Frictionless Commerce: Small But SharpBy Baselinemag | Posted 2006-01-14 Print
Frictionless Commerce earns praise for a complete suite and improved software quality, though customers say it had a tough time delivering global support.
Frictionless Commerce rubs customers the right way. Though at times constrained by its small size, the 85-person company is praised for being open and responsive, and for providing a well-rounded spend management software suite.
Anthony Santiago, vice president of global sourcing and supplier management at Bristol-Myers Squibb, says Frictionless has been "a remarkable partner." The pharmaceutical company uses its software to track suppliers and hold online auctions, pumping $380 million in spending through the system in 2005. Bristol-Myers Squibb installed the software in late 2002. Early on, when Frictionless released an update, the software didn't always work at first, Santiago says. Now, however, "they have it down to a science." Adds Santiago: "They're really straightforward about what they can and cannot do."
For Alticor, the parent company of Amway, "Frictionless was almost a perfect marriage for the processes we'd set up here," says Michael Nelson, director of strategic procurement. For example, Alticor's "sourcing effectiveness" teams used to analyze categories of spending by compiling data in spreadsheets, then taping printouts to a wall in a 6-by-10-foot matrix. Frictionless "gave us the tools to automate that analysis and turn it into actionable information," Nelson says.
But Frictionless hasn't been able to support customers in Europe or Asia very well, says Luke Nieuwenhuis, Alticor's manager of strategic sourcing and direct materials procurement. Alticor has had to help Frictionless get training programs established in some countries, according to Nieuwenhuis. "It's unfortunate that we're forced to lead them and direct some of their activities," he says. Frictionless acknowledges that it has relatively limited international operations, with its only European presence an office in London and no offices in the Asia-Pacific region (though it expects to expand its reach in 2006).
And while privately held Frictionless isn't profitableit expects to become cash-flow positive this yearthe company appears to be more stable now than it was three years ago, says Jon Finseth, director of sourcing and procurement at TDS Telecom, a cable and phone service provider. "Frictionless was small, but they had all the capabilities we wanted in one system," he says, adding: "They're one of the vendors in this space left standing."
Revenue, 2004: $10.8M (Information Access est.)
Revenue growth claimed: 50% from 2003 to '04
Total funding to date: $58.1M in four rounds
Investors: Polaris Venture Partners, RRE Ventures, Lake Street Capital, Draper Richards
No. of customers reported: 45
Akamai Technologies, BEA Systems, Intel, Oracle
Accenture, Archstone Consulting, BearingPoint, Delinea, Denali Consulting, Deloitte
Financial Services: Aetna, Cigna, MetLife, Prudential, Wachovia
Energy: PSEG, Florida Power & Light
Manufacturing: Philip Morris USA, Revlon
Pharmaceutical: Bristol-Myers Squibb,
Eli Lilly and Co.
Telecommunications: Sprint Nextel
Cambridge, Mass. (headquarters); London
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