Yesterday, BravoSolution, a supply management solution provider that offers a suite of strategic sourcing solutions, announced that it had acquired Puridiom, a small, but longstanding solution suite provider specializing in procure-to-pay (“P2P”), in a transaction that closed on August 1. Financial terms of the transaction were not announced. The deal advances Bravo’s ongoing reach into the procure-to-pay market that began several years ago via partnerships with Basware in 2013 and then Verian in 2015 (Bravo says it will continue the partnerships with the combined Basware-Verian company). As Bravo’s CEO, Jim Wetekamp, told our team in an interview about the acquisition, “The Puridiom deal springboards us into the full source-to-pay, single, integrated solution market and is a big step for us.” All Puridiom principals have joined the Bravo team and Bravo is now working now to integrate the Puridiom staff and expects that it will release its first integrated Bravo-Puridiom solution (focused on eProcurement: requisition-to-order) as part of a BravoAdvantage solution suite release in Q1, 2017 (for a marriage of two streams – upstream and downstream – as shown in this article’s picture). This will be followed by a second release targeted for mid-2017 which will include eInvoicing capabilities.
The Players: BravoSolution and Puridiom
BravoSolution is a provider of strategic procurement solutions and services with 600 global customers and reported revenue in 2015 of €79.6 million. Readers of CPO Rising should be highly familiar with Bravo, via its sponsorship of this site and its strong presence in the sourcing/procurement solutions and services marketplace. Bravo offers an end-to-end strategic sourcing solution suite, “BravoAdvantage” (click the link to read our recent assessment of the suite) that focuses on supplier value and savings management. Solutions can be cloud-based (SaaS), installed on-premise, or on virtual workstations, and are modular in that customers can add on applications as they go. BravoAdvantage encompasses all four “pillars” of strategic sourcing today: spend analysis, sourcing, contract management, and supplier management. In past briefings, the company has highlighted “supplier value management” as a core strength. Bravo also offers a full range of services to support procurement operations including strategic sourcing, process, technology, and advisory services.
BravoSolution operates independently, but is majority-owned by Italmobiliare, an Italian-based investment/holding company. When Bravo executive, Jim Wetekamp, was appointed CEO in 2014, the company began the process to centralize both its operations and brand globally while also building out and prioritizing its technology suite and capabilities. Today Bravo is one of the unique companies in the market that offers a strong blend of technology and services in support of its clients’ strategic procurement needs.
Puridiom is a privately-held company that was founded and managed by industry veteran (and visionary), Jesus Ramos, its CEO. Puridiom offers a suite of solutions with specialization in eProcurement and AP automation. Puridiom is one of the smaller supply management solution providers in our space, but its size belies a core technology and IP set that is far more advanced than is typically found in a company of its size. Puridiom has a deep expertise in procurement technology (particularly eProcurement) and a strong understanding of the technology needs of procurement organizations, developed over decades of work in the space.
Puridiom is a small supply management software company based outside of Harrisburg in central Pennsylvania. While the executive team offers decades of experience in the procurement technology space, the company was self-funded and owner-operated. As such, Puridiom never achieved the true scale across the different areas of its operations that was needed to make it to the next tier in the market. This was, by and large, a conscious decision, as Puridiom had multiple opportunities over the years to take outside money that could have been used to fund growth.
Ardent Analysis
In the Spring of 2015, Ardent Partners strongly recommended to each company that it pursue partnership talks with the other company, going so far as to recommend a potential acquisition by Bravo. As part of Ardent’s services and ongoing relationships with each company, in the intervening months, we held briefings and discussions with executives from both companies about the different market opportunities that existed for each and continued to promote the idea that some type of Bravo/Puridiom union made sense. The path to the altar was not direct, but our reasoning behind why this marriage could work then is why we are fans of the deal today – simply put, Puridiom was a small, undiscovered treasure with a core technology that could, with the investment, reach, and expertise that Bravo possessed, scale significantly in a relatively short period of time. Time will tell, but at the outset, we believe that Bravo’s acquisition of Puridiom will prove itself to be one of the industry’s better acquisitions in recent years and that it will generate a very strong ROI for Bravo. Certainly the company will need to execute well to make its returns and a big key to making the deal successful will be the successful deployment of an integrated source-to-pay suite that can gain market share within Bravo’s current customer base with the early releases. As Wetekamp told us, “Our strategy is to be a leader in strategic procurement, which definitely entails providing a full footprint from upstream to downstream and providing more value through the delivery of technology. This deal gives us a greater opportunity, from a functionality standpoint, to achieve that. It also provides an opportunity to engage more fully into partnerships with consultancies that traditionally do more work with downstream providers.”
