IBM acquires cloud operator Emptoris
IBM yesterday announced a definitive agreement to acquire Emptoris Inc., a provider of cloud and on-premise analytics software that brings more intelligence to procurement and supply chain operations with spend, supplier and contract management for Smarter Commerce.
Financial terms of the deal were not disclosed.
Emptoris is based in Burlington, Mass. with offices in the U.S., U.K., France, Germany, Australia, India, Brazil and China, with more than 350 customers in 75 countries. Emptoris’ global client base includes spans multiple industries including consumer products, financial services, healthcare, telecommunications, chemical/oil/gas, utilities, construction and industrial manufacturing.
The acquisition is the latest addition to IBM’s Smarter Commerce initiative, launched in March 2011, which is aimed at helping companies respond to shifting customer buying patterns. Emptoris brings to IBM Smarter Commerce a set of new, flexible and integrated solutions that orchestrate and manage the sourcing and procurement of goods and materials as part of supply chain management. Supply chain intelligence using these solutions enables better inventory management and can create large savings opportunities.
IBM SMARTER COMMERCE INTRODUCTION
For example, a large global oil and gas company established a centralized sourcing network across its entire enterprise operating in more than 80 countries, which enabled them to focus on the most strategic, highest cost, frequently-purchased items. This brought speed, transparency and simplification to the sourcing process.
As a result, the company runs thousands of sourcing events per year managing more than 15,000 suppliers in 10 languages, achieving more than 9 percent reduction on managed categories of goods.
IBM has estimated that the Smarter Commerce initiative is a $20 billion market opportunity in software alone. Smarter Commerce helps organizations that are struggling to meet the demands of rapidly shifting customer buying patterns in the era of mobile and social networks.
This new digital marketplace requires companies to respond rapidly to customer demands by automating their buying, marketing, selling and service processes. Developing the right procurement strategy and an adaptive supply chain are keys to success in this evolving environment.
According to industry analysts at Forrester Research, IBM is a recognized leader in multiple categories within Smarter Commerce.
SEE OTHER TOP STORIES IN THE SUPPLY CHAIN DIGITAL CONTENT NETWORK
With this acquisition, IBM builds on its capabilities in the “buy” aspect of Smarter Commerce and extends it to a new line of c-suite executives – chief procurement officers. This growing list of decision makers includes chief information officers, chief financial officers, chief supply chain officers and chief marketing officers.
Procurement and sourcing professionals increasingly need better supplier management, spend analysis and contract management solutions to lower sourcing costs and risks. Emptoris is a leader in delivering these benefits by automating vendor selection, negotiation, management and compliance.
Emptoris’ spend management solutions complement the existing B2B integration and supply chain management capabilities IBM acquired through the purchase of Sterling Commerce in 2010. The Emptoris acquisition will allow IBM to deliver more solutions focused on the needs of sourcing and procurement professionals.
“IBM is continuing to deliver innovative solutions to help organizations put the customer at the center of their business operations,” said Craig Hayman, General Manager of Industry Solutions at IBM. “Procurement is being asked to show how it can deliver value to the organization. Adding Emptoris strengthens the comprehensive capabilities we deliver and enables IBM to meet the specific needs of chief procurement officers.”
Emptoris CEO Patrick Quirk was equally excited about the announcement
“Emptoris leadership in the 'buy' or supply chain capabilities of Smarter Commerce enables customers to better source, optimize and control enterprise spending,” Quirk said. “Procurement officers need to manage the full engagement, integrating suppliers with key internal systems and have the capability and visibility to manage compliance and mitigate supply risk. That is the value we bring to the procurement organization.”
The Emptoris acquisition also will complement IBM's Supply Chain Management (SCM) Business Process Outsourcing capabilities within its Global Process Services organization. Emptoris' expertise and technology enhances IBM's Procurement and Supply Chain services, including its ability to apply category expertise and global operations to help clients streamline and automate supplier interactions, resulting in improved strategic sourcing, reduced service costs, and greater savings from spend with suppliers.
The acquisition is anticipated to close in the first quarter of 2012, subject to the satisfaction of customary closing conditions and applicable regulatory reviews.
Edited by Kevin Scarpati
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.