Amex: No Safe Harbor

Given that so many acquisitions end up failing, why are companies so obsessed by them? It seems the more that they have to spend on expensive strategy consultants -- either third-party firms or internal teams -- the more deals they tend to make. In the procurement area, American Express is one organization that is notorious for deluding itself when entering into investments and acquisitions that might look good on PowerPoint, but that never quite achieve the level of implemented results that they initially envisioned. Where Amex falls apart on execution I'm not sure, but their track record is anything but stellar. It now appears that Harbor Payments is their latest debacle / write-off. It's not a quick history -- the story starts a few years ago.

Back in 2006, Amex bought Harbor Payments, entering into what was then a somewhat nascent EIPP sector, at least in North America. On paper, the move looked shrewd. But like almost everything else Amex has touched around procurement offerings over the years, outside of travel-related products, things did not work out as planned. I previously summed up my view of their deal blunders when I noted in a post that "from past deals with Marketmile/Ketera to the more recent Rearden investment and Harbor Payments, Amex has made serious attempts to break into the market, but they've always come up short on the execution side relative to what they could become. Rumor now is that the venerable financial services company is struggling to fully integrate Harbor into its suite of capabilities and the group is largely functioning independently -- or at least not in a collaborative, go-to-market manner -- with the rest of Amex."

In the past few weeks, I've been able to confirm from multiple sources that the Harbor integration has hit new lows and that Amex has nearly abandoned the solution, at least on the invoicing side of the house. Some close to Amex blame Harbor's technology as the reason for the challenges. But I'm not so sure, based on Amex's overall track record in the area. Amex is still including some very limited payment components from Harbor on their price sheet, but besides that, it appears they're not selling the solution in the field anymore, opting instead for another invoicing option from a third party. Perhaps this is due in part to the rumored management disintegration of Amex's source-to-settle group. Regardless, the botched Harbor acquisition is further proof that companies without a track record of success integrating software components into financial solutions should stay away from the apps market, at least from an acquisition perspective.

Fortunately for customers, the invoicing automation and EIPP market is still full of viable solutions providers. Given the need for companies to better manage working capital in the downturn, 2009 might be a break-out year for EIPP and invoice automation in North America. Next week, I will finally get around to publishing my review of BasWare's invoice automation suite (this has been more than a few months in the making). I also plan to investigate and write about solutions from other vendors including Ariba, PurchasingNet, Chase/J.P. Morgan (Xign) and others throughout the year. Stay tuned. Even if Amex has lost their safe harbor, there are many more boats safely afloat in the water for you to consider!

Jason Busch

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