Author Archives: Jason Busch



About Jason Busch

Jason is the founder of Azul Partners, which he started in 2004. He is regarded as one of the top experts in the world of procurement, finance and supply chain technologies. Jason divides his time into two areas. First, he works with sponsors and executives on corporate strategy, M&A and due diligence initiatives; second, he incubates and launches new ventures for Azul Partners. Jason got his on-the-job education in procurement solutions working at FreeMarkets in corporate development and other areas. Before that, he started his career in consulting and merchant banking. Jason holds undergraduate and graduate degrees from the University of Pennsylvania in English Literature and History.


Exploring the supply chain finance and P2P implications based on Greensill’s restructuring

Earlier today, the WSJ reported that Greensill Capital could face restructuring or liquidation. For those not involved in the esoteric world of trade financing (and supply chain finance, or “SCF,” in particular), it can be difficult to understand the structures that Greensill and its peers are involved with. So let’s first define supply chain finance (and offshoots of it) for those which are just coming up to speed before exploring the supply chain finance and procure-to-pay (P2P) implications of Greensill’s potential restructuring.

Making sense of the world of B2B payments and procurement technology: Backdrop, market segmentation and vendor mapping

B2B payments vendors

A couple of years ago, I fought a small battle with the management team of Spend Matters’ parent company (Azul Partners) about making the investment to cover what was then a nascent market for B2B payments as a solution extension to categories that we cover in SolutionMap: Procure-to-Pay, Invoice-to-Pay and AP Automation solutions. I was not alone, among my colleagues, in making the case to cover B2B payments, both as a drill-down of SolutionMap within AP Automation and Invoice-to-Pay, but also as a stand-alone area on Spend Matters.

But those who weren’t initially taken with the idea asked the fundamental question: Why?

Why would procurement and AP leaders care about B2B payments in relation to their primary technology decisions? It’s a fair question.

It is clear from a range of M&A activity (e.g., the payments/treasury management services (TMS)/P2P/AP mash-up of Coupa/BELLIN last year) as well as converged solution featuring a combination of internally developed solutions alongside integrated third-party capability (e.g., Coupa Pay, Tipalti), not to mention pure-play solutions (e.g., AvidXchange), that B2B payments are converging with the world of procurement and AP technology.

This Spend Matters PRO series segments and explores the various providers in the non-bank B2B payments market into four distinct market segments while exploring the overlap (think Venn diagram) between the groupings and individual providers. But to get everyone started on the same level, we’ll begin by providing some context and history of B2B payments overall. Still, if you’re from procurement or AP and your relatively new to world of B2B payments (or brand-new), we recommend starting here:

But where do B2B payment technology vendors (and their procurement and AP counterparts) fit into this world today?

Let’s begin ...

The 5 Levels of M&A Technology Integration: Stage 5 Replatforming

replatforming

Stage 5 integration is the ultimate step in M&A software integration. Few technology companies end up achieving Stage 5 integration following an acquisition or set of acquisitions. It’s actually more common in the case of a tech firm taking an internal legacy platform and rebuilding capability onto a new one. This is something hundreds of technology firms had to do in the case of transitioning enterprise technology (i.e., software installed behind the firewall and often heavily customized) to cloud-based models. SAP Ariba, Jaggaer, Oracle, Medius, Basware and dozens of other providers did precisely this over the past two decades (some more recently than others).

In this Spend Matters PRO series, we are defining, introducing and exploring the five levels of M&A technology integration that vendors must go through when bringing together different modules and platforms. We should note, however, that bringing together different applications and technology stacks is not a requirement of any acquisition. But anytime a technology provider wants to market and achieve customer synergies through a transaction outside of “cross-sell/up-sell,” the degree of integration planned, its timing and ultimate realization should be a priority for investors and customers alike.

Today, we explore the fifth and final level of integration that occurs in a post-merger situation or when vendors replatform old technology onto a new stack while still having to maintain existing solution capability on the legacy platform. From a vendor perspective, we define how to do it and provide examples of this type of integration. And from a user perspective, we suggest tips and tricks for technology buyers to discern this level of integration compared with others.

If you’re new to this series and want to learn the five levels of integration, start with this introduction. In the previous installments, we cover Stage 1, Stage 2, Stage 3 and Stage 4 integration levels in detail.

What the Jason Alexander hoodie ad teaches us about the past and future of spend analytics capabilities

jason alexander

One of our favorite Super Bowl advertisements this year was the Jason Alexander “hoodie” — a totally hilarious plug for Tide. Any true “Seinfeld” fan knows that you’re usually laughing at George Costanza, not with him, but somehow you feel sorry for the guy, at least part of the time, which is precisely why this commercial is so effective. While you want to see George get what he deserves most of the time, it just feels wrong to dishonor the short man or beat him up after a certain point, which is why the Super Bowl ad is such a work of genius — it doesn’t stop.

