Workday, a provider of finance and human resources solutions, has announced its intent to acquire Scout RFP for a cool $540 million in cash. For those with a long-time background in the industry, this might at first seem like a somewhat mind-boggling sum for a sourcing provider, bringing back memories of Ariba buying Trading Dynamics in the early B2B sourcing era.
But things are a bit different this time, as Scout is bringing rapid growth, material customer numbers (240+ customers) and material ARR growth to the table (we’ll do a back-of-the-napkin analysis of ARR and revenue contribution later in this series). Moreover, it’s an innocuous way for Workday to target procurement without having to go after “the hard stuff” (another key theme we’ll explore).
So beyond the somewhat shocking number at first, the deal can begin to make sense if you peel the transaction onion. So let’s begin.
As we kick off our analysis in this Spend Matters Nexus series analyzing the transaction, we’ll focus this first brief on providing a quick overview of Scout, graphically explain where it fits in the source-to-pay landscape, explore the provider’s strengths and weaknesses, and then begin to delve into the rationale for the deal from the Workday vantage point.
Later this week, we’ll offer an analysis of the M&A and deal components of the transaction (e.g., estimated multiples), provide deeper insight into the integrations/touchpoints between Workday and Scout, and share an analysis of the impact on the competitive landscape (for competitive ERPs, source-to-pay suites and independent sourcing providers).
Jason Busch serves as Managing Director of Spend Matters Nexus, a membership, research and advisory organization serving technology acquirers (private equity, corporate development, etc.) and CEOs in the procurement and finance solutions marketplace (including contract management, B2B marketplaces/connectivity, indirect procurement, services procurement, direct procurement, commodity management, payment, trade financing, GRC/third-party management and related adjacent sectors).
For full access to this Spend Matters member content:
