Perhaps no recent incident better reflects the current landscape for procurement technology than the announcement in November that JAGGAER plans to acquire BravoSolution. This is the perfect illustration of a technology area in the throes of assertive merger and acquisition (M&A) activity.
With the acquisition of Puridiom by BravoSolution in 2016, the merging of JAGGAER with Pool4Tool in June and now this latest acquisition, we are presented with a fast consolidating market.
The principal driver for this M&A activity was the push by specialist providers to increase the number of work activities their solution could cover. With Procurement Leaders upcoming technology report suggesting that 57% of procurement teams are targeting a single global solution for their procurement processes, in comparison to best of breed or teams being free to choose, this push is understandable.
However, in the case of the JAGGAER–BravoSolution tie-up, this doesn’t seem to be the main consideration. In fact, it seems that the activities their technologies are most frequently deployed to support overlap significantly, with both solutions focusing predominantly on eSourcing.
The focus of the acquisition, instead, seems to be to tap into the widely different client bases for both providers, and the potential to expand into a larger range of vertical markets. BravoSolution has a large body of public sector customers, and identified construction, utilities and oil as target areas, while JAGGAER has a strong presence among pharmaceutical and discrete manufacturing companies.
The drive to provide both direct, and indirect, procurement for a wider range of verticals seems to be the principal vision underpinning the move.
For teams currently using one of these firms, the takeover is bound to have implications during the merger process. Competitors quickly jumped on the opportunity to raise concerns around JAGGAER’s ability to integrate its many acquisitions into one synchronised solution,, with SynerTrade announcing a ‘safe passage’ for all BravoSolution customers. After all, the speed of inorganic growth for the company has brought some speculation that there may be difficulties ahead.
Having acquired BravoSolution, POOL4TOOL and in previous years; Spend Radar, Upside Software and CombineNet, it may face difficulties in bringing all its components together to develop a synchronised, integrated solution. With some competitors offering fully integrated single-code base solutions and presenting this to be a key point of differentiation- could this issue be further thrust into vendor comparisons?
What does this all mean for procurement teams?
On the surface, the main consideration will be the elevation of JAGGAER to a serious competitor among industry behemoths, such as SAP Ariba. In a press release about the acquisition, the company claims it will boost the company to the second largest procurement technology vendor by revenue. With BravoSolution’s customers primarily based in Europe, and JAGGAER’s significant US customer-base, the reach of the newly-formed firm in two key procurement technology markets is one to watch.
But, more interesting is the focus the merged company will bring to industry verticals. As the vendor market has shifted towards SaaS cloud provision, customisability has reduced and even with configuration, some procurement teams feel the technology doesn’t really suit their industry-specific requirements. The growth of JAGGAER provides a counterweight to this shift, recognising the need to focus in on industry needs - will other vendors follow?
This article is a piece of independent writing by a member of Procurement Leaders’ content team.