SHARING THE BURDEN
New regulations and global uncertainty are reviving corporate focus on payment factories and in-house banks.
As companies look further outside their borders for new growth and increased regulation makes tracking cash flows even more crucial, interest in centralizing and standardizing payment flows is growing. Depending on the company, this could mean implementing a payment factory, an in-house bank and/or a shared services center. A payment factory, as the term implies, generally refers to “centralizing payments through a single hub,” notes Andrew Owens, senior vice president of enterprise payments with SunGard AvantGard. The objective typically is to drive transaction efficiency by standardizing processes and eliminating redundancies.
Venture capitalists are still investing in flashy Internet start-ups, but the "Next Big Thing" is more likely to be a maker of humdrum Internet plumbing for businesses.
The Wall Street Journal's third annual ranking of the top 50 venture-capital-backed companies shows a crop of contenders that overall are focused less on online consumers than in years' past.
Contract management as we've historically looked at it has been a stand-alone sector of the procurement market. It's also been stand-alone of procurement, for that matter. When focused on legal and/or sales as the target users, it requires a number of key areas of capability coverage in terms of vendors. In our own analyses for clients in contract lifecycle management (CLM) evaluations, these have included discrete capabilities in areas like authoring/drafting, clause scoring/clause libraries, clause analytics, workflow and recommendations, broader analytics, basic negotiations, approvals/workflow, compliance, monitoring, administration and broader systems integration. Systems integration alone, especially for P2P, direct and services procurement, has been a major area of integration in some of the more customized instances of CLM software we've seen.
Coupa 8 was a featured "Product of the Week" in Network World magazine.
Key features: Coupa 8, which includes new modules - Coupa Smarter Contracts and Coupa Invoicing, gives customers further insight into overall spend, so they can reduce costs and directly impact the bottom line. More info.
September until the end of the year is traditionally a time of increased business activity, with 47% more corporate events and large business deals taking place during this timeframe. With this comes an increased strain on accounts payable departments and those trying to reconcile expense claims during a time of increased travel and activity. T&E expenses are still an area beset with problems – from lost receipts, accusations of favouritism to outright fraud. On top of this, there’s the added issue of employees claiming that they simply "didn't know" whether they were able to claim for certain items or not, so just included them amongst their other receipts and hoped for the best. And this is common across many organisations - clear knowledge on what is a legitimate expense claim, and what isn't, an issue confirmed by a recent report by Capital One, that up to 45% fail to make any claims, at an average personal cost of more than £350.
When Kristen Lampert took over the corporate-services department at Ziegler in 2010, she couldn’t afford to waste time and effort on inefficient processes. The unit, responsible for managing logistics, purchasing, and events for the specialty-investment bank, had been downsized to three full-time employees, yet all of Ziegler’s approval and bill-paying processes were paper-based.
Yesterday, Coupa announced that it would soon launch Release 8, making the latest version of its cloud P2P application suite available on September 14th. Two members of the Spend Matters team have been briefed on Release 8, but we have not yet seen the new functionality and enhancements outside of screen shots, so we'll withhold our detailed commentary until we've had a chance to play in the tool sandbox a bit.
Determined to continue to build on their existing platform and offer an extension into several key areas of an organisation's business function, Coupa has announced the launch of Coupa Release 8. This includes major enhancements to the Coupa platform, mobility enhancements and two new core capabilities: Coupa Smarter Contracts and Coupa Invoicing. These updates give customers further insight into their overall spend, so they can reduce costs and directly impact the bottom line.
by Andrea Hayley
The Department of Justice contacted BravoSolutions about three to four weeks ago as part of its second request investigation of SAP's (NYSE:SAP) proposed acquisition of Ariba (NASDAQ:ARBA), said a company executive. Paul Martyn, vice president of marketing for BravoSolutions said the Milan, Italy-based Ariba competitor submitted a response to the agency about one week ago.
The USD 4.3bn deal was announced 22 May and is projected to close in 4Q12. The closing date was extended from 3Q12 after the companies announced they received a request for additional information from the DoJ on 3 July.
Martyn said it was his understanding that “at least a handful” of players in the business networks industry had also received requests for input from the DoJ.
Ariba is the largest player in the business network space. The Sunnyvale, California-based company offers a full suite of services which include connecting buyers and sellers via a cloud-based e-procurement service then completing the transaction by linking the purchase through a firm’s accounts payable. SAP is among the largest players in the business enterprise software space.
A SAP spokesperson declined to comment on the proposed transaction's impact on the market while it is still being discussed at the DoJ. Ariba did not respond to a request for comment.
Speaking to this news service, Martyn and four additional Ariba competitors said the combination of SAP and Ariba is expected to strengthen the cloud-based, procure-to-pay market for business-to-business transactions. As such, each of the competitors said they viewed the proposed deal positively.
