Numerous acquisitions have taken place in the RPA space over the past couple of years. As we looked at these acquisitions closely in our blog “Is It Open Season for RPA Acquisitions?,” one of the key trends we highlighted was the entry of big enterprise tech product vendors like Microsoft and SAP in the RPA space, and why more acquisitions might follow in the broader intelligent automation space as they seek to build more holistic business transformation solutions.
After augmenting its technology portfolio with RPA through its 2018 Contextor acquisition, SAP is now looking to strengthen its standing in the broader intelligent automation space with its acquisition of Signavio, a company that offers process mining, process modeling, and process orchestration products, among others. While the deal price was not officially disclosed, it is rumored to be around a whopping US$1.2 billion.
This is certainly a strategic move by SAP to acquire a process mining capability that offers huge potential to help enterprises accelerate their process improvement and intelligent automation initiatives. The size of the acquisition further validates the process mining market, which is relatively nascent but continues to grow exponentially. Please see our report titled “Process Mining State of the Market Report 2020” for more details on the process mining market.
Why the acquisition?
SAP has significant penetration in the enterprise software space and possesses a huge volume of rich process data generated by its ERP systems. While SAP has the data, which is indeed the new oil to drive transformation, it lacked the capability to effectively utilize it to deliver process intelligence and actionable insights.
The COVID-19 pandemic has amplified the importance of building resilience and agility into business processes and driven organizations to accelerate their digital transformation journeys. In a quest to provide its customers visibility into their business processes and help them better adapt to changing market dynamics, SAP recently launched a dedicated business process intelligence unit; Signavio’s process mining capability will plug key missing pieces into its portfolio. The acquisition will help strengthen SAP’s value proposition for enabling enterprises to understand, improve, and transform their business processes faster and at scale.
It will also help SAP reduce its reliance on third-party process mining vendors in overcoming key challenges, like lack of process documentation and visibility into the as-is process state, in driving S/4HANA migration for its customers.
What does Signavio bring to SAP?
Signavio was founded in 2009 to address the need for a collaborative approach to process management through its web-based process orchestration solution. Over the years, it launched other products such as process mining. Signavio brings a host of capabilities for SAP to augment its intelligent automation value proposition:
- Process intelligence and management
- Signavio Process Intelligence, the company’s process mining solution, delivers a fact-based approach to discover, monitor, and improve as-is processes. It comes with embedded ETL capability and a cloud-based analytics engine
- Signavio Process Manager, its process modeling product, designs and documents the future state of processes
- Signavio Workflow Accelerator, the company’s process orchestration product, triggers workflows/actions based on the derived insights
- Pre-built connectors and packaged solutions
- Packaged solutions for ERP transformation and S/4HANA migration
- Process-specific solutions like O2C and P2P optimization help accelerate time-to-value realization
- Pre-built connectors for mining Salesforce-based processes
- Cloud value proposition – Signavio’s cloud-based offerings align directionally with SAP’s strategic agenda of driving the shift to the cloud and its vision for its business process intelligence capability
What the acquisition means for the market and other process mining vendors
- Democratization of process intelligence – Considering SAP’s deep penetration in the enterprise application landscape around the world, it is one of the key data sources for process mining solutions. With this acquisition, SAP will deliver process mining capabilities that are tightly integrated with its suite of enterprise applications. Bundling it as part of its RISE with SAP package will result in improved awareness and adoption of process intelligence/process mining, which otherwise is a relatively less mature market in terms of commercial adoption. It will also put downward pricing pressure on other process mining vendors, making it more affordable
- Impact on process mining vendor landscape and partnerships – Several process mining vendors, including Celonis, have strategic go-to-market partnerships and technology integrations with SAP. This helps them identify prospective clients and offer pre-built templates and packaged solutions to their clients to ease adoption. It’s likely that these partnerships will continue, and clients will be given the flexibility to choose, as co-opetition is becoming quite common in the enterprise software space. For example, SAP maintained its partnerships with RPA vendors after the Contextor acquisition. SAP’s business process intelligence could have a stronger value proposition for processes based solely on SAP. However, for processes involving multiple ERP systems, including SAP, third-party process mining vendors will likely have an advantage as they do not compete directly with big tech players and so can invest in solutions across different ERP/CRM systems.
While it could take some time to embed Signavio’s offerings at a technical level within SAP’s Business Process Intelligence suite, it will be interesting to see how well SAP is able to leverage this investment. Making focused efforts to ensure that Signavio, which is a much smaller company than SAP, does not drown in the vast SAP ocean will be critical to achieving the desired success.
This acquisition could also trigger other big enterprise tech vendors like Microsoft, Oracle, and Salesforce to make similar moves, especially with increasing enterprise focus on improving the customer experience and the role of process mining in discovering customer journeys, identifying pain points, and finding ways to address these.