Author Archives: Nick Heinzmann



Analysis of Apttus-Conga deal — Background, transaction analysis and a bit of armchair speculation

Mergers and Acquisition News in procurement industry

Apttus made waves in the CLM market this week with an announcement of its intent to acquire Conga, merging the two firms under the Conga brand to create a hefty player for “configure, price, quote” (CPQ) software, CLM and document management with roughly $400 million in revenue. The deal is perhaps not the transaction one would expect of either player. Both vendors have considerable product overlap, bringing together a set of sell-side CLM capabilities and deep historical hooks into the Salesforce ecosystem.

Still, there is some rationale for the deal. As you peel the onion on customers, the CLM market and where future deals could arise, you can see the potential logic behind Apttus owner Thoma Bravo’s move. At its core, the deal is about quickly producing scale, as the combined firm counts well north of 11,000 customers. It also brings a significant toolbox of CLM adjacent tools (e.g., CPQ, BPM/workflow management) into one ecosystem, which in turn creates a competitive alternative to the other elephant in the CLM room (especially from a customer count standpoint), DocuSign, which with its acquisitions of SpringCM and Seal Software has built its own contract management ecosystem enabled by its ubiquitous e-signature product.

So just what exactly do Apttus and Conga offer customers today, and what are the key takeaways for the CLM market? Spend Matters has not yet been briefed on the “new Conga” product merger plans and firm strategy, but we do have deep background into Conga, given its recent participation in the Spring/Q1 2020 CLM SolutionMap, and a few ideas about how the transaction could play out for another strategic buyer down the road.

Let’s explore these now ...

Coupa buys ConnXus: Product Background and Deal Rationale

Coupa announced Monday it has acquired ConnXus, an Ohio-based provider of supplier relationship management and diversity solutions, for an undisclosed sum.

The deal continues Coupa’s ongoing R&D investment augmented by its corporate development streak. Over the past 18 months the San Mateo, California-based S2P provider has acquired five firms, including another in the SRM space, Hiperos (now unified into the Coupa platform as Coupa Risk assess). But while the Hiperos purchase expanded Coupa’s third-party risk management capabilities, ConnXus brings an entirely different set of supplier management functionality. This includes deep expertise and data related to supplier diversity initiatives — for which ConnXus is best known — as well as several related offerings, such as an automated supplier master data cleansing service.

So what does ConnXus bring that’s new to Coupa, and why does the acquisition make sense in the context of an already strong-performing supplier relationship management and risk solution? This Spend Matters PRO brief reviews the SXM offerings of both ConnXus and Coupa, exploring the deal rationale from a product perspective. It also explores what the deal means for current customers and prospects. A separate brief from Spend Matter Nexus will cover the acquisition from an investment perspective.

Ravacan is a new provider carving a niche in the growing direct materials space

direct materials sourcing

To understand why the technology market for direct materials is seeing a rise in young solution providers like Ravacan, it’s important to understand the space and how it compares to the indirect procurement market.

Thanks to several developments over the last decade, indirect procurement organizations have seen a “rising tide” effect in the number of choices and increasing capability of today’s solution providers.

As first-generation indirect procurement solutions moved to the cloud and second-generation entrants gained notoriety, interest in the procurement sector grew — which lead to new funding for startups, providers crossing international borders and incumbents pushing the envelope of what they could do using automation, like RPA, and early attempts at AI, like auto-classification of spend data.

Direct procurement technology, though, is a different story.

While there are choices today for various direct procurement solutions, the pool is much smaller, and the options are less consistently mature (or developing) than their agile indirect peers.

But to the list of standalone providers targeting a niche in the direct material procurement space, we can now add Ravacan.

ProcurePort: Vendor Analysis (Solution Overview, Strengths/Weaknesses, SWOT, Market Analysis)

This Spend Matters PRO Vendor Introduction offers a candid take on ProcurePort and its capabilities. The brief includes an overview of ProcurePort’s strategic sourcing offering, a breakdown of what is comparatively good (and not so good) about the solution, a SWOT analysis and a selection requirements checklist for companies that might consider the provider.