It could not be learned whether SAP’s main competitor, Oracle (NASDAQ:ORCL), has been contacted by the DoJ. Although, each of the Ariba competitors noted the rivalry between the two companies. Oracle declined comment.
SAP's acquisition of Ariba for 9.8x the company's 2011 annual revenue serves as a concrete data point for valuing spend management companies, said Coupa CEO Rob Bernshteyn. San Mateo, California-based Coupa is a smaller, up-and-coming competitor to Ariba.
The deal also serves to increase the visibility and attractiveness of networks in a business context, said Hubwoo (HBW:EN) Chief Marketing Officer, Rinus Strydom. The France-based company, which competes with Ariba, has offered its network exclusively to SAP for four years and has a historic relationship with the German company dating back 10 years. Strydom declined to comment on whether Hubwoo had been contacted by the DoJ.
Steve Muddiman, senior vice president of marketing for Helsinki-based Basware, said he too believes the proposed SAP deal validates the business network market as well as the potential for more consolidation in the industry.
Muddiman said Basware, another major competitor of Ariba, had not been contacted by the DoJ as of 20 August. He did, however, note that Basware was contacted on 31 July by the UK Office of Fair Trading for input on the merger.
Since the announcement of the proposed deal, Tripp Shannon, COO of Perfect Commerce, said the company has been invited to bid on more deals as firms appear to be gravitating toward competitors as they wait and see what SAP will do once it acquires Ariba. Shannon described Ariba as the main US competitor of the Newport News, VA-based company which develops software that streamlines digital business-to-business processes.
Bernshteyn said firms do not always want to work with large companies like SAP or Oracle. According to the executive, Coupa beat out competitors, including Ariba, in 9 out of 10 contracts it vied for in the last quarter.
“We are very, very excited about [the deal]…we have a huge market in which to create business,” Bernshteyn added. He said Coupa had not been contacted by the DoJ as of 16 August, adding that he does not see antitrust being an issue for the deal. An antitrust lawyer with industry experience also said this deal does not seem like an obvious candidate to trigger competition concerns.
While the competitors interviewed by this news service do not appear to be concerned about the proposed deal, some acknowledged that the transaction may raise eyebrows at the DoJ due to the size and dominant position of SAP and Ariba in their respective markets.
The agency may take issue with SAP's commercial influence due to its large market position as well as the possibility for customers to be made captive, said Martyn. In an investor presentation on the proposed Ariba deal, SAP notes that its customers make up a majority of the global 2,000 companies that spend USD 12tr with their suppliers.
If SAP were to require customers to buy or bundle Ariba’s network usage with its products, Hubwoo’s Strydom said this too could raise antitrust concerns.
According to Andrew Bartolini, Managing Partner & Chief Research Officer at Ardent Partners which specializes in supply management research and promotion, the proposed deal has some areas of overlap.
Bartolini highlighted that SAP first offered e-procurement cloud solutions through its 2006 acquisition of Frictionless Commerce. While it had partnered with Hubwoo and others to expand its cloud offerings, SAP's acquisition of SuccessFactors in early 2012 truly brought the company into the cloud space, a research paper published by Bartolini notes. Ariba also offers an installed on-premise software service which overlaps with SAP's service.
Despite pockets of concern, Bartolini said “my gut tells me that this deal is fine, and there is enough competition," underscoring that procure-to-pay is a fragmented and not very mature market.
According to Martyn, Ariba's has only penetrated about 5% to 10% of the potential business networks market even with its dominant position. Strydom and the four other competitors said there is room for two or more networks per customer given companies prefer more than one sourcing option to mitigate risk. Smaller firms offer a variety of different services and often lower fees, several of the competitors noted.
Moreover, Bartolini explained that there are still a significant number of single application deals in which firms adopt one part of a procure-to-pay network, such as e-procurement, contract and spending analysis solutions, or accounts payable rather than the entire suite. This, he added, fosters competition in the marketplace and minimizes the chance that SAP would be able to dominate the market after acquiring Ariba. Strydom estimated that there are about 55 to 75 small to medium-sized network and e-procurement companies delivering services in markets which are often defined geographically or vertically.
Martyn predicted the deal "is likely to be approved, but there may be a red herring in there."
Oh, you’re doing that already? And you’re wasting time managing accounts payable every day, tracking down approvals for purchases you don’t understand? Here’s how small companies can tackle purchasing inefficiencies.
Mark Verbeck, like many CFOs, was starting to feel like the bad guy, the guy who always said no.
When he started working at Blade Network Technologies as CFO in 2008, the company, which makes networking software that lives inside blade servers, was a 50-person operation. Like many smaller businesses, it relied on tribal knowledge to manage its spending: everyone knew (or believed they knew) what everyone else was doing, and when anyone bought anything, everyone knew (or thought they knew) whether it made business sense.