GEP Acquires Enporion — Procurement BPO and Software Consolidation Continues

Earlier today, GEP -- a fast growing procurement BPO, software and services firm and the provider formerly known Global eProcure -- announced it had acquired Enporion, a specialist vendor targeting the utilities industry with surprisingly broad (given its size) software capabilities spanning the source-to-pay spectrum (and beyond). Over the years, Spend Matters has had numerous interactions, demonstrations and briefings with Enporion, and overall, we came away surprised by the depth and breadth of their capabilities, including solutions that could be put to good use outside their original charter and focus targeting the utilities industry. The deal is the latest in a string of acquisitions in the procurement sector, including IBM's recent announcement that it was buying Emptoris.

When Spend Matters last spoke to Enporion in an official briefing, the provider had three product/solution lines: Supply Chain Manager (SCM -- including a sourcing and procurement suite), an integrated cash/settlement offering and a professional services arm. At this point in 2008, the firm had doubled both employee count and revenue from previous years, and according to their leadership, had achieved their third year of GAAP profitability. We'll provide additional commentary and thoughts on the transaction later this week, focusing primarily on what it means for GEP customers, prospects and the broader BPO market. But in the meantime, our quick analysis suggests that the acquisition was a means for GEP to gain a leg up on its procurement BPO competition by going deeper in the P2P area, rather than a targeted expansion focusing on utilities, specifically. Simply put, Enporion lacked credibility and reach outside its initial target market segment, despite having a range of solutions that would make it competitive against Ariba, SAP, Oracle and others in parts of the broader procurement marketplace.

In the press release announcing the transaction, GEP positions Enporion as a provider offering "strategic sourcing and e-procurement applications" that served "customers in the electric and gas utilities, manufacturing and distribution industries." Reiterating our initial take upon hearing the news, our suspicions were confirmed after a briefing call that the transaction had little to do with targeting a specific vertical or buying customers/revenue. Rather, the proverbial 1+1=3 synergy that GEP is hoping to gain from the transaction will focus on technology enhancements to its own suite. Before delving into the transaction in a more detailed analysis tomorrow, we'll close out our initial coverage noting that both GEP and Enporion are .Net development shops. Theoretically, this should speed up the realization of cross-suite technology integration synergies as well as broader R&D integration between the two development organizations.

Stay tuned as our coverage of the transaction continues.

- Jason Busch

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