ProcurePort offers a strategic sourcing solution that’s main focus is on configuring and managing RFX and auction processes. The vendor started out in 2011 as a reverse auction platform, later adding support for RFX creation and adjacent capabilities for contract and supplier information management (SIM). In 2018, ProcurePort acquired a separate P2P platform that it now sells under its brand, but the upstream and downstream solutions are separate products and not sold as a unified source-to-pay offering. (This analysis does not consider ProcurePort’s P2P product.)

The ProcurePort customer base includes both larger manufacturers and small companies (i.e., teams of two or three practitioners managing approximately $50 million in spend). Manufacturers in particular gravitate to ProcurePort for its ability to handle large item counts — ranging from 1,000 to 15,000 items in some cases — as well as its positioning as a competitively priced tool (single seats and bundles are priced significantly below those of S2P competitors like Coupa, Ivalua and Jaggaer).

In addition to its SaaS solution, ProcurePort also offers managed services for reverse auction management and spend analysis (e.g., spend classification).

Let’s take a deeper look at ProcurePort and its solution.

CORONAVIRUS RESPONSE: Fraud, P2P and Vendor Management Safeguards — Protecting cash and rapidly vetting suppliers in a crisis

In this installment of our “Coronavirus Response” series, Spend Matters will explore fraud, P2P and vendor management safeguards. With the COVID-19 crisis creating new fires for procurement to put out and critical supply risks arising to address, fraud is an unfortunate reality that businesses need to remain on guard against — especially in times where bad actors mobilize to take advantage of distracted and newly remote operations. This PRO brief will focus on the first three solution providers that we’ll profile in this category: AppZen, ConnXus and APEX Analytix.

The mission of this series is to examine categories of relevant solutions and example providers that professionals in procurement, finance and supply chain organizations should investigate to reduce, and even mitigate, coronavirus supply risk. And even if the solutions are only addressing a subset of the issues, the ability to respond intelligently in the short term can also help set organizations up for the future when sanity returns to the world.

Today’s brief focuses on the fifth of the seven solution categories that we’re covering:

1. Supply risk management solutions that include supply chain risk, CSR risk, supplier financial risk, etc.
2. Sourcing and commodity management, including advanced sourcing, direct sourcing, automated supplier discovery, and commodity management to help dynamically plan and source. (See this category’s recommended solutions for direct sourcing here.)
3. Advanced procurement analytics to enable direct procurement and/or to perform “spend planning” when demand drops out or spikes. (Its profile for this series is here.)
4. Procure to Pay (P2P) that emphasizes working capital, dynamic discounting, payment control and related finance priorities to help inject cash into the P2P process — especially for many cash-starved suppliers. (This category is discussed in-depth here.)
5. Fraud, P2P and vendor management safeguards when new suppliers need to be set up quickly, and also when lowlife fraudsters try to use the pandemic as a way to steal money and IP.
6. Providers with deep contract analytics that can analyze a contract portfolio for affected contracts from suppliers (and customers) for not just force majeure clauses, but other related clauses that tie to the multiple risks popping up at once in the pandemic.
7. Contingent Workforce and Services solutions that are able to, at a minimum, help rapidly ramp up on-demand workers to deal with massive resource shortfalls. We are looking at four categories of solutions for sourcing remote/online work; solutions for sourcing and managing contract workers at geo-specific capabilities; solutions to “direct source” and manage contract workers; solutions for data management and analytics. (The first PRO brief from this category, about sourcing remote/online work, can be read here.)

Owing to the magnitude of the crisis, Spend Matters recently made the series introduction available for free to all readers. PRO subscribers can see our follow-up pieces that profile the other categories and their solutions in that market. We will include a lot of information on each category PRO brief that readers can see without hitting a paywall, but since we also draw heavily from our existing deep-dive analysis of the providers from our SolutionMap database, some information will be available only to our PRO subscribers.

