Last week, I shared the details surrounding Infor's anonymous paid referral program that was introduced and subsequently cancelled in less than 24 hours. One of the scarier things about this incident isn't that the initiative made its way through the Infor commercial organization and out to potential "influencers," but that many such programs are happening today, and without much knowledge of the fact. Whether it's technology, services, office products, IT equipment or other spend categories, vendor-paid channel referral fees -- some of which are certainly below the surface -- have been around for decades. And some, such as those captured by group purchasing organizations (GPOs), are even part of the core business model for intermediaries.

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This post is not intended for Ariba investors. If you're one of them, please feel free to read on, but rest assured I don't want to get into any investment advice one way or the other. Rather, this post is aimed specifically at Ariba customers and prospects that may have seen their vendor's share price rocket and decline in the past few weeks, in part based on the market's view about how much they think you might spend -- and your suppliers might spend -- with Ariba in the coming quarters and years. In times of appreciating currency, it's quite common for vendors to develop a bit of cockiness in their overall customer engagement philosophy based on the view that a rise in stock price equates with a self-fulfilling vision of leading the market and beating others. Trust me, I've seen it before within organizations that I've worked both for and with.

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A couple of weeks ago, I re-introduced Spend Matters readers to Supplierforce, a Dublin-based Spend Management software/SaaS suite provider and consultancy with particular strengths in the area of supplier information management. Today I'll conclude my analysis by walking through some of Supplierforce's functional capabilities and its overall solution philosophy and approach. When considering what Supplierforce is trying to do with its platform, it's most important to remember they started by intending to make up for the shortcomings of procurement and supplier management in existing user ERP systems. In this regard, Supplierforce provides a virtual vendor master that allows users to push and pull data from multiple back-end sources to create a unified view of who their company is doing business with, in a way that is nuanced relative to other solutions.

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In years past, I introduced Spend Matters readers to a little-known supplier information-management vendor, Supplierforce, which is based in Dublin (you can read previous posts on Supplierforce here and here. Supplierforce has moved beyond its SIM past to embrace a broader portfolio of Spend Management technologies designed, in its words, around "empowering procurement, optimizing performance and accelerating savings and value." Most of these descriptors are rather generic, but if you get past the buzzwords, Supplierforce provides early proof that it's possible for a vendor to build out from a targeted area into others while maintaining its initial focus. In fact, Supplierforce would argue that by incorporating a range of capabilities related to spend visibility/intelligence, strategic sourcing, and supplier relationship management (not in the SAP sense, mind you), it's sharpened its core supplier management strengths in the process.

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In the first post on Aravo's recently introduced $50K Supply Risk QuickStart program, I provided some details on what the package includes and how Aravo integrates different data sources to present views into different supply risk elements. In this post, I'll provide additional details on how Aravo plans to go to market with this and related tools. Supply Risk is one of a number of QuickStart programs that Aravo plans to take to market in the coming quarters as a way to get customers to use its solutions more quickly. It hopes to demonstrate the benefits that targeted supplier information-management tools and packaged services can bring (and upsell to a more comprehensive SIM program and solution once it's able to prove the value in a targeted area). Aravo told me to look for a total of four QuickStart software and solution bundles in "short order" that will bundle products, services, information, and training.

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In the first column in this prediction series on building supplier transparency, I focused on the area of financial and business transparency. But this is only one type of supply chain transparency on which companies will focus on building in 2010, however. Spend Matters' research suggests that an increasing number of organizations will also focus on building two additional kinds of supplier transparency this year: social transparency and performance transparency. With each, as with financial and business transparency, it's important to remember that building transparency represents a more significant initiative and investment than enabling visibility into a single indicator or information type; transparency implies a new level of continuous insight to supplier actions and behaviors.

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Over on Supply Chain Management Review, an article by two Wipro consultants suggests that business intelligence (BI) software, such as the kind acquired by SAP and Oracle in recent years, is key to building supply chain visibility. The two argue that "BI capability allows monitoring of supply chain performance and helps in capturing new insights into all aspects of the businesses, fostering innovation." Moreover, "BI allows driving performance improvement in individual functions, business processes that span across multiple functions and in the extended supply chain through collaboration with customers, vendors and other trading partners delivering significant benefits in terms of cost reduction, customer service improvements and lower inventory levels." While this is a great vision, perhaps it's better for those in the implementation and advisory ecosystem than for the actual customer that's got to pay to make it all work.

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Economic issues in Europe have dominated the news over the last few days. Greece is in real danger of going bust; years of corruption, government overspending, and tax avoidance are coming home to roost.

Will the EU -- Germany and France in particular -- bail Greece out? If not, the contagion has the potential to spread around the Eurozone to Spain, Italy, Ireland. At least the UK can depreciate its currency to help get out of trouble; Greece is locked into the Euro and has not made the structural changes necessary to adapt since it joined.

If the EU does support Greece, will there be enough incentive for the Greek government and people to make the necessary painful adjustments, which will mean real cuts in living standards? Or will they keep on spending, like the rich kid on heroin who knows that when things get really tough, Daddy will bail them out? (“Daddy” in this case being Germany, with some help from France and the Benelux countries.)

Last week, however, we saw poor indicators from Germany in particular and the Eurozone in general, in terms of the economic recovery, so voters in the stronger countries are less likely to be comfortable with bailing out their profligate neighbors. As the BBC reports:

“Economic growth in the eurozone has slowed to a crawl -- and that's bad news for the UK as much as it is for member states. The 0.1% growth figure for the fourth quarter of 2009 was worse than expected and puts into perspective the UK's similarly anaemic performance over the same period.”

I have always feared that the UK was in for a “double dip” recession; I am probably a bit of an economic pessimist by nature. These figures suggest, however, that this may be an issue for Europe more widely. And once public-sector cuts start to hit home in countries including the UK, that must act as another kick to an already weak economy.

So ... no answers or predictions, other than this: If you are a service/solution provider/supplier to the Eurozone or the UK, don't bank on a robust recovery and booming sales any time too soon.

- Peter Smith

Spend Matters believes that in 2010 transparency -- not simply compliance management or supplier on-boarding -- will begin to rule the supplier management focus. In recent years, many organizations have begun their supplier information management journey by attempting to solve singule issues, often in response to a particular regulatory, customer, or market demand. In some cases, these investments have allowed procurement organizations and the the business areas they represent to check the box on meeting standards requirements (e.g., RoHS in high tech, CFR requirements for traceability in medical devices, etc). Others have gone slightly further, providing new capabilities that actually improve business performance (e.g., supplier on-boarding systems that enable companies to bring more spend under management faster). In nearly all cases, the desired result has been a specific goal rather than a broader level of transparency between the buying organization and its supply chain (potentially multiple tiers).

Spend Matters believes that, starting in 2010, we'll see leading procurement and supply chain organizations start to focus on building broader transparency into their supply base, not only to solve immediate requirements but also to stay flexible and nimble, the better to manage future requirements and to react to changes in the market. In this regard, companies will focus on transparency as a means to both current (and necessary) realized ends as well as future, potentially unknown ones, such as the need to rapidly implement and effect a successful supplier development effort in response to a crisis (e.g., quality failure, adulterated ingredients/parts, child-labor violation, etc.) In some cases, they'll rely on suppliers to partially or fully offset the costs of these programs by requiring a registration and/or annual fee. Our research suggests that there is significant polarization among organizations about whether to have suppliers offset transparency-program costs (or, in some cases, to make such programs a profit center).

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