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Why would Medius buy Wax Digital? (Part 4: Strategy and competitive landscape analysis for procurement and ERP vendors)

11/25/2019 By


This Spend Matters Nexus research brief explores the potential competitive impact of the Medius and Wax Digital combination on the procurement and ERP vendor landscape. It also explores the strategies that some providers within these groups are already pursuing (or may pursue) in response to customer requirements, competitive pressures and the desire to expand the overall total addressable market for integrated procurement and finance solutions.

Procurement technology vendors and ERPs targeting procurement compete in a catch-all market segment that can make an area like CRM or human capital management (HCM) seem simple by comparison. From sourcing to contract management to supplier management (and all of its sub-disciplines) to e-procurement to analytics (and beyond) for all types of spend — indirect, direct, services, tail, etc. — the various components of procurement technology are as diverse as the specialist, suite and ERP vendors targeting the market.

Vendors covered in this analysis include Corcentric, Coupa, Infor, Jaggaer, Microsoft, Epicor, GEP, Ivalua, Netsuite (Oracle), Oracle, Proactis, Sage, Synertrade, SAP, Unit4 and Zycus.

If you are just coming up to speed on the Wax Digital-Medius combination, start here with this Nexus series — (Part 1: Company Backgrounds, Product Strengths/Weaknesses, Deal Rationale), (Part 2: Wax strengths, customers, integration considerations), and (Part 3: Strategy and competitive landscape analysis for AP automation and invoice-to-pay). Free Spend Matters’ news coverage of the deal can be found here and here.

Jason Busch serves as Managing Director of Spend Matters Nexus, a research and advisory group that works with sponsors, CEOs and boards on due diligence, M&A strategy and product strategy. Spend Matters and Spend Matters Nexus are owned by Azul Partners. Disclosure: Azul Partners served as an adviser to Marlin Equity in the Wax-Medius transaction.

Procurement Technology Competitors

For the uninformed competitor, it would be easy to dismiss the combination of Wax Digital and Medius as a UK and European procurement technology deal with private equity backing (i.e., a cash flow-synergy play like Jaggaer, albeit a regional one in this case). But for all the reasons we have discussed so far in this series focused on Wax’s strong technology integration platform, the common stacks/architectures of the two providers and finance/procurement product synergies, such a view is likely to be far more wrong than right.

Together, Wax and Medius not only have a strong opportunity to grow and cement market share in Europe — they also have the opportunity to expand materially in North America by carving out a niche that Coupa, Ivalua, SAP Ariba and others have not fully addressed, while also providing an alternative solution to add into the selection mix for larger customers (Wax has proven it can hold its own when invited to Global 2000 selections).

Procurement technology vendors should take seriously the threat of Wax Digital and Medius together, especially with the support of a sponsor like Marlin which is no stranger to this sector. As such, they would be wise to consider the following as they look at this combination and the rapidly evolving market:

  • Taking the time to fully understand the strengths and weaknesses of the combination. Spend Matters SolutionMap Insider will prove a useful step here to understand the comparative technology and customer strengths and weaknesses of Wax Digital (and Medius, in 2020). With a comparatively small sales and marketing budget, Wax has been able to successfully compete against much bigger names in its home market when it gets the opportunity.
  • Realizing the market for integrated procurement and finance technology applications, especially in the middle market and upper middle market, is becoming “a thing” — rather than just marketing jargon in white papers and PowerPoint. We believe that procurement technology providers should be looking for ways to incorporate finance as a key stakeholder in many of the modules they support (perhaps with the one exception of sourcing). Among the larger providers in the sector, Coupa gets this in spades (and is adept at selling into a finance audience), and is a useful vendor to learn from in its approach here.
  • Considering targeted acquisitions or organic suite expansion that can expand the value proposition for procurement as a partner to finance. This may include the obvious (e.g., more finance centric spend/procurement analytics, invoice auditing + recovery/audit/fraud detection capabilities, procurement (and legal) centric contract management, etc.) but it may also include less obvious areas as well (e.g., core AP automation, working capital management, treasury management, commodity management, etc.)
  • Continue to provide broader value propositions (e.g., integration of AP, AR, payment and financing offerings with procurement technology) that can target both procurement and finance stakeholders, either individually or separately. This appears to be the vision for Corcentric (with Determine).
  • Focusing on consolidation and scale within procurement and directly adjacent markets.
  • Differentiating by becoming a strategic partner to customers beyond basic automation and enablement capabilities. This could include differentiating based on in-application benchmarking, community content, prescriptive/predictive analytics, process mining/process improvement as a component of applications. Today, Wax Digital and Medius, like some peers, present a strong set of core capabilities in sourcing, supplier management, e-procurement, invoice-to-pay (inclusive of AP automation) and related areas, but is still very much an applications vendor. The areas listed can help build differentiation as a means for competitors to move beyond competing on feature/function alone.
  • Expanding the value proposition of integrated procurement and finance solutions to adjacent services to mirror what professional employer organizations (PEOs like Trinet) have done for HCM. In these models, software is just a component of the broader offering (including content, contracts, market intelligence, etc.) Note: This is not necessarily BPO, but may include elements of BPO and managed services, such as group purchasing/leveraged contracts.
  • Considering geographic M&A to drive consolidation and critical mass in certain regions.

