And no amount of M&A is going to change that.
- 1. There are still lots of problems software does not address
- 2. No provider can address everything, even with a narrow functional focus
- 3. Benefits only come from integration, not acquisition
1. There are still lots of problems that software does not address.
Software is simply automation of process by way of (mathematical or logical) algorithms. It is not intelligent (despite claims of AI supporters to the contrary), cannot sense the problems you need to solve, and cannot tell you what you are not doing outside of the process it was coded to support.
For example, in spend analysis, it cannot tell you what spend to look at, how to slice and dice it for unidentified opportunities, and where the functionality is lacking. It can identify trends, indicate what processes worked in the past to take advantage of those trends, but cannot identify any new, unknown, variables that could prevent those processes from working again.
2. No provider can address everything, even with a narrow functional focus.
There are at least half a dozen pure-play best of breed providers in pure spend analysis, and these follow half a dozen pure-play best of breed providers in pure spend analysis that were recently acquired, and all have unique capabilities. Thus, when there is still no provider that does it all, and still so much innovation to do in each narrow functional domain, it’s obvious that S2P Nirvana is still a long, long way off.
3. Benefits only come from integration, not acquisition.
Without integration, there are no more benefits than each solution had on its own. Just because the two solutions are now owned by the same provider does not mean there is any benefit besides potential volume-based cost leverage (if the provider can be persuaded) or more staff for additional services support. Benefits come from simplified and expedited processes, which generally only come from smooth integration, and, sometimes, even absorption of a smaller product into a bigger one.
In other words, S2P Nirvana is a long way off and M&A isn’t going to change that, so while the M&A train is going full steam ahead, it doesn’t mean it’s going to get you to your destination any faster.