From both an organizational and solutions standpoint, the deal is highly synergistic. Despite being companies of very different sizes and compositions, Puridiom has a small, adaptable staff that should find a nice home within Bravo and its core solutions complement the current BravoAdvantage offering. We’ll continue with our analysis and general thoughts on the deal in a bulleted (but not entirely linear) format, as well as some of the opportunities and risks that Bravo will now face:
- Bravo has long-professed an interest in bringing a fully-integrated source-to-pay suite
- Bravo’s partnerships with Basware and Verian (which Wetekamp says will be maintained) are, nonetheless, partnerships. What happens if Basware buys a strategic sourcing company like Scanmarket (click to read our recent update on the company) or is acquired by a company like IBM (two reasonable possibilities, in our view)?
- Owning a P2P solution suite allows Bravo to better control its own solutions destiny
- Market consolidation, including the acquisitions of downstream specialists b-pack by Determine and Verian by Basware, left fewer potential P2P companies for Bravo to acquire
- The cost of the Puridiom acquisition makes it a relatively low financial risk for Bravo and should provide the Bravo executive team with a longer time frame over which to assess the overall success or failure of the deal; it will, nonetheless, be important to gain traction with the new solution in 2017
- There is no single customer today that uses Bravo for upstream and Puridiom for downstream; this could be explained by many factors including differing levels of sales and marketing prowess and organizational focus; it could also indicate that Purdiom’s solutions will need a significant amount of investment to make them “market ready” for Fortune 500-type companies.
- Ardent Partners believes that many of Bravo’s European customers are similar (in size and relative complexity) to the US mid-market procurement departments that Puridiom serves today and will provide an early indication of how complementary the solutions really are or the level of effort required to make them so
- The cost of the Puridiom acquisition, even in the aftermath of a relatively expensive (by traditional measures) Verian acquisition, will be significantly less than the cost of building a new eProcurement and AP solution set from the ground up
- The new, integrated solution will be significantly more advanced and market-tested than any newly developed eProcurement solution version 1.0 that Bravo could build in the short-term
- Bravo believes that the similarity in core architectures of the two solution suites is enough to enable a “lift and shift” transfer of Puridiom’s code into Bravo’s format
- The reason for the current Puridiom solution gaps can be more generally explained as resource and investment constraints and not a lack of understanding current market requirements; the Puridiom team is very aware of the gaps and constraints in the current solutions and what needs to be done to improve them
- The core Puridiom solutions will benefit greatly from the attention of a large, experienced team with sizable (at least by comparison) resources and deliberate processes
- The entrepreneurial tendencies of the Puridiom team that led to the development of a very broad set of solutions will need to checked for now so that immediate energies can be concentrated on building out the core solution req-to-order, workflow, supplier management, and AP capabilities first
- Deep product knowledge of the Puridiom solutions is held by a very small number of people. Accordingly, it will be important for Bravo to maintain access to the Puridiom product experts and Jesus Ramos, in particular, in the near term or at least until a full knowledge transfer has been accomplished
- The Puridiom executives were, by both design and necessity, very hands-on managers. These executives will play a major role in maintaining and upselling the current Puridiom customer base
Final Thoughts
The supply management solutions market is very different than the one I entered more than 16 years ago – cloud technology has played a big role in that change, as has the development of a large number of supply management solutions that are simply more robust, usable, and affordable than ever before. Along the way, the compression of functionality among providers in the market and a general desire by procurement departments and enterprises, in general, to simplify their technology infrastructures has made the “suite approach” to supply management increasingly popular (versus a “best-of-breed” approach).
Solution providers have taken notice. One-time specialists like Zycus and Coupa have developed their own source-to-pay suites while others like SAP, SciQuest and Determine have built their suites via acquisition and integration. Bravo’s acquisition of Puridiom is in a similar vein to this latter group and we believe it is a smart acquisition of a highly underrated set of solutions (and executives). The deal also provides a relatively low-cost, and therefore, relatively low-risk way to permanently enter the P2P market. The perceived risk in the deal is that Puridiom’s solutions are untested by large, global, Fortune 500 companies, but the solutions do not have to match that market’s requirements in early 2017 for the deal to be an unqualified success. Ardent Partners expects that, barring missteps, the first release of the integrated solution should work well for many of Bravo’s current customers and be competitive in some new suite deals. And, by maintaining its partnership with Basware/Verian, Bravo buys itself some time for the Puridiom P2P solutions to cycle through several development cycles.
Disclosure: Ardent Partners was involved in market and advisory discussions with multiple executives from both companies prior to the announcement of this deal. Ardent Partners has advised and worked for BravoSolution, Puridiom, Determine, Zycus, SAP, and Basware via ongoing relationships that have extended multiple years. In the last 12 months, Ardent Partners has also performed project-based work for every other solution provider mentioned in this article.
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