Last week we reported on the SAP/Fieldglass announcement that has taken the airwaves by storm. It has been prolific on the twittersphere and beyond, and generated non-stop buzz among market players, industry professionals and the analyst community. No wonder it has sparked so much dialogue; the combination of a cloud-based VMS with the network-based procurement capabilities of Ariba and the HR expertise of SuccessFactors places SAP in a unique position, offering a platform that will enable businesses to manage their entire workforce with an end-to-end process.
Since the announcement, our Spend Matters US industry analysts, Jason Busch and Pierre Mitchell, have been immersing themselves in the story and watching it evolve. They have been reporting with staggering regularity, giving a broader and deeper insight into coverage and adding clear observation and expert opinion on the implications for the marketplace, tailored to bring our readers what they want to know.
So, if you would like more information from people at the very top of their field, we’ve put together a “best bits” roundup of their many perspectives in an easy-to-navigate list, with links to the full analysis.
Spend Matters had been predicting a SAP acquisition of one of the top VMS providers since June 2013 in its PRO-level analysis ‘M&A Watch: Which Top VMS Will Be Acquired in The Next 12 Months?’ which can be found here. “We continue to believe that A VMS provider extension continues to represent a strong fit for Ariba/SAP to expand category coverage and spend capture and is still a natural plug-in to the Ariba network business model,” it said. “Besides product and revenue synergies with Ariba and the Ariba network, an SAP acquisition of a top VMS would provide global upsell capabilities for the ERP giant.”
And it could not have been more right - keeping a sharp eye on developments, Jason and Pierre were primed and ready to make initial observations as soon as the announcement was in public domain.
The first research brief outlines what the analysts believe to be the main implications of the deal; stating that “the volume-based pricing is a strong fit with the existing Ariba network revenue model … the upsell for SAP/Ariba customers should not be difficult, as procurement has increasingly taken over the buying of VMS and statement of work (SOW) technology and solutions from HR and IT.”
It goes on to give a nice, tight analysis of the numbers involved in this highly profitable venture.
You can read the whole brief here.
Background and drivers:
Hot on the heels of this brief – barely an hour later – came ‘Services Procurement Hindsight is 20/20: Ariba, SAP, and Fieldglass’ with the background to their prediction and a link to the previously published and well-worth-a-read ‘What Does Ariba Have Up Its Services Procurement Sleeve?
“Services procurement is a giant opportunity within the Ariba customer base, and one that few organizations are tackling well … there’s a material body of evidence that suggests Ariba is embarking on initiatives — not just marketing rhetoric — to pursue this sector more aggressively.”
Read the whole brief here.
This was closely followed by ‘Fast Facts and Sector Background’ giving some basic facts about the announcement. The discussion gives the details we know about the acquisition and sound analysis of the ones we don’t. For example, while the terms of the announcement were undisclosed, Spend Matters offers its own prediction of what they might be. It outlines some interesting facts and figures about Fieldglass, its fit within SAP and its position in the marketplace.
Full coverage can be found here.
Later that afternoon in Spend Matters Plus (subscription required) came ‘Questions Raised by the $1+ Billion Acquisition,’ looking below the surface of the acquisition and exploring the deeper questions raised by the customer and the marketplace, like, What really drove the deal? After examining what the ripest questions might be, Spend Matters will be following the details as they unfold and offering expert thought on the answers to those questions. It promises to make for some very interesting reading over the coming days and weeks – so worth keeping tuned in.
The full report can be found here.
Competition and market focus:
The next day, Spend Matter PRO (subscription required) featured a report on ‘Competitive Implications and Market Analysis,’ highlighting how the transaction will have significant ramifications in the competitive marketplace for both VMS and broader services procurement applications (including IQNavigator, Beeline/Adecco, Oracle, IBM, Provade and others).
It observes that: “It will likely put pressure on certain competitors to react, while putting others in a new type of driver’s seat. It’s also likely to foster the growth of new business models and investments in the sector. We’ll explore these elements in this research brief, including offering a detailed analysis of what the acquisition could bring for specific competitors as well as disruptive market players. And we even go so far as to introduce a strategic scenario where a VMS could actually add functionality for non-services procurement.”
This highly perceptive insight is found in full here.
The human angle:
Later that day, while most analysis ultimately centred on the solution, the technical innovation and capability of the two providers, and the implications for customers and the broader market, this article talked about the implications to humans. “Why SAP’s Acquisition of Fieldglass is not like Buying Ariba” looks at how contingent and services procurement professionals are much tighter nit than the communities surrounding the Ariba solution deal. Given that they are keener to share information and trade best practices, they will be a very different audience with very different expectations and demands.
Read the whole insight here.
Looking ahead -- There will be extensive coverage to come on the largest services procurement software acquisition in history, which, subject to regulatory approvals, should be completed by the end of the second fiscal quarter. With contingent workforces estimated to grow by 30 percent over the next three years, Spend Matters expects to see a considerable rise in SAP’s cloud revenue. So watch out for further analysis.