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Workday to acquire Scout RFP for $540 million in cash

11/04/2019 By

Modules

Earlier this afternoon, Workday announced its intent to acquire Scout RFP, a sourcing technology provider, for $540 million in cash. Scout RFP was a Workday Ventures portfolio company and Workday partner previously. In a Workday blog, the HR and ERP provider notes that Scout RFP’s “more than 160 employees across North America and Europe will be joining Workday.”

In the press release announcing the transaction, Workday suggests that “with Scout RFP, Workday will provide organizations a comprehensive source-to-pay solution with a best-in-class strategic sourcing offering to transform the procurement organization and deliver better business outcomes, including reduction in spend, greater policy compliance, and maximized engagement across key stakeholders.”

“Scout RFP provides an intuitive and modern cloud-based platform for strategic sourcing and supplier engagement that makes sourcing simpler, smarter and more streamlined. Hundreds of customers use Scout RFP to source faster, drive efficiency and maximize the value of supplier relationships.”

Workday expects the transaction to close in the company’s fourth quarter fiscal year 2020, prior to Jan. 31, 2020, “subject to the satisfaction of customary closing conditions, including required regulatory approval.”

Scout has become a well-known and fast growing provider in the strategic sourcing technology area owing to a user experience which customers are strong proponents of. A Scout customer reference in Spend Matters SolutionMap notes that the provider’s “focus on delivering a best-in-class user experience has enabled us to quickly scale the solution and achieve high rates of user adoption.”

It also notes that “the learning curve for new users is low, and consequently, internal training and support resource requirements have been significantly less than with comparable tools.”

Michael Lamoureux, Spend Matters’ lead analyst in the sourcing technology area, notes that “ScoutRFP opens up more of the extremely fast growing S2P space to Workday (which some value at $50 billion as a total addressable market), and Workday benefits from a product known more for its usability and adoption than just about any other sourcing platform on the global market.”

“And even though Scout may have limited sourcing functionality in more advanced areas compared to some of its peers, when you consider that over one-third of mid-size and larger organizations have no real sourcing platforms that have been adopted with any consistency or standardization, and roughly two-thirds have only limited (or no) strategic sourcing experience, ScoutRFP is the perfect platform to get teams started on the basics,” Lamoureux said.

While Scout brings over 240 customers to Workday, we suspect the primary rationale for the transaction is to provide a relatively low-touch solution for Workday to upsell into its customer base as an entry point into procurement.

Stay tuned for further coverage and analysis of the transaction on Spend Matters Nexus tomorrow.

 

Related coverage can be found here:

SAP Ariba Sourcing: How Does it Compare Today and What is Coming Tomorrow (Part 2: Playing the Scout Card)

 

Scout RFP: Vendor Analysis (Part 1) — Background and Solution Overview

 

Scout RFP: Vendor Analysis (Part 2) — Product Strengths and Weaknesses

 

Scout RFP: Vendor Analysis (Part 3) — Competitive and Summary Analysis