IBM to Sunset Emptoris, Transition Customers to SAP Ariba as Part of Broader Partnership Agreement

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SAP Ariba and IBM Emptoris announced this morning at Sapphire 2017 that they were creating a strategic partnership. The deal represents a significant commitment by both organizations that spans applications, cognitive collaboration (SAP Leonardo and IBM Watson) and professional services. The combination of efforts is not, however, an acquisition of IBM Emptoris by SAP Ariba, which had been a rumor in the market for a number of weeks.

Earlier today, I had the chance to speak to Alex Atzberger, president of SAP Ariba, and Michael O’Leary, director of procurement solutions and supply chain insights at IBM Watson Customer Engagement, to learn more about the partnership. We will cover the relationship in greater detail on Spend Matters throughout the day and week, but will report on the news aspects of the partnership in this initial coverage.

For an in-depth look into the partnership and a guide to how SAP Ariba solutions compare to those delivered by Emptoris, check out our First Take analysis on Spend Matters PRO.   

IBM Emptoris and SAP Ariba Applications

First and foremost, the relationship involves the sunsetting of IBM Emptoris products over a multiyear timeline. Here are some highlights of this component of the partnership we learned during the discussion and additional research:

  • IBM will “work with SAP Ariba to bring new and existing IBM customers, including those using IBM Emptoris solutions, to the SAP Ariba platform, where they can benefit from this expanded functionality and the comprehensive source-to-settle offerings that SAP Ariba provides,” according to the announcement.  
  • Altogether, this component of the announcement will affect more than 200 IBM Emptoris customers. SAP Ariba and IBM Emptoris did not provide details on the number of IBM Emptoris customers to Spend Matters, but a general estimate is in the 250 range.
  • IBM Emptoris customers, including those with IBM Enterprise Licensing Agreements (ELAs) will be given the opportunity to transition over to SAP Ariba products.
  • IBM Cloud customers will be supported through May 2020.
  • On-premise customers will be supported for a period of five years from the time of their last agreements with IBM Emptoris (specifically, from when the last version they licensed was released into the market).
  • IBM Emptoris will continue to provide patches and other related updates (e.g., new browser support) to IBM Emptoris customers of both cloud and on premise solutions during these timeframes, but it will not be providing enhancements to its procurement modules beyond these administrative support updates during the sunset/transition period.
  • No “money was exchanged as part of the relationship,” but there “will be revenue share for conversions.” Going forward, SAP Ariba will own the IP for new solutions that will be developed as part of the partnership in cognitive and other areas and will have a revenue share with IBM Emptoris for the usage of Watson and other components that are jointly leveraged (IBM's current API call-based licensing model for Watson already supports these types of arrangements).
  • IBM employees will remain with IBM; no employees will be transitioned to SAP Ariba.
  • The two organizations will co-locate employees in development centers first in Palo Alto, California, to focus on the development of next-generation procurement solutions (centered initially on cognitive applications of SAP Leonardo and IBM Watson).

Spend Matters will provide additional coverage, insights and analysis of this component of the SAP Ariba and IBM Emptoris partnership later today and this week.  

Looking Ahead: Cognitive Applications and Partner Support

Beyond the transitioning of IBM Emptoris customers to SAP Ariba, other components of the announcement included the leveraging of both SAP Leonardo and IBM Watson cognitive components to create new applications that learn from the network and application insights of SAP Ariba customers. SAP Ariba shared that it plans to show two use cases of these new capabilities by the end of 2017, potentially starting with contract management and strategic sourcing.

Specifically, according to this component of the partnership and the announcement, “Leveraging SAP Leonardo, IBM Watson technologies and SAP Ariba, the solutions will bring intelligence from procurement data together with predictive insights from unstructured information to enable improved decision making across supplier management, contracts and sourcing activities.”

Another component of the partnership involves a deeper relationship between IBM’s professional services arms and SAP Ariba. In this area, “IBM Global Business Services will provide consulting and services to build, implement and operate the new offerings using tailored roadmaps to help enterprises of all sizes lower costs and realize faster time to value. Additionally, the companies will launch a Cognitive Procurement hub to further the development of intelligent procurement solutions and services, working side by side to explore applications of emerging technologies, including blockchain.”

Initial Analysis: IBM Emptoris Customers

From an IBM Emptoris customer perspective, our initial analysis of the transaction suggests that IBM appears to have taken a high road with Emptoris customers across several areas regarding the future of its procurement applications with this partnership (vs. an outright sale of the assets). This includes the multiyear support horizon for current IBM Emptoris solutions as part of the sunsetting of the products and continued direct relationship with IBM, which should provide an ample window for procurement organizations to fully consider and develop a formalized transition plan.  

While some may argue that IBM provided this longer window based on contractual obligations (e.g., because of the ELA components of certain agreements with large customers), it is clear that the partnership provides significant time for current IBM Emptoris customers to fully evaluate all of their options, including the potential to transition to SAP Ariba or to select other providers.

We will be providing continuing coverage of the partnership throughout the day and week, including deeper analysis of the relationship. We encourage Spend Matters PRO advisory clients to set up time with our team to understand their options following the announcement of this partnership.

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Voices (2)

  1. Jason Busch:

    Dennis, I’ve not traded in my axe, but that was my “last” performance in front of a group! So happy Jeff stuck with it — that guys has serious talent and heart.

    My father, though, who is also a bass player (among other instruments) and used to work for our company, has been making a career of playing in his retirement in various bands, which is super cool (unfortunately he never passed his musical genes onto me which is why I play bass!). I’ll get back to it someday even if I never follow in his footsteps!

    In terms of tech stuff or just a friendly hello, happy to chat anytime or meet up in the New Year! We’re still in the same apartment and our office is downtown now (Michigan Avenue — moving up in the world 🙂 …

    And in a twist of irony, Corporate United’s sister company (Prime Advantage) — they were just bought by the same new parent holding company — is across the hall from us on the same floor.

  2. Dennis Diamond:

    Jason – I am at Sears Holdings Corp (“SHC”) in Procurement. SHC has built its entire procurement process around Ariba. Since coming here in 2012 many of my peers in IT procurement have questioned SAP’s commitment to Ariba. I just got this issue raised again today! When I googled the topic it took me to this article from a certain Jason Busch at Spend Matters. Clearly this article helps dispel this issue. Not sure you will recall, but I attended a wonderful dinner event at your home in 2009. It was hosted by a consortium spend company. Maybe Corporate United? You performed on the bass guitar that night with Jeff Gordford who sang and was employed by the host company. Jeff of course continued with his singing career. Are you still slammin on the bass?

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