Qualified sources outside Emptoris suggest the company will now have combined revenue in the $80-90mm range, putting it in within what Spend Matters believes is safe striking range of an IPO in the coming 12 months if its investors decide to head down that path. Financial terms of the transaction were not disclosed, and the acquisition was funded by Marlin Equity Partners, Emptoris' owner. From a distribution and partnership standpoint, both Rivermine and Emptoris have established channel and partner relationships with leading consultancies and BPO providers including Accenture, IBM and Deloitte.
In a series of posts looking at this transaction and the telecom expense management opportunity over the coming days, Spend Matters will provide background, context and analysis surrounding this transaction and the broader market opportunity for procurement organizations to more closely manage the telecom category. We will also provide a cursory analysis of other alternatives in TEM market, which we will explore and review further in the coming months. In the rest of this post, we will share a bit of quick insight examining the telecom procurement market and the rationale behind the transaction (which may seem a bit off base, at first, for those who are not familiar with the TEM market).
Telecom is a category that consumes over $100 million in annual spending inside the typical Fortune 500 organization. For nearly all large organizations, potential telecom savings opportunities from better sourcing, inventory management, compliance, demand management, device/line provisioning and invoice auditing range from the high seven to the low/mid eight figure (yes, you read that correctly). But in reality, there is not one "telecom" category. There are many, from connectivity and bandwidth (e.g., the fat pipes that feed data going into and coming out of organizations) to mobile (e.g., smart phones and mobile devices used by front line employees) and a tremendous amount in between.
The fundamental challenge of managing these diverse sub-categories within telecom revolves around a common set of contracting, provisioning, compliance and invoicing challenges. Today, solutions from procurement and ERP vendors such as Ariba, SAP and Oracle (and previously Emptoris) don't begin to address the nuances of telecom procurement outside of initial negotiation and contracting, transaction / document exchange and limited aspects of vendor management, areas which represents a small component of the overall challenge.
Later today, in the next post looking at this acquisition and the broader opportunity, we'll examine how telecom expense management solutions differ from traditional procurement and sourcing application areas. We will also examine what this news means for Emptoris and Rivermine customers, competitors and the broader procurement and telecom expense management market, providing analysis and opinion on the topics. Check back soon!
Update: 6:50 AM CT -- read customer and competitive implications of the announcement in this article.
Disclosure: Spend Matters Group, LLC, a Spend Matters affiliate, provided limited advisory services to Emptoris related to this transaction. See full Spend Matters and affiliate organization client disclosures by clicking here.
- Jason Busch