Analysis Content

Why would Medius buy Wax Digital? (Part 1: Company Backgrounds, Product Strengths/Weaknesses, Deal Rationale)

Earlier today, Medius announced it is joining forces with Wax Digital. Specifically, Medius, a Nordic-based provider of AP automation solutions with a growing presence in North America, is acquiring Wax Digital, a UK-based source-to-pay suite provider.

The entity will be owned by Marlin Equity Partners, a private equity firm, which purchased Medius in 2017. For those like me who have been around this sector for too long, you might remember Marlin for its purchase of Emptoris (before IBM acquired the provider from Marlin).

Flash forward exactly one decade from that buyout, and the combination of Medius and Wax brings together two providers with different geographic and product strengths with a combined emphasis on targeting finance and procurement organizations.

As we kick off our analysis in this Spend Matters Nexus series analyzing the transaction, we’ll focus this first brief on providing a quick overview of Medius and Wax Digital, and graphically explain how both fit into the source-to-pay landscape. We’ll also offer up high-level strengths and weaknesses on the solution level (for Wax) and a detailed introduction to the Medius AP footprint. Finally, we’ll begin to explore the rationale for the combination.

Later this week, we’ll delve more deeply into a particular strength of Wax based on Spend Matters’ SolutionMap data showing it has happy customers, explore the benefits of bringing together finance and procurement solutions to drive a larger total accessible market (TAM), and offer deeper insight into the potential integrations/touchpoints between Medius and Wax Digital. Finally, we will share an analysis of the impact on the competitive landscape, exploring how the combination may impact competitive AP automation and invoice-to-pay vendors as well as procure-to-pay and source-to-pay suites.



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 this transaction.

Workday and Scout RFP: Customer Recommendations [PRO]

This Spend Matters PRO research brief provides analysis in support of Workday and Scout RFP customers following last week’s news that Workday is acquiring the sourcing provider. Previous coverage of the transaction with content aimed at CEOs, strategy / corporate development leaders and investors can be found on Spend Matters Nexus (see Part 1, Part 2, Part 3 and Part 4).

Nexus coverage provides an overview of the transaction, an introduction to Scout RFP, Scout RFP strengths / weaknesses, competitive analysis and recommendations (for ERP providers, suite providers and best-of-breed providers, separately) and potential Workday and Scout RFP integration touchpoints.

Today on Spend Matters PRO, we turn our attention to those which will be most impacted by the announcement: Scout RFP and Workday customers. We encourage Spend Matters PRO practitioner clients who are using or considering Scout RFP or Workday for procurement to contact us for more information on how the acquisition could affect them.

Workday acquiring Scout RFP (Part 4: Potential Areas of Solution Integration)

integration

Our final Spend Matters Nexus brief for the week analyzing Workday’s acquisition of Scout RFP focuses on potential product and workflow integration touchpoints between the providers, based on activities that Workday and Scout worked on while “partners only” as well as more strategic considerations. (See the first three installments here, here and here, covering general deal analysis, Scout capabilities + strengths/weaknesses, and competitive sector analysis.)

Today’s analysis begins with a list of generic sourcing integration touchpoints with broader source-to-pay and procurement technology capabilities.

As our Nexus coverage has shown, we tend to look at the acquisition of Scout as a clever, innocuous way for Workday to get into the edges of procurement with a standalone, crowd-pleasing solution. But we also think there’s much more to come from a Workday product roadmap perspective — and that this move is only one of the first acts of a much longer play.

Note: This analysis will be updated next week based on a briefing call with Workday.

 Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

Workday’s acquisition of Scout RFP (Part 3: Suite and Best-of-Breed Competitor Analysis and Recommendations)

Earlier in the week, the finance and HR solutions provider Workday announced it was buying Scout RFP, a sourcing solution for those who would rather use Uber than maintain an old car (I make this observation with full cynicism intended because my 25-year-old car has been in the shop for three of the past six months ).

You can find previous free coverage of the transaction news on Spend Matters here and here. In our first Nexus subscriber brief covering the procurement technology sector’s M&A news, we offered background on Scout RFP, explored the provider’s strengths and weaknesses, and gave our initial insights into the rationale for the transaction. The second brief explored the competitive implications of the transaction on Workday’s ERP competitors.

