Last week, I had the pleasure of speaking at the inaugural Global Procurement Technology Summit sponsored by ISM and Spend Matters in Baltimore. Andrew Karpie from Spend Matters and I spoke, in part, on the difference between networks and platforms in supply chain automation.
To distill a one-hour presentation to its essence:
- Networks are a subset of platforms. All Platforms are networks (and benefit from network effects), but not all networks are platforms.
- Consider the common supply chain automation networks—EDI networks, Coupa, Ariba, Basware, and marketplaces such AmazonBusiness or Upwork. Now add to these networks:
- Open APIs to allow developers to add new applications
- Complementors who provide additional services to either or both sides of the network (e.g, banks, insurance providers, analytics providers, etc.)
Voila, you have platforms.
The Trade-Off Between Traction and “Platformness” in Supply Chain Automation
The supply chain automation market is transitioning from being served by networks to platforms. The “older”, established networks with traction, however, tend to have few platform elements. Meanwhile, the newer players architected as platforms tend to have less traction. This trade-off between traction/adoption and “platformness” is captured in the following 2X2 diagram, with traction on the X-axis and “Platformness” on the Y-axis.
Please note the logos are not drawn to scale. And please don’t over-interpret the positions of the logos either. I’m not doing a Magic Quadrant or Forrester Report!
Some examples from the chart:
- Tradeshift is architected as a platform more than the other e-procurement networks. However, it has very little traction.
- AmazonBusiness is a marketplace which is one type of platform. But it is still unclear if AmazonBusiness will open APIs as it has on the consumer side of their business. Amazon probably has more traction than I gave them credit for on the chart, but they are still not established with non-card spend and large enterprises. (Based on their presentation at the GPTS both of those issues are being addressed shortly!)
- Coupa has a multi-tenant SaaS model, an open enablement model, a GPO, and other platform elements, but no open API.
- SPS Commerce is an EDI network that has added platform elements, including an open API and complementors. They are still small relative to the EDI giants, but have moved quickly and successfully.
- I positioned Ariba as a network because as of Tuesday last week, Ariba did not have an open API, though they had a connection to Discover for payments. Lo and behold, on Wednesday at AribaLive last week Ariba announced an “Open Ecosystem” and a future supply chain finance offering. Ariba also seems to have copied Coupa’s email-only enabled supplier model as well. All platform moves.
With the exception of the EDI giants, the race is on for these network players to get to the upper right quadrant and establish themselves as platforms with traction.