George is a bit like spend analytics in the broader source-to-pay world, at least some of the time. It’s a bit of a sideshow, even if it shouldn’t be. And sometimes, at least in the worst of cases, we have to laugh at it, not with it — like when it tells us we’re buying mice, not furry lab mice! But just like the hoodie, if we can laugh at it or at least acknowledge its flaws in terms of where analytics’ value generation typically comes up short, we will end up respecting the potential for it even more in the end.

Now, we’re not saying that a typical procurement organization cannot get value out of a spend analytics solution. Many provide material value to their clients, at least power users, and have for some time. Most users, in fact, do extract value for their investment in these tools. But like a Jason Alexander hoodie, until you just come to accept the technology for what it is, you might find yourself disrespecting what you’ve actually bought.

Said more directly, you’re likely to not get (nearly) as much value out of your analytics solution as you should, and not getting this value will cost you more than you realize — maybe even multiples of what you are paying for a solution that is supposed to identify, and help you prevent, overspending.

Here’s why.

The 5 Levels of M&A Technology Integration: Stage 4 UX Integration/Replication

ux integration

When we introduced Stage 3 technology integration (data model integration) in a post M&A vendor environment, we dropped a Monty Python reference as a metaphor for the challenges of achieving this level of unification. But for Stage 4, we need to extend our cinematic and television metaphors to the next level and go, with apologies to Star Trek, Where No Man Has Gone Before. Well, that is not entirely true, but generally, only a minority of technology firms achieve Stage 4 integration: UX Integration/Replication (on top of a single data model).

In this Spend Matters PRO series, we are defining, introducing and exploring the five levels of M&A technology integration that vendors must go through when bringing together different modules and platforms. We should note, however, that integrating different applications and technology stacks is not a requirement of any acquisition. But any time a technology provider wants to market and achieve customer synergies through a transaction outside of “cross-sell/up-sell” the degree of integration planned, its timing and ultimate realization should be a priority for investors and customers alike.

Today, we explore the fourth level of integration that occurs in a post-merger situation or when vendors replatform old technology onto a new stack while still having to maintain existing solution capability on the legacy platform. From a vendor perspective, we define how to do it and provide examples of this type of integration. And from a user perspective, we suggest tips and tricks for technology buyers to discern this level of integration compared with others.

If you’re new to this series and want to learn the five levels of integration, start with this introduction. In the previous installments, we cover Stage 1, Stage 2 and Stage 3 integration levels in detail.

The 5 Levels of M&A Technology Integration: Stage 3

Data model integration

For many on the M&A integration front lines who are tasked with getting product synergies from combined assets of different firms, data model integration often appears high on the post-merger/acquisition grail quest. The same sentiment would likely echo from customers, at least those who have gone through a vendor consolidation in the past. But, in fact, data model integration is only Stage 3 (out of 5 stages) of post-acquisition technology integration — it’s the mid-point! And with apologies, to the Monty Python crew, that’s no ordinary rabbit!

In this Spend Matters PRO series, we are defining, introducing and exploring the five levels of M&A technology integration that vendors must go through when bringing together different modules and platforms. We should note, however, that bringing together different applications and technology stacks is not a requirement of any acquisition. But anytime a technology provider wants to market and achieve customer synergies through a transaction outside of “cross-sell/up-sell” the degree of integration planned, its timing and ultimate realization should be a priority for investors and customers alike.

Today, we explore the third level of integration that occurs in a post-merger situation or when vendors replatform old technology onto a new stack while still having to maintain existing solution capability on the legacy platform. From a vendor perspective, we define how to do it and provide examples of this type of integration. And from a user perspective, we suggest tips and tricks for technology buyers to discern this level of integration compared with others.

If you’re new to this series and want to learn the five levels of integration, start with this introduction., which fully explains the partially obscured chart below.



In the previous installments, we covered Stage 1 and Stage 2 integration levels in detail.

The 5 Levels of M&A Technology Integration: Stage 2

In this Spend Matters PRO series, we define, introduce and explore the five levels of M&A technology integration that vendors must go through when bringing together different modules and platforms. We should note, however, that bringing together different applications and technology stacks is not a requirement of any acquisition. But anytime a technology provider wants to market and achieve customer synergies through a transaction outside of “cross-sell/up-sell” the degree of integration planned, its timing and ultimate realization should be a priority for investors and customers alike.

Today, we explore the second level of integration that occurs in a post-merger situation or when vendors replatform old technology onto a new stack while still having to maintain existing solution capability on the legacy platform. From a vendor perspective, we define how to do it and provide examples of this type of integration. And from a user perspective, we suggest tips and tricks for technology buyers to discern this level of integration compared with others.

If you’re new to this series and want to learn the five levels of integration, start with this introduction. In the previous installment, we cover Stage 1 integration in detail.

The 5 Levels of M&A Technology Integration: Stage 1

integration

In this Spend Matters PRO series, we will define, introduce and explore the five levels of M&A technology integration that vendors must go through when bringing together different modules and platforms.

Today, we explore the first level of integration that occurs in a post-merger situation or when vendors replatform old technology onto a new stack while still having to maintain existing solution capability on the legacy platform.

