Workday announced this afternoon that it has entered into an agreement to acquire online procurement platform Scout RFP for $540 million. The company raised more than $60 million on a post valuation of $184.5 million, according to PitchBook data.
The acquisition builds on top of Workday’s existing procurement solutions, Workday Procurement and Workday Inventory, but Workday chief product product officer Petros Dermetzis wrote in a blog post announcing the deal that Scout gives the company a more complete solution for customers.
“With increased importance around the supplier as a strategic asset, the acquisition of Scout RFP will help accelerate Workday’s ability to deliver a comprehensive source-to-pay solution with a best-in-class strategic sourcing offering, elevating the office of procurement in strategic importance and transforming the procurement function,” he wrote.
Ray Wang, founder and principal analyst at Constellation Research says that Workday has been trying to be the end-to-end cloud back office player. He says, “One of their big gaps has been in procurement.”
Wang says that Workday has been investing with eye toward filling gaps in the product set for some time. In fact, Workday Ventures has been an investor in Scout RFP since 2018, and it’s also an official Workday partner.
“A lot of the Workday investments are in portfolio companies that are complimentary to Workday’s larger vision of the future of Cloud ERP. Today’s definition of ERP includes finance, HCM (human capital management), projects, procurement, supply chain and asset management,” Wang told TechCrunch.
As the Scout RFP founders stated in a blog post about today’s announcement, the two companies have worked well together and a deal made sense. “Working closely with the Workday team, we realized how similar our companies’ beliefs and values are. Both companies put user experience at the center of product focus and are committed to customer satisfaction, employee engagement and overall business impact. It was not surprising how easy it was to work together and how quickly we saw success partnering on go-to-market activities. From a culture standpoint, it just worked,” they wrote. A deal eventually came together as a result.
Scout RFP is a fairly substantial business, with 240 customers in 155 countries. There are 300,000 users on the platform, according to data supplied by the company. The company’s 160 employees will be moving to Workday when the deal closes, which is expected by the end of January, pending standard regulatory review.