Smaller Can Be Beautiful

Small B2B software providers worth a (careful) look, Forester says

Tempe, AZ  June 6, 2001  Continued turmoil in the B2B software market might have you thinking twice before signing the check for an application from a small solution supplier, but a little due diligence can go a long way in helping you avoid the bankrupt-provider blues, according to a new report from tech-consultancy Forrester Research.

Forrester analysts Laurie Orlov, Steven Kafka and Meredith Child note in their May 22 report, titled "How to Buy Wisely from B2B Software Startups," that recently several e-procurement, sell-side and e-marketplace software providers either have gone belly-up (they cite Metiom and SpaceWorks as examples) or have hit hard times.

But Forrester argues that companies should not throw the baby out with the B2Bathwater by rejecting solutions from small providers out-of-hand. The microproviders "outpace established players with innovative solutions" that can help companies achieve supply chain efficiencies, the Forrester analysts write.

For example, the report cites tools to coordinate sales (from providers such as iMediation, Commergent Technologies and Motive Communications), streamline supply (Atlas Commerce, NetVendor and diCarta) and speed product-design and strategic-sourcing processes (Alventive, Healy Hudson and eBreviate).

Forrester recommends five criteria for evaluating software providers:

 -- Sufficient, long-term funding to keep the provider alive post-sale.

 -- Veteran managers that understand the industry.

 -- Reference customers willing to talk about their implementations on the record.

 -- Partnerships with integrators willing to dedicate a practice area to the solution and with another, major software supplier willing to sell the smaller provider's product as a useful supplement to its own product.

 -- "Agile products," which Forrester describes as software that includes "easily configurable components and Net-native architecture" that will allow the software to evolve over time.