May 8, 2012
Last week saw news that yet another top GRC software vendor has been acquired, following in the footsteps of Paisley, Archer, OpenPages, among others. BWise has always been an impressive vendor in the GRC space, so first off I think congratulations are in order for both parties.
That said, if you didn’t foresee NASDAQ getting into the GRC software space coming, don’t beat yourself up… after seeing the large technology vendors and content providers enter the space over the past 3 years, this wasn’t an obvious move. But looking a little deeper, NASDAQ’s move makes sense for a couple reasons:
– NASDAQ’s target market cares about GRC. NASDAQ lists its target roles as marketing/corporate communications, board and corporate secretary, investor relations, and corporate finance. All of these roles have a vested interest in better controls, stronger risk management practices, and improved corporate governance.
– BWise has always focused on the “G” of GRC. More than any other of the top GRC software vendors, BWise targeted governance professionals with capabilities such as entity management.
– There are immediate integration possibilities. Among NASDAQ’s corporate solutions are products for board management, whistleblower reporting, and XBRL filing. BWise has a host of capabilities (issue management, process management, policy management, reporting, etc.) that could quickly add value to implementations of those products.
But, as always with a deal like this, both parties will have to show the market how they will address some key questions:
– In this new home how much will BWise be able to concentrate on GRC domains not core to NASDAQ’s target market? BWise has invested substantially on technology to help customers with operational risk management, sustainability management, IT governance, and a long list of other domains. Some of these may ultimately fit into NASDAQ’s long-term strategy (if not sustainability management, CSR management is important for many listed companies), but we will have to wait to see how much additional investment NASDAQ is willing to make developing these peripheral areas further.
– What resources does NASDAQ bring to the table for BWise? Compared to the other big acquisitions in the space, it’s more difficult to see how NASDAQ’s available resources will add value to existing BWise customers (Thomson Reuters brought content to its Paisley acquisition, IBM brought analytical capabilities to OpenPages, EMC brought product integrations to Archer, etc.).
– How does BWise’s business model change? BWise historically has been good at helping clients with large, sophisticated GRC implementations involving stakeholders from throughout the business. Given everything I’ve covered so far, does BWise focus more specifically on finance and governance professionals and less on risk and compliance professionals? Do they target smaller deals among NASDAQ’s existing customer base?
In the broader context, this represents yet another direction for the GRC software market. Sure, NASDAQ’s GRC strategy will probably have elements that resemble a bit of what we’ve seen from Thomson Reuters, Wolters Kluwer, and SAI Global, but at first glance the prospects with BWise seem like they will be very specialized and targeted. Helping public companies improve their governance structures is important, but eventually NASDAQ will have to decide how much to invest in GRC capabilities that don’t fit that objective. And ultimately, that may mean we see less of BWise in some of the broader GRC domains where it has seen success. So vendors that have previously been head-to-head competitors continue to be heading down more divergent paths.
In any case, I’m looking forward to seeing what’s to come. (I'm especially curious to see whether MetricStream gets more attention from potential acquirers as one of the more successful still-independent vendors in the market.)