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Supplier Relationship Management Firms Merge

by Diane Himes, MA Editorial Staff

Posted on Monday, July 23, 2007 5:48:00 PM       Sign Up to receive Daily News Alerts in your E-mail Inbox                               

On-demand supplier relationship management provider Perfect Commerce has announced the completion of a merger with procurement outsourcing service provider CorMine LLC. The combined company will retain the Perfect Commerce name and maintain headquarters at the former CorMine location in Hampton, VA. Specific terms of the deal were not disclosed.

Perfect Commerce, founded in 2000, competes with such vendors as Procuri, Emptoris, and Ariba in the on-demand supplier relationship and spend management market. Its SRM software suite includes the PerfectProcure, PerfectManage, PerfectFinance, PerfectInsight, and PerfectSource modules.

CorMine, whose customers are large manufacturing and technology companies, including Boeing, Del Monte, Hitachi, and Lenovo, emerged as a stand-alone business in 2001 after a stint providing procurement and sourcing services exclusively to IBM.

Perfect Commerce and CorMine maintained a business partnership for approximately 18 months prior to the merger, which, CorMine President and CEO Hampton Wall told Managing Automation, was the next logical step in the relationship.

"Most of our competitors provide either just software or just service," Wall said, explaining why the new company will stand out among competitors.

Mickey North Rizza, a research director at AMR Research, agreed. "There is now a new outsourcing and technology provider under the Perfect Commerce name, providing services across all areas of spend," North Rizza told Managing Automation.

Another competitive difference, Wall said, is that CorMine brings to the new company an established network of 18,000 suppliers with pre-negotiated financial contracts.

"From the industry's perspective, [the company] will seem new," Wall said, because of its ability to provide the combination of procurement software with services, while leveraging an extensive supplier network. The combined company has about 250 customers ranging in size, and mostly in manufacturing industries, Wall said.

The CorMine merger is a natural step for Perfect Commerce as the company builds out its software as a service (SaaS) delivery model, Ben Pring, research vice president covering procurement and outsourcing for Gartner Inc., told Managing Automation. The addition of CorMine's functional process knowledge will bring balance to Perfect Commerce's quality of service, specifically around such functions as materials capital equipment and maintenance, repair, and overhaul (MRO), he said.

Wall retains the roles of president and CEO of the merged company. John Sharman, formerly president and CEO of Perfect Commerce, will have a "leadership position" on the company's board of directors, according to a company statement.

A recent forecast report (subscription required) from AMR Research on the sourcing and procurement market says that the market grew at a rate of 10% per year from 2005 to 2006, and projects that it will continue to grow at an 8% CAGR through 2011. The report also notes that revenue in the market is shifting from traditional license models to alternative deployment models, such as SaaS, as well as extended service offerings.

Several reasons the SaaS delivery model is attractive to line-of-business buyers in the market for sourcing and procurement applications include speed to deployment, lower up-front costs and risks, and a pay-as-you-go usage model, according to the AMR report.

As in other areas of the enterprise software market, the AMR report also predicts continuing consolidation among sourcing and procurement vendors.