Accelerated global growth
The updated strategy for 2013-2015 focuses on accelerated global growth both organically and through acquisitions, which facilitates positive development of operating profit margin.
Basware’s business is based on automating procurement and account payable and receivable processes within and between organizations. Basware offers all products and services through a global cloud. The services are hosted in a few key locations, which meet the highest service level requirements of private and public organizations.
Today, Basware is the global market leader in Purchase to Pay (P2P) with close to 2.000 software and SaaS customers in Invoice Automation and Procurement and approximately 800.000 active organizations transacting through the Basware supplier and buyer network for invoices and purchase messages. Basware’s focus markets - the Purchase-to-Pay software and e-invoicing markets - are expected to grow substantially over the next few years, especially in the geographical areas where Basware is already well-positioned.
Basware’s long-term objective to grow annually 15-30 percent in net sales boosted by over 50 percent growth in Automation Services which is intact compared to the previous strategy period. The company's long-term objective for operating profit margin continues to be 15-20 percent of net sales which is expected to improve towards the end of the period. The share of recurring revenue is aimed to grow to 70 percent compared with current 55 percent, with Software as a Service (SaaS) and electronic invoicing contributing most to the growth, thus improving the profitability.
A key aspect of the refocused growth strategy is a transformation of Basware’s business as it continues to move from a model based on software license sales to a model of selling services. This transformation is captured in Basware’s vision, which is to become The Largest Business Commerce Network.
By the end of 2015, Basware aims to become the largest business commerce network for buyers and suppliers. Basware’s objective is to reach 150 million transactions in 2015, compared with 21 million transactions in 2011.
Basware will intensify its go-to-market activities in order to reach higher growth by segmenting customers by size and by buyers’ and suppliers’ organizations. Special attention will be placed on small and medium-sized organizations. Basware’s go-to-market activities are expanded with channel and online sales on top of direct sales. Basware is looking for partners that are providing outsourcing services for financial processes for global organizations. The company is looking for service providers and accounting firms as partners for small and medium-sized organizations. Such partners act as Virtual Operators or Sales Agents.
While Basware will continue to serve companies with its global product offering in all of the countries it is presently operating in, Basware is also adjusting its approach towards geographical coverage in order to focus its resources efficiently and be able to rapidly capture significant market share from key markets.
In the strategy period, Basware aims to significantly increase the number of new customers for its products and services. Basware will support new customer acquisition by centralizing and automating the marketing lead generation process, thus creating an increasing number of actionable leads for sales operations. The company will support the organic growth also with new acquisitions and will thus continue its M&A activities in order to drive the consolidation of the e-invoicing market in Europe and North America.
In order to achieve the strategic growth targets, Basware needs to also successfully strengthen and expand its current and future customer relationships. We will package our products and services into customer solutions and will focus on transitionoing our current customers on to Basware Alusta.
Basware’s product and services strategy is geared around category leadership. Basware Alusta, launched in early 2012, is a cloud-based flexible platform for Purchase-to-Pay technology that is built on open standards and designed to bring together Basware’s B2B process knowledge with its cloud services optimized to ensure easy connectivity with the Open Network to companies of all sizes. Basware Alusta is strongly offered as a service and supports Basware’s strategic transformation to a services company. New value added services, such as Supply Chain Financing and Dynamic Discounting, will offer new revenue streams and contribute to the future growth of cloud service business.
Basware’s offering and solutions and services are available globally. The company aims to increase its global presence by increasing its service provisioning and delivery activities for supplier customers while putting additional emphasis on sales on selected key markets for getting a higher share in P2P software and services business. These markets offer significant upside potential for the company in terms of market share and transaction volume, organically and in the form of potential acquisitions.
Realizing the strategy will improve the profitability of the company in several ways over the strategy period. The benefits of the new strategic profitability drivers are partially offset by investments required for the growth.
- SaaS and electronic invoicing offer the benefits of a scalable business model where technical platforms can take up new customers without having to invest into infrastructure in the same proportion that the revenue grows.
- Partner and online channel will contribute positively to the profitability in the long run. Strong investments on Basware’s online channel will be carried out during the strategy period.
- Delivering standardized products and services enables optimum resource utilization and scalable processes across the company.
- Basware will continue expanding the use of lower cost base sourcing of resources in its operations globally for the needs of the growing business. In addition to the current R&D and transaction services production, offshoring will continued to be used in customer support, project delivery and internal support functions.