IBM Gets Close to Emptoris — Our Notes From the Analyst Call

As part of our coverage of the Emptoris and IBM deal, we wanted to offer up a post sharing our notes (and observations) directly from the IBM & Emptoris joint analyst call held, December 15, 2011. See our other coverage here, here and here.

The call began with an introduction by David Hybels, Analyst Relations for Industry Solutions at IBM's Sterling Commerce unit. The primary speaker for IBM was Craig Hayman, General Manager of IBM Industry Solutions, the solutions area Emptoris will fall under once the deal is closed. Patrick Quirk, Emptoris' CEO, was naturally also active on the call.

IBM began by noting it has a seven-year track record of working with Emptoris, so it was an informed purchase decision. According to IBM, they were impressed with the solid ROI with Emptoris rollouts, with clients recouping their investment sometimes as quickly as in a matter of weeks. Moreover, the recent (Thanksgiving Day) Emptoris win in the UK -- the GPS government deal -- was another big feather in Emptoris' hat. Note to Spend Matters readers: Emptoris won half of this deal. The other half went to a different vendor.

IBM stated the top reasons for the acquisition as:

  • The fit with IBM's Smart Commerce vision of placing customers at the core of their "buy-market-sell-service" cycle
  • The core focus on customer success in both organizations
  • Strengthened product portfolio -- particular spend analysis capabilities and the ability to aggregate all ERP data, analyze, and tie to contracts
  • Round out their source-to-pay offering -- SLM added to IBM B2B integration
  • Enhance IBM Source-to-pay BPO
  • Global strategy fit

China and other APAC opportunities were talked about. Emptoris has a development team in Shanghai and clients such as China National Offshore with a Chinese-language enabled solution. IBM will bring more R&D money and capital to support further expansion. Indonesia was mentioned as another area. IBM has opened a transportation logistics center in China and is eager to pull Emptoris SMEs into that deployment. As one vertical industry focus example, retail was mentioned and is expected to be a center of expansion focus -- with plans already under way to utilize Emptoris in IBM's larger accounts.

Regarding the acquisition management, IBM has instituted a liaison position that intends to firewall the culture in the two organizations and bring the best of IBM to Emptoris while intending to incorporate some of the best aspects of Emptoris' culture back to IBM. A concern among many is that the relatively nimble Emptoris operation will drown in the "blue-washing" that is about to take place, so we cross our fingers and wish the acquisition liaison best of luck with fixing issues and bringing the best of both to either side.

Staffing changes are not expected, in fact. The IBM talent management process is intended ensure that the best resources choose to continue on which will be a critical success item for IBM and Emptoris. Moreover, Emptoris expects increased depth of research around analytics, procurement and optimization to become available to Emptoris' engineers and product managers when building the next level of the Emptoris product line. IBM also provided additional info around technology plans (e.g., IBM closes many hybrid deals incorporating both cloud and on-premises solutions and expects this to continue).

Other opportunities lie with leveraging Sterling Commerce, acquired by IBM from AT&T in May of 2010. Sterling currently manages over 1.5 billion transactions annually (75% are procurement related) and is expected to drive additional value as part of this transaction, they suggest. IBM does not intend to change its partnership plans -- they are currently working with SAP/Oracle for integration and also work with Accenture/Deloitte. IBM is willing to partner with anyone in deals. The customer decides.

When asked why Ariba wasn't acquired instead of Emptoris, the reply was a skillful dodge stating that IBM needed to acquire a firm with the best technology, strategy and client satisfaction -- which not so subtly implied that Ariba was found lacking in these areas.

- Jason Busch and Thomas Kase

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