Some transactions in the technology and solutions marketplace end up resonating far beyond the size of the deal. Even though we have no doubt (given the growth of BIQ) that the transaction was a solid -- likely more than solid -- exit all around for the owners, their relative revenue size in the broader analytics market is quite small, even though their influence, adoption and use (through channels and resellers) has far exceeded their size. Still, it's Spend Matters view that the Opera acquisition will have market ramifications that typically result from only larger transactions.
For customers, we believe that the impact to current users with be negligible. Unlike other deals (e.g., Ariba/Procuri) where the acquiring company ended up killing off much if not all of the acquired technology and requiring customers to eventually migrate to a new solution, Spend Matters believes that there is absolutely zero risk of such a scenario in the Opera/BIQ case.
If anything, users are likely to enjoy more rapid development cycles on new features and releases as BIQ gains the advantage of having a parent to fuel R&D investment. Incidentally, much of the BIQ R&D prioritization in the past was driven, at least in part, by the recommendations of Opera, given they were one of the firms that along with Lexington Analytics pushed the limits of the BIQ application.
While together Opera and Lexington Analytics represent the majority of channel revenue for BIQ, existing channel partners that have realized success selling the BIQ application are likely to continue to progress under a largely business-as-usual model (the potential always exists for those who might be directly competitive with the broader Opera vision for the new owner to change their approach, but we have been told this is unlikely). It is unclear what the future holds for smaller distributors and those considering reseller or distribution models although we expect the status quo to continue...
From a competitive perspective, Spend Matters believes that the transaction will have a range of implications. These include:
- A more rapid march to consolidation in the spend analysis market. Even though vendors such as Spend Radar and Rosslyn Analytics are very different than BIQ, it is likely the better assets in the market will not remain independent for long
- New investment and enthusiasm for the sector will continue. Look for more services firms like Insight Sourcing Group to form successful spend analysis software ventures separate from their core business. The same will be true of BPO providers as well
- The Opera deal is likely to ultimately force the hand of IBM to get more serious about spend analysis and procurement analytics (it will also make Opera more attractive to IBM as an acquisition candidate). IBM has the resources (given their internal PhD count and newly acquired Emptoris assets) to do something quite intriguing here as well (although BIQ provides a distinct advantage in areas to Emptoris, IBM has many other data aggregation and analytics assets at its disposal, including the CDI capability from Initiate Systems)
- Accenture may be left out of the advanced procurement analytics market unless they develop their own capabilities or grow through acquisition; given the long-term rivalry with IBM in the BPO market and the growth of Opera's P&L in this area (which because its already significant perhaps we will see a move from the services and BPO giant) it is unlikely they will not do something, potentially even quite different (e.g., imagine Accenture Marketing Sciences type analytics across a range of complex services categories)
- Upsetting the spend analysis apple cart with incumbent providers as Opera launches more proactive solutions that change how spend analysis and procurement/AP opportunities are surfaced to customers in an insight-driven BPO/KPO manner that leverages automation (built on human intelligence) at the core
- Forcing other BPOs (e.g., Infosys, Genpact, Procurian, Xchanging, Proxima, CapGemini) to decide if they want to be in the business of spend analysis or whether to partner with providers like Opera or others