In the previous installments of this series, we examined a range of topics regarding how to plan for -- and what to expect -- when it comes to M&A in the Spend Management sector. In this last post in the series, we'll conclude by discussing the final three providers on our acquisition watch list for the year. Even if these individual organizations remain independent, they're a good proxy for the types of organizations that larger providers will be looking to acquire in the sector. Let's begin.
Ketera - Ketera is a vendor that has been in a state of transformation since its original founding. Formally called MarketMile during the .com heydey, Ketera transformed itself from a B2B marketplace into an On Demand enterprise applications company. Now again, Ketera is attempting to make the migration back to a network/marketplace-based business model. While the current strategic direction of the business plan is extremely ambitious, even if Ketera does not stay independent, its current technology assets and legacy revenue base (which is not huge, but it would be material as part of a roll-up) could prove especially interesting for a range of other providers either: A) looking to invest in a SaaS-based source-to-pay platform or B) attempting to build out a true network-based business model in the Spend Management sector.
Who might acquire Ketera? While it might actually be a good fit on either a completely top down basis with an enterprise software vendor whose capabilities are already in the process of transitioning its business model while building greater Spend Management depth or a company or financial institution with electronic invoice presentment payment (EIPP) capability looking to leverage a marketplace environment, Ketera is probably a better fit with an existing supplier directory company like an Alibaba which is weak on the applications/technology side but wants to buy its way into the procurement sector. Acquisition odds: 70%.
Zycus - Zycus got its start in the Spend Management world by focusing exclusively on spend visibility -- data acquisition and data cleansing / classification to be exact. Within this space, they built their reputation to a Mercedes-like status for quality and price (think the W124 series for you car buffs in the audience). But more recently, Zycus has branched out into other areas, including spend analytics, spend category strategy, development and management, and e-sourcing. It's most recent foray is into the contract management arena. In all of the areas they've chosen to pursue, Zycus has taken anything but a me-too approach. In fact, within e-sourcing for example, the application sports a user experience and interface that help to differentiate it in the market (and at price points which make it competitive with the low-end as well as the high).
But Zycus' real strengths lie where it's been strongest for the longest period of time -- spend data acquisition, classification, management and, now, as a logical slight extension, analytics. I suspect this is why they'll be such an interesting acquisition target for a potential suitor given their existing market share in this part of the Spend Management arena as well as their overall prospects in the sector. At this point, given SAP's acquisition of Analytics, Inc., we can probably scratch them off the list of potential suitors. But Oracle, BasWare, IBM and others looking to expand their solution capabilities and footprints -- not to mention acquiring a strong customer list and a high quality Indian back-office and R&D operation -- could find Zycus appealing on many levels. They're also slightly larger than many of the other providers I've discussed in this series, making a potential acquisition that much more attractive. Acquisition odds: 65%
Fieldglass - Fieldglass is, without question, one of the largest VMS (and broader services procurement) plays in the market. And they're most certainly the largest platform provider that is not commercially affiliated with a direct related or parent / sister organization that delivers MSP services. Those who are familiar with Fieldglass and its competitors often prefer the intuitiveness of the Fieldglass interface. While power users might find some of its rivals slightly more powerful in certain areas, Fieldglass nevertheless delivers a top performing solution with strong administrative, functional and analytical capabilities. Moreover, their recurring revenue model, in most cases based on the volume of spend running through the system, would provide any acquirer with a stable foundation from which to base future growth.
Who should buy Fieldglass? Ariba is one possible suitor. In fact, there are many similarities between the strengths of what Fieldglass brought to the services procurement world and what Procuri brought primarily to e-sourcing and related areas. Granted Ariba already has a services procurement capability, but arguably their current traction and product maturity in the services procurement arena is less than what their e-sourcing maturity was when they acquired Procuri (and Fieldglass is a functionally superior product for services procurement compared with what Procuri delivered for e-sourcing). Other possible companies who might find Fieldglass attractive include SAP and Oracle, if they continue to focus on building out SaaS-focused revenue models, as well as the talent management and HR vendors (not to mention the MSP market as well). Acquisition odds: 60%