Perspectives on the Paisley Acquisition

While briefed on the acquisition before the announcement, I took a few days before commenting on my blog.  The reason being two-fold – I came down with a seasonal cold, but more importantly I wanted to reflect on this some more.

 

In general – the acquisition of Paisley by Thomson Reuters is a good thing.  Good for Paisley, good for Thomson, good for the market, and even good for competitors.  Though there are some concerns I have as well.

• It is good for Paisely as it gives them a much bigger organization and client base to pursue than they had before.  The ability to integrate and deliver Thomson’s wealth of content is also very intriguing and delivers on the risk and regulatory intelligence theme I have been discussing for some time.

• It is good for Thomson Reuters as it gives them a technology platform to be competitive in the market and deliver their content on.  The Paisley on-demand/SaaS offering is a critical component for them to deliver content within.  It allows them to stay competitive as other content providers such as Wolters Kluwer/CCH (acquired TeamMate and Ci3) and SAI Global (acquired 80-20 Software) are aggressively pursuing technology integration and acquisition.  We will see what card LexisNexis plays in the next few months as a result to this competitive positioning.

• It is good for the GRC – governance, risk, compliance, and audit market.  I believe we are a verge of widespread convergence in this space.  There are too many providers in a tough economy.  I know of several organizations looking to acquire someone as they feel they can get a good deal in the current economy.  Consolidation is good and is what this market needs to be stable and sustainable.

• Finally, it is good for competitors.  One aspect of this is the previous point as it accelerates the consolidation.  The other aspect is the fact that whenever acquisitions happen it causes current clients to consider their future options and direction.  The audit management market is in a perfect storm right now.  With the acquisition of TeamMate and now Paisley you have approximately 80% of the current audit management software market changing hands.  With a lot of new entrants into this space it should be some interesting times for market positioning in the next year.

As for my concerns – they largely depend on Thomson’s strategy going forward.  Paisley has built an excellent GRC application and has delivered a solution that helps a variety of risk and compliance roles well outside its traditional audit base.  Since the Tax and Accounting division of Thomson did this acquisition I fear that Paisley’s market penetration and competitiveness in other areas of risk and compliance may be limited.  Paisley also has a strong partnership with QUMAS that has just started showing traction on policy management, I am not sure how Thomson will sustain and nurture this going forward.

 

If Thomson can leverage the Paisley acquisition across its business/product lines to be a platform to manage risk and compliance and integrate Thomson content – then Paisley becomes a truly dominant next generation GRC application.  However, if Thomson entrenches Paisley in the Tax and Accounting area – then Paisley becomes a next generation audit management platform (minus the automated/continuous control piece), but loses much relevance in the broader GRC market.