The M&A Category

Bringing Procurement Rigor to Merger Integration

Spend Matters welcomes this guest post from Bernard Gunther, co-founder of Spendata.

Mergers are rationalized by the expectation of post-merger synergies, a major one being cost reduction. However, cost savings opportunities that are routinely exploited by procurement are rarely a focal point for “clean teams” in pre-merger scenarios, or by the merged organization in the key 100 days of post-merger integration (PMI). In fact, the majority of mergers rarely deliver all of the expected cost savings.[2] In contrast, procurement can play a crucial role in planning for and delivering cost savings typically overlooked during the pre-merger analysis.

The Smart PE Money Knows When to Pay Up: Avetta Gets New Ownership

To say private equity firms have been ogling over procurement technology and solution firms of late is an understatement. The floodgates have been unleashed. Case in point: PE firm Welsh, Carson, Anderson & Stowe announced earlier Wednesday it will acquire a majority interest in Avetta, a supplier compliance and risk management firm, in a deal that likely broke multiple records (double meaning intended) in the procurement solutions market. (Another firm, TCV, will also acquire a minority stake.) The transaction is significant for the procurement technology space for a number of reasons. But perhaps most interesting, it highlights the differing approaches PE firms are taking to buying, operating and selling solution providers, as well as the kinds of business models that have become attractive (and lucrative) to these firms.

Top 3 Procurement Mergers and Acquisitions of 2017 (and 2018, So Far)

No matter the year, activity in procurement mergers and acquisitions (M&A) always tops the list of highly read Spend Matters coverage. It should be no surprise, as the short-, medium- and long-term results affect procurement providers and, ultimately, practitioners alike. Over the last year (and in the first month of 2018), we’ve seen several key link-ups whose ramifications have already begun to ripple throughout the sector. Here are the top events — in no particular ranked order — of the past 12 months or so, and what they mean to the industry, according to the Spend Matters analysts and extended team.

ADP’s Acquisition of WorkMarket: Just Moving Pieces Around on the Board or Starting a Whole New Game? (Part 2) [PRO]

ADP is a top player in the employee payroll, benefits, tax and compliance, PEO and core HR software markets, where customer (buyer) profiles are conservative and tend to favor scale, efficiency and established brands. For years, ADP and its peers have served and competed in these markets, and almost as if in parallel universes, a distinct population of solution providers (ranging from Adecco to SAP Fieldglass) have served and competed in separate contingent workforce technology and services markets. But while the contingent workforce sector has many things in common with the human resource sector, there is one increasingly important deviation — and it starts with “g” (as in “gig”).

The freelancer and independent contractor management market segment — the contingent workforce solution segment home to WorkMarket — is about as different a solution market as one could imagine compared to both classic HR and staffing-based labor models. It is blossoming, dynamic and high growth, as well as fraught with disruptive dynamics, unsolved problems and evolving regulatory dilemmas. So, we ask, perhaps part tongue in cheek, “What the heck is ADP doing buying WorkMarket?”

Yes, WorkMarket: the first-to-market, leading-edge, “gigish” technology solution that has been enabling businesses to (a) compliantly pay and administer essentially any type of external, independent worker (b) digitally profile these contractor workers and employees of the organization in labor clouds and (c) allow an organization’s business managers to directly source and deploy those workers into projects and programs.

This Spend Matters PRO series attempts to answer this question, not only by looking at WorkMarket — a provider we have profiled and analyzed in past Spend Matters coverage (see here, here and here) — in a brand new context but also exploring ADP’s rationale to acquire and embed this capability alongside its other offerings (spoiler alert: possibly getting closer to payments and emerging compliance needs in its customer base). The first part of this series provided insight into the deal itself, where WorkMarket fits in the ADP organization and our own analysis of what the acquisition could mean for ADP customers, shareholders and the freelancer/IC solutions marketplace. In this second part of the series, we share perspective on what a “WorkMarket Inside” offering could be like for ADP and clients, along with some speculation on what ADP’s “opening move” in the contingent workforce space might mean longer term.

