Now that Emptoris and Ariba are gone as independent spend management software suite vendors (acquired by IBM and SAP respectively), is SciQuest trying to take their place? The company may indeed have those aspirations, based on its 2011 acquisition of AECsoft for Supplier Information Management (SIM), Supplier Diversity, and Sourcing Technology, and the recent 2012 acquisition of Upside Software for its leading Contract Management capabilities. Most recently, SciQuest acquired Spend Radar LLC, a rapidly growing provider of easy-to-use and flexible spend analysis software.
SciQuest will still have to fill out its burgeoning portfolio, and it will take time to integrate the offerings effectively. There are some indications that AECsoft was “a bag of spanners,” which SciQuest is still grappling with. Still, I think that Spend Radar will be a great fit owing to its similar culture. This is not necessarily a game-changer move, but rather a great and sensible bolt-on. Spend Radar is a relatively good cloud-based company—it has a solid traditional model and business, and sizeable professional services—but it could not scale on its own in the long run. SciQuest’s larger muscles can help in this regard, as the vendor is growing quickly but at a rate that is manageable.
It appears that it is business as usual at Spend Radar, with no departures (if anything, the company has an open head count). It was reportedly included in the contract that Spend Radar’s employees weren’t required to move to North Carolina (SciQuest’s HQ). SciQuest actually really likes the Chicago location, since it’s central to its current Boston, Texas, and Edmonton (Canada) hubs. There won’t be a “Spend Radar, a SciQuest company” setup, as all are SciQuest employees now, but SciQuest is reportedly going to keep Spend Radar as the product name for spend analysis, since it has some brand recognition. I don’t believe SciQuest is going to change the name to Spend Director (“Director” is SciQuest nomenclature for its main modules), because the company was impressed with Spend Radar search engine rankings and it doesn’t want to introduce any new terms. (From what I understand, Upside Software hadn’t been marketed to the same extent in this regard, so the renaming of Upside Contract to Contract Director was more logical.)
I think that mergers and acquisitions (M&A) will continue in this highly fragmented market, and hopefully this will stimulate the market and increase uptake of all of the associated services to spend management. While this is still quite an immature market, we are seeing organizations considering more than point solutions, which is an encouraging sign.
It is interesting that SciQuest’s recent acquisitions—Upside Software and Spend Radar—are strategic partners of the sourcing optimization vendor CombineNet. CombineNet claims to not be in a competitive situation with SciQuest, but in fact it complements SciQuest’s go-to-market approach. SciQuest has traditionally focused on industries where CombineNet does not (government, education, healthcare), and should view CombineNet as a strategic partner to move into new supply chain–intensive industries represented by its focus areas, to expand the market footprint. CombineNet will continue to partner with SciQuest to resell and the contract management and spend analytics products to clients as a best-of-breed solution alternative. But, depending on SciQuest’s appetite (and war chest) and CombineNet’s price (and willingness to be acquired), who knows what might happen down the track.
References and Recommended Reading