Going back a few years at Emptoris, it was always interesting to try to sort through the quantitative information disclosures they would share with the media and analysts. I won't get into some of the columns this prompted on Spend Matters and other sites at the time -- or the creative titles -- but needless to say, Emptoris got the message, and became at least a bit more transparent with the information it shared with outsiders. And given what Emptoris disclosed at Empower, it would appear this transparency is increasing. But before getting into the specifics of their revenue breakdowns and percentages -- not to mention what it means for the business -- let's first talk about the chest pounding claims that Emptoris and all other vendors in the sector love to make.
At the start of the event, Emptoris claimed the following numbers:
- 24 trillion spend analyzed
- 200 billion sourced
- 80 billion in managed contracts
- 30 billion estimated savings
- 25 billion [in managed] services spend
Stop here for one minute. Let's take the first claim of 24 trillion (dollars) in spend analyzed. If we were to take this on face value, this number would amount to roughly 40% of gross world product (GWP) or world GDP in 2008. I would only hope that Emptoris would have the opportunity to look at such a material portion of the GWP because the world would be a much more cost effective place for it. But alas, I calculate they're probably working with only low single digits (if that) of world GDP because they've arrived at this number through most likely counting same company spend refreshes (monthly, quarterly, etc.) as part of it. In other words, they've got to be counting the same spend many times over -- each time it goes through their system.
The $200 billion sourced is a much more realistic claim as are the savings percentages and dollars of managed contracts and overall services spend under management (however, Emptoris' services procurement competitors would claim this number is skewed by non-contingent services spending and is not a fair direct comparison). All of these numbers are spread across Emptoris 187 customers, 55 of whom attended Empower. Based on this customer count and my own conservative revenue estimates for Emptoris, its clear the company is still generating, on average, in the mid six figures of revenue per year for each customer. At least historically speaking, this number is higher than what some of Emptoris' other competitors see for similar products.
But how does Emptoris' customer spending breakdown from a solution and revenue-type perspective? I quickly jotted down at Emptoris Empower that today, roughly 20% of Emptoris revenue is tied to spend analysis, 41% to sourcing and 38% to contract management. License revenue accounts for 11% of their overall revenue, maintenance for 17%, subscriptions and hosting for 39% and services for 33% -- a diversified mix. I suspect that going forward, Emptoris, like many organizations, will face customer pressures to reduce maintenance and support costs as well as a larger percentage of new deals headed down the subscription/hosting front.
Emptoris has nothing to lose from being more disclosive like this in its numbers. What they shared, above, represents the components of a company with a healthy and diversified customer and solution base. Let's just hope that both Emptoris and its competitors spend less in 2009 and beyond in legal bills -- both defensive and offensive -- from petty claims, opting instead to double down on customer-driven R&D designed to help companies continue to take their overall Spend Management results to the next level.