Every once in a while, you come across an infographic or segmentation that helps you make sense of the world.  I had this experience, more than 10 years ago, when Vasuki Subbarao (now at Vendavo) showed me a variant of this chart –a segmentation of indirect spend by the nature of the category’s source to settle process.

Diagram showing segmentation of source to settle processes

Since 2003 when I first saw this chart, the market for source to settle solutions has developed very much along the lines of these processes.  For every “branch of the tree”, there are now established software, managed service provider (MSP), and outsource solutions. Examples include:

  • SKU-based:  Ariba, Coupa, Sciquest, etc.
  • Travel:  Concur, Amex Travel, Deem, and other wannabes
  • Labor-based:  Fieldglass, IQNavigator, elance, MSPs
  • Custom /Complex Specs:  Innerworkings and other MSPs in print, Eved in meetings and events, numerous advertising exchanges
  • Logistics:  GT Nexus, Amber Road, Inttra, RailInc. 3PLs etc.
  • 3rd Party Services:  Software and MSP solutions in plant maintenance, facilities maintenance, energy usage, etc.

These days you can even outsource the audit of the invoices from your outsourcing provider–think about that one for a second–to a company called Swingtide.  (Thanks to Cory Bricker of Cass Information Systems for identifying Swingtide.  By the way, I bet Cory can name dozens of companies who perform just bill auditing and payments on the last three branches of the tree, which lend themselves well to complex matching and payment issues.)

Note that every branch of the tree can be even further segmented.  For example, logistics includes, Ocean, Rail, Truck, Small parcel, same day delivery, etc.  In addition, every step of the source to settle process can also be segmented, as shown previously here.  So imagine a large chart with each sub-category of spend as a row and columns for each discrete step in the source to settle process.  (You will have to imagine that because I have not built that yet, but I probably will some day.)

Each time I encounter a new company, I find myself analyzing it by imagining where they belong on this map–which categories and which part of the Source to Settle or Order to Cash process they are addressing.  I want to know if they understand this model, their competition, and if they have thought about the match between the part of the process they are focusing on and the one that causes the most pain in the categories they seem to be targeting.  True category experts may not articulate it this way, but they understand intuitively where the pain points are.

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