In summary, procurement technology vendors, especially in the sourcing, supplier management and e-procurement areas, are likely to be competing more against Wax and Medius in the future — in North America and Europe. While materially differentiated procurement suite vendors (for various reasons) such as Coupa, Ivalua and GEP should still prepare to compete against this competition more frequently, we believe that Wax-Medius will be an even bigger competitive threat for other vendors.

These include suite vendors such as Corcentric, Jaggaer, Proactis, SAP (Ariba), Synertrade and Zycus — not to mention the dozens of modular vendors in the sourcing, supplier management and e-procurement markets that are likely to also encounter this combination more often. We recommended that CEOs, boards and strategy/corporate development leaders at these firms should be developing strategies that take into account this combination, while commercial teams should invest the time to get smart on the comparative strengths and weaknesses of Wax Digital and Medius to compete tactically in the field so they can be prepared when they face off against it.

ERP Competitors

For competitive ERP providers like Medius and Wax Digital, it is important to understand what the combination brings. These providers should be more concerned about tactically competing against Medius and Wax as a suite provider than, say, tactically competing against point solutions (like Scout RFP as part of Workday).

This is because the combination offers compelling suite capabilities in the areas that matter most, and functionally, Wax is superior to many peers (e.g., Scout in sourcing), while also driving very high levels of customer satisfaction based on both Spend Matters and Gartner customer data.

Analysis and Recommendations

Above all, on a macro level, ERP providers that are not already deep into the procurement market will need to decide if they are going to pursue the procurement technology sector or not (Oracle, SAP and Workday withstanding). For ERP providers that have not pursued procurement holistically yet, the clock will be ticking to target their customers, as the 100+ independent suite and best-of-breed providers targeting core source-to-pay increasingly descend on their installed base (not to mention new rival cloud ERPs like Workday selling financials and procurement together).

In terms of specific guidance for providers that have not yet committed to delivering source-to-pay capabilities as a business applications focus (including Infor, Microsoft, Epicor, Netsuite (Oracle), Sage and Unit4), Medius and Wax’s move should drive urgency to act, not only to create a broader compelling offering in new financials opportunities, but also to defend their own turf against a new competitor.

For all of these providers today, procurement components or extensions to core financials represent very constrained capability that is often more developed (depending on provider) for a manufacturing environment. We should also note that each of these ERPs would do well to consider acquiring the combination of Wax and Medius once it is integrated together.

ERP companies have traditionally had a hard time developing competitive capability in procurement from a business application perspective.

As we have noted before, It is important to remember that for these providers, ERP (and procurement capability) grew out of MRP. And MRP was designed as a production planning and inventory control system used to manage manufacturing processes with an emphasis on product planning & development, manufacturing, market and sales forecasting, inventory management, shipping schedules and a central data of information.

As such, these solutions generally present similar weaknesses across the source-to-pay spectrum as below:


  • RFX evaluation — traditional ERP systems have no or very limited RFX capabilities because they were originally designed to store the award information (in large part because traditional purchasing used to be “3-bids-and-a-buy” offline).
  • Market data — traditional ERP systems do not store market & commodity data.


  • Contract storage and searching — document management was always an afterthought.
  • Contracting is usually a bolt-on module with limited integration, minimal meta-data support and poor search functionality.

Supplier Management

  • Offers limited to no capabilities (e.g., supplier onboarding/enablement, portal, supplier information management, master data management, supplier information management, supplier compliance, supply risk management, etc.)


  • Baseline capability gaps — newer ERP systems have SCM modules, but these modules generally do not permit integration with third-party networks or supplier systems that allow for automated PO submission, supplier acknowledgement, invoice receipt, goods receipt transmission, etc. And this typically results in dual data entry — as the buyer will have to enter the same information in the AP/AR systems that are being used to manage the transaction and the ERP.
  • As important as core functional gaps, the buying interface in ERP (and catalog management) does not support modern shopping and user requirements.
  • Dispute resolution processes — ERP systems do not contain collaborative dispute resolution mechanisms so the resolution process has to take place entirely outside of the system; in addition, basic ERP systems do not support invoice versioning or audit trails, so all of the offers and counter-offers get lost, and no one knows why an invoice was modified.
  • Payment — ERP systems do not support payments and often don’t support integration with EFT payment platforms; payment receipts need to be pushed from the AP system into the ERP.
  • Tax reclamation — many ERPs do not support detailed tax type and rate information, so an analyst doesn’t know the tax breakdown and whether or not the organization can apply for reimbursement without cross-reference with the AP system or, in some cases, the original invoice.

In short, “standard” ERP technology will never be competitive against specialized procurement solutions. And the “call option” for ERPs that have not yet gotten into procurement for selling new capabilities into their installed base will be expiring sooner rather than latter. We anticipate Wax and Medius will accelerate this phenomena. Unless, of course, one of these providers buys this combination or another like it, a scenario we’d put our chips on over the medium to longer term.

Summary ERP Recommendations 

  • Oracle, SAP and Workday should take seriously the threat of Medius and Wax in their customer base, especially in the middle market and upper middle market.
  • For other ERPs without a comprehensive procurement offering, the combination will provide yet further competition given the expanded reach that the two providers will have.
  • Both Wax and Medius have strong individual track records in support of ERP and broader ERP systems integration. They will no doubt leverage these capabilities in competing against the broader ERP ecosystem.