Ivalua Acquires Directworks, Moves Further Into Direct Materials Procurement

On Friday, procurement technology firm Ivalua announced the acquisition of Directworks.

Ivalua was founded in France around the millennium (initially by schoolfriends who got back together ten years after graduation to start the firm) and has grown somewhat “under the radar” until recently, perhaps with a lower profile than SAP Ariba, Coupa, or BravoSolution. But growth has nonetheless been steady and indeed pretty rapid; 20-30% a year in recent times. The US is also a strong market for Ivalua now, with the global HQ now in California, and presence has increased over the past three years or so in the UK too, with Steve Cobley leading the charge here.

As a private firm, revenues are not declared but our estimate for this year would be something around the $35-40 million level for Ivalua; we have no idea frankly in terms of Directworks, but a fair bit less than that, we guess.

But the Ivalua under the radar approach came to an end somewhat earlier this year when the firm announced a major investment of $70 million from private equity firm KKR, who took a significant minority stake in the firm. We were wondering what they were going to spend the money on, and this is at least the beginning of the answer to that question.

Directworks is, as the name suggests, a specialist in manufacturing and direct spend procurement technology. As the press release said,  “Directworks provides a better way for highly engineered product manufacturers to work collaboratively across teams and with suppliers to develop, launch and deliver more profitable products”. That is an obvious complement to Ivalua’s very strong and pretty broad capability in the indirect area. As our colleagues at Spend Matters US said on Friday,

“In terms of indirect spend know-how, Ivalua is a thought leader and its software is top drawer. On the direct side, Directworks goes deep, delivering Ivalua an arsenal of hard-won intellectual property based on battle-tested experience”.

Our colleagues also identified some weaknesses in the Directworks product – around the user interface, for instance. (I have not looked at the product in any detail). So the challenge for Ivalua “is to harness the raw horsepower Directworks brings and showcase it in a fashion that doesn’t subtract from the user experience it has so carefully crafted”.

If you want to know more about this type of technology, and see how Ivalua compares to other providers in various sectors and whether it aligns with your procurement organisation’s buying persona, then do check out the excellent Spend Matters Q4 2017 SolutionMap release. Very powerful and useful analysis, I guarantee. And we will have more to say on the deal in the coming days, we suspect.

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