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.