From a vendor perspective, we define how to do it and provide examples of this type of integration. And from a user perspective, we suggest tips and tricks for technology buyers to discern this level of integration compared with others.

If you’re new to this series and want to learn the five levels of integration, start here with our Introduction post.

The 5 Levels of M&A Technology Integration: An Introduction

integration

In this Spend Matters PRO series, we will define, introduce and explore the five levels of M&A technology integration that vendors must go through when bringing together different companies and platforms.

We hope this will allow everyone in the market — customers especially — to plan for and assess different levels of vendor integration, and ultimately, will contribute to aligning the value created over an extended time horizon for technology buyers and shareholders alike.

This is important because while mergers and acquisitions (M&A) often generate value for shareholders, they do not always do so for customers — or at least not at the level they are “sold.” Such a strategy can create obfuscation for users and result in solution components that do not necessarily “talk to each other” or “work together” as well as a PowerPoint or demonstration might suggest.

And since every suite vendor in the source-to-pay market (except Zycus) got to where they are at least in part — and sometimes as a primary strategy — by acquiring other providers, this is a particularly important topic. We should note Zycus does not get a free pass here either: It has had its own issues making different, internally developed platforms and codebases talk to each other, however, which mirror M&A integration challenges.*

Today, we introduce and define the five levels of M&A technology integration, where Stage 0 is no integration at all. And we’ll explain why the five stages matter, starting first with establishing a reference framework for customers, vendors, consultants and investors.



* This topic applies beyond M&A as well, in cases of internal vendor re-platforming of solutions, integrating different internally developed platforms and customer migration (e.g., a transition from enterprise software or early SaaS or to a modern cloud architecture).

Now let's delve into the details about solution integrations.

Coupa’s Biggest Acquisition Yet (Part 1) — LLamasoft Transaction Overview, Initial Musings and Deal Tailwinds

Mergers and Acquisition News in procurement industry

Earlier this morning, Coupa announced it was acquiring LLamasoft in a $1.5 billion transaction (with the deal expected to close Nov. 2, 2020 — today). My colleagues on the analyst team at Spend Matters PRO are covering the transaction from a procurement and supply chain practitioner perspective. In short: what it is, why it matters and what it might bring product-wise from the combined organization. You can read Spend Matters coverage today here: the breaking news, PRO analysis of procurement-supply chain’s future and a PRO look at LLamasoft’s functional capabilities.

In this Spend Matters Nexus series, I’ll focus on covering the transaction from an M&A and competitive strategy perspective, providing analysis for a narrower audience interested in the transaction from an investor and corporate development vantage point.

Today, I’ll start with an overview of the deal (transaction overview + analysis), offer up some initial musings, and share some of the tailwinds that might support the deal as the combined organization takes its wares to market.

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter. Disclosure: Spend Matters’ parent company, Azul Partners, provided due diligence services to Coupa as part of this transaction.

You can’t optimize for products that are a rounding error in a broader P&L

In this counterpart article, Jason Busch argues against giving away optimization.

My colleague’s proposal is to give away optimization, when it is, in fact a form of differentiation for providers in the sourcing space. Until optimization becomes as “expected” as RFI/RFX or reverse auction capability in sourcing, I, personally, would actively discourage providers from simply tossing it in. But what I would deploy is clever marketing, channel, business model and go-to-market approaches to capitalize on the asset, if I had it.

What is driving Tipalti’s $2 billion valuation? 10 reasons AP Automation is such an attractive market

procurement

Yesterday, Tipalti announced it had raised $150 million at a cool $2 billion valuation. (See Spend Matters’ coverage of Tipalti below.*)

What is remarkable about this raise and the valuation is that Tipalti, which focuses on accounts payable automation and payments, is still a relatively small firm in the procurement and finance technology sector, even if it is growing at a strong clip.

While I don’t have current financials on the firm that I can share, Owler lists them (erroneously low) at $15 million, and applying the ever-convenient $200,000 or $250,000 per employee multiple based on LinkedIn employees still places them materially below $100 million in revenue.

So regardless of how you slice it, we likely have a private company here — and one that was founded outside the U.S., in fact, that can sometimes hurt comparative valuations — valued in excess of 20X top line.

For an outsider to this sector, barring truly off-the-chart growth metrics (beyond even top-performing cloud application norms), this might seem anomalous. But it’s not, given a number of variables at play here in the AP automation and B2B payments market.

In this Nexus column, I will share the “inside baseball” 10 reasons why AP is such an attractive market for firms and investors — and why Tipalti is smack dab at the center of any rationale investment thesis in this market (including a contrast with superior functional solutions for AP such as Basware, which is comparatively uninteresting from an investment vantage point).

* See Tipalti’s latest Spend Matters coverage and ratings below:

Jason Busch is Managing Partner of Azul Partners’ Investor Advisory Group. He works with sponsors, CEOs and boards on data-driven due diligence, M&A and business strategy. Jason is also the lead author of Spend Matters Nexus, a private newsletter. Disclosure: Azul Partners has advised numerous sponsors and firms in support of M&A strategy and due diligence in the accounts payable automation and B2B payments sector.