IBM / Emptoris – a couple of European issues

Jason, Thomas and colleagues at Spend Matters US have provided some great insight into the IBM and Emptoris deal – you can read their pieces from Friday here and here.  But there are a couple of European aspects I wanted to pick up on.

It was interesting to see that the contract Emptoris won with the UK Government – for their Sourcing tool – was given such prominence in the IBM announcement and subsequent call.  It is important, without a doubt, but it will be interesting to see how the team at the Government Procurement Service perceive this move. IBM have a mixed record in the public sector, like most of the large IT vendors, although they avoided any involvement in the NHS IT programme for instance. But the mood in Cabinet Office is very much in favour of small, agile, open-source type IT strategies and suppliers, which suggests IBM would not necessarily be the absolute flavour of the month.

In addition, it was John Collington (now Government CPO), when he was at the Home Office, who was the first big supporter of Emptoris in government circles. I believe that was based on his experience working with them when he was at Accenture – with whom Emptoris have always had a close relationship.

How will Collington feel about Accenture’s number 1 competitor now owning Emptoris? Cleary, this isn’t going to jeopardise the recent deal or anything, but as the precise scope and therefore potential revenue from this contract is still up for grabs, perceptions might matter. So if they are smart, IBM will make sure they retain the key Emptoris people who have built those government relationships.

Secondly, the Xcitec acquisition a few months ago brought strong capability (and some good people) into the Emptoris fold. But Xcitec strike me as a quite Germany-centric firm.  Their client base was (and still is I believe) heavily centred around large German corporates. Now those clients have already seen the move to Emptoris – but now seeing Xcitec swallowed up by arguably the most American of all tech firms – how will they respond? It’s easy to see how a more “local” competitor to Xcitec might develop some positioning to go after Xcitec clients.

Xcitec was also allowing Emptoris to develop an interesting positioning around “supplier lifecycle management”. (Indeed, it’s so interesting that we’ve written a research paper on the topic which will be launched in the New Year). But this was based strongly on a holistic view of their capability. Now if that positioning gets changed with additional IBM products brought into the mix, the logic may get less clear.

We should stress that there are of course many potential positives with the deal. IBM have a great opportunity to show in Europe that they really are experts in procurement – in consulting, in software and in outsourced service provision. I’ve been a huge admirer for many years of how they run their own procurement, but they have not in my view ever quite exploited that as well as they might in third party sales terms. Emptoris gives then a great opportunity to build their leadership positioning in these markets – but there are risks ahead as well, including those we’ve described (and see Spend Matters US posts for much more on the opportunities and issues around this deal).

 

First Voice

  1. David Orr:

    Let’s hope IBM don’t kill the product when they rebrand & position it.

    In the controversial IBM-owned South West One (SW1) joint venture with two of my local councils (Somerset County & Taunton Deane) and my local Avon & Somerset Police, IBM promised a new integrated Help Desk for IT to be based upon an acquisition called Maximo (now part of Tivoli).

    Somerset County Council paid £5m for a variety of IT productivity investments and Maximo was one of the principal projects.

    Maximo was due to go live in April 2008 and that deadline was missed and two more up to June 2011. IBM have now admitted that Maximo (originally aimed at property-based assets) is not going to be suitable to fulfill the IT Help Desk commitment and look to have left SW1 looking for another product, whilst Somerset County Council soldier on with the original Assyst Help Desk (that is based on an older version from 2007).

    Footnote: For the 2nd time in 3 years, SW1 have failed to submit their accounts on time (this time for the 2009/10 accounts due for 30th Sep 2011). Another big loss then?

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