For fraud and vendor safeguards, the immediate need for companies in all sectors will include proactively detecting fraudulent behavior from all possible sources, whether it’s employees abusing normal corporate channels (e.g., stocking their own homes with toilet paper on the company dime) or cybercriminals posing as suppliers to reroute payments into personal bank accounts. At the same time, manufacturers may need to identify new sources of supply, leading them to rapidly onboard new suppliers. Yet without proper safeguards in place, a frantic selection could lead to longer-term problems, should the supplier have past issues with regulatory compliance or run an unsustainable operation.

The initial three solutions — from AppZen, ConnXus and APEX Analytix — all have capabilities in proactive fraud detection or supplier risk management, especially as it pertains to the validation of supplier information. We will likely add providers with similar and other strengths in fraud detection and vendor risk management at a later stage.

Each category-specific PRO piece in this series has three sections:

1. Problems and Use Cases. We’ll highlight the problems in force (which will vary through different phases of the crisis) and the various scenarios where solutions can provide deeper insights, intelligence and scalable workflows.
2. Solution Rationale and Value. We’ll outline how various solutions can help solve the problems and the specific questions that they’ll help answer.
3. Example Providers. We’ll highlight the solution providers that can support the problems and deliver value.

Some providers are offering coronavirus-specific programs and “freemium” commercial offers, and we’ll note those whenever we update this piece. We’ll also start the series with providers that we already have deep knowledge on, but we’ve been seeking information from other vendors too.

Let’s jump into how fraud and vendor safeguard solutions can help.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off — Learn more

For coronavirus crisis, SourceDay customers share a consistent lesson: Prioritize supplier collaboration today

As manufacturers weather the uncertainty wrought by the coronavirus pandemic, they’re learning that effectively managing the information supply chain with a distributed workforce requires adjustments from the traditional approach.

Supply chain managers are now cut off from their office’s communications that they’ve grown dependent on to collaborate with suppliers — things like spreadsheets saved to desktops, office phones set up to make international calls on behalf of the company. The supply chain managers are either feeling the pain of relying on manual processes or adapting to a new world where critical supply chain information is intermediated by SaaS solutions.

The latter approach is how customers of SourceDay, a provider of supplier collaboration solutions for manufacturers, are handling the COVID-19 outbreak. In a briefing with Spend Matters on Thursday, the Austin, Texas-based provider shared data it has been tracking across its user base on how the outbreak is affecting manufacturer behavior, along with case studies of how the SourceDay users have applied the tool to combat this crisis.

The lessons from SourceDay customers outline a clear trend: Pursue mass segmentation and communication of priorities with suppliers rapidly, or risk being overwhelmed by the deluge of change orders, delays and cancellations created by the pandemic.

AppZen: Vendor Analysis — Strengths/Weaknesses, Company SWOT, Competitors, Selection Checklist

The term “audit” usually implies a reactive activity. When something goes wrong, a business conducts an audit to find out what happened, then corrects its procedures to prevent the error from recurring. This approach is, of course, not ideal. Rather than spend time and energy retroactively correcting a problem, taking a proactive, preventative approach to auditing would be more efficient as this would allow businesses to stamp out potential risks before they became problems.

The idea that a business should proactively address risks may seem obvious, but for many accounts payable organizations this is easier said than done. The major barrier to doing so is one of prioritization. A Fortune 500 enterprise may process billions of transactions a year, many of which represent normal, expected spending. But a handful should raise flags — for potential instances of overpayment, duplicate payment or even fraud. The challenge of proactive auditing is not one of developing a proper mindset but of determining how best to find the needle in the expense and invoice haystack. AppZen is like a super magnet for those needles. Founded in 2010, AppZen is an expense and accounts payable auditing platform that uses AI to help businesses identify spending risks before they make payments. Its roster of more than 1,500 customers — including many of the top brands in industries from banking to media and pharma — use the solution to spot non-compliant employee expenses, duplicate charges and other anomalies (e.g., consistent overcharging from a supplier).

