finance and analysis interface with line of business of users. ERP and large application vendors now view it critical to own not only the business process -- in SAP speak -- but also the business decision.

Enough generalist commentary. Let's cut to the procurement and operations implications of this move -- and the general trend in the sector towards eventually merging applications with analytics. In the Spend Management technology world, virtually no vendor that I'm aware of has got out of the box analytical and statistical analysis capabilities that can easily be integrated with the entire suite of buy-side technology capabilities, from up-front spend analysis through to contract management and demand planning. Many do it in silos (e.g., spend analytics, risk management, sourcing optimization, supply chain optimization). But none offer it -- at least in an easy to digest manner, without spending millions with the systems integrators to make it work -- from start to finish.

Part of this is due to the fact that few procurement and operations organizations have historically needed access to this type of analytical horsepower in all of their activities. At best, they used this type of capability in a targeted fashion (e.g., a make versus buy analysis). But top tier finance organizations -- at least in recent years -- have gone down a different path, demanding that their IT staff give them access to capabilities to make better compliance and financial decisions across their business activities. I would suspect that with the rise of Spend Management in recent years -- and the new risk management elements that are coming to light in the area -- that this sort of reporting and visibility will also become standard for procurement and operations organizations at some point in the future.

What will be possible in an integrated BI / Spend Management world? The recent and now questionable -- once the Oracle ink is dry with Hyperion -- deal between Ketera and Oracle's latest target offered a great vision. I wrote recently that "from basic executive dashboards that monitor performance, savings and spend by category and supplier to more advanced capabilities that might take into account commodity risk exposure and comparative organizational performance, the potential for BI to become an integral part of Spend Management is very real."

But who will come to dominate the analytical, risk management and compliance side of Spend Management? My guess is that it's unlikely to be any one vendor in the near-term. But Oracle and SAP will certainly have a leg-up on best of breed vendors from a suite and enterprise integration perspective if they ever get their act together with procurement and operational analytical and compliance capabilities with any breadth and depth. When that time will come is questionable. However, when it does, it will be up to best of breed vendors to prove that they're still relevant in this area. As a final aside, SAS is one dark-horse in this race as well, but until they start to make a splash in the sector, they're likely to remain under the radar of most organizations.

- Jason Busch

In one of the more interesting acquisitions last year, Equifax picked up data enrichment provider Austin Tetra. Recently, the ever traveling and enterprising Michael Lamoureux took it upon himself to provide us with an updated as to how Equifax is digesting its recent Spend Management morsel.

What's most interesting about his write-up is it would appear that Equifax is starting to move down the path of developing a competitive offering to D&B's Open Ratings that goes beyond simply looking at credit scores to determine supplier operational and financial viability (with Austin Tetra's help). Still, their core procurement business is very much on the data enrichment side. Many used to look at them as a cheaper alternative to D&B to cleansing a supplier master, but this is not entirely fair (as Austin Tetra had specific areas of strength).

According to Michael, "they've spent a lot of time building integration solutions into many standard ERP, spend analysis, business intelligence, financial data stores, and sourcing platforms to allow you to get the data you need, where you need it, in the format you need it." Even if they fail to develop a predictive supply risk solution that goes beyond the business credit score, I'm guessing that with the increasing demand for spend visibility solutions, that they’ll be able to keep themselves busy in this area alone.

- Jason Busch

Over the past few months, AMR's Mickey North Rizza and I have been trading thoughts on the spend visibility sector -- among other areas -- quite a bit. Because Mickey recently came from a practitioner role, I think she is in a unique position as both an analyst and user "insider" to discuss what is valuable in the real-world. Her recent brief Great News for Procurement: Spend Analytics Capabilities Are Improving (registration and subscription required) is a useful take on the progress that vendors are making to providing solutions which can create sustainable and measurable impact.

