Clients Shape Source to Pay Systems with Asks That Drive Development and M&A
You would think that selecting a source to pay system based on requirements coverage would be sufficient to make the best decision. However, I would argue that you should also understand how the system’s evolved over time before buying (development road map & acquisitions). Would you buy and old house before asking for the list of past renovations before buying?
An Old House’s Previous Owners Have Shaped the House’s Story
When you move in, the house is new for you, but it’s already gone through a lot. Since it’s initial construction, rooms has been used for different uses depending on the inhabitant’s requirements. They’ve also probably done renovations to satisfy specific needs or desires (sun room!). When you move in, regardless of your thoroughness during the inspection, you will find features you didn’t spot initially. Some of these will be a delightful surprise (there’s an ironing board in the kitchen cupboard!) and others will be a continuous bother, impossible to fix at a reasonable price (has this stair always squeaked as we walk by?).
When you seek to carry out renovations of your own, you might stumble upon a load bearing wall that prevents you from turning the kitchen and living room into “an open space”. To do so, you would need to tear down the whole house and start over (but how will I achieve feng shui?!). That’s why if you want to mold the house to your needs, you must understand the house’s evolution in addition to its current condition (easier said than done!). Can you get your hands on the initial blueprints? Does the city have any data on residents over the years and building permits they may have sought out? Can the current owners fill you in on the house’s stories? Now I hear you thinking: “What does this have to do with my system selection?”.
An Source to Pay System Vendor’s Previous Clients Shaped the Structure of the System
A Source to Pay system is a software product which has usually been developed over multiple years by multidisciplinary teams with different backgrounds and levels of expertise. In most cases, it will also be a mix of multiple different systems acquired and melded together over time. Yes, when you “move in” you are getting a fresh new copy of the system but it’s a copy of an “old house” that’s evolved based on previous customer requirements and asks that the parent company is trying to satisfy. Solution modules were “renovated” with development and/or acquisitions of other solutions (sun room!). When you “move in” and implement the Source to Pay system, regardless of your thoroughness during the RFP process, you will find features you didn’t identify or consider during the process. Some of these features will be a delightful surprise (a whole standard set of connectors to another solution you just bought!) and others will be a continuous bother that are impossible to fix at a reasonable price (what do you mean there’s no API to extract this specific piece of data!?).
When you attempt developments of your own (renovations) in the Source to Pay system, you might find out that certain back-end code logic prevents you from implementing the desired change (but how will you achieve business feng shui?!). That’s why if you want to mold the system your needs (or at the very least understand what standards and rules you will need to bend to), you must understand the system’s evolution in addition to its current condition (easier said than done!).
Mining the Source to Pay System’s Story Through the Rfx Process
As you initiate RFI and RFP processes, here are some questions you should consider asking to understand a potential system’s “story”:
- Can you provide a list of company acquisitions and illustrate how these software assets have been integrated into your offering?
- Have the acquired organizations been fully integrated into your company or do they still operate as separate entities? Can you detail the company structure (i.e. departments, business units)?
- Is it possible to obtain a diagram of the back-end database structure?
- Are all modules written in the same programming language? If not, how are you managing the integrations between different modules written in different languages?
- How do you manage the organic development of your solution? Is it possible to get a tour of the product development operations?
- Please provide references of mature clients so we can understand the intricacies of operating your system (IT and business contacts).
Being able to answer these questions before engaging in a long-term relationship with a strategic partner is important. It will ensure you understand the potential scope of challenges you will inevitably face over the course of the relationship. For example, you’ll be able to factor in considerations that might affect your ability to support the solution after Go-Live. Because, make no mistake, when you implement a Source to Pay system, you are starting a long-term relationship with a software vendor. And, just like with buying an old house, you want to prevent being haunted by the decision!
How Has M&A Shaped the Source to Pay Provider Landscape?
To illustrate how considering this type of information can inform your buying decision, I’ve compiled acquisition data for the Top 5 Source-to-Pay suites as listed in the 2018 Gartner Magic Quadrant for Source-to-Pay Suites: SAP Ariba, Coupa, Basware, Jaggaer & Ivalua. As you will notice, these companies all have very different acquisition profiles. Therefore, their product suites will have evolved very differently even if they support the same set of core processes.
