It’s THE hot topic of the week.
ORO Labs pulled a rabbit out of the hat on Tuesday, announcing their acquisition of London-based analyst and consultancy firm ProcureTech.
I have to admit, I definitely didn’t see it coming.
But what does it mean for our industry, and what do I think this will bring?
ORO Labs acquires ProcureTech: what do we know so far?
ORO has acquired ProcureTech, and all of ProcureTech’s existing employees (I think it’s about 13) will be part of ORO’s team.
I know a couple of folks at ORO, and they seem pretty positive about the acquisition. It brings extensive procurement and implementation expertise to a team and an organisation that doesn’t have so much of it currently.
We also know that Lance Younger, ProcureTech’s CEO, will stay on as EVP of Alliances & Partnerships and will head up ORO’s operations in EMEA.
Interestingly, a couple of weeks before the acquisition, ProcureTech’s second in command, Michael Rooney, left the company to take up a new role as Enterprise Advisory Lead at Zip. A coincidence? Or did he know what was coming and decided to jump ship?
What does ORO do, and who are their competitors?
ORO Labs is a San Francisco-headquartered orchestration platform, targeting enterprise clients and boasting a Fortune 500 client base. This includes Swiss pharma multinational Roche as one of their first customers.
Their two Founders are ex-SAP Ariba employees, and thus have a deep knowledge of the SAP ecosystem.
ORO’s main competitors would be the other intake and process orchestration platforms, the biggest of whom are Levelpath and Zip, along with ConvergentIS, Focal Point, and then Tonkean (although they’re essentially a point solution) to a somewhat lesser extent.
Other intake solutions, for example the likes of Opstream (US), Pivot (France), and Omnea (UK), I see as playing in a similar space but not as direct competitors. These solutions are more focused on mid-market businesses and have seen the most success in the tech sector.
ORO, on the other hand, appears to be targeting more traditional corporates. These target customers are likely to already be running a legacy tech stack. Given the Founders’ background, any businesses running Ariba would theoretically be a natural good fit for ORO.
What’s in it for ORO?
First of all, let’s explore it from ORO’s perspective.
We know from the press releases that ORO Labs acquires ProcureTech predominantly to leverage their implementation expertise as a consultancy firm, and to take advantage of their footprint in EMEA.
ProcureTech’s operations are in London, and ORO did not have anyone located in EMEA prior to the deal.
Given ORO’s obvious fit with traditional, large enterprises who have a SAP ecosystem, they seem to have a natural competitive advantage to target some of Europe’s largest enterprises. A high percentage of them are running SAP as an ERP, and many also have Ariba as a legacy tech stack.
Through the acquisition of ProcureTech, they are essentially building a moat around the EMEA market before Levelpath – who I see as their most direct competitor – could establish a presence there.
Zip is growing strongly in Europe too, and has some implementation partners already. But would a typical ORO target customer also consider Zip as a solution? I see it as less likely, even though they might include both in the sourcing process.
For me, Zip seems an obvious fit for high growth companies and those who are approaching digital transformation from a greenfield position. They offer intake-to-pay, and as such are more directly competing with Coupa than ORO. Zip’s product could easily be targeted to CFOs as well as CPOs, whereas ORO is firmly in the procurement space.
Whereas ORO sits on top of – and integrates with – legacy tech, Zip is a more standalone alternative to a legacy S2P suite. It’s unlikely that a large enterprise organisation running Ariba would rip it out completely and replace it with Zip. Ariba has more features and functionality. Zip is much more modern from a UI/UX perspective, but not as feature-rich.
With the acquisition, it’s hard to argue against ORO becoming the dominant player in EMEA. Zip will likely gain market share too, but in different types of businesses. Will Levelpath expand into the EMEA market after this move? It remains to be seen.
What’s in it for ProcureTech?
While the advantages for ORO are clear, it’s less clear to me what ProcureTech as a business will get out of this deal.
No doubt it’s a great exit for Lance personally as CEO. It wouldn’t surprise me if he bows out of ORO after 12-18 months to take early retirement or to pursue a new venture.
What I find a bit puzzling is that seemingly the most valuable ProcureTech assets are not part of the deal.
ORO has essentially acquired ProcureTech for their implementation expertise, EMEA footprint, and, no doubt, Lance’s own personal network of CPOs, consultancy partners and procurement tech Founders.
As a business, ProcureTech was primarily known for their other ventures. Their Digital Accelerator program seemed to be gaining traction, and was well respected by those startups I spoke to who were part of it.
Surely this was the crown jewel, along with the ProcureTech 100 list and the sponsored content arm of their business?
While there are other competitors out there that do certain aspects of these – including ourselves – from the outside in it appeared to be a profitable and successful business.
Digital transformation consultancies are plentiful. Respected and independent analyst firms? Not so much. Why would they voluntarily give this up? It doesn’t make sense to me.
So, I guess I’m a bit confused as to what ProcureTech as a business gets from the deal, beyond a successful exit for Lance as CEO.
What will happen to ProcureTech’s other business streams?
The trail goes a bit cold here.
I was at an event last week in São Paulo where Dr. Elouise Epstein was speaking, and we got the chance to talk briefly. It seems she was also in the dark, and only found out shortly before the acquisition was announced.
Lance has confirmed a couple of times in response to comments and posts on LinkedIn that they will no longer pursue the ProcureTech 100, the Accelerator, and the sponsored content collaborations with other procurement tech providers.
They also had the SOURCE, which is essentially a (gated) direct competitor product to our own (not gated) Software Finder database. Likewise, we assume that this will be mothballed for now.
It would clearly be a conflict of interest here to pursue these under ORO’s ownership.
So, what happens to these? Does Lance own the rights to them? Or has ORO acquired these assets too?
This is the part where I suspect we will learn more over the coming weeks or months. Will there be a buyer for these? Only time will tell.
For now, any discussion of this is pure speculation, which I don’t want to get into.
As Pierre Mitchell from Spend Matters commented earlier this week, it could slot in nicely within DPW’s ecosystem. His other suggestion – that Kearney may buy it because of the Dr. Epstein connection – I personally find less likely.
Like I said, I’m not going to speculate further. It’s certainly an interesting topic for conversation over a beer at conferences and events though!
What next?
2025 is definitely an exciting year so far in the procuretech space. I expect there will probably be more, unexpected announcements and acquisitions in the coming months.
For now, like you, I’m going to grab my popcorn and see how this one plays out.
