IBM on Thursday announced an agreement to acquire a leader in the cloud and on-premise analytics software field. IBM will take over Emptoris for an undisclosed amount.
Emptoris makes software that works to add intelligence to procurement and supply-chain operations with spend, supplier and contract management . The acquisition is the latest addition to IBM's Smarter Commerce initiative the company launched earlier this year. The initiative aims to help companies respond to shifting customer buying patterns.
"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," said Patrick Quirk, CEO of Emptoris. "That is the value we bring to the procurement organization."
Emptoris in Action
With the Emptoris acquisition, IBM builds on its capabilities in what it calls the "buy" aspect of Smarter Commerce, while also extending 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.
As IBM sees it, procurement and sourcing professionals increasingly need better supplier management, spend analysis and contract management solutions to lower sourcing costs and risks. Emptoris helps execs drive these benefits by automating vendor selection, negotiation, management and compliance.
Here's an example of Emptoris in action: A large global oil and gas company established a centralized sourcing network across its entire enterprise operating in more than 80 countries. The network allowed the firm 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.
IT's New Bar
"IBM is demonstrating that by moving forward in a very orderly and measured way, it is not only creating a large number of solutions that its customers can use to drive profits, but that it understands its customers' businesses in a very tangible, if not intimate way," said Charles King, principal analyst at Pund-IT. "That's the base of the Smarter Commerce strategy but it also creates a new bar for computing IT vendors to be able to meet."
King argued that it's no longer enough for IT vendors to sell hardware or databases or productivity software anymore. Rather, business organizations need IT vendors that understand the mechanics of their business and how technology can help them work better, smarter and faster.
"The world has become an increasingly competitive place, and the laggards get left behind and plowed over. Vendors like IBM in particular understand that. How many of the company's competitors understand that is open to speculation," King said.
"When we see this kind of strategy that IBM is pursuing in commerce, you can see how the company could take the basic template of what they are doing in commerce and extend it into almost any other industry. And that's precisely what I expect IBM to do in the coming months and years."