Similar to when I received a call from investment banking firm Craig-Hallum regarding my post that the Ontario Education Collaborative Marketplace or “OECM” had decided to drop Ariba and eat $20 million in the process, the conversation I had with a representative from an investment banking firm shortly after I had posted my article on SciQuest, was equally telling.
Of the many questions their Equity Research Associate asked me regarding my coverage of SciQuest, these are the ones that stood out the most:
- Are the company’s challenges limited to the commercial market, or are there also similar issues within the higher ed market?
- What were my thoughts regarding the State audit surrounding the University of Connecticut spending “more than $900,000 in licensing fees on SciQuest software” that it had never actually used?
- To what extent is pressure from competitor’s such as Coupa having an impact on SciQuest’s performance and future?
- Is the reported and repeated delay in the signing of a large contract a sign that the deal will not go through?
In answering these, as well as other questions, the underlying tone was clear . . . SciQuest is definitely a company that is in big trouble.
To start, and referencing the recycled press release announcing purportedly “new” wins in higher education, it is evident that SciQuest’s problems extend to what was once a stronghold in terms of its indigenous market. Rumblings of a growing dissatisfaction with the company’s solution within the higher ed sector signal the decline of what was once – at least for a period of time – a winning partnership. Simply put, if your one time strongest constituents are no longer supporting you what does that tell you?
Just as a side note, and while the research associate indicated that the recycled press release was technically accurate in that they represented new contracts involving existing higher ed relationships, he acknowledged that it was nonetheless a somewhat dubious practice.
In my response to his question regarding the UConn audit, I had indicated that this was the perfect example of the dash and dine approach of the company in terms of implementing its solution. While there are without a doubt unique elements with every implementation, this seems to be the central issue with SciQuest customers across the board including Colorado and Oregon. It is also likely the reason why another state will soon be dropping the company.
Even though neither state has gone live with the “full set of solutions they purchased in 2011,” SciQuest CEO Stephen Wiehe (yes the same Stephen Wiehe that led the privatization of the company back in 2004), is taking an aggressive position. Specifically, Wiehe is of the opinion that his wayward customers do not have the right to cancel the contracts, and that if a settlement cannot be negotiated, the company will pursue “all of my available remedies.” – from SciQuest comes full circle with CombineNet acquisition (Part 2 of 2) by Jon Hansen, Buyers Meeting Point
He then asked if existing higher ed institutions will follow suit or wait until their contracts expire to move on to a new vendor.
Given SciQuest CEO Stephen Wiehe’s “response” to Colordao and Oregon’s decision to cancel their contracts with the company, I indicated that most higher ed institutions will likely ride it out to the end rather than face a similarly heavy-handed response. Either that, or hope for a UConn-type audit to give them a reason to get off the hook.
Apparently CEO Stephen Wiehe likes to fix pinball machines . . . too bad he can’t fix SciQuest.
Regarding the impact that competitors were having on SciQuest’s fortunes, he asked me about Coupa – which in and of itself I found interesting – as well as who might fill the void for a solution provider in the higher ed sector. Regarding the latter question, I had indicated that companies such as Unimarket seem to be making serious headway. However, I also emphasized the fact that the focus should not be on the companies but their results in terms of successful implementations. At the end of the day, it is ultimately the point of consideration or measurement that matters most.
As for Coupa, look for my post on this sometime next week.
From the standpoint of the delay in the signing of a new, large contract, my answer was fairly simple. Given the above scenarios, would you want to be the person putting your name on the dotted line to engage the services of a company whose clients are in various sates of dissatisfaction and distress?
We agreed to stay in touch as further developments come to light. In this context, and as always I will keep you faithful reader, in the loop!
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Procurement Insights 
Dan Corazzi
November 28, 2014
Jon,
Interesting article and points on competition. Actually, the spend management provider who has gained the greatest market share in Higher Education is ESM Solutions. With over 75 new customers in the last few years, with the inclusions of large institutions such as University of Tennessee, University of Alabama, University of Cincinnati, Cal State, Michigan State, Auburn, Ivy Tech and many others, ESM is transforming higher education procurement.
piblogger
November 28, 2014
Thank you for the information Dan. How can I learn more about ESM?
Dan Corazzi
December 1, 2014
Jon,
I would be very interested in speaking with you. I am in the UK on business until Thursday. Are you available to speak Friday afternoon or Monday of next week? My email address is djcorazzi@esmsolutions.com
Dan
Daniel Perry
December 1, 2014
Thank you for the mention in your article Jon. Unimarket has been making serious headway by steadily and organically increasing our customer base thanks to glowing referrals from customers, suppliers and third-parties. It’s a testament to our solutions and services, that we are consistently being mentioned in the same breath as the stalwarts of the industry.
It’s unfortunate that SciQuest appear to be turning their back on the customers that literally made them who they are today. Quoting customer references of customers that are not live, and charging for solutions that aren’t delivered results in a ripple effect where similar vendors are being tarnished with the same brush.
When providers over-promise, under-deliver and the customer doesn’t achieve their ROI, it reflects poorly on e-Procurement solutions as a whole.
All that being said, if a provider does not live up to the expectations of their customers, it provides those customers with an opportunity to look elsewhere for new solution providers (like Unimarket, ESM and others).
While this is definitely a wake-up call for SciQuest, it also acts warning to any would-be successors: Look after your customers and provide value for money or fear the wrath of the auditors!
Matthew Setta
June 2, 2015
Great article Jon. Please notice the impact BuyerQuest is having on the market. Stanford University is currently implementing BuyerQuest’s full P2P suite. First generation solutions will definitely be at risk as BuyerQuest brings truly eCommerce/Amazon-like functionality and single tenant deployment to the higher ed world.