ADP’s Acquisition of WorkMarket: Just Moving Pieces Around on the Board or Starting a Whole New Game? (Part 1) [PRO]

ADP, the global payroll and human capital management solution provider, recently announced its acquisition of the enterprise workforce management platform business WorkMarket. Founded in 2010, WorkMarket has evolved over time as a pioneer and key player in the emerging and evolving “enterprise-meets-gig-economy” solution space, without, however, reaching breakout market traction and scale revenue. In juxtaposition, ADP’s broad, global footprint of payroll, HR, benefits and talent management services/technology solutions for both small and medium-sized businesses (SMBs) and large enterprises has squarely rested on the payroll and other human capital requirements pertaining to its clients’ full and part-time employees, as opposed to external contingent workers.

Given the rise of the so-called “gig economy” and the increasing importance of external independent contract workers — variously termed independent consultants, freelancers, ICs or gig workers — there would seem to be an obvious inner logic to the match, even though most of the details about the transaction and the rationale for the acquisition are still absent. Taking that into account, this two-part PRO brief examines what we know about WorkMarket and why ADP made the acquisition. It also attempts to discern more of the detailed ingredients in the mix behind the scenes. Finally, this brief provides a viewpoint on what the acquisition could mean for WorkMarket going forward and what it could indicate about evolving market and competitive dynamics within the human capital management — employee and contingent workforce — solution sector.

Comparing Jaggaer and BravoSolution: Contract Lifecycle Management [PRO]

contract

Within the procurement technology suite market, acquired contract management solutions have a history of aging more like a Zinfandel or Beaujolais and less like a Cabernet or Merlot. But the greater problem is not how well the grape (or clause library) can stand the test of time; it’s that the best elements of CLM modules do not necessarily “blend” as well as other capabilities in a procurement suite that are easier to integrate or replatform.

One of the challenges is that the requirements to effectively tackle specialized CLM components from a development and innovation standpoint are specific to CLM. Said another way, the economies of scale in development are not the same as say delivering an integrated sourcing and supplier management capability. Another major challenge is that best-of-breed CLM vendors have innovated far more rapidly in recent years by introducing new capabilities.

Within this context, BravoSolution and Jaggaer both present somewhat average CLM capabilities, based on our Q4 2017 SolutionMap results. They are certainly not bad, but neither solution delivers the same capabilities as leading best-of-breed vendors, nor do they stir our enthusiasm the way other areas of each of the providers' suites do.

In this research brief, we answer the following questions:

  • Comparatively, how does each respective CLM module stack up on a capability basis?
  • What are the functional strengths of each supplier management module “under the surface”?
  • What are the “best fit” SolutionMap personas for each CLM module?
  • Who are alternative CLM providers?
  • What are disruptive forces in the CLM market that could affect both providers?
  • Is there a disadvantage to “going non-suite” in the CLM area?
This Spend Matters PRO brief is based on the following inputs: Q4 2017 SolutionMap datasets (analyst scoring) based on our SolutionMap methodology, demonstration notes and Spend Matters PRO research on alternative suppliers (Vendor Snapshots).

Comparing Jaggaer and BravoSolution: Supplier Management [PRO]

As Spend Matters defines it in terms of SolutionMap functional requirements, supplier management is a catch-all for a range of underlying capabilities. Said another way, it is not “single” supply market. Supplier management solutions combine varying depths of underlying technical capabilities with single or multi-initiative functional support capabilities. No one vendor is great at all of it — not even close — even if there are significant advantages to coupling supplier management with other modules in an integrated suite.

BravoSolution, Jaggaer and Jaggaer Direct each bring different capabilities to the supplier management equation that can make the individual modules a better fit for certain organizations and industries than others. It can also make comparing them (either directly or with others) confusing for those who are somewhat new to all of the areas that supplier management technologies support and enable.

In this research brief, we will answer the following questions:

  • Comparatively, how does each respective supplier management module stack up on a capability basis?
  • What are the functional strengths of each supplier management module “under the surface”?
  • What are the “best fit” SolutionMap personas for each supplier management module?
  • Who are alternative supplier management providers?
  • What are disruptive forces in the supplier management market (e.g., artificial intelligence, low-cost solutions) that could affect both providers?
  • Is there a disadvantage to “going non-suite” in the supplier management area?
This Spend Matters PRO brief is based on the following inputs: Q4 2017 SolutionMap datasets (analyst scoring) based on our SolutionMap methodology, demonstration notes and Spend Matters PRO research on alternative suppliers (Vendor Snapshots).