In Mickey's words, until recently, spend analytics vendors had "not yet delivered on their collective promise of actionable and execution-oriented information ... while first-generation products streamlined procurement data gathering from disparate systems, they did little to address the process flow of supplier rationalization, commodity and category classification, and opportunity assessments." It goes without saying that Mickey and I generally see eye-to-eye when it comes to the need to enable spend visibility to create actionable outcomes. But there is one statement in the piece -- see if you can pick it out -- which I take issue with (also, Mickey did not mention BIQ or SAS, two vendors who are realizing significant traction of late in the sector as well).

- Jason Busch

If there's any question as to how hot spend visibility is right now, it was quickly dispelled last week when there were three separate vendor announcements about product enhancements. I covered the Procuri spend visibility analyst tour -- and you can find their press release noting spend visibility enhancement here -- so today I'll point you to two different announcements from Ketera and Zycus (the later of which is very interesting, and I'll get to why in a minute).

I will refrain from commenting on Ketera's news since my knowledge of their current product is incomplete and my past experience with it is most likely not reflective of where Ketera is with the solution today. Having said this, it would seem the recently announced enhancements are a big step in the right direction, and I very much look forward to sharing more with the Spend Matters community when I've had a chance to dig into it.

Let's switch tracks to Zycus. In my view, the recent announcement is a big deal. Historically, Zycus' spend visibility bread and butter has been data enrichment and classification -- an area which they are one of the clear market leaders. Period. But with the current announcement, Zycus is diving headfirst into the strategy and analytics component of spend analysis, firing a shot across the bow of other providers who have previously differentiated largely on the power of their integrated approach (and their strategy development capabilities). With the new release, Zycus calls its capability "Actionable Analytics 4.0" and notes that it "brings objective-driven and savings opportunity focused actionable analytics to customers through innovative features that are a first in the spend visibility market."

Where is Zycus headed with this? If you're thinking spend analysis meets bubble chart sourcing strategy development, you'd be on the right track. But Zycus is going after this vision in a largely automated manner without $2500 / day management consultants analyzing the results and developing a strategy for you. Having seen an earlier demo version of this release, I can say that you'd never know that Zycus' roots came from the auto-classification side of the house. It's slick (and not in a Clinton-esque way). If you were previously looking at Zycus as just a focused classification and enrichment and provider within an integrated spend visibility deployment, you owe it to yourself to see how far they've come on the analytical and visual side.

My question for the community is where are the ERP providers in the visibility race of late? With all of the vendor noise -- not to mention the increased deal flow that I and other observers are seeing in the market -- publishing black papers is simply not going to cut it. Along these lines -- and given Oracle's already stated stance on visibility -- I reckon that we'll see SAP come up with an integrated solution to spend visibility before its adversary does.

- Jason Busch

Along with the industry analysts, I took part in hearing Procuri's latest road-show pitch during their most recent analyst tour last week. Tim Minahan and Rod True, Senior Vice President of Spend Intelligence at Procuri, were joined by client Greg Shifflet, who serves as Director of Enterprise Spend Management at Alliant Tech Systems. In full disclosure, my wife used to work with Greg at Deloitte, and I later introduced him to FreeMarkets / Ariba, his past employer, before he landed at Alliant Tech Systems.

In the briefing, Greg told the story about how Alliant Tech Systems, a $3.4 billion defense contractor and space manufacturer, is creating a center led supply management and enterprise sourcing initiative and using Procuri TotalSpend (which used to be called TotalAnalytics) to gain a better handle on what they're buying and how they are managing categories and internal knowledge. Alliant Tech Systems has deployed the Procuri solution in a behind-the-firewall implementation (dispelling the notion that Procuri is just On Demand) and are using it to integrate to a mish-mash of transactional and information systems with 55 specific types of extracts coming from 20 sources of data.

What I find so refreshing about talking to Greg is how willing he is to defy convention by investing in visibility and analytics before making the jump to e-sourcing and other Spend Management areas. In my experience, far too many companies start with reverse auctions in select categories to get a quick win for senior management when in fact if they had any hopes of creating a sustainable program that would build on itself, providing increasing year-over-year returns, spend visibility would, in fact, make a far better investment area. And coming from Greg, a former expert consultant in the space who has carried our hundreds of auctions, the choice to invest in visibility first says a lot.

