Is IBM's Recent Datacap Acquisition an Important Side-Step into the Procurement Realm?

In August, IBM continued down its well-paved acquisition path by adding yet another vendor into its software portfolio. Datacap, a technology provider focusing on content and document data capture, entry and management, marks the latest organization to join the Big Blue application borg. According to Managing Automation's analysis of what IBM gets out of the deal, "Datacap's portfolio includes a broad sweep of applications, from document and invoice scanning and processing to records management." In the data scanning/OCR area within invoice automation, Datacap competed in a crowded market against providers with greater share including Basware, Kofax, Ariba and numerous other providers, nearly all of whom had a broader payables process footprint that extended and integrated more tightly into the purchasing, invoicing and payment processes.

Yet Datacap goes beyond just data acquisition, and potentially provides an interesting complement to another recent IBM acquisition, Initiate Systems (See previous posts here and here). The above-linked article suggests that Datacap "is said to convert into actionable form unstructured data, such as e-mail messages, image files, and PowerPoint presentations." In the case of Initiate Systems and other providers of customer data integration (and potentially supplier data integration) suites, integrating unstructured data into the structured mix remains a formidable challenge. Might Datacap help IBM build a better mousetrap here in procurement and payables? "Prospective uses for the software include automated supplier invoice processing with integration to accounts payable functions in ERP systems, as well as a system of e-mail management that includes recognition, classification, and routing of supplier e-mails to a back-end system of record," Managing Automation suggests.

In other words, what IBM could potentially build here would look like a combination of an operationally-focused electronic invoice presentment and payment (EIPP) system combined with a new type of supplier data hub which would look most similar to what Oracle has been up to, leveraging old Siebel customer data integration technology in this area. A solution like this would potentially disrupt the supplier information management quo while also providing a strong value proposition around visibility, control and flexibility to both procurement and finance executives when it comes to all aspects of supplier management. Despite the potential of this move, IBM is still missing out on core spend analysis, sourcing, eProcurement, contract management and related capabilities, all of which could help complement and accelerate the penetration of a solution in this area.

Jason Busch

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