Sunday, August 24, 2008

Search Vendors adding Spend Analysis capabilities

Jason Busch in his Spend Matters blog recently wrote about enterprise search vendor Endeca possibly entering Spend Analysis market (http://www.spendmatters.com/index.cfm/2008/8/22/Endeca-Quietly-Launching-Into-the-Spend-Management-World). In my opinion this is just another example of collision of Search and Business Intelligence markets. BI vendors were already applying BI toolkits to Spend Analysis and now Search vendors are also following them into Spend Analysis.
The worlds of Search and traditional Business Intelligence are merging. BI vendors are adding search features and search vendors are pushing the envelope for reporting & analytics. For example, ad hoc reporting can be better implemented by apply parametric search coupled with charting & graphing.

It will be interesting. Historically, Spend Analysis always included reporting & analytics components but advanced search and data mining capabilities can make spend analysis much more powerful and actionable. It will be worth watching not only Endeca but also other search vendors like Autonomy, Fast Search & Transfer (now owned by Microsoft), and even Google.

Search vendors can also leverage their technologies into Spend Processing which is essentially a prerequisite to Spend Analysis. In fact, quite often Spend Analysis vendors will bundle Spend Processing with Spend Analysis. To perform a meaningful ranking of search results, Search vendors have developed various algorithmic approaches such as K nearest neighbor for pattern recognition classifier, Bayesian for probabilistic learning classifier, different weights for different words for Vector Space classifier. Those intellectual properties and techniques can be effectively applied towards elements of Spend Processing such as spend classification, supplier de-duplication, spend clustering, etc. Thus, I would expect that search vendors will play an increasingly important role in Spend Analysis.

2 comments:

Anurag Dixit said...

Hi Aloke,
I saw your comment on Jason's blog and that is how I landed here. I completely agree with you, when you say that data is the most important piece of the spend analysis puzzle. In fact, we at Zycus at realized this much ahead of time (in 2000).
We have pioneered the use of Baeysian algorithm in Spend Analysis and now have two patents on AI algorithms for spend data classification and enrichment. I would also like to add that it is not just technology but we are also recognized as one of the market share leaders in this space.
Drop me a line on anuragATZycusDOTcom and I would be more than happy to schedule a small briefing to take you through our products, achievement and future directions.
Thanks,
Anurag Dixit
VP Marketing, Zycus
www.zycus.com

Aloke Bhandia said...

I agree with you in that Zycus is one of the industry leaders in Spend Analysis. I would love to get an update from Zycus in this area. However, my original comments were intended to indicate the areas of technical strengths that traditional search vendors can leverage to enter Spend Analysis. Search vendors can be a force to reckon with due to the investment they can potentially make if they decide to focus in this area. The possibilities of continual improvement in the areas such as automated spend line item classification based on company history, supplier history, item description, etc. is almost unlimited and the vendor that can build competitive barrier through rapid algorithm enhancement, rich supplier database and accelerated customer acquisition will be very difficult to dislodge.