As we continue our analysis on Spend Matters Nexus, we turn our attention to landscape implications of the transaction that may affect other, specialized procurement technology providers. We also offer lessons learned for this group as well in terms of what really matters with driving customer success, growth and, subsequently, valuation. Today’s research brief provides a competitive analysis for the source-to-pay suite market segment (e.g., Corcentric, Coupa, Ivalua, Jaggaer, SAP Ariba, SynerTrade, Wax Digital and Zycus) as well as specialty providers that emphasize the sourcing area. U.S. and European sourcing specialists include Allocation Network, Bonfire, EC Sourcing Group, K2 Sourcing, Keelvar, MarketDojo, Promena and ScanMarket and my favorite, at least for its name, SourceDog.



Since the other dog is my car right now and I’m late for a meeting, let me call that proverbial Uber and get on with this analysis.

Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

Workday’s acquisition of Scout RFP (Part 2: ERP competitors analyzed)

Yesterday, the finance and HR solutions provider Workday announced it was buying Scout RFP, an easy-to-use sourcing solution. You can find previous free coverage on the transaction on Spend Matters here and here. In our first Nexus subscriber brief covering the procurement technology sector’s M&A news, we offered background on Scout, explored the provider’s strengths and weaknesses, and gave our initial insights into the rationale for the transaction.

As we continue our analysis on Spend Matters Nexus, we turn our attention to landscape implications of the transaction that may affect other technology providers. Today’s research brief provides a competitive analysis for the ERP market segment including providers such as Epicor, Infor, Oracle, Microsoft, Netsuite (Oracle), SAP, Sage and Unit4.

In this analysis, we also provide context via a brief history lesson on how (and why) ERP providers have traditionally offered procurement capability as an extension of financials, tracing the emergence of ERP from MRP. Specifically, we trace how and why this legacy has led to a situation of technology that is inadequate for procurement’s needs (which gave rise to the source-to-pay technology market in the first place).



Subsequent competitive analyses of the transaction will consider both suite and best-of-breed / independent procurement technology providers, including the valuation impact on the sector (and what some of the key drivers to valuation have been recently). We will also explore in greater detail the process, sales and technical integration considerations for Workday as it digests this procurement amuse-bouche.

But for now, let’s dust off our competitive bifocals as we magnify the competitive considerations of the deal, examining Workday’s ERP peers competing for their share of the $50 billion procurement technology total addressable market (TAM), as estimated by Coupa’s  Business Spend Management TAM.

Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

First Take Analysis: Workday’s Acquisition of Scout RFP (Part 1: Scout Background, Strengths/Weaknesses, Deal Rationale)

Workday, a provider of finance and human resources solutions, has announced its intent to acquire Scout RFP for a cool $540 million in cash. For those with a long-time background in the industry, this might at first seem like a somewhat mind-boggling sum for a sourcing provider, bringing back memories of Ariba buying Trading Dynamics in the early B2B sourcing era.

But things are a bit different this time, as Scout is bringing rapid growth, material customer numbers (240+ customers) and material ARR growth to the table (we’ll do a back-of-the-napkin analysis of ARR and revenue contribution later in this series). Moreover, it’s an innocuous way for Workday to target procurement without having to go after “the hard stuff” (another key theme we’ll explore).

So beyond the somewhat shocking number at first, the deal can begin to make sense if you peel the transaction onion. So let’s begin.

As we kick off our analysis in this Spend Matters Nexus series analyzing the transaction, we’ll focus this first brief on providing a quick overview of Scout, graphically explain where it fits in the source-to-pay landscape, explore the provider’s strengths and weaknesses, and then begin to delve into the rationale for the deal from the Workday vantage point.

Later this week, we’ll offer an analysis of the M&A and deal components of the transaction (e.g., estimated multiples), provide deeper insight into the integrations/touchpoints between Workday and Scout, and share an analysis of the impact on the competitive landscape (for competitive ERPs, source-to-pay suites and independent sourcing providers).



Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

Brightfield (TDX) Raises a Whopper of a Round: Analysis + Implications for Contingent Workforce/Services Technology [PRO]

Earlier today, Spend Matters reported that a $53 million Series A funding round was raised by Brightfield (TDX), formerly a consulting firm that became a provider of AI-derived market intelligence for the contingent workforce/services community. Spend Matters believes the size of the round — very large for a series A — is indicative of a number of factors beyond the fact that Brightfield (TDX) is a more mature organization in terms of product, customers and revenue than most companies going up for an earlier stage funding round.

Indeed, Brightfield “2.0’s” rapid data-driven success after its pivot — and the comparatively gargantuan investor vote of confidence at the Series A level — represent several converging trends. We will explore these in this Spend Matters Nexus research brief, which also provides overall analysis and key takeaways for services procurement providers, investors and practitioners. Our analysis begins with a company and solution overview of Brightfield and its TDX platform, Talent Data Exchange.

Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).

‘Future 5’ award: Spend Matters names 5 standout procurement technology start-ups

To highlight the most exciting procurement technology start-up companies in the world, Spend Matters is releasing its “Future 5” listing today in conjunction with the Digital Procurement World conference in Amsterdam.

The procurement technology analyst and media firm Spend Matters is well-known to recognize 100 procurement vendors in the industry each spring through its “50 Procurement Providers to Watch” and “50 Procurement Providers to Know” lists.

Given the speed with which many procurement technology start-ups move from early-stage to market contenders, the Spend Matters team decided to issue this mid-year Future 5 listing of exciting players.

Watchdog Gone Wild? Why New York City’s Procurement Technology Overhaul is Actually a Good Thing

magnifying glass analysis

Recent media reports have alleged that New York City has been overpaying for its implementation of procurement software suite provider Ivalua in NYC’s procurement transformation efforts. The reports have used a watchdog group’s analysis that has tried to compare the seemingly high price tag of the NYC implementation of Ivalua to a smaller implementation of the city of Dallas by a more niche software provider named Bonfire. Ivalua and Bonfire are two procurement software providers that Spend Matters covers within the broad procurement provider ecosystem.

The headlines appeared suspicious, and we decided to take a deeper look at the projects and the providers in question. Our analysis indicates that one report’s direct comparison of these costs is misleading and flawed. We have a few takeaways from the group’s conclusions, and our analysis indicates that the NYC deal could easily pay for itself and be a boon for the city.

Corcentric to Acquire Determine: Valuation, Transaction Overview, Customer Recommendations and Competitive Landscape Analysis (Part 1) [PRO]

Earlier this week, Corcentric — a provider focused at the intersection of accounts payable automation, order-to-cash, trade financing, procurement consulting and group purchasing organization (GPO) software and services — announced its most strategic software acquisition to date: Determine.

But what are the highlights of the transaction? How do the proposed terms of the combination address Determine’s balance sheet liabilities — and more important, what is our summary analysis of Corcentric + Determine?

In this two-part Spend Matters PRO brief, we will provide an overview of the combination (by the numbers), an analysis of the transaction/valuation, our “elephant in the room” observations, summary recommendations for Corcentric and Determine customers and an analysis of the competitive landscape implications of the transaction.

In later PRO research briefs, we will offer our perspective on Determine’s functional strengths and weaknesses in both the procure-to-pay (i.e., e-procurement and invoice-to-pay) and strategic procurement technologies (e.g., sourcing, CLM, etc.) areas and what these bring to Corcentric, and, with sufficient distribution (that they lack today, at least in North America), what they could bring to the broader source-to-pay market.

Procurement Technology and Solutions M&A Outlook: 10 Predictions for 2019 (Part 4) [PRO]

Today, I’ll share a critical 10th prediction (arguably the most important of all) of our M&A predictions series. Please allow me to indulge my last prediction in a folksy, CliffsNotes way to get both the seasoned experts on sector deals — of which we can count on just a few fingers — and everyone else on the same page as to what’s really happening.

In the third installment, I shared three additional predictions exploring how the procurement technology landscape is shifting as we enter 2019. The most recent prognostications centered on the rising intersection of procurement technology with payment and financing as a consolidation driver, more sellers engaging in proactive processes and unorthodox groups of strategic buyers emerging from left field on some deals.

These predictions build on the second installment of our M&A predictions for 2019, during which I explored an expanding focus on services procurement (assets), the increasing interest in strategic procurement technologies (SPT) and the scarcity of e-procurement and procure-to-pay targets left in the market.

And in the first installment in the series, I analyzed the deals that have happened already in 2018, as well as our first three of 10 prognostications for next year. First, private equity firms will play an increased role in the sector. Second, valuations will be all over the map. And third, peripheral players will respond to the “Amazon effect."

Happy holidays everyone and happy deal hunting in 2019! Let’s get into the final prediction.

Coupa and Hiperos: Customer Recommendations [PRO]

This Spend Matters PRO research brief provides analysis in support of Hiperos and Coupa customers following this week’s news that Coupa is acquiring Hiperos.

We’ve examined the implications of the deal on the supplier management landscape and done a head-to-head comparison of the providers.

Now this brief includes recommendations for immediate steps and longer-term considerations that are generic to procurement technology M&A transactions in general — such as change of control clause implications — and specific to this acquisition.

We encourage Spend Matters PRO practitioner clients who are using or considering Hiperos to contact us for more information on how the acquisition could affect them.

Now read on to get the customer/prospect recommendations for Hiperos and Coupa.