This Spend Matters Vendor Introduction provides an overview of AppZen’s solution set. It includes a perspective on what is comparatively good (and not so good) about the solution, a SWOT analysis, a look at competitors (or lack thereof) and a selection requirements checklist for organizations that might consider the vendor.

Also, we will post a profile of AppZen for our Coronavirus Response series, which highlights go-to vendors to help mitigate the business risks and aftermath of the COVID-19 outbreak.

Through April 2020, a special PRO Expert Survival Pack is available to procurement practitioners only* at up to 50% off - Learn more

Cirtuo: Vendor Analysis (Solution Overview, Product Analysis, SWOT, Selection Checklist)

For all the talk of “strategic sourcing” and elevating procurement as a “strategic partner” in the business, a lot of technology features in the S2P market today, to be frank, has nothing to do with strategy. Instead, their focus is often on transaction facilitation or generating operational efficiencies, which providers suggest will free up procurement resource time to focus on “strategy.” Strategic sourcing solutions, for example, facilitate e-auctions with suppliers and speed up event creation through reusable templates and supplier enablement. They do not, however, shape or improve your procurement organization’s actual sourcing strategies.

Strategy, it seems, has more in common with art than software engineering — if you believe the focus of the S2P market, that is. In truth, though, there’s no reason that technology can’t be applied to the realm of strategy, whether for decision-making or strategy creation or performance improvement management.

Cirtuo, the focus of this Spend Matters PRO Vendor Introduction, proves this point convincingly — and in the process is creating what one could call an entirely different class of procurement solution.

This Vendor Introduction offers a candid take on Cirtuo and its capabilities. The review includes a look at Cirtuo’s solution set, a perspective on what is comparatively good (and not so good) about the solution, a SWOT analysis and a selection requirements checklist for organizations that might consider the vendor.

DocuSign buys Seal Software: Why the CLM Market and Digital Platform Market May Never be the Same (Solution Overview and AI Competitive Analysis)

Spend Matters reported last week that DocuSign, which offers its eponymous e-signature product and a CLM solution (formerly SpringCM), had entered a $188 million all-cash agreement to purchase AI and contract analytics specialist Seal Software. The transaction brings Seal’s capabilities for enterprise-wide contract discovery and analysis firmly into the wheelhouse of a growing CLM presence for DocuSign (beyond digital signatures), as well as raises the competitive bar for CLM specialists, suite providers of many forms and even for “digital platforms.”

But what exactly is DocuSign’s current positioning in the CLM market, and what does acquiring Seal Software bring to the provider’s platform — the “DocuSign Agreement Cloud”?

This Spend Matters PRO brief provides an overview of DocuSign’s current set of capabilities and applicability to the buy-side CLM market, as well as a reprise of Seal Software’s core functionality and offerings. It also includes a comparative rundown of where both specialist CLM vendors and S2P suites are in their own AI development journeys, along with our projection for how DocuSign’s CLM strategy will play out in the broader CLM space and potentially as a disruptive offering in the amorphous digital platform market.

To cut to the chase: The CLM market and digital platform market may never be the same.

Oracle Procurement Contracts Cloud: Vendor Analysis, Analysis and SWOT

ERP vendors aren’t always known for their deep functionality, where best-of-breed solution providers rule the roost with specialized technology features. For example, contract lifecycle management (CLM) is such an area. While best-of-breed providers are going deep into AI for contract analytics and building sophisticated contract modeling, most ERP vendors have rudimentary capabilities that are often scattered across different modules in the ERP suite. Oracle’s Enterprise Contracts functionality is used in its Oracle Procurement Cloud suite solution (which itself is part of Oracle’s ERP Cloud suite), however Enterprise Contracts is a slightly different animal and can mostly hold its own in many areas against deeper solutions, including the CLM modules within the top source-to-pay (S2P) suites in the market.