As a result of this investment and initial analysis, Greg has queued up an initial pipeline of 50 e-sourcing projects (which include a combination of sealed bids, eRFXs, and reverse auctions) based on company-wide spend -- not individual silos looking for a hammer-driven one-time panacea. And because senior management views the company's Spend Management efforts as so strategic, the team has gotten a seat at the M&A table as well, helping analyze potential targets based on opportunities for cost and risk reduction.

Going forward, following the deployment of TotalSpend, which includes category management and knowledge management capabilities in addition to features traditionally associated with spend visibility and analytics, Greg's team plans to deploy e-sourcing capability, along with a supplier portal and contract management (where they plan to tie together sell-side and buy-side contracts). And ultimately, further down the technology enabled-road, they also plan to invest in eProcurement and EIPP as well.

The case of Alliant Tech Systems offers at least one critical lesson to all companies getting started with Spend Management. And that's the importance of building a visibility foundation before investing in other Spend Management technology areas. Despite the upfront delays it might create to initial savings implementation -- as opposed to diving head first into the execution side of strategic sourcing -- paving the right foundation will no doubt pay dividends for Alliant Tech in the long-term.

- Jason Busch

Last week, Ketera announced a deal with Hyperion, a leading business intelligence vendor. As David Bush already picked up on E-Sourcing Forum, "This alliance should come as no surprise to those paying attention since Burton Goldfield was formerly in executive management at Hyperion before taking the reins at Ketera. I would be surprised if this was not brewing while he was on his way out the door or on Day 1 in Santa Clara."

In my view, given Burton's past roles selling and positioning BI solutions to financial and corporate executives, there's no doubt he sees the power that such capabilities could bring to procurement. From basic executive dashboards that monitor performance, savings and spend by category and supplier to more advanced capabilities that might take into account commodity risk exposure and comparative organizational performance, the potential for BI to become an integral part of Spend Management is very real.

But unfortunately, I don't think selling these types of integrated solutions is going to be as easy as it should be to the average procurement organization -- at least not in the near future. And that's because the majority of procurement organizations are still struggling to get their arms around such basic information that even the most rudimentary spend visibility and analysis capabilities can enable. Adding a BI layer on top of spend analysis to track and manage additional metrics makes tremendous sense, but until the typical procurement organization has at least basic visibility into spending and performance data company wide, I'd argue that these types of solutions will be of secondary importance.

In addition, procurement is not faced with the same type of burning compliance platform that CFOs and controllers faced with SarbOx (which made Burton's marketing challenge at Hyperion so much easier at the time). I remember a couple of years back when Hyperion's wonderful sign-here "tear-sheet" advertising campaign suggested that those executives who did not have adequate financial controls to enable visibility into performance and operational data might be faced with jail. Despite the sensational side of this marketing campaign, it actually had financial executives tearing out advertisements from CFO and Business week, among other publications, and giving them to IT to go investigate.

Now, I doubt that we'll see the same set of executives get as excited about better visibility into procurement and supply chain intelligence -- despite the potential returns. But regardless, with this announcement Ketera and Hyperion are lighting the path to a level of Spend Management visibility and insight that will ultimately become the industry standard -- most likely a decade or two down the road.

- Jason Busch

If you have a minute, it's worth checking out Eric Strovink's guest post over on E-Sourcing Forum that discusses why companies are often disappointed from their spend analysis initiatives. Eric argues that meeting the needs of three separate groups of constituents can be quite a challenge. These three groups are:

1) Those primarily interested in reports

2) Those who drill around a spend dataset, occasionally, to explore specific areas of interest, or to track down individual payments

3) Power users who are using the spend data to locate, drive, and monitor the next level of savings initiatives — initiatives that are aimed past low-hanging fruit that has already been harvested

The obstacle, according to Eric, is that "satisfying all three of these groups is beyond the reach of most of the current generation of spend analysis products." Check out the post to see how he builds on the rest of this argument. Obviously, it's a bit self-serving, but I'd argue that there's quite a bit of truth in what he has to say.

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