On-demand supply chain management provider Procuri Inc. has acquired TrueSource Inc., a purveyor of spend management application services and a Procuri partner for the past year. Terms of the deal were not disclosed.
The acquisition, announced at Procuri's Empower 2006 conference in Atlanta earlier this week, brings in-house the spend management product that TrueSource developed and Procuri has been selling for the past year under the TotalAnalytics rubric.
"There was always an option -- do we build or buy?" said Tim Minahan, senior vice president of marketing for Procuri, in an interview with Managing Automation. "We definitely had to have [spend management] in our suite, and then I think it got to a point where we realized we really needed to own it as well."
The original partnership with TrueSource, initiated in 2005, helped fill out the functionality of Procuri's suite of supplier management products, and also afforded it time to integrate TrueSource's functionality with its products in advance of the purchase agreement, although Minahan said the partnership was not necessarily established with acquisition in mind.
The TrueSource product that Procuri gains, which will continue to be known as TotalAnalytics, helps a company manage and analyze its spending with a host of suppliers and across myriad functional areas.
"Most companies have a largely heterogeneous application environment," Minahan noted -- systems scattered across operational sites or business departments that run the gamut from Oracle's latest ERP offering, for instance, to legacy systems that are a decade old. The TrueSource product, he said, extracts data from the various systems of record, optimizes and organizes the data, and describes the resulting picture of the company's spending habits.
The product includes an auto-classification engine that relies on 120,000 preset rules to "cleanse" data that may be incomplete or inaccurate. Those rules can determine, for instance, whether the abbreviation "blk" stands for black or bulk, depending on the context in which it occurs.
While the analytical tool organizes a company's existing supply network, evaluation of potential suppliers against information such as financial viability and diversity status, Minahan noted, is possible through one of Procuri's existing products, called Total Supplier.
Procuri's acquisition of TrueSource, along with several recent partnership announcements, represents an effort to expand its product capabilities to offer a more complete supplier management solution.
Vance Checketts, channel director for global supply management at research firm Aberdeen Group, said the acquisition does indeed afford Procuri a broader footprint in the arena of supply chain management. The company's 2005 acquisition of Contract Management Solutions, Inc. (CMSI) brought contract management functionality to Procuri's portfolio, augmenting its existing sourcing solutions. Now, the TrueSource addition delivers a third major strength -- spend management and analysis.
That, Checketts said, gives Procuri critical mass. "Even with one or two subcategory areas, you're still considered a niche vendor," he said. "And now this is maybe three subcategory areas in which they have strong solutions."
In a research note published in the wake of the announcement, AMR Research's Mickey North Rizza echoed that assessment. "The [Empower] conference news," she wrote, "shows Procuri has clearly marked its spot in on-demand supply management as a suite provider."
Procuri's conference news wasn't limited to M&A moves. Among the revelations: A pact with SEEBURGER in which the application integration vendor will provide the back-end connections between Procuri's products and any ERP system its customers might be running; a partnership with Austin Tetra that will allow Procuri customers to subscribe to a service that informs them if any foreign suppliers are not cleared to do business in the U.S. because of violations of either the Patriot Act or Sarbanes-Oxley; and the release of its TotalView product, a Web-based dashboard for supply chain analytics that can be personalized for each user.
"To me, it's the cumulative effect of what's going on there that shows real forward progress, that puts them on the map," Checketts said.
The announcements amount to a clarion call to competitors. The Aribas of the world, Checketts said, "need to be taking note of this," as should other on-demand vendors such as Ketera. He also noted that a company such as Emptoris, which has developed functionality similar to Procuri's, may now need to decide whether it needs to follow an acquisition path to create a better analytics product.
Places where Procuri can still fill out its offerings, according to Checketts, include e-procurement and invoice reconciliation.
Procuri claims a customer base of approximately 360. The privately held company does not disclose revenue figures. TrueSource brings about 12 customers into Procuri's fold, most of which are large companies with a global presence. That fits nicely with Procuri's top-tier clients.
Just over a third of Procuri's customers are Global 2000 firms with annual revenues in excess of $5 billion, according to Minahan, who disclosed that one of the top 10 companies in the Fortune 500 recently decided to standardize on Procuri's products for its global sourcing management, though he declined to name the company. Another third of Procuri's customers pull in annual revenue of between $1 billion and $5 billion, while the remaining third command less than $1 billion per year.
Procuri also revealed that Toyota Motor Credit Corp. and Toyota Motor Sales U.S.A. have both licensed the TotalAnalytics product in recent months.
The company declined to reveal pricing for its newly acquired product. The general model for pricing, Minahan said, factors in the number of users of the product and the number of systems from which it must draw spend data. TrueAnalytics will continue to be offered as a standalone, on-demand product.