We analysts can have a tendency to be a bit dry. While my hope is that the information is nevertheless helpful, I can certainly understand if a parade of charts and tables makes your eyes glaze over on occasion. With that in mind, I’m mixing things up a bit. Today’s post opts to get back to basics, and just share some ideas and approaches in the market that I think are pretty interesting. The five items that follow help confirm something that I’ve long believed: that there are some pretty smart people out there working to solve common procure-to-pay problems in uncommon ways. The aim isn’t to provide a full feature/functionality comparison, but rather to highlight a few companies that are keeping the market moving forward.
Before jumping in, I have two preliminary (but important) notes. First, this list is not intended to be exhaustive or exclusive. There are a lot of companies working on P2P, some of which may be doing (or planning to do) similar things – this is just a sampling. Second, I’ve chosen to highlight ideas and companies that I find interesting.1 With that said, let’s get started!
Keeping up with the Joneses, analytically speaking. As my colleague James Haight can attest, there’s a lot of focus on business intelligence and analytics in the market. One of the cool things about business networks is that they are very well-positioned to collect the sorts of helpful information that feed into those BI applications. With hundreds, thousands, or millions of transactions flying back and forth between large sets of trading partners, capturing and presenting that information can be pretty valuable to all parties involved. It’s also something that came up in a recent conversation with Coupa’s Tony Wessels. They’ve embedded comparative analytics inside their cloud-based solution so that businesses can compare their performance (say, average days to process an invoice) against others on the network. The presentation is clear and concise, keeping in line with the level of user-friendliness we’ve come to expect from Coupa over the years. What’s cool is that with these benchmarks, everyone is measuring things the same way – it’s a handy (and non-labor-intensive) way to compare performance against peers. As a fan of data and analysis, this makes me smile.
Arachnophilia. It’s not often that you hear someone profess a love of spiders. Normally, I wouldn’t have an opinion one way or the other.2 That view changed a bit after a conversation with MDSL’s CEO, Ben Mendoza. We talked about a lot, but one of the key things that I latched onto was their smart approach to a common procure-to-pay issue: that is, retrieving invoices from supplier portals. See, MDSL’s focus is on really complex invoices, like those for telecommunications and market data services. Where email may suffice for a normal invoice covering fifteen line items over a few pages, it’s a problematic delivery mechanism for those behemoth documents that detail every telephone line, data plan, etc. for a business unit or entire company. It makes much more sense for those files to be created and stored by the supplier and then retrieved by the customer. As you can imagine, the portal model has caught hold here. You can probably also imagine what’s involved on a monthly basis handling this retrieval manually. MDSL’s clever solution was to build a stable of “spiders” (think of the automated crawlers Google uses to map the internet) that recognize all of these portals and can automatically navigate through them to retrieve files on their clients’ behalf.
Accessible eInvoicing. When I think about the future of procure-to-pay, electronic invoicing is a big component. I look forward to the day when we’re all just exchanging data, rather than physical printouts or digital pictures of documents that need to be processed to make use of what’s right there in front of us. To get there, we need two main things: (1) a commonly-understood taxonomy for what the different pieces are, and (2) a document container that keeps things nice and organized for sharing between trading partners. There are efforts underway (see OASIS), but we’re not there yet. In the meantime, I thought we were left with a choice between processing paper or custom-configuring electronic invoicing on closer to a one-to-one level — until a recent conversation with CloudTrade’s Richard Manson. Since they sell mainly through partners, they may not sound immediately familiar. One of the things they’ve developed is a tool that extracts actual data from PDF documents (rather than treating it as an image to be processed via OCR). Since PDF-generation is a common option in ERP and accounting systems, this makes a lot of sense as an intermediate step toward full-scale, standards-based electronic invoicing. This approach treats the PDF as that document container. Because PDFs aren’t built with invoice-specific tags, there’s still some work required to “teach” the system where to find information – but when it does, what it finds is exactly what was sent by the supplier.
Engineering food… in a good way. Manufacturing operations have always been at home with enterprise applications; ERP was born from that space. One of the hallmarks of that type of business is the use of bills of materials and sales forecasts to feed into MRP, create planned orders, and automate materials purchases. But what about non-manufacturing operations that share some of those traits? This point came up in a discussion with BirchStreet Systems’ Bill Hirsch. What stood out to me most of all was what they call their Recipes module. It does for hospitality what traditional ERP does for consumer goods manufacturing: it understands the components that make up a dish3, integrates information on future demand, monitors inventory levels, and can auto-create requisitions to keep things running smoothly. How cool is that? The manufacturing-oriented approach is smart, since food-preparation is really a smaller-scale manufacturing operation (if we’re talking production runs) coupled with a service element. It’s good to see industries with unique (or at least less-than-common) characteristics being addressed with creative solutions.
Helping the little guy. Large enterprise buyers are often in a very strong position to impose extended payment terms on their suppliers, which can leave those suppliers in a pinch: find a third-party source of financing to bridge the gap or (attempt to) offer discount terms to incentivize earlier payment. As I mentioned in a previous post, the effective interest rate on those discount terms can be quite high, as can the usual rates for selling the related receivables to a factor. With that as a background, I was intrigued when Oliver Belin of PrimeRevenue mentioned that suppliers of large buyers using on their system can get accelerated payments at annualized rates in the range of 1-3% (compared with 36% for 2/10 net 30). Of course, this approach won’t work for 100% of companies or 100% of transactions: the rates are low because they’re based on the credit rating of large, established buyers and the process begins with an approved invoice and irrevocable payment obligation (lowering risk and therefore rates). Still, in these types of situations where you can’t control the terms-extension mandate of a large buyer, it’s nice to know there are options.
And there you have it: five items of note in the procure-to-pay space that I think are worthy of some attention. There are others, of course, and I promise that I’ll follow-up with more in the future. Until then, I have some charts to make.
1. No commercial relationship has dictated or influenced my choices. As I had mentioned in my inaugural post here with Blue Hill, we do generate revenue from solution providers in the market. That’s the nature of the business. I also reserved the right to point out technologies that I think are cool. That’s my task for today. None of these comments should be read to imply that any cited technology is right for your business (they might / they might not), but they should be read to imply that they’re doing interesting things that are worthy of recognition.
2. I wouldn’t be doing my job as an analyst if I didn’t have a caveat. For any hypothetical spider, my statement holds. In the event of said spider biting me, the scenario is altered and the scales tip heavily away from the spider’s favor. Spiders: you have been put on notice.
3. If ‘recipe’ seems a bit too pedestrian, I’ll cast my vote for Culinary Bill of Materials (cBOM for short). Of course, analysts do have a tendency of overcomplicating things… so I’ll keep this pitch hidden in the footnotes.