IBM completed its acquisition of Emptoris in February 2012, ostensibly to bolster its Smarter Commerce solution suite. There have been significant changes for Emptoris in the intervening years, and 2015 was no different. Ardent Partners analysts caught up with IBM Emptoris/Procurement leadership recently—Michael O’Leary, Director, Emptoris Procurement Solutions; Justin Sadler-Smith, European Procurement Solutions Leader; and John Colbert, Program Director, Product Management, IBM Commerce—and discussed the company’s performance in the past year as well as what the future holds for the IBM Procurement team, as it is now officially known.
One of the key facets about this team is that they recognize the kind of challenges that the modern CPO faces. O’Leary noted that the procurement executives that IBM meets are under a huge amount of pressure today; between expectations to drive enterprise-level goals, act as stewards of risk, and manage a complex supply chain. In that context, it is understandable that CPOs can sometimes struggle to unlock true enterprise value from the supply chain.
2015: Year of Growth and Change
IBM Procurement enjoyed significant growth in 2015 as their total client roster grew 16% last year, and they improved their customer renewal rates by 8.5% across the board. One highlight, O’Leary said, was the ability to move from 5% of customers using the latest Emptoris release (version 10) at the end of 2014 to nearly 60% using the upgraded solution at the end of 2015. Additionally, 50% of all their OnCloud (hosted) clients are now deployed on IBM’s SoftLayer system which IBM believes gives it direct access, better control, and ultimately enhanced responsiveness to their customers. Emptoris believes that the customer migration to SoftLayer is a contributing factor to the 5% overall increase in customer satisfaction last year (from 85% to 90%). The positive feedback has continued since the rollout of Emptoris V10.1 in early December, 2015 with O’Leary noting in two weeks, Emptoris had 10 clients already signed up for an upgrade.
Emptoris won several new clients in 2015, including three major retailers, a vertical in which Emptoris has not historically been very strong. One of the biggest is Zalando, the largest online fashion retailer in Europe, which also happened to be the first joint deal for the full source-to-pay suite Emptoris closed as part of its partnership with Coupa.
Yoox.com was another of the major retailers that became an Emptoris customer in 2015, and Sadler-Smith also noted that USAID was another major client win in the past year. Emptoris also added BASF, Dimensional Fund Advisors, Novo Nordisk, and Ensign Group to its roster. Sadler-Smith noted that many of their new deals were for the full Emptoris suite, instead of individual modules, which is a trend in the market, particularly as procurement departments mature.
Strategic Focus
“Helping CPOs unlock value” is, according to O’Leary, where IBM believes its solutions and services can most help the procurement department. This is the concept that O’Leary said grounded the IBM team in 2015 and will do so again in 2016. As a result, the Emptoris team is focused on three distinct areas for itself in the year ahead, which it categorizes as:
- Achieving Operational Excellence—Emptoris has distinct deployment methods, including single-tenant hosted and on-premise installations, but the majority of their client growth has been in their hosted installations, according to O’Leary. This customer preference has forced the Emptoris team to focus on achieving operational excellence with its hosted solutions.
- Reinventing the User Experience—The second key strategic focus for Emptoris in 2016 is the user experience (“UX”). According to O’Leary, this focus builds upon the new user interface which was introduced last year as part of a long overdue “Blue washing” (this is the term insiders use when an IBM-acquired solution like Emptoris is overhauled to better match the general characteristics of an IBM solution). It extends that update more broadly by leveraging a “design thinking” approach used across IBM that considers how users engage and interact with Emptoris. Version 10.1 of Emptoris, released in December, was the first in a series of releases that will address UX. O’Leary says the initial customer feedback has been very positive.
- Accelerating Innovation—The third area of focus in 2016 is on accelerating innovation. One of the most interesting aspects of the Emptoris suite today is that it exists within an entire ecosystem of IBM products that may be leveraged directly and indirectly into the Emptoris products (more on that below).
O’Leary emphasized that these areas will drive the team’s decisions, investments, and actions throughout the entire year and that early customer feedback has validated these choices.
Priorities for 2016
John Colbert, the product management leader for Emptoris, then discussed the four roadmap themes and areas of investment for Emptoris in 2016: interaction, integration, analytics, and innovation. Emptoris emphasizes each of these themes in different ways, such as, in the case of interaction, where they plan to focus on user experience enhancements and how users interact with the solution (“design thinking”) versus the traditional approach to software development that prioritizes specific features and user interface improvements
Since IBM has a strong heritage in analytics, Emptoris plans to extend those capabilities into the Emptoris suite by working with reporting services that have external data systems and leveraging the capabilities of the IBM Watson group. In the case of integration, Colbert said Emptoris plans to work with other IBM product teams such as Maximo and Filenet, as well as external partners such as Coupa and other enterprise applications to streamline deployments.
Innovation, the final roadmap theme, involves using different internal tools to extend the capabilities of the Emptoris solution, such as supply chain risk reporting and natural language queries with the Watson group. Emptoris is going full-steam ahead with innovation across its suite; Colbert said there are currently up to 12 different initiatives in play, and called out four specifically that the Emptoris team is working on today.
- Big Data for Supply Risk—Emptoris is working on an integration with Watson Data Explorer that can help manage supply risk. Colbert said that this product will enable procurement to better manage supply risk by making better sense of the massive amounts of information and unstructured data that are relevant to suppliers, regions, and overall supply risk management
- Social Collaborative Procurement—The aim of the social collaborative procurement initiative, a joint solution between Emptoris and IBM’s Connections social network, is to help purchasers stay more connected with their peers, suppliers, and partners.
- Procurement Advisor—According to Colbert, the procurement advisor platform uses the natural language processing capabilities of Watson to manage an increasing amount of complex information that procurement needs to handle in order to remain compliant with regulations. Basically, the solution allows users to query Watson’s Rank and Retrieve functionality with natural language questions and receive an answer from the database.
- Watson Corporate Intelligence for Procurement—The final major initiative is an evolution of Emptoris’ SupplierIQ product that is augmented with Watson technology. The solution pulls together information from multiple sources and automatically creates the full picture for the user.
Of the four initiatives above, only the Watson Corporate Intelligence platform is currently available to users (as a service). The social collaboration application is currently in the proof-of-concept stage, while the big data for supply risk and procurement advisor applications are in earlier stages. While it is not certain how many of the 12 current innovation initiatives will ultimately make it to market, IBM-Emptoris’ push for innovation in aggregate is viewed by Ardent as a strong positive.
Final Thoughts
Nearly four years after IBM acquired Emptoris, the procurement solution appears to finally be truly integrated under the IBM corporate umbrella. Recently, IBM has made some good, albeit overdue, investments in the Emptoris suite—particularly in the user experience realm—and is now working to drive it forward with support of the larger IBM product portfolio. Whether they are successful or not remains to be seen, but the strategic focus to create more forward-thinking procurement applications that can drive success in an increasingly data-driven world certainly gives them a fighting chance.
Separately, our CPO RISING 2016 Research Survey is now open to CPOs and procurement executives alike. Take the survey to see how you compare to the industry’s Best-in-Class.
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