GTCR & Opus Global Buy Hiperos: Consolidation Begins in Supplier Management Solution Market (Part 1) [Plus+]

- July 10, 2014 3:23 PM | Categories: M&A, Solution Providers, Supplier Management
Tags:

Marketing can have a funny influence on things. Hiperos labels what it enables as “third party management” rather than “supplier management” or “supplier lifecycle management.” But make no mistake. This is a play with words by a clever marketing department and doesn’t mean a different core value proposition. (We think this comes from a sales focus on finance rather than procurement; to the CFO it’s all a bunch of third parties and compliance, and finance just can’t be bothered with terms like suppliers.) When GTCR and Opus Global acquired Hiperos earlier this week and not only kept the current management (one of whom is a major investor) actively engaged in the business but also put them on the broader holding company’s board, they were making a bet on the need to better manage traditional indirect suppliers, staffing companies, consultants, BPOs, and others who serve customers in a contracted way – in their case, typically large financial services clients. In many cases, Hiperos led with a “meet the [fill in the blank] regulatory requirement” value proposition – a message that works, especially for a finance audience.

But what Hiperos and its competitors (Aravo, HICX, IBM/Emptoris, Lavante, Oracle, SAP, and many others) are capable of accomplishing in the sector far transcends simply meeting check-the-box regulations. Done right, the better engagement of suppliers across a lifecycle is a massive undertaking, as it starts with a tailored onboarding process (don’t count on your P2P or e-invoicing provider to touch more than a few bases in this area) and carries through to supplier engagement, performance management, development, risk management and eventually off-boarding (by PO, assignment or overall) at both the SKU and overall vendor level. And it’s an undertaking that can transform procurement and finance outcomes spanning all non-employee resources and T&E-related spending (which represents a massive portion of the business). For this and related reasons, we believe that in 2015 (and perhaps sooner) we will see more consolidation in this market. In this three-part Spend Matters Plus research series, VP of Research Thomas Kase and Managing Director Jason Busch consider the backdrop and rationale behind the expected consolidation and offer predictions for what moves to watch. Our analysis today begins with why this market is becoming more strategic to customers.

For full access to this Plus/Pro content: