Emptoris Forges a More Flexible Customer Path (Part 2)

In my first post updating Emptoris' recent directional shifts and progress in the market, I focused quite a bit on what the company had to say about its direction. In this post, I'll turn to the feedback I'm getting from the market in regards to Emptoris' direction based upon discussions with customers, prospects, channels, analysts, etc. I'll divide this post into three sections: current market perceptions, Emptoris direction (and fit with market needs) and a final analysis.

First, regarding how the market views Emptoris, I would argue that the provider has done a decent job -- some might argue overly aggressive -- at justifying and already trying to upsell their new Services Procurement solution into their customer base. But one thing they've discounted of late -- and which I'd argue is costing them in overall market perception as well as the deals they've been getting invited to -- is how they're viewed overall following the Marlin buyout. Previously, going back a number of years, Emptoris stood for product innovation in the sourcing, contracts and supplier performance arena (and to some degree in spend analysis as well).

But recently, Emptoris has started to slip in perception in some of these areas, in large part because they've trumpeted the same market messages for years and because a handful of negative customer experiences over time have gotten greater play among some prospects than they deserve (the perception of a financially motivated PE buyout /roll-up has not helped the case, either). At the same time, Emptoris has continued to rely on third-party validation from industry analysts to help position the company, but many would argue analyst influence -- specifically the respect companies accord rankings in reports -- has slipped. Because of this Emptoris needs to evolve and cast a new image on how they want customers to perceive them. Simply claiming "innovation" and "top rankings" is stale and is not working like it once did.

Which brings me to my second area of discussion -- how Emptoris is adapting its overall direction (and positioning) to today's market. In this regard, Emptoris has smartened up to the fact they need to carve out a new market niche for themselves. Here, I would expect that in the next couple of quarters, we will begin to see a new Emptoris image emerge. I suspect Emptoris will try to carve out the segment of the market that values advanced solution capabilities as well as flexibility to deliver results. I think this is a smart move -- and one that could place them firmly between Ariba and the ERP providers -- albeit one that risks getting muddled with other competitors in a similar position. In addition, Emptoris will need to focus serious efforts -- like Ariba -- on improving the capabilites and knowledge of its sales organization. I know based on numerous discussions that the inconsistency of the quality and knowledge of Emptoris sales professionals in deals has cost them business.

Third, and last, what's my final analysis in terms of what we can expect from Emptoris in the coming quarters and year? Look for five things in my view. 1) A continued (but quieter) commitment to solution -- not just product -- innovation in emerging releases because without it, Emptoris has nowhere to go but down; 2) Continued tension and challenge between meshing the needs of their shareholders (i.e., rapid growth, both organic and non-organic) and individual customer requirements; 3) New marketing messages to emerge in Q3 and Q4 that are different from those of the past; 4) Expanded channel and partner relations that outshine those of the competition (and result in material deal-flow); and 5) A strong fight (perhaps losing, perhaps not) to maintain their perception as one of the top three leaders in the market as SAP, Oracle, BravoSolution, AT Kearney Procurement Solutions, Zycus and others attempt to dethrone Emptoris' perceived high level spot within supply management and sourcing/spend related solutions specifically. Already, two of these providers (non-ERP) are close to or have passed Emptoris in revenue in these areas.

Jason Busch

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