Oracle’s Procurement Contracts Cloud is an offering that stems from the enterprise/ERP functions, and it is the focus of this Spend Matters PRO Vendor Introduction, which offers a candid take on the Procurement Contracts Cloud and its capabilities.

The Vendor Introduction includes an overview of Oracle’s solution set, a perspective on what is comparatively good (and not so good) about the solution, a SWOT analysis and a selection requirements checklist for organizations that might consider the vendor.

2020 Predicaments in Contract Management: Poor Adoption, CLM Market Fragmentation and Limited Imagination

contract lifecycle management

(Editor’s note: Spend Matters’ analysts are taking on the new year by looking at their areas of procurement technology to see what’s broken and what can and should be fixed this year. Here, analyst Nick Heinzmann lays out problems in contract lifecycle management (CLM). In another piece also published today for our PRO subscribers, he lays out his predictions for 2020.)

Businesses may be trying to bring themselves into the 21st century on a wave of digital transformation, especially as it relates to B2B e-commerce, but this technological evolution has a major stumbling block — contracts.

Across industries and company sizes, businesses exhibit low maturity for their approach to contract management.

This presents both a problem and a missed opportunity.

So what’s holding businesses back from attaining contract management enlightenment? We see a few major impediments:

2020 Predictions for Contract Management: Where the CLM Market Is Going This Year and This Decade

contract

Contract management technology is stuck between a rock and a hard place. At its full potential, CLM solutions promise the ability to plan and orchestrate the fundamental instruments of enterprise value creation — that is, an organization’s contracts — yet their current adoption and use within businesses (beyond their current role of legal risk transfer documents) is less robust than one might expect (see today’s post “2020 Predicaments in Contract Management: Poor Adoption, CLM Market Fragmentation and Limited Imagination”).

No one is fully to blame for this historical lackluster state of affairs regarding contract management transformation, but things are starting to change. 2019 has actually been an extremely strong market based on market demand because:

* A combination of the money at stake that is currently buried within opaque legal language in contracts — and the commercial risks that continue to ramp up as global business conditions become more volatile.
* An increasing realization by practitioners of the value leakage that is occurring because of contracts that are not adequately managing commercial complexity and are not integrated with execution systems.
* Since contracts are the lynchpin between sourcing and both P2P and supplier management, CLM becomes a natural extension of these areas into the other. * The need to cure M&A hangovers and gain enterprise scale by getting visibility of contracts, standardizing them (and the contracting process), and tying them into all business processes that touch contracts (hint: the majority of all processes!).
* A desire to apply AI in an area where it can have substantial impact on process costs (i.e., internal/external counsel rates for contract review are not cheap) and process effectiveness where CLM is the perfect candidate.
* Vendor dynamics that have impacted re-looking at CLM solutions — e.g., IBM Emptoris exiting the market; broader suite-level selections that include CLM; ERP upgrades; and/or legal groups looking to be proactive in finding solutions that go beyond glorified document management.

On the provider side, there’s also been some key growth drivers related to private equity investments in best-of-breed CLM players like Icertis, SirionLabs, Agiloft, etc. and also numerous niche AI-centric start-ups. And S2P suites have made incremental improvement, but only insomuch as to keep up competitive parity, rather than deeply innovativing.

But there are, in our view, a few key problems among providers of CLM systems that, if fixed, would go a long way toward improving the contract management maturity of their customers. Some problems are readily addressable, and we think procurement and legal organizations will see progress on these issues within the next year. Others are much thornier, and while a potential solution is conceivable, vendors will likely take several years to get there — if not the rest of the decade. There will also potentially be some disruptive moves in application categories outside of core CLM, S2P, CRM, etc. that we actually see as very feasible.

In this Spend Matters PRO brief, we’ll examine three of the biggest impediments to CLM system success within procurement and legal organizations, as discussed in our other blog post today. We’ll then project potential scenarios that vendors could follow to help solve these problems, including some “predictions” for how the market could evolve in the next year and beyond.