IBM Emptoris – Hello, Is There Anybody There?

If we go back six or seven years to the early days of Spend Matters in Europe, BravoSolution and Emptoris were two of our first major sponsors, two competing firms with strong product suites covering primarily sourcing, spend analytics and contract management.

Both were genuinely great to work with, good people, good products, and both doing pretty well in the market. Emptoris made a couple of interesting acquisitions: a German risk management firm, Xcitec and then Rivermine, a telecoms expense management business. Both seemed to address interesting niches that would appeal to procurement clients.

In 2012, IBM bought Emptoris. All looked good at first – the huge IBM customer base would be an obvious target to sell into, and the resources of the giant firm would surely help Emptoris battle with BravoSolution, Ariba (bought by SAP in 2012) and perhaps a small up and coming firm that we were just beginning to feature – Coupa.

But gradually, the doubts crept in. Good people we knew moved on either within IBM, or went elsewhere, and were not really replaced as far as we could see – Justin Sadler-Smith going last year was the last link with the “old” Emptoris for us. IBM sold Rivermine, and two of the key people from Xcitec (which didn’t seem to go anywhere under IBM) went off to found riskmethods -  now a Spend Matters sponsor and growing rapidly in the supply chain risk management world.

We met the impressive CPO of IBM, Bob Murphy, a while back, but the contact from a product development, market or just news point of view has dried up. So although Spend Matters UK did not feed into the article, we weren’t surprised to see our US team writing this a couple of weeks back -

“Spend Matters has learned that Emptoris has had multiple rounds of employee departures in recent quarters ... This includes not only commercial team members but product management and customer support/implementation professionals, as well. (In certain cases, it appears the majority of entire teams are or will be eliminated.)

There are numerous additional considerations involved in the current situation of Emptoris and IBM that Spend Matters has heard about from multiple parties, yet has not been able to substantiate with IBM or other sources. These include the possibility (unconfirmed) that the Emptoris business unit is being positioned for divestiture to an external party. Again, these statements from our sources have not been substantiated by IBM, but have been made by multiple individuals outside the organization”.

But what has been interesting is the response from IBM, which certainly this side of the Atlantic has been – zero. You might think there would be something, or somebody saying “no, you’re wrong, let us explain why all is well in the Emptoris world”. But nothing.

We can only assume that our US article was accurate. If so, it is a shame, and whilst it is a drop in the IBM ocean, there seems to have been a destruction of shareholder value here. Going back to our initial comparison, BravoSolution has continued its strong and steady growth globally, moving into a strong position in the Middle East for instance. SAPAriba has seen strong competition from Coupa (that “small” firm) but has invested and indeed made other smart acquisitions like Fieldglass and Concur. And Coupa has grown hugely and floated, as well as making recent smart acquisitions itself. But IBM Emptoris has not evolved and developed in the way that others have.

In an alternate universe, IBM could have made an acquisition a few years ago of a business with a good P2P offering and would then have had a full S2P suite. IBM’s technology could have led to the guys behind riskmethods doing what they’ve done and more within Big Blue, making it a leader in supply chain risk management. Investment in the core Emptoris product might have given Trade Extensions a run for their money in the advanced sourcing area – Trade Extensions, now to become part of Coupa of course. Watson (the IBM big data offering) could now be doing clever data stuff, with data drawn from hundreds or thousands of full S2P clients.

Maybe we will be proved wrong and IBM has some grand master plan in this space. Clearly, there is a big focus on Watson, AI and analytics.  But at the moment, it feels like the firm has ceded much of the procurement tech market to others.

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Voices (3)

  1. Mini Seal:

    I remember when a VCR cost £500. They were supplied by excellent pioneers like Ferguson, Sony, and Philips. I remember when the price of a VCR was £100. Ferguson, Sony and Philips had by then left the stage, as margins were no longer suitable for what had become a generic product.

  2. Amol Joshi:

    IBM employs some of the smartest people in the world and is in many ways has been and continues to be an amazing company. And that’s why it is not only perplexing but also sad that your points are spot on. Surely the saga is great material for Harvard case study.

    1. Dan:

      I would read “who says elephants can’t dance?” by Lou Gerstner. IBM has always had smart people, but its problems tend to be cultural in nature.

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