IBM's Acquisition Of Emptoris Further Reduces IT Sourcing Professionals' Options

Just over a week after SAP published its intention to buy Success Factors, IBM announced yesterday that it will acquire Emptoris, one of the leading ePurchasing suite vendors. My colleague Andrew Bartels has described in his blog some of the implications for other vendors in the ePurchasing market:

My interest is in what the acquisition means for sourcing professionals, not just the CPOs who might be Emptoris customers, but the IT sourcing professionals setting strategies for dealing with major suppliers such as IBM and SAP.

·         Emptoris customers should give IBM the benefit of the doubt, for now. Craig Hayman, General Manager of IBM’s Industry Solutions division, assured me that he would take great care not to damage Emptoris’s strengths, the ones that attracted him to the company, as they did you, its customers. Emptoris consistently does well in Forrester Wave™ evaluations, not only for its functionality but also its focus on sourcing and procurement, its emphasis on ensuring customer success, and its consistent record of innovation. The good news is that Hayman doesn’t underestimate the challenges of integrating Emptoris into IBM, but is confident he can overcome them. It will take a couple of years before we can judge his success.

·         IT sourcing leaders should be worried by the disappearance of another independent provider. Many of Emptoris’s customers are primarily SAP shops when it comes to back office applications. If you’re an IT sourcing leader or CIO in such a company then you need companies like Emptoris and Success Factors outside your SAP footprint, to provide innovation and negotiation leverage. Moreover, you want SAP to be reinvesting your maintenance dollars to enhance its existing product, not to buy up its competitors. However well IBM takes its acquisitions forward, it won’t provide as powerful a bargaining threat to SAP as a field of strong independent software providers would do.

Hayman has an interesting strategy for his division, to integrate buy-side solutions such as Emptoris and Sterling Commerce into a sell-side applications portfolio, focused on his customers’ customers. That makes sense in PowerPoint, but in practice, a customer that buys into this strategy may find that it has added over-dependence on IBM to its existing over-dependence on SAP. Such a customer might decide that it may as well make itself comfortable in SAP’s rapidly improving frying pan rather than leap into IBM’s fire. People that want a real alternative to SAP for commercial reasons may do better to look at the many cooler (in the frying pan/ fire sense) alternative providers, from Ariba to Zycus. 

Bottom line: This is an exciting development for the ePurchasing market, but I can't help being saddened by the disappearance of strong independent software companies such as Emptoris and Success Factors.


The origins of IBM's acquisition of Emptoris goes back to 2009

Here is my take on the acquisition which ironically ties back to a post in 2009; With IBM’s acquisition of Emptoris the other shoe drops vis-à-vis the latter’s 2009 acquisition of Click Commerce or . . . will Jason Busch finally get what I was saying! (

Impact on Emptoris's services procurement product is unclear

I read the blog posts in your links but I'm afraid I couldnt understand what point you were trying to make or on what you disagree with Jason Busch. The fact that Emptoris made a good job of building on its Click Commerce acquisition doesnt alter the fact that it was a risky move, slightly away from its core area. I dont see any evidence that this product was at all significant in IBM's decision to acquire Emptoris, let alone be "based on the acquisition" as you seem to be suggesting. Its too early to expect IBM to have coherent plans for what to do with its services procurement product, and while it doesnt fit within the Smarter Commerce vision as well as Emptoris's other products, IBM wont want to ignore its potential.

You separately state "Today’s range of bona fide players is indeed wide and varied, with creditability (sic) no longer being tied to capitalization size or for that matter present install (sic) bases." It is true that great ideas and VC funding can enable a vendor to develop its product without a large installed base, but dont confuse 'potential' with 'credibility'. Scale is very important to a software company, particularly in ePurchasing where you need to be able to reach all your suppliers &/or customers.