Spend-analysis providers meet with business intelligence specialists in software market showdown

E-procurement specialist Ariba cites two challenges that concern procurement executives the most: delivering measurable results, and analyzing spend data. In a spend-analysis market crowded with competing applications, the relationship between the two may reveal which vendors are likely to win out.

For many procurement executives, spend analysis poses four core problems, the first of which is accessing data that may be spread over multiple systems at multiple locations. The second is normalizing it so that apples are counted with apples, and pears with pears; and third, analyzing it with tools powerful enough to deliver insight capable of driving dollars to the bottom line. On which note, cue the fourth problem: paying for it.

“Justifying spend analysis on its own can be a challenge because the ROI doesn't come from the analysis itself, but from acting on the insight it provides,” says Alex Saric, director of solutions marketing at Ariba.

Hence in part the drive to bundle spend analysis in with the rest of the e-procurement platform—the strategy adopted by Ariba—and latterly by Procuri, which has abandoned its spend analysis partnership with business intelligence (BI) specialist SAS in favor of acquiring TrueSource last September. Bundled as part of a suite, goes the logic, spend analysis ROI is harder to question.

But can spend analysis applications from platform vendors such as Ariba and Procuri really deliver as good an analysis as that achievable by a pure-play BI vendor such as SAS—for whom data analysis is the day job?

Extracting data from multiple sources—once touted as a BI specialist's secret weapon—is no longer much of a differentiator. At North Canton, Ohio-based security products manufacturer Diebold, for example, Ariba successfully extracted spend data from five ERP systems. “From a strategic perspective, it's the procurement expertise that vendors bring to the task that matters, not the skills in data extraction,” says Mike Rager, VP of global indirect procurement.

Tim Minahan, Procuri's senior VP of marketing, concurs. “Market knowledge—knowing that IBM is the same as I.B.M—and supplier classification, including supplier 'parent-child' relationships, is a bigger problem,” he says. Where IT issues come to the fore, he believes, is the size of the deployment footprint. “SAS is a well-proven business intelligence vendor, but its deployments are large, behind the firewall, and take longer to implement than Procuri's on-demand model,” he argues.

“We aren't the right choice for everyone,” concedes SAS Business Developer Tim Fairchild. “But where there's a lot of data—plus data-quality issues and a requirement for a high degree of sophistication in terms of analytics—then we'll either be the solution, or we'll be supplementing what the platform guys do.”

Ariba's Alex Saric isn't so sure. Yes, he notes, there are areas of overlap with BI-based solutions—but also one critical differentiator. “With an e-procurement-based solution, the impact doesn't stop with the analysis: We have the power to drive the broad adoption of the findings,” he says.

By locking end users into the purchasing policies arrived at through analysis, in other words, Ariba and similar solutions close the loop. Business intelligence solutions, on the other hand, “stop with the intelligence—they don't move into execution.” In a market presently concerned with the twin challenges of spend analysis and delivering measurable results, that could be a key point of differentiation.