SAP Ariba – 10 Acquisitions
Founded in 1996. Headquartered in Palo Alto, California, USA; acquired by software giant SAP in May 2012.
| Acquired Organization | Date | Comments | Press Release |
|---|---|---|---|
| b-process | 2011-10 | e-invoicing network technology provider | Link |
| Quadrem | 2010-11 | Supplier Network technology provider | Link |
| Procuri | 2007-09 | Cloud sourcing, contract management, spend analysis and supplier management technology provider | Link |
| FreeMarkets | 2004-06 | End-to-End procurement technology provider | Link |
| Softface | 2004-03 | Spend management technology provider | Link |
| Alliente | 2004-01 | Procurement Business Process Outsourcing (BPO) services provider | Link |
| Goodex AG | 2003-01 | e-auction and sourcing technology provider | Link |
| Suppliermarket.com | 2000-06 | Supplier Network technology provider | Link |
| TRADEX Technologies | 1999-12 | Supplier Network technology provider | Link |
| TradingDynamics | 1999-11 | eSourcing technology provider | Link |
Coupa Software – 17 Acquisitions
Founded in 2006. Headquartered in San Mateo, California, USA.
| Acquired Organization | Date | Comments | Press Release |
|---|---|---|---|
| Pana | 2021-03 | Travel booking technology provider | Link |
| LLamasoft | 2020-11 | AI-Powered Supply Chain Design and Planning | Link |
| Yapta | 2020-01 | travel booking technology provider (price optimization, tracking and booking flight tickets, and receiving airline refunds) | Link |
| Exari | 2019-04 | Contract Lifecycle Management technology provider | Link |
| Hiperos | 2018-12 | Supplier risk technology provider | Link |
| Acquiire | 2018-10 | Real-time catalog search technology provider | Link |
| DCR Workforce | 2018-09 | Contingent workforce and services procurement technology provider | Link |
| Simeno Systems AG | 2017-12 | Advanced catalog management technology provider | Link |
| Deep Relevance | 2017-10 | Fraud detection technology provider | Link |
| Riskopy | 2017-05 | Supplier Risk technology provider | Link |
| Trade Extensions | 2017-04 | Sourcing & sourcing optimization technology provider | Link |
| Spend360 International | 2017-01 | Spend data enrichment technology provider | Link |
| Contractually | 2016-01 | Contract control & red-lining technology provider | Link |
| TripScanner | 2015-07 | Travel booking technology provider | Link |
| Invoice Smash | 2015-07 | Cloud accounts payable & e-invoicing technology provider | Link |
| ZenPurchase | 2015-02 | RFP & supplier onboarding technology provider | Link |
| Xpenser | 2013-04 | Cloud expense management technology provider | Link |
Basware – 1 Acquisition
Founded in 2002. Headquartered in Charlotte, North Carolina, USA.
| Acquired Organization | Date | Comments | Press Release |
|---|---|---|---|
| Verian Technologies | 2016-03 | Operational procurement cloud technology provider | Link |
Jaggaer (Formerly SciQuest) – 4 Acquisitions
Founded in 1995. Headquartered in Cary, North Carolina, USA; acquired by Accel-KKR private equity firm in May 2016. Accel-KKR’s majority stake sold to Civen in 2019.
| Acquired Organizations | Date | Comments | Press Release |
|---|---|---|---|
| BravoSolution | 2017-11 | Program Management, Spend analysis, eSourcing, contract management & supplier performance management technology provider | Link |
| Pool4Tool | 2017-06 | End-to-end direct materials procurement technology provider | Link |
| CombineNet | 2013-09 | Advanced sourcing technology provider | Link |
| Spend Radar | 2012-09 | Spend Analysis technology provider | Link |
Ivalua – 1 Acquisition
Founded in 2000. Headquartered in Redwood City, California, USA.
| Acquired Organization | Date | Comments | Press Release |
|---|---|---|---|
| Directworks | 2017-10 | Direct materials procurement technology provider | Link |
Follow the S2P Vendor Stories as They Unfold
Regardless of if you’ve already purchased a Source to Pay system or are “window shopping”, one of the best ways to follow the evolution of these “stories” is to read vendor press releases and industry analyst blogs. Personally, I’ve added a number of sites to my RSS reader for a customized, “newspaper” of Source to Pay news. Although I am biased, I find it interesting to see how the Source to Pay system industry continues to evolve. I’ll share my list shortly so you can follow along!
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How was your S2P system procurement experience? Did you find some vendors better than others at answering this type of “evolution” question? Are there any other product evolution questions that you include in your software RFx events? Let me know in the comments
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Last Updated on March 25, 2021 by Joël Collin-Demers
