eProcurement firm Proactis responds to shareholder criticism and brings in new clients

You may remember the excitement recently when Isis Equity Partners, the private equity firm who are a major shareholder (26%) in Proactis, the eProcurement provider of both P2P and eSourcing solutions, issued a statement challenging the Proactis strategy. Isis said they wanted the firm to explore means of releasing more shareholder value – perhaps through acquisitions or even selling the business.

So given this, I caught up recently with Rod Jones, the Proactis CEO, for a chat.

He’s clearly annoyed with the Isis action and points out that no other shareholder supported the Isis statement. He says Proactis have a clear strategy and have shared that with Isis, and they’re half way though execution of a five-year plan. He questions whether Isis really understand some aspects of the Proactis business – for instance, that the move away from traditional software licensing to an annual fee subscription, and a “cloud” based model, means a short term hit to what you can report in terms of annual revenue.

That’s true enough, and it may be that 2012 was the tipping point year for the firm in terms of that change, in which case the future will look brighter.  Arguably the SaaS model,  once established, can bring greater certainty of revenue over a longer period of time.  (And we made a similar comment with respect to Basware the other day; there is a transition as software firms switch business models and that is evident in their financials).

Jones also pointed out the continuing positive analyst ratings of the Proactis software – a recent report from Cap Gemini putting them right up with the best in class. (We would suggest caution around the soundness of that Cap survey, but to be fair Proactis generally comes out reasonably well in analyst reviews).

Anyway, there are strong developments in non-UK countries, with progress in the Middle East and the US. Proactis is using partners in other countries, and developing relationships with BPO providers – such as Tata Consulting Services who have signed up to use the product where they deliver procurement BPO.  “The product is truly multi-currency, and multi-national” as Jones points out.

And contract wins are continuing in a steady stream – one of the most recent examples being the Government of Barbados, with an agreement for Proactis “to deliver its full range of Spend Control and eProcurement software solutions as part of a modernisation project of the Barbados National Procurement System”.

I’d certainly be happy to go out there to help with that implementation.. very reasonable day rates...

There is an attitude of some caution in the Proactis approach perhaps, which (without wishing to stereotype here too much) perhaps plays to their Yorkshire heritage, in terms of a dis-inclination to take too many risks and go for faster growth, a la Coupa for instance. Anyway, the views of Isis certainly shouldn’t get potential Proactis customers too concerned – the firm appears to be in decent financial shape and seems to be on an upswing of financial performance which is reassuring, even if the pace isn’t what Isis feel it could or should be.

So the fundamental test for potential clients should remain – does the product (and services around it)  best meet your specific needs?

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