IBM Buys Supply Chain Analytics Firm Emptoris

Thor Olavsrud

Updated · Dec 15, 2011

IBM is on a roll. After announcing it would acquire cloud-based commerce analytics software firm DemandTec last week, Big Blue on Thursday said it had signed a definitive agreement to acquire cloud and on-premise analytics software specialist Emptoris.

Financial terms of the deal were not disclosed. IBM (NYSE:IBM) snapped up DemandTec in a $440 million cash transaction.

Emptoris focuses on cloud and on-premise analytics related to procurement and the supply chain. IBM pointed to a recent example: Emptoris helped a large global oil and gas company establish a centralized sourcing network across its operations in more than 80 countries, giving it the ability to focus on the most strategic, highest-cost and frequently purchased items. As a result, IBM said the oil and gas company, which runs thousands of sourcing events per year managing more than 15,000 suppliers in 10 languages, has been able to reduce its costs on the managed categories of goods by more than nine percent.

“Emptoris' leadership in the ‘buy' or supply chain capabilities of Smarter Commerce enables customers to better source, optimize and control enterprise spending,” said Patrick Quirk, chief executive officer of Emptoris. “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.”

Emptoris, based in Burlington, Mass., has more than 725 employees worldwide. It has 350 customers—including American Express, Boeing, Cigna, Kraft and Samsung—in 75 countries and boasts offices in the U.S., UK, France, Germany, Australia, India, Brazil and China.

The acquisition is the latest in a raft of deals that fall under the umbrella of IBM's Smarter Commerce Initiative, which it launched in March 2011 with the aim of helping companies respond to shifting customer buying patterns by automating their buying, marketing, selling and service processes. IBM said this area represents a $20 billion market opportunity in software alone.

“We believe Emptoris will support IBM's Smarter Commerce by helping procurement officers purchase more efficiently,” said Brian Marshall, IT hardware and data networking analyst for International Strategy & Investment Group (ISG). “Recall IBM also purchased DemandTec last week for $440 million to address Smarter Commerce, which it views as a $20 billion addressable market. We believe IBM is among the best in large-cap technology at building high-value software capabilities through acquisition and has increased its efforts in recent months. We expect this asset will prove strategic to IBM in helping customers improve their supply chain intelligence and optimize the purchasing process.”

IBM is looking to Emptoris to build on the “buy” aspect of its Smarter Commerce initiative. Big Blue plans to use the company's spend management solutions to build on the B2B integration and supply chain management capabilities it picked up with its 2010 acquisition of Sterling Commerce. IBM said the acquisition will also complement the Supply Chain Management (SCM) Business Process Outsourcing capabilities of its Global Process Services Organization.

“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 to the organization. Adding Emptoris strengthens the comprehensive capabilities we deliver and enables IBM to meet the specific needs of chief procurement officers.”

IBM said it expects the transaction to close in the first quarter of 2012.

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