When a company goes through the due diligence process looking to acquire another organization prior to the signing of a definitive agreement or announcement, it typically has a code name for the project. Historically, the suitor uses the first letter of the target's name as the start of the cipher that will stand in its place. In the case of Ariba, SAP used the internal code-name "angel" when discussing the deal. But whether or not Ariba proves to be SAP's true benevolent procurement and supplier network seraph, mediating network transactions and more between the heavens and the ground in the cloud, remains to be seen.

SAP shared on their analyst call that Ariba is currently the world's largest network for "buyer/seller collaboration" bringing "instant access to a network of 730,000 companies [which] is expected to grow to 1 million companies in 2012." Yet Ariba and SAP are not alone in the network game. There are a range of supplier networks and invoicing network connectivity providers in the market, ranging from SAP partner Hubwoo (it remains to be seen what role Hubwoo will play for Ariba going forward following the close of the Ariba transaction), Basware, Oracle, OB10, Transcepta, Pagero, Rearden, Coupa, ADP (oil and gas specific), Tradeshift and many others with varying degrees of capabilities and business models. In addition, on the EDI-side of the equation, GXS (which has broader ambitions and capabilities than what it is most known for) and IBM/Sterling also add to the collective network competitive environment.

[More]

Please excuse our back-of-the-napkin math, but while we're waiting on hold to join the SAP/Ariba analyst call, we thought we'd share some quick arithmetic on SAP's recent cloud transactions.

SuccessFactors
2011: 1,578 employees, sales $327.9M - $208K per employee
SAP paid $3.4B -- 10.4X revenue or $2.15M per employee

Ariba
2011: 2,432 employees, sales $443.8M - $182K per employee
SAP plans to pay $4.3B - 9.7X revenue or $1.77M per employee

SAP
2011: 55,765 employees, sales $19,116.3M - $343K per employee
At the same 10X evaluation SAP would be worth $191B -- however today their market cap is $70B

[More]

Moments ago, SAP announced it would acquire Ariba. According to the news, "SAP AG and Ariba announced that SAP's subsidiary, SAP America, Inc., has entered into an agreement to acquire Ariba for $45.00 per share, representing an enterprise value of approximately $4.3B ... The Ariba board has unanimously approved the transaction." SAP is funding the transaction from "free cash and a €2.4B term loan facility." Further, "The transaction is expected to close in Q3 of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions ... The transaction is expected to be accretive to SAP's non-IFRS EPS in 2013."

With the acquisition announcement, it's clear that SAP is playing for cloud-keeps in the business applications space, even if Ariba represents a source-to-pay provider that ported its CD business to a SaaS model. Coming on the heels and post-merger integration of the SuccessFactors transaction and the internal SAP cloud team realignment, the Ariba news will no doubt be a surprise to many in the field. While we will analyze the solution and product synergies of the announcement throughout the next few days, there is significant overlap in the solution base between the two providers, and still, a number of holes that SAP will have left to fill (e.g., advanced sourcing/optimization).

[More]

Last week, ISM announced the appointment of Thomas Derry as its new CEO, effective July 30th, 2012. Derry currently serves as VP and COO of a similarly sized organization, the Association for Financial Professionals. According to ISM, "in his role with AFP, Derry is responsible for strategic planning and development, including U.S. and Canadian membership organizations and two wholly owned, for-profit U.K. subsidiaries. He has experience in all organizational functions, including advocacy, finance, human resources, sales, product development, publications, certification, education and training, conference production and marketing. Prior to joining AFP in 2003, Derry was with LexisNexis Group in Dayton, Ohio."

Spend Matters' Peter Smith and Jason Busch had the chance to interview Derry shortly after the news was announced. Peter, incidentally, is a former chairman of the Chartered Institutes of Purchasing and Supply (CIPS), in the UK, which is increasingly seen as a "competitor" -- if you can label associations as such -- to ISM on the world stage, outside of the home market for each. In a multi-part interview series, we'll share what we learned from Derry. Our net impression is that he is a worldly thinker who will take a more activist stance for the profession and ISM's membership base in issues pertaining to trade, policy and the like.

[More]

This is a headline I'm sure that many of BravoSolution's competitors do not want to read. According to sources in the industry, Mickey North Rizza is joining BravoSoluton in an executive role. In our view, Mickey was the last of the industry analyst greats in the procurement market. A great thinker, strategist, writer and speaker, the entire industry turns to her opinions. Moreover, those who know her know what a great person she is at the core. The Gartner/AMR client base's loss, however, is BravoSolution's -- and thereby Bravo's customers -- gain. In the coming weeks, it's our ambition to share more about what she'll be up to in the new role, including, we hope, having an active voice on Spend Matters from time to time.

[More]

In the past few weeks, we've hinted at how the times will be changing significantly at Spend Matters as we introduce an entirely new, research-driven chapter in our history. In the coming weeks, we will be launching a members-only community and research service with access to the most informed and independent procurement and related supply chain information, insight, analysis and opinion available globally. In previewing what is to come for practitioners and our overall approach, we provided a bit of higher-level detail in our last post on the topic. Flipping over the equation, for solution providers, our mission is to drive a new level of opinion, knowledge and awareness to help organizations better understand their customers, the market and competitive landscape, develop offerings, position and sell effectively, identify and understand potential partners, and generate revenue.

[More]

Please click here for Part 1 of this post.

Looking at functional enhancements, Coupa has very specific goals in terms of what it intends to build. For example, take the area of contract management. Coupa does not plan to ever be "an Upside," in Rob Bernshteyn's words. "We won't go down to the level of creating n-tier templates and authoring tools as they do," he remarked. But they do want to be the "Google drive or Dropbox of contracts...providing metadata around individual agreements, alerting and contract management capability that is pre-integrated into requisitioning to drive compliance and POs specifically based on contract terms." If someone needs true contract management depth -- for legal authoring and redlining, for example -- Rob suggests that their partners like Emptoris will always be happy to take a call. But Coupa will deliver contract management as a means to further the capabilities of its core P2P capabilities.

[More]

Earlier today, Coupa announced it had raised $22 million in financing -- you can read our first take on the news here -- in its latest capital raise. Based on the valuation and size of the round, there's no question that investment interest in P2P is alive and well. We hope this round will provide a much-needed jumpstart to the sector for VCs and private equity firms to invest in innovative providers across the eProcurement, e-invoicing and supplier network areas. But what are the most important takeaways from Coupa's sizeable round?

[More]

Earlier today, Coupa (the fastest growing eProcurement software provider in net new customer wins by our calculations, including Ariba, SAP, Oracle and others), announced that it had raised $22 million in its latest round of financing. According to the announcement, the Series E financing round was "led by new investor Crosslink Capital with existing investors Battery Ventures, BlueRun Ventures, El Dorado Ventures and Mohr Davidow Ventures also participating." While terms of the round were not disclosed, "the latest valuation was a very significant multiple of previous rounds," according to the announcement.

Coupa's momentum undoubtedly contributed to the high valuation and multiple. At their customer roadshow in Chicago last week, Coupa shared that year-over-year bookings are up over 180% and platform usage has increased by over 150%. But how will the new funding round support Coupa's strategic direction? Spend Matters put the spotlight on Coupa's CEO, Rob Bernshteyn, earlier in the week. We asked him some pointed questions around how and where he intends to spend (or not spend) the war chest, including planned areas of product expansion.

[More]