Oildex Acquires OpenInvoice from ADP: History, Facts and Initial Analysis

Businessman hand touching M & A on virtual screen - merger & acquisition concept Businessman hand touching M & A on virtual screen - merger & acquisition concept

Oildex, a service of Transzap Inc., announced Monday it acquired procure-to-pay provider OpenInvoice from Automatic Data Processing Inc. Spend Matters was aware that ADP had entered into a formal process many months ago to sell the OpenInvoice business line, which it originally acquired in 2010 from Calgary-based DO2 Technologies, also known as Digital Oilfield.

“We are thrilled to converge the highly complementary Oildex B2B solutions with the OpenInvoice automation solution to meet and exceed the needs of our customers today and in the future,” said Richard Slack, CEO of Oildex. “Together, our product portfolio is unparalleled in financial supply chain automation, and covers the unique needs of both large and small enterprises that manage a complex supply chain.”

ADP and DO2 Background

Initially, the DO2 business had grown solidly within ADP. Invoice volume going through the ADP e-invoicing solution increased more than 400% from 2008 to 2013, reaching $125 billion in 2012, according to previous Spend Matters reports. This represented an annual 40% increase in transactions and a 90% increase in what ADP defined as spend processed. The growth rate under ADP remained consistent with DO2’s independent numbers.

Spend Matters Plus/PRO subscription coverage previously reported that the solution did a “thorough job of checking the advanced invoice automation box” across a range of basic areas, including:

  • A supplier portal capability for accessing basic information, such as checking on an invoice status
  • Experience integrating in complex systems environments, such asmulti ERP/MRP tools, and multiple instances
  • Flexibility in capturing invoices across multiple types and formats, including ways to capture the long-tail of suppliers
  • Matching, workflow and routing capability, which while not always elegant behind the scenes – as in Excel upload-based configurations – provides considerable depth of enablement
  • Straight-through processing at 95% or higher levels
  • Predictive coding for a highly domain-specific environment
  • Ability to support visibility into multiple levels of supplier transactions and granular, line-level details in environments where PO-based visibility can be limited
  • Contract compliance integration and robust exception handling
  • Analytics that support both reporting and strategy development for supplier engagement, A/P efficiency and more

Yet in recent quarters, sources suggested OpenInvoice may have hit some headwinds, as competition in the market increased and the business line became less important to ADP’s core strategy.

Enter Oildex

Denver-based Oildex is a provider of cloud-based accounting software. Accel-KKR, a technology-focused private equity firm that owns the majority of Oildex, will be making an incremental equity investment in the company to help facilitate the acquisition of the ADP product set.

Oildex’s solutions also include workflow automation and electronic document exchange designed specifically for the oil and gas industry. Its accounts payable software and web-based information exchange are built to be industry specific in supporting the needs of customers by targeting operating efficiency and driving better visibility into cash management.

Oildex is well known in the oil and gas industry for its core invoicing and supplier on-boarding capabilities, which enable business-to-business and financial systems integration. With the addition of OpenInvoice products to its value proposition, Oildex will strengthen its position and services offering by delivering improved integrated capabilities (despite some material product overlap) spanning:

  • Catalogs
  • Price sheets
  • Purchasing order processing
  • Field tickets support

The combined company will operate as Oildex and will have more than 1,100 customers and a network of more than 50,000 suppliers, with key operation centers in the United States and Canada.

Stronger Together

Spend Matters believes the combination of Oildex and OpenInvoice will create a stronger value proposition to the oil and gas industry than either firm could previously offer separately. It will also leave specialist competitors such as Actian, Amalto and Cortex with less scale and breadth in targeting a similar set of customers. (And in an increasingly competitive market, those same customers are also being served by SAP’S Ariba, Hubwoo, Taulia and Verian, among other providers).

Later this week, Spend Matters is scheduled to receive a briefing on the acquisition. Subsequent coverage will analyze the deal for Spend Matters PRO subscribers, including recommendations to customers and potential customers of the combined solution set.

Discuss this:

Your email address will not be published. Required fields are marked *