The P2P and B2B integration sector is heating up further with the news that Liaison Technologies is buying Hubspan. The deal follows SAP's acquisition of Crossgate, a Hubspan competitor, in 2011, as well as recent increased interest in the procurement and supplier management sector by the likes of integration stalwarts GXS and others. While Spend Matters has not covered Liaison Technologies in the past, we are familiar with Hubspan, including its relationship with Ariba, and will be offering a more detailed analysis of their capability in the coming weeks. Today, we offer a quick summary of the deal and a rapid analysis.
The news and PR spin: Liaison Technologies, an Atlanta-based provider of cloud integration and data management services and solutions, has acquired Hubspan, also a provider of cloud-based business integration solutions. The acquisition gives the combined company an effective channel sales model, additional cloud-based security and compliance solutions, further penetration in key industry verticals, and a deeper talent pool. Hubspan, based out of Seattle, provides integration services for several industry networks including Ariba, NetSuite, Visa and others.
After a conversation with Hubspan's CEO, Trisha Gross, and Liaison's CEO, Bob Renner, Spend Matters can add a few details to the official press releases:
Client base – often the reason for acquisitions, and according to the parties, there is little name overlap even though the services provided are similar, so this factor certainly played a role in the deal. Their combined customer base primarily falls in the biotech, life sciences, financial services, wholesale distribution and manufacturing industries.
Payment security – This is at the core of the fun acronym PCI DSS (Payment Card Industry Data Security Standard), an information security standard for organizations that handle credit card information for credit, debit, POS cards and similar – also a strength of Hubspan's. Additionally, the acquisition adds process and security strengths around SSAE 16 (ref. SAS 70).
Big files – an area where Hubspan adds stronger Master Data Management (MDM) capabilities around secure and scalable massive file transfers. Whether related to product design documents, BOM solutions, or other large and sensitive files, the business challenge around managing access and revision of these files is a difficult issue for most companies.
Channel partners – OEM and a referral program are additional benefits that Hubspan brings to the marriage. Hubspan has succeeded in driving both channel and direct go-to-market strategies.
Size – the combined entity should have revenues that are closing in on $100MM, which makes it one of the largest cloud-based B2B solution integration providers.
Competition – the two CEOs sing in unison in that they do not view their competition as GXS and IBM (Sterling Commerce). They label those firms as stuck in providing primarily legacy EDI connectivity that is defined by high volume at very low price points. Adding insult to their analysis, they assert that they don't see those firms that often in deals. By contrast, in their view, there is a bifurcation around the legacy model and the higher end, with growing need for complete integrations – the latter being where they see themselves. Spend Matters takes a more nuanced view, which we'll be sharing in a deeper analysis in the weeks to come.
Going forward – during the interview, the companies assert their strength in the marketplace and the need to move ahead with not only client acquisition but also thought leadership, becoming the one-stop-shop for their client's integration needs. We will have to wait and see how this works out in practice, but at the moment it sounds like they have solid game plan and a good dose of confidence in their abilities to carry this out. At Spend Matters, we will follow up with a deeper analysis of the integrated offering and compare this to the vision of SAP/Ariba, GXS and others – as well as offering a more objective view than Liaison on what capabilities truly exist today amongst all of the providers in the sector, versus those which are just cloud integration vapor.