News broke earlier this morning that WNS will acquire procurement managed services provider Denali Sourcing Services for a reported sum of $40M. WNS and Denali Sourcing Services are long time partners on end to end source to pay deals, with Denali supporting the source to contract process, and WNS the procure to pay scope. Through the acquisition, WNS formally brings Denali’s capabilities in-house, and can now offer a full end-to-end suite of services.
As regular Art of Procurement listeners and readers will know, procurement outsourcing, and procurement-as-a-service is an area that I am very familiar with (having been both a buyer and service provider), and also an area that I am passionate about. This is a big deal in the procurement services world and so, while the dust is still settling on the press release, I wanted to offer my immediate thoughts:
- This is a good deal for both parties. The combined company can now go-to-market as peers against other end-to-end competitors such as Accenture, IBM, GEP, Genpact and CSC / Xchanging.
- WNS will benefit from access to the strategic end of the procurement value chain, and the area where solutions can be priced on value, not cost. In my opinion, for end-to-end procurement services firms, their upstream capabilities are their true differentiators.
- Denali Sourcing Services will benefit from integrating WNS’ execution capabilities into their client delivery infrastructure. However, how they manage the fine line between marrying Denali’s entrepreneurial spirit with rigorous process will be a key to the long term success of the deal.
- Denali Sourcing Services will be unencumbered by any market confusion over their value proposition. I always felt that the pure breadth of services offered by Denali Sourcing Services’ parent company (Denali Group) made it difficult for the Sourcing Services group to differentiate themselves in the market vs. the offerings of their parent.
This is a win-win deal for both parties, and the obvious culmination of their long term partnership. For WNS clients, there really is no downside. For Denali clients, care must be taken to ensure that the acquisition positively impacts the services they deliver, rather than stifling the flexibility and agility for which they are known.