The Forrester Wave™: eProcurement Platforms, Q4 2019 has arrived. As always, it’s fun to see who the analysts say is “up” and who is “down”. You can access the entire report here.
The Forrester Wave™: eProcurement Platforms, Q4 2019 (with Valuations)
Below is the “money shot”. I added market valuations where they are available.
(Note: Basware and Coupa’s market caps are public. I estimated valuations for Tradeshift, Ivalua, and Jaggaer based on published reports.)
Coupa dominates the report, but two other companies really stand out: Basware and SAP.
Basware
Basware stands out because it has a highly-rated product, but it has a single-digit growth rate and minimal EBITDA. As a result, Basware has a tiny market cap relative to its size. Basware’s enterprise value is less than 3x its revenue, while several other companies in this sector trade for several multiples of that. It’s no wonder that Tradeshift tried to buy Basware.
SAP
Boy, there have to be some pretty upset people in Walldorf. SAP, the inventor and market share leader of e-procurement, ended up in the lowest category, “contender”, in this report. Are there any other Forrester Waves, where the market leader is tied for the lowest rating? Either Forrester is off its rocker, SAP has managed to really destroy its offering or both. I suspect it is a bit of both.
As a former Aribian, it is sad to see this rating of the SAP offering. On the other hand, I remember vividly in May 2001, when Gartner placed Ariba on its “watch list” and stated the following:
Existing Ariba customers should minimise their investment in the company’s e-procurement solution, and potential customers should select that solution only if they are protected from fallout from a possible Ariba acquisition, according to a Gartner report scheduled to be released this week. Gartner has placed Ariba on its “problem watch” list, which the analyst firm reserves for vendors with solutions where the risk of buying the software is greater than the potential benefits, according to a copy of the report obtained by InfoWorld.
Note that Ariba was acquired 13 years later for $4.5 billion. In the meantime, many of the companies Gartner was not worried about went out of business. CommerceOne, for instance, filed for bankruptcy within three years.
At the time I was relatively new to the software industry, so this was one of my first exposures to the software analyst world. It was such a ridiculous statement at the time and so laughably wrong, it forever made me take analyst reports with a grain of salt. Do the same with bloggers, of course!
A great history lesson Bob … I could not help but opine here too.
My view: it was a good acquisition for SAP even if Forrester is getting prickly based on subjective “data”. As for customers that have bought Ariba from SAP or changed vendors, caveat emptor. Shame on those which did not do their homework if they are not as satisfied if they could be. This is preventable with a good selection process!
Agreed. If you are a mid-sized retailer or a large oil and gas company, your criteria for purchasing could not be more different. By excluding vertical providers, they don’t even give you the right vendors to shortlist. But brands are a powerful thing…
Agreed. Now let me challenge you to put your pen to paper on another topic: how would you maximize the enterprise value of Basware given the disconnect between how well it rates and its market cap?
Oooh, great question and one I have wondered about. Tradeshift’s possible acquisition was a good idea. Build a power alley in the Nordics. Might be a nice add for Coupa (just for the multiple arbitrage on SaaS revenue). But it would be atypical. Would also strengthen Jaggaer’s e-invoicing capability, but are they ready to absorb more?