Today, Workday announced the $540m acquisition of a procurement SaaS start-up called ScoutRFP which has created an easy to use request for proposal (RFP) tool for procurement teams. Using ScoutRFP, procurement teams and stakeholders across the business can email suppliers to compete for an opportunity at their enterprise. Scout created a pipeline product which allows procurement teams to track the RFPs and other procurement activity happening across the company. Scout has 240 customers and Workday Procurement has 650 customers, of which half are live now. We know the founders of Scout extremely well, particularly Stan, Alex, and Chris. They did a fantastic job of simplifying an old tired product space (the RFP or the Sourcing Suite) which has been dominated by SAP, Oracle, and the Source to Pay Suites like Ariba, Coupa, Jagger, and Zycus. As you look at the evolution of procurement software, you see the new fast growing enterprise software companies starting to enter. At the Workday Analyst Day, Workday made a commitment to procurement and the Chief Procurement Officer as a similar persona to HR and the Chief People Officer. Workday sees procurement as a natural extension of their financial suite. Scout is a natural acquisition for Workday as Workday does not have sourcing functionality today.
So as a procurement leader, what does the success of ScoutRFP and the acquisition by Workday mean for you?
- Best-of-breed, point solutions provide best experience and ROI for customers. In a market dominated by traditional, tired software, Scout focused on a very narrow use case (the RFP) and listened deeply to customers. Scout developed a very focused solution that did not try to replicate the full source-to-pay which has been the business model for most companies in the space (like Ariba and Coupa).
- Procurement is ready for purpose-built, modern software. SurveyMonkey and Qualtrics leveraged the “online survey” for broad use cases and customer experience management. Scout applied similar software asking questions and bringing multiple parties (stakeholders, procurement, and suppliers) together for procurement. By focusing on specific end users and specific use cases, Scout was able to create tremendous value for both the procurement team and the enterprise overall. Many IT teams would argue that a general purpose solution like Google Docs, SurveyMonkey or Excel is “good enough” for RFPs. We are seeing more and more that the procurement teams see increased productivity and results/savings by using a best of breed solution that is built for the workflows and data of the procurement use case.
- Data is becoming the strategic asset. Driving intelligence from the data within SaaS applications is the BIG opportunity in procurement. Solutions like Scout (and Suplari!) are connecting multiple suppliers and stakeholders, collecting strategic information that can be leveraged to drive strategic long-term value. Today, this data is trapped in spreadsheets, hard drives, and online data silos. Aggregating, cleansing, normalizing and then analyzing this data will drive significant unique intelligence that is not being captured today.
- Purpose built SaaS drives collaboration. One of the key values of SaaS is the ability to drive collaboration across procurement, finance, internal stakeholders, and suppliers. Finance and procurement are ultimately service providers to the business. Both finance and procurement struggle to develop productive relationships with their internal stakeholders and suppliers. SaaS allows multiple users and stakeholders to collaborate to efficiently and effectively drive business outcomes.
The Workday acquisition of ScoutRFP is another example of best of breed, purpose-built SaaS software driving superior outcomes for customers, when compared to the functionality of Procure to Pay suites. It is worth speaking to the pure play, best of breed software as you are thinking through digital transformation.
Congratulations to the Scout, the Workday Supply Chain, and the Workday Ventures teams who are filled with solid, wonderful people!