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Transcepta #3 – Going from strength to strength – community of 12,500 users

It’s good to hear that Transcepta is going from strength to strength, servicing the needs of more than 12,500 companies in such a short time, proving that there is a real market for a simple product offering on EIPP. It’s a great story, and my congratulations go to Mitch, Shan and the team. But I wish they do not get carried away with marketing statements such as “the only solution in the market…”. As I stated before there are number of solutions that constitute printer driver technology. Among these are Accountis and EasyInvoice. EasyInvoice’s business model is perhaps closer to Transcepta than Accountis. At the end, it’s all down to the execution and in most cases, it does not matter how great your technology is. In this regard, Transcepta has done exceptionally well, perhaps better than Accountis as Accountis’ business model is significantly different from Transcepta. 

Having said above, Transcepta has done well to simplify Accounts Receivable (A/R) automation workflow:

  1. Supplier (Vendor) downloads and installs Virtual Printer Driver from Transcepta’s web site.
  2. Once installed, Supplier selects Transcepta Virtual Printer as the printer and prints an invoice.
  3. An electronic message is sent to Transcepta’s hosted data center, which maps, parses and formats the invoice dynamically.
  4. Transcepta then transmits the invoice to the relevant buyer.
  5. The buyer receives the invoice in desired format and import invoice directly into the Accounts Payable (A/P) system for processing.

Whilst Transcepta handles supplier-end directly, the Buyer (Purchaser) end interfacing is usually undertaken by Transcepta’s partners, such as 170Systems. In this respect, Transcepta’s core competency lies on Supplier-side, similar to that of Esker, where Transcepta’s founders come from. However, Transcepta’s solution is easier to implement and lot less complicated than Esker’s. Transcepta clearly fills a gap in the market. But at the same time, they are constraints by their reliance on partners for A/P interfacing. However, if you flip the model (stick with my argument till the end please and do take a pinch of salt before you read on):

  1. 170Systems wins a contract with a large buyer.
  2. The buyer has 1000’s of suppliers from large to small.
  3. 170Systems has two options, implement data capture through scanning, OCR and ICR, or look for a partner who could connect supplier ends, so that invoices could flow electronically from suppliers’ systems to buyer’s system.
  4. If the timing is of the critical essence due to corporate deadline (someone within CxO deciding on an unacceptable deadline), then go with data capture and deal with significant error handling.
  5. If not choose a partner who could bring supplier invoices electronically.
  6. Now 170Systems got two partners to choose from, OB10 and Transcepta.
  7. mmh! Decide on whose solution offers the best financial reward and/or ease of implementation.
  8. In addition, who has most suppliers already trading through their network, which reduces the deployment timescale.
  9. Now my guess is Transcepta is fully geared for supplier adaptation, but OB10 does both supplier and buyer side implementations, which means management of multiple expectations, which Transcepta is not burdened with. 
  10. If I use MBA thinking, then Transcepta has the better chance of coming on top on A/R side than OB10. This is not to say that OB10 is complacent, but their sole focus is not on A/R. As a specialist of A/R, Transcepta has a better chance of emerging on top over time.
  11. However, OB10 has a proven track record and longer history, therefore can be deemed as the incumbent.
  12. Customers do like dealing with one provider than multiple providers. OB10 can do both A/R and A/P ends but not sure whether they have printer driver technology.

Ignoring few more steps, let’s speculate here thinking aloud. Now I know Jamie do not like me writing this, but this is only a hypothesis and should not be taken too seriously (however if you do take seriously I can bridge a conversation):

  1. OB10 will watch Transcepta grow in the US market.
  2. Transcepta will be wanting to launch in Europe fairly soon.
  3. US is a vital geography for OB10 as most revenue growth will come from there.
  4. If Transcepta adopts an aggressive strategy with significant financial backing with improved pricing model for suppliers, they will start to capture vital market share from OB10
  5. Now OB10 is faced with two choices – continue to battle with Transcepta or buy them out

Now there are many options to this scenario as it is hypothetical including somewhere down the line “Hub Alliance”. I will leave that for another day.

Thinking back, am I irresponsible in writing above. I do not think so. I merely stated a possible scenario that CxOs always should think about. What if..Unfortunately, CxOs are busy delivering and may not necessarily have sufficient time to think through such crazy forward looking scenarios. And no one can be complacent. I also need to establish whether OB10 has printer driver technology. If not they need to seriously consider it, as it could take a lot of the pain away.

This is where ebdex’s market brief and advisory services become valuable resource to vendor community. Good to have a sales pitch somewhere.

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  • Todd

    I find it ironic that you correctly point out the ‘marketing-speak’ that they are prone to, but fail to realize that the 12,500 users are not companies who are clients of the system, but rather the receivers of the invoices from the far fewer Transcepta clients – you fell to the marketing-speak yourself. Even the largest EIPP companies have nowhere near that number of actual users, with users not being the receivers of electronic invoices, but the company sending them, and also not being counted as each seat within a company, but one company using the system to send invoices and receive payments equals one ‘user’.

  • Todd

    I find it ironic that you correctly point out the ‘marketing-speak’ that they are prone to, but fail to realize that the 12,500 users are not companies who are clients of the system, but rather the receivers of the invoices from the far fewer Transcepta clients – you fell to the marketing-speak yourself. Even the largest EIPP companies have nowhere near that number of actual users, with users not being the receivers of electronic invoices, but the company sending them, and also not being counted as each seat within a company, but one company using the system to send invoices and receive payments equals one ‘user’.

  • Todd, great to meet you here. Words I used “servicing the needs of more than 12,500 companies”. That does not mean they are all revenue paying customers – simply users of the product. I agree company = 1 user. Vendors apply different revenue models – some charging both receiver and the sender, other’s simply charging the receiver in the case of accounts payable. What is your method of charging? Perhaps worth having a chat off-line.

  • Todd, great to meet you here. Words I used “servicing the needs of more than 12,500 companies”. That does not mean they are all revenue paying customers – simply users of the product. I agree company = 1 user. Vendors apply different revenue models – some charging both receiver and the sender, other’s simply charging the receiver in the case of accounts payable. What is your method of charging? Perhaps worth having a chat off-line.

  • Doug

    Interesting article above — thank you. Have you addressed this topic and Transcepta in particular again since the above (Transepta #4 perhaps?) Would be interested in your assessment since this gap in time.

  • ManojRanaweera

    Doug, I have not covered this subject for a while as I have moved on. My focus these days are on building http://www.edocr.com and http://www.nwstartup20.co.uk. However, I have left the door open through http://www.foresightnorth.com, if this topic becomes commercially viable for a revisit.

    You might be interested in tapping to http://www.edocr.com/tags/eipp