A Kiwi entrepreneur has found a welcome niche for his vision
When I spoke to Scott Blackwood in 2008 he was a former Ernst and Young consultant who'd come home from the United States with a dream of building a better way to buy things online.
He'd made his first sales of Unimarket to organisations like Hamilton City Council and Waikato
University, and the family was settling in back home.
But entrepreneurship has its own pulse, and I caught up with Blackwood last week while he was back briefly from North America.
He relocated there last July, after a former EY colleague, Kurt Black, convinced the company Unimarket should target the US higher education sector.
Blackwood didn't intend to go back so soon, but like entrepreneurs before him he discovered breaking new markets isn't a job that can be done remotely.
However good the local staff is, people want to be able to look the person in charge in the eye when they're making such a radical purchase.
Unimarket pulls together a whole lot of suppliers and integrates their online sales in such a way the buyer can do whatever they need through the Unimarket site.
It's hosted on servers in Kentucky and developed and managed out of Auckland.
"It's a true cloud-based software as a service application. Unimarket can do a lot of the things the early marketplace sites promised. The technology has caught up with the theory," Blackwood says.
From the customer side, everything feeds back into the organisation's financial or resource planning system.
On the supplier side, Unimarket modules take care of things such as managing catalogues and e-stores, giving quotes, invoicing, reporting, with links back into suppliers' e-commerce and supply chain solutions.
Suppliers can load catalogues for individual customers or for anyone who wants to buy. The system can handle collaborative price breaks, so there is an incentive to group together customers to negotiate better deals.
That dynamic is underpinning US sales. The first major customer was NACUBO, the National Association of College and University Business Officers, which wanted a campus business portal to make purchasing easier for the 2500 tertiary institutes on its books.
The four New Hampshire universities were next to sign, keen to find ways to cut their procurement costs.
"It's not a big state, but it put us on the map. It's hard to sell into state systems," Blackwood says.
In December, Unimarket formed a partnership with Provista, a group purchasing organisation with 6000 members spending US$35 billion ($49 billion) a year, to publish Provista group purchasing contracts online for colleges, universities and related consortia.
"With that buying power, Provista can contract for significant discounts," Blackwood says.
Just selling the software doesn't mean everyone in the network will automatically use it. That's where partnerships come into their own, as the partners do the sales job to encourage customers and suppliers to opt in.
Provista got the Association of Independent Colleges and Universities of Pennsylvania to build a Unimarket procurement portal for its 87 members.
Blackwood says as well as making savings by doing business online, the colleges will get not only the bulk discounts Provista negotiates but will get access to state contracts, which may be hard for individual buyers to find out about.
While this activity is going on in a niche, but large, market in the US, in New Zealand Unimarket is signing up universities, polytechnics, councils, large corporate customers like insurance companies and even the Employers and Manufacturers Association, who wanted a procurement portal for its members.
That means it can develop small and quickly scale up, such as with the module written for Hamilton City that allows any supplier to automatically generate an electronic invoice online.
That's a boon for small suppliers and is a feature not found in competing systems.
As for the competition, Blackwood doesn't see Unimarket going head to head with the procurement heavyweight Ariba, which targets the largest 500 or 1000 companies.
"There are tens of thousands of organisations below that which need electronic procurement at a lower upfront cost," he says.
Unimarket charges a fee to users, spread over a five-year subscription, but it also takes a small clip from what is sold on the supplier side.
Blackwood says entering the US market just as it was going into a deep recession might not have seemed a wise decision, but it worked out well, with sales growth of 200 per cent a quarter.
Unimarket's chair Garth Biggs, a veteran of the New Zealand IT industry, says in retrospect it was a great time to move, with a public sector crying out for efficiency. "The whole world stopped buying procurement systems so we didn't lose any ground, and because we knocked on a lot of doors and got our name out there, as the market picked up we got a profile we wouldn't get if we started now," Biggs says.
He says the economics of software as a service means the entry point is tens of thousands of dollars, rather than hundreds of thousands, making it far more attractive for smaller organisations.
He says Blackwood is showing the classic behaviour that might be expected from younger entrepreneurs with less experience. "He is showing incredible commitment to getting it out there to make it work," Biggs says.
"You need exceptional flexibility from people working in early-stage companies."
