Last week, CDC Software Corporation announced a potential new acquisition in the supply chain sector. According to their press release, CDC “signed a term sheet to acquire a leading provider of on-demand software as a service (SaaS) supply chain management solutions,” which represents “the latest move by CDC Software to expand its growing portfolio of SaaS solutions.” Even though the move appears to be aimed at the supply chain planning or transportation space based on its description, I highly suspect we’ll see CDC become more active in the broader procurement and sourcing sector as well, given that the “transaction is part of CDC Software’s acquisition strategy to increase its maintenance and SaaS recurring revenue to about 70 percent of total revenue over the next few years.” Simply put, organic growth rarely comes that fast.
Late in 2009, I wrote a post questioning whether CDC Software would target the buy-side applications. Clearly, I was on to something here, but where should CDC expand next if they’re interested in the broader procurement and sourcing market? I would suggest four areas of key interest: spend analysis, sourcing, supplier management and P2P. All three areas are logical beachheads to expand and there are multiple options in each area to consider for acquisition. Moreover, each has proven out a successful business model in SaaS already (and some, like supplier management, are dominated by a SaaS business model, with what Spend Matters estimates is SaaS market penetration over 90% compared with installed or single-tenant hosted models)…
