BravoSolution and Basware Join Forces in Global Partnership: Prelude to Something More?
Basware and BravoSolution announced a comprehensive partnership this morning that closely links the two providers’ go-to-market strategies and some of their solution components initially. Here are some highlights from the announcement:
“BravoSolution’s offering delivers sustained supply management value through a combination of spend analysis, eSourcing, contract management and vendor management solutions. Basware’s Purchase-to-Pay (P2P) solution and Basware Commerce Network focus on the automation of procurement and accounts payable processes, and the maximisation of spend under management. By combining both technologies and process expertise, the partnership can extend the value delivered to customers and plug the ‘savings gap’, a common issue in which value leaks from negotiated supplier contracts due to non-compliance in the corporate purchasing process.”
“Upon completion of a strategic sourcing initiative, the resulting contractual agreement can proactively be managed across its entire lifecycle and activated across the business by empowering … end users with easy, consumer-style purchasing systems to ensure preferred suppliers are used and negotiated savings realized … the effective creation and management of contract and catalog content are examples of key integration points for the partnership. The integration allows contracts strategically sourced in BravoSolution to become operational in the purchase-to-pay process through Basware.”
Making Big Waves
This partnership is curious (and potentially impactful) on many levels – and is probably the most important non-M&A deal in the procurement, supply chain, and finance software sectors thus far this year. Here’s why:
- Relative product/solution strength and market leadership of Basware and BravoSolution in key areas of expertise (e-invoicing/invoice automation and spend analysis, sourcing, supplier performance/risk/compliance management, respectively)
- Size and global footprint of providers – the combined commercial presence of both teams together makes them the largest non-ERP provider in the sector going to market together
- Public sector leadership in Europe (BravoSolution is very strong in the UK, Italy, Spain, etc. and Basware is a dominant P2P player in the Nordics)
- Limited product overlap between the two providers – predominantly a merry meeting of upstream and downstream functionality
The partnership “framework” that BravoSolution and Basware shared with the Spend Matters research team during a briefing earlier this week suggests that the two providers are following the “upstream / downstream” segmentation of procurement activities that Ariba introduced in its own product and modular area delineations many years ago.
Spend Teamwork: Picking up the Procurement and A/P Puukko
The Italo-Finnish couple is positioning BravoSolution as contributing the products that lead to “value creation” in procurement activities up through the “value contracted phase.” Then Basware will pick up the football – perhaps “pick up the puukko” is a more appropriate analogy – by focusing on the “value realization” and “value measurement” areas with its products.
Specifically, in the upstream procurement, BravoSolution will contribute the following components:
- Spend analytics (the joint partnership presentation noted this as a “service,” but we are aware that BravoSolution also sells spend analytics tools on a stand-alone product basis, although this is not a preferred customer usage approach)
- Vendor management (e.g., supplier management, supplier performance management, risk management, compliance management for Conflict Minerals and other areas); note to advanced readers: these are really just components of what advanced spend analytics should include, which stand in contrast to the application-specific A/P analytics delivered via Basware
- Master data management (MDM) for spend/supplier data
- Contract management (contracting drafting and clause library)
- Tender management (e-sourcing, auctions, optimization, etc.)
On a downstream basis, Basware will contribute the following components:
- Contract management (operational contract execution)
- Catalog management
- eProcurement/Purchasing compliance (desktop and mobile)
- AP automation (inclusive of e-invoicing, supplier network connectivity, broader A/P enablement, etc.)
- Spend visibility and reporting
This diagram and segmentation is not 100% clean given the overlap in the analytics and spend visibility areas and the fact that it’s not entirely accurate to segment upstream and downstream activities due to the increasing interaction between the two (e.g., using supplier performance or budget data in the context of a requisition). Still, the product overlap remains minimal, and in fact, if you dig below the surface of the analytics offerings, the overlap is small indeed (e.g., Basware does not have spend classification capability in-house). The kind of multi-ERP spend analytics that Bravo performs is quite different from the introspective P2P spend visibility that Basware’s system delivers. Both are needed for effective sourcing and procurement, and should not be seen as particularly overlapping.
Integration: Technology, Product and, in the Future, Company?
In the area of integration, the two solution suites will be loosely coupled to start the partnership (integration points at the moment are limited to initial sourcing integration with requisitioning, content/catalog loading, and loosely coupled analytics). But clearly, future solution integration could help differentiate the providers’ combined assets. For example, BravoSolution clearly has great category IP that could be captured in Basware’s next-generation Alusta solution. Going the other way, Basware’s supplier network knowledge could also be captured to provide input to BravoSolution customers on selecting optimal supplier lists for a sourcing process for identifying and qualifying vendors.
Even with limited integration to start, on many levels, BravoSolution and Basware seem tailor-made for collaboration with each other. Consider the respective functional footprints, solution orientations (BravoSolution is a solution-focused provider with stand-alone tools it can deliver; Basware is a product-centric company that has enabling managed services for P2P on the network side), geographic footprints and company cultures (a topic we’ve not yet explored)—and the combination begins to make sense on multiple levels.
All of this of course raises the question: is the partnership a prelude to something more? Spend Matters thinks that if the relationship is successful and gains early traction with clients, it could lead to an even more strategic relationship and deeper alliance between the two providers. An eventual merger or acquisition is not out of the picture – although considering Bravo’s sizable publicly traded parent company, the ultimate owner could very well be ItalCementi, should it decide to invest in a sector clearly growing faster than the construction market in the Eurozone!
Curious about general vendor M&A in the procurement sector and potential transactions in services market specifically? Join us for a practitioner only Spend Matters pop-up webinar this Thursday: M&A Watch: OB10, CombineNet, is a VMS next? During the webinar, we’ll cover
- Recent procurement sector acquisitions (OB10, SciQuest/CombineNet)
- IPO market activity and what it means for providers (and customers)
- Potential vendor management system (VMS) acquisition candidates
- Potential VMS buyers
- Steps customers should take to ensure their interests are looked after in the case their service providers are acquired
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