Basware Acquires Procserve: Spend Matters Initial Analysis

Accenture

As we reported earlier, Basware announced today it has acquired Procserve. Basware, a provider of P2P, e-invoicing and network connectivity solutions (and now trade financing as well), said the deal with public sector e-procurement vendor Procserve "significantly strengthens Basware’s position in the public sector, combining Procserve’s UK government experience with Basware’s established global expertise in purchase-to-pay and e-invoicing."

Spend Matters UK also reported on M&A news earlier this morning. You can read the full article, Breaking News – Basware Acquires Procserve, UK Public Sector eProcurement Providerto learn more details of the deal.

We plan to provide a more in-depth look at the acquisition soon on Spend Matters PRO as well. But, here are our initial thoughts on the deal from this side of the Atlantic.

  • It is smart for Basware to use its appreciating currency and balance sheet to acquire volume, but also to purchase technology that could potentially be used elsewhere in its solution portfolio (outside of just targeted efforts in the UK public sector).
  • On a comparative basis, Basware has continued to struggle to date on the e-procurement side of P2P, and while Procserve has focused on the UK public sector, there might be elements of the solution that architecturally and on the product-level could improve Basware’s overall capabilities to more effectively compete against providers like Coupa, Ariba, SAP and Oracle on a global footing for integrated P2P deals. The acquisition might also help deflect attention away from Basware's Alusta platform, which has been a work in progress for many years on the application side. By potentially combining the e-procurement elements of Procserv with the e-invoicing, financing and network components of Basware, the overall suite and connectivity picture begins to look more complete and market-ready to compete in the suite market. But where this leaves Alusta is an important question.
  • There is not yet a clear leader in the UK public sector for P2P and trade financing collectively. This deal will no doubt make Basware more competitive in the UK public sector market on the e-procurement side, but it is a leap of faith to equate purchasing volume with invoicing and payment market leadership — especially when financing is involved. On the financing side, Tungsten and Taulia are also fighting hard for this market, as are earlier generation providers like Oxygen Finance. I would sooner bet on horses than handicap who is going to win the UK public sector P2P and trade financing game at this stage.
  • Basware is in the midst of positioning itself as a fintech company, but it is important to look under the surface of what is driving the bulk of revenue today — cloud-based e-invoicing, network connectivity, legacy customers that have not migrated to Alusta, etc. Spend Matters views Basware as one of the most capable AP automation and e-invoicing providers with a strong supplier network, especially in Europe. But the fintech move/positioning is still in the early days and is potentially misleading based on the strength of the business to date in other areas.

First Voice

  1. Ravi:

    Great Article…Will this deal really work?

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