As you know, and much like the coverage of our industry in general, I usually find press releases announcing either a new client win, or a merger and acquisition, as little more than the perfunctory dissemination of information that reveals little if anything meaningful. In fact, the vast majority of announcements would be better placed in either a Facebook discussion stream or Twitter Tweet, in which someone shares what they had for lunch that day.
. . . this result should emphasize the importance of the need for the assessment or explanation of industry events to appeal to a much broader audience, an audience whose influence on both adoption and outcomes can no longer be overlooked. – May 21st, 2009 PI Post Achieving Practical Outcomes to Complex Purchases at the Heart of the Emptoris Acquisition of Click Commerce
What this means is that in reviewing all of the press releases that cross my virtual desk every morning, each and every one follow a similar and monotonous pattern of gushing, mind numbing sentiments from the world of “the new client is wonderful, we’re wonderful, and gosh darn it everyone is wonderful” dribble.
It is through this discriminating filter that I try to find the underlying relevance of an industry event. An example of this is my coverage of the Periscope acquisition of BidSync, which eventually evolved into the NIGP #CodeGate controversy (Up Periscope? Examining Periscope’s acquisition of BidSync with a “Survivor’s” eye).
So when the news that Tradeshift landed Air France-KLM has a client, it is through the above referenced scrutinizing eye that an interesting angle to the story caught my attention.
SAP is attempting to “buy its way into the cloud” . . . versus actually “being in the cloud.” – Vishal Patel, Head of Industry Solutions, Tradeshift
Often times, the best insights come from asking outside of the box questions.
For example, when I asked Tradeshift’s Vishal Patel if the company’s win was a reflection of the fact that SAP’s traditional stronghold in key markets such as the airline industry, was beginning to wane, he expressed the opinion that it was. He of course prefaced his response with the politically correct statement that SAP is still a strong presence, and that Tradeshift was happy that they could easily integrate with the company’s back-end enterprise application.
I then asked him why he felt this shift in market influence was occurring? Could it be for example, tied to the recognition that the old ERP-based eProcurement solutions of the past never delivered on their promise (refer to my Gartner Postmodern ERP post from December 6th, 2014)? Did this, I continued, open the door to the acknowledgement on the part of corporate clients that to be effective, platforms such as Tradeshift and Nipendo do not have to be expensive overarching endeavors that take years to implement, before delivering tangible benefits?
After giving a positive response, Patel added that besides his company being in the “right place at the right time,” Tradeshift’s strategy of “complimenting rather than replacing incumbents such as SAP” played an important role in landing the Air France-KLM deal.
This being said, he then went on to suggest that Tradeshift’s ability to seamlessly add third-party apps to their platform, thereby expanding the company’s ability to offer a complete supply chain solution, was ultimately the driving force behind their future success.
This reminded me of my interview with IBM’s Pete Wharton back in December. At that time Wharton, who is Big Blue’s Commerce Solutions Product Marketing Leader, explained that the company’s collaborative partnership with JD Edwards was part of a plan “to create an ecosystem of technology partners to extend IBM’s service capabilities to its customers.” In short, and similar to IBM, Tradeshift is building its own ecosystem through the incorporation of third-party apps that compliment their core offering.
I then posed the following question; given that IBM has recognized and appears to be responding to this market shift, where does this leave SAP? For example, would SAP follow a similar path to that of IBM?
This is when Patel made the statement that SAP is making attempts to “buy its way” into the cloud.
Based on his statement, I asked Patel if this made Tradeshift an acquisition target, and if it did, what would the company do?
While acknowledging that Tradeshift would indeed be an attractive takeover target for SAP – or for that matter any other large ERP provider, he was not sure that he could answer how his organization would respond to such an overture.
What he does know however, is that there is a definite trend on the part of companies to “move away from SAP,” citing both Air France and DHL as being prime examples. My take regarding this last statement from Patel speaks volumes, in that it suggests that SAP is in a state of static oblivion. Specifically, if they don’t do something to successfully “buy their way into the cloud,” they could eventually find themselves relegated to back-end system spectators, with a diminishing market influence and share in the new world of collaborative eCommerce.
In this context, the Air France-KLM win may very well represent one of several critical turning points in terms of where our industry, and the overall market itself, is headed – including the determination of who will be at the helm of this brave new world.
To me, this is the real story behind the Tradeshift contract win.
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Procurement Insights 
John King
April 18, 2015
Ha ha ha!
What would SAP be buying?