Comparing Jaggaer and BravoSolution: Sourcing [PRO]

The combination of Jaggaer and BravoSolution certainly brings together the broadest — and in nearly all areas the deepest — sourcing technology capabilities in the market today. This includes functionally best-in-class integrated sourcing, analytics, category and supplier management capability on the BravoSolution side, as well as Jaggaer ASO, one of the top-performing sourcing optimization solutions. Finally, even though much of the North American market is blissfully unaware of the manufacturing procurement capabilities of Jaggaer Direct, this solution tops the functional charts in specialized capabilities and adds to the unique sourcing footprint Jaggaer will have when the ink is dry on the transaction.

In this research brief, we will answer the following questions:

  • How does each respective sourcing module compare on a capability basis?
  • What are the functional strengths of each sourcing module under the surface?
  • What are the “best fit” SolutionMap personas for each sourcing module?
  • Who are alternative sourcing providers?
  • What are disruptive forces in the sourcing market (e.g., artificial intelligence, low-cost solutions) that could affect both providers?
  • Is there a disadvantage to “going non-suite” in the sourcing area?
This Spend Matters PRO brief is based on the following inputs: Q4 SolutionMap datasets (analyst scoring) based on our SolutionMap methodology, demonstration notes and Spend Matters PRO research on alternative suppliers (Vendor Snapshots).

U.S. Healthcare Needs Private Equity

The Wall Street Journal is reporting this week that two major hospital systems, Ascension and Providence St. Joseph Health, are in merger talks. If the deal goes through, the combined entity would include nearly 200 hospitals across 27 states with annual revenues of about $45 billion. The combination would surpass the current largest U.S. for-profit hospital operator, Nashville-based HCA Healthcare. Proponents of the deal say the move could add supply chain efficiencies, eliminate operational redundancies and reduce unnecessary spending.

Comparing Jaggaer and BravoSolution: Spend Analytics [PRO]

While the dust has not yet settled on the Jaggaer-BravoSolution transaction, customers and prospective customers have already sent us multiple inquiries about how both organizations’ suites and modules stack up against each other. In the coming weeks on Spend Matters PRO, we will examine the capabilities of both providers on a module-by-module basis. Starting first with spend analytics, we will also explore both providers (and Jaggaer Direct, where applicable) in the sourcing, supplier management and contract management areas.



In this research brief, we answer the following questions:
  • Comparatively, how does each respective spend analytics module stack up on a capability basis?
  • What are the functional strengths of each spend analytics module under the surface?
  • What are the “best fit” SolutionMap personas for each analytics module?
  • Who are alternative analytics providers?
  • What are disruptive forces in the spend analytics market (e.g., artificial intelligence, low-cost solutions) that could affect both providers?
  • Is there a disadvantage to “going non-suite” in the spend analytics area?

This Spend Matters PRO brief derives insights from our Q4 2017 SolutionMap datasets (analyst scoring) based on our SolutionMap methodology, demonstration notes and Spend Matters PRO research on alternative suppliers (Vendor Snapshots).

Simeno Who? An Unofficial, Unauthorized FAQ Exploring Coupa’s Largest Acquisition To Date (Part 1) [PRO]

Coupa announced Monday it had acquired Simeno, likely its biggest acquisition to date, as measured by the revenue of the target it acquired. But buying Simeno gives Coupa far more than just a means to arbitrage European SaaS vendor multiples to North American ones and buy its way into dozens of larger European customers. Rather, the acquisition brings Simeno’s prebuilt supplier content integrations, unique solutions and intellectual property, particularly in the catalog management and services procurement areas, to Coupa.

Part 1 of this Spend Matters PRO Research Brief attempts to answer the following questions: Why haven’t I heard of Simeno? How large is Simeno? Why did Coupa buy Simeno? What did Simeno look like from a high-level SWOT perspective prior to the acquisition? And what are Simeno’s solution strengths and weaknesses?

Coupa Acquires Simeno to Augment Catalog Search and Management Capabilities

Coupa has acquired procure-to-pay (P2P) provider Simeno, extending the platform’s marketplace strategy to provide deeper and pre-integrated supplier connections and opening key markets to support continued expansion. Based in Basel, Switzerland, Simeno offers key capabilities in cross-catalog search and advanced catalog management. Large enterprises often use Simeno as a shopping front-end for systems such as SAP PM, SAP MM and Oracle iProcure to augment cross-catalog search capability.