In a bid to address growing customer need for deeper visibility into direct materials and maintenance, repair and operations spending, enterprise supply management software provider Emptoris (Burlington, MA) earlier this week acquired spend data management software provider Intigma (Irving, TX). Acquisition price was not disclosed.
"Over the last two years we saw more demand for this technology and we started to have a clear understanding that this is something we can't afford not to offer," said Emptoris CEO Avner Schneur, in an interview.
Lora Cecere, research director of supply chain management at AMR Research Inc. (Boston), agreed with Schneur's assessment. "With an annual growth rate above 8%, sourcing and procurement is one of the fastest growing areas in the enterprise applications market, and spend analysis is one of the hottest areas within sourcing and procurement," she said in a statement.
Emptoris had a choice. It could develop the technology itself, "but that was unlikely because of time to market and the knowledge base that was needed," said Schneur. Or it could buy a company that already had the requisite technology, skills and knowledge. Choosing the latter, Emptoris tested five different companies' capabilities, including Intigma, with which it had a partnership (Schneur declined to disclose the names of the other companies.)
The companies had to classify, normalize and enrich 15,000 line items from a real case study. Intigma performed the best out of the group. "We expected them to ... but I was pleased to see just how much better they were," said Schneur. Intigma had a two week turnaround time, classified 75% of the line items and "was the highest quality we could find," he said.
The next-best company had a 12 weeks turnaround time and lower quality. The worst company took 15 weeks. "Intigma had far superior quality, which verified that this was the correct decision," said Schneur.
Intigma's technology automatically cleanses, enriches and classifies unstructured procurement and supplier data locked inside companies' ERP systems. Where critical data is missing, its proprietary technology supplements that data with information from third-party sources.
By expanding its current spend analysis offering, Emptoris is now able to offer customers the ability to manage their enterprise spend with full 360-degree visibility into all purchases. This additional insight can then be used to fuel cost savings programs that accelerate earnings growth and expand procurement monitoring programs, which ensure compliance with internal processes and mounting government regulations.
"We've let our customers get significant bottom line financial impact and reduced total cost, which translates into increased earnings," said Kevin Potts, director of product marketing for Emptoris. For example, after using Emptoris' software, Motorola experienced cost savings of $600 million, Potts said. "Motorola won an award for this ... the CFO mentioned this helped the company increase its earnings ... its stock jumped," he noted.
Intigma's data management capabilities will be integrated into the Emptoris 5 enterprise management software suite of Web-based applications that integrate spend analysis, supplier negotiation, optimization-based bid analysis, contract compliance and supplier performance management capabilities. The full solution, with the additional data management components, will be available in three months, said Schneur.
All of Intigma's employees were retained by Emptoris. "There will be no layoffs at all ... the company will only grow, [Intigma employees will] have more work to do," said Schneur.
Schneur stressed that Emptoris' acquisition of spend analytics developer Zeborg in September 2003, supplier assessment software provider Valuedge in December 2004 and now Intigma is not part of a grand acquisition strategy. "It's a solutions strategy. We constantly review what components and services to add to our solution. We ask, 'Can we develop it, or do we go outside?' ... If we'll have a need for another supplement, we will figure it out in the future. There are no specific acquisitions in sight at this moment," said Schneur.