– technology? (doesn’t work, ask Lear Corporation or Regus)
– revenue? ($2.5m revenue in 2014 so cannot see that being the prize)
– customers? (They have ten, fifteen max, and 4 are shopping for replacement networks)
– people? (the goods one are leaving in droves)
– opinions (plenty of those in Tradeshift. Maybe that’s th prize?)
Come on get real. This article is clearly planted by loudmouth Lanng in the hope SAP will read it and step up… Before he runs out of cash. Never going to happen.
piblogger
April 18, 2015
Okay, so don’t beat around the bush John and tell us what you really think 😉
So what are your thoughts about Nipendo and others?
Given that we are, according to Gartner, in the postmodern ERP era (read my referenced post), who are the ones most likely to step up in terms of the vacuum that is being created by the long overdue end of the ERP dinosaur era?
John King
April 19, 2015
Well don’t buy the assertion that we are at the end of the ERP era per se. It’s true that the ERP vendors need to diversify from pure ERP but it looks to me like they are well ahead of that curve. SAP have acquired several market leaders and continue to pump billions into carrying forward those solutions and innovating… And according to the numbers I have seen on revenue, network growth, customer retention, it’s a strategy that is working. Equally Oracle’s continued investment in its own eproc solutions is keeping most of its customers from looking elsewhere. I just don’t see a vacuum, though I appreciate it helps sell Gartner services to raise and then attempt to answer this question.
There will always be niche providers in this space living around the edges of the gorilla vendors and they have an important role. They are better in the mid market for instance (where customers are less likely to have placed big bets on an Oracle or SAP strategy) and they often step up to more peculiar use cases (industry plays for example). They also ensure the big boys keep innovating and stay on their toes. Some do well and get bought (Ariba, Emptoris). But even where companies have grown into credible alternatives to the big vendors (basware, coupa) they are still unlikely to surpass SAP and Oracle in terms of market share just because there is such a marginal argument for somebody selecting them over their incumbent strategic partner.
But whether I’m right or wrong about this, I stand by my comments tradeshift not being worthy of consideration in this context. A company with great ideas but whose entire execution strategy has revolved around a continuous spew of negative and ill informed marketing in lieu of building robust IP, acquiring and keeping customers or any of the other things required to demonstrate credibility. Theyb bring shame on this market.
piblogger
April 19, 2015
Interesting perspectives, especially your statement “I appreciate it helps sell Gartner services to raise and then attempt to answer this question.”
Are you suggesting John that Gartner’s coverage is along the lines of the security guard who starts a fire and then is the one to call the fire department so that they can be seen as the one who saved the day?
piblogger
April 18, 2015
By the way readers, here is the link to the press release regarding the Lear deal to which John King referenced in his comment; http://www.marketwired.com/press-release/tradeshift-signs-agreement-with-lear-1817977.htm
I will be following up on this and will of course keep you posted.
Cynical
April 19, 2015
So, tradeshifty are desperate to be sold?
Still peddling drivel about their ‘contract wins’ , whereas actually the buyers found the enrollment performance to be so poor they vowed not to use TS again?
Or, come to that, why not admit the much-hyped ‘free to suppliers’ is far from free – vide the 37 page charging manual they have issued to their staff.
Why would SAP buy a non compliant network of dubious credentials like TS?
piblogger
April 19, 2015
Thank you for your comment Cynical . . . although I would certainly give more credence to your position had you used your real name as opposed to a pseudonym.
That said, what are your thoughts regarding the larger question re who will step up to fill the vacuum in terms of market leader in the postmodern ERP era to which Gartner referred? After all, 85 percent of all e-Procurement initiatives of the enterprise era failed to deliver the expected results including SAP, Oracle etc. In fact, here is the link to a very well received white paper I wrote titled SAP: A Propensity For Failure; http://www.slideshare.net/piblogger/sap-a-propensity-for-failure
Toels Overgaard
April 20, 2015
Interesting comments. I worked in the Danish government when this company was formed. The feeling was the founders played lots of vendors in the market (in the name of their government) with a pretend RFP to gather market intelligence and ideas and then they held the government to ransom in spinning out into their own company. It was a scandal at the time. I thought they had dispersed but it seems the controversy continues.
piblogger
April 20, 2015
Thank you for taking the time to comment Troels – by the way when I did a search on your name the spelling came up as being Troels so I assume that Toels was a typo.
I would be interested in learning more about this. Can you provide me with a name or names of individuals at the Danish Government with whom I can speak?