VERTD Verticalnet (MM)

Verticalnet, Inc. (Nasdaq:VERTD), a leading provider of on-demand supply management solutions, today announced that its European business has seen significant expansion and transformation over the past several quarters. Key business trends include significant increases in new customers, broadened indirect channels focused on reselling both software and services, and rapidly increasing levels of adoption and savings achieved by customers leveraging Verticalnet's supply management solutions. Since the merger of Verticalnet and Digital Union, a leading UK provider of auction and procurement solutions, in July 2005, Verticalnet has fielded an expanded team for both the UK and European markets focused on sales, services, and continued software development. The broader European capabilities are driving a focus on customer success achieved through world class products and local market support. Recent market success suggests that this focus is being recognized by both customers and prospects. "We are very pleased with our European progress and with the success that Verticalnet and Digital Union have achieved since the merger," stated Paddy Lawton, President of Verticalnet Europe. "The market is quickly shifting toward a European view of sourcing and procurement and we are in the right place, with the right team and with the right product to take advantage of market trends. Our products could not be more spot-on in terms of their fit given the current market requirements," Lawton continued. Business Progress: -- Verticalnet has signed three new software customers within Europe thus far in the second quarter of 2006 including licenses for XE Negotiation Manager and XE Procurement Manager. These new customers include a major UK retailer, a global food services company, and a large professional services organization. -- Managed E-sourcing and auction events year to date are currently at 87% of total 2005 levels suggesting that events for 2006 will likely more than double versus 2005. Savings from such events have averaged 21% across a wide range of direct, indirect, and services categories. Despite prior perspectives that the European market may be less receptive to emerging e-sourcing negotiation techniques, results suggest that European savings opportunities may exceed those experienced in the United States through the use of competitive bidding techniques. -- Verticalnet's XE Collaborative Solutions (XECS) continues to gain traction, with three major XECS engagements to date in the second quarter of 2006. Increasingly European customers are seeing the benefit of expert-led optimization focused category sourcing particularly in complex categories such as pan-European freight where savings achieved through such techniques well exceed benefits achieved using traditional methods or self-service tools. Emerging European Trends: As Verticalnet continues to expand its base of customers within Europe, a number of clear trends are emerging within and across the Verticalnet customer base. While some of these trends mirror trends experienced with in the United States, a number of trends are specifically European in nature. Verticalnet's ability to support these trends through both products and services has proven critical in recent market successes. Key trends include: -- Advanced negotiation usage - increasingly, European customers are shifting beyond auction-based negotiation for indirect categories to more advanced negotiation techniques, resulting in allocated awards or optimized solutions. This trend is specifically relevant when customers are sourcing aggregated spend across multiple countries and are seeking to award suppliers by regions. In a recent pan-European transportation event Verticalnet supported a customer's goal of awarding 2000 shipping lanes, accepting bids from over 300 suppliers across 20 countries. -- Spend visibility is driving European procurement - European procurement is evolving towards a center-led model and spend analysis is the critical enabler by providing visibility and control to centralized procurement. Regional scale is being leveraged and regional control of suppliers and buying organizations is being managed and monitored through a repeatable spend analysis process. Verticalnet's XE Spend Manager is increasingly leveraged by European customers and divisions of US companies given the solution's ability to address multiple languages and currencies. Recent implementations have involved data in over 20 different languages including Czech, Turkish, Swedish, and Kazakh. -- Europe Expands -Increasingly, procurement organizations are expanding the definition of European operations to include Russia, the Middle East, and South Africa. These new markets and their unique characteristics are now being incorporated into spend analysis roll-outs as well as complex category sourcing engagements. Not only are organizations expanding their management of operations into these regions, they are also fast becoming the source of supply in addition to the Far East. This shift in European supply markets drives a different set of language requirements for technology and for customer support, than traditional US sources. -- Local Services Are Critical - In sourcing, software isn't enough. European customers seek and require services support for training, event support, and spend analysis. For companies with beachheads in Europe, the lack of local services organization with product and solution training can prove to be not only a pitfall but a missed opportunity. Verticalnet's acquisition of Digital Union and the expansion of Verticalnet's European services capabilities through this acquisition have proven to be a key selling point versus other US-based rivals highlighted by a number of new customer wins. "The ability to capture spend intelligence for our European, Middle Eastern, and African operations and the ability to rapidly convert insight into savings through on-line negotiation are critical components of our procurement transformation process," stated Philippe Agostini, EMA Sourcing Director for JohnsonDiversey. "Verticalnet's ability to service both Europe and North America has provided us with the resources and support we need to be successful in this transformation." Philippe Agostini concludes, "The rollout of our new sourcing process in Europe will be a key cost-savings driver for JohnsonDiversey, and with Verticalnet's assistance we are realizing value sooner than later." Verticalnet's XE Supply Management Suite is architected to support the complexity of European Sourcing requirements and the evolving needs of this market - from visibility through negotiation to compliance. Verticalnet's XE 5.2 release, made generally available in October, 2005, was significantly focused on ease of use and internationalization. In addition to Verticalnet's expanded European scale, much of Verticalnet's recent market traction within Europe can be attributed to the significant product investments delivered in the XE 5.2 release. The Verticalnet XE Supply Management Suite includes: -- Verticalnet(R) Program Manager-- lowers the total cost of ownership and improves productivity through sound and re-usable program and process management -- Verticalnet(R) Spend Manager-- a fast, intelligent, and repeatable solution for identifying, evaluating, and quantifying enterprise-wide sourcing opportunities while measuring compliance -- Verticalnet(R) Negotiation -- accelerates and improves negotiated savings through online auctions and eRFX events -- Verticalnet(R) Contract Manager-- provides real-time insights into contract obligations, exposures, expirations, changes and renewals delivering greater control, reducing costly oversights and minimizing supplier risk -- Verticalnet(R) Procurement Manager-- simplifies and improves control over the procurement process to help companies realize the maximum cost savings identified through supplier sourcing and negotiation -- Verticalnet(R) Performance Manager-- enables companies to effectively track and manage supplier performance, contract compliance and identify potential areas of supplier risk -- Verticalnet(R) Collaborative Solutions -- enables companies to apply innovative negotiation techniques, flexible optimization scenarios, and bid collection approaches to drive the highest possible savings across large complex categories including transportation, packaging, and MRO. To learn more, please visit us at www.verticalnet.com.