Will ERP Consolidation Impact the Spend Management Market?

As the close date for the Infor / SSA deal inches closer, I thought it would be useful to take a quick minute to discuss the impact of a rapidly consolidating ERP market on Spend Management technology providers. For those that do not know either firm, SSA is a roll-up consisting of a dozen of vendors acquired over the years (many for maintenance revenue and their customer base). Infor has followed a similar strategy as well, but managed to bulk up faster than its pending target. Unlike SAP or Oracle, neither vendor has attempted to differentiate on technology or product superiority overall -- rather, both represent traditional CA-like roll-up strategies designed to milk and up-sell an installed base.

What's interesting is that neither firm has a strong Spend Management capability, yet both have decent -- albeit highly focused -- supply chain strengths relative to the overall market. Given this, might Infor look to the Spend Management world as it continues its roll-up path once it digests SSA? Strategically, a move like this is probably a good fit, but I doubt there's anyone with significant enough maintenance revenue to be attractive enough. Even though Ariba's valuation is low, it just does not seem like a good fit given Ariba's services and On-Demand focus, not to mention their declining reliance on installed software and maintenance. After Ariba, the size of vendors drops off considerably in the market. Who else might be large enough to get Infor's attention? Emptoris has enough revenue to contribute to such a roll-up, but dollars aside, is probably not the best match. It would be like integrating a high-end Citroen into Honda's product line -- not exactly the ideal fit.

Jason Busch

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