Emptoris Inc.'s acquisition this week of diCarta Inc. will allow Emptoris to more rapidly integrate compliance management features into its supply management software suite, according to President and CEO Avner Schneur.
"Over the last few years we've seen more and more need for contract and compliance management, so we felt we wanted to beef up that whole area," said Schneur, who will continue to oversee the privately owned combined company bearing the Emptoris name.
Schneur declined to reveal how much Burlington, MA-based Emptoris paid for diCarta, a privately owned vendor of sell-side and buy-side contract and compliance management software. Prior to the acquisition, diCarta had about $31 million in annual sales and Emptoris had about $70 million in annual sales, according to estimates from Forrester Research.
San Carlos, CA-based diCarta claimed 50 customers. The combined company will have about 150 enterprise customers, including manufacturers such as GlaxoSmithKline and Motorola.
The diCarta board of directors has been dissolved, Schneur said. There are no changes to the Emptoris board as a result of the deal. diCarta's products will be integrated into the Emptoris product line, Schneur said.
diCarta CEO Mike Kaul has left the company, according to Schneur, along with six other former diCarta employees. The combined company will have about 360 employees.
Although the two companies focused on markets that are rapidly converging, they shared few customers, Schneur said.
At the same time, Emptoris announced plans for a new release of its key product, Emptoris 6, which enhances the company's core supply management offering while adding compliance and contract management functionality from diCarta. The two companies had been working together on the new release for nine months, Schneur said.
That collaboration was the latest extension of a 30-month-old partnership between Emptoris and diCarta that has also seen the companies cross sell each other's products. The co-development efforts led to the acquisition, which actually became final last month, Schneur said.
The deal makes sense from a product strategy standpoint, said AMR Research analysts Mickey North Rizza and Mark Hillman in a research alert . The addition of diCarta's contract and compliance management with Emptoris's supply management products will give chief financial officers a tool they can use to better track and transform supply networks, the analysts said.
Emptoris's ability to challenge Ariba Inc. for preeminence in the supply management market, however, will depend on Emptoris's ability to successfully combine its culture with that of diCarta and on its success in getting its new, combined sales force to sell both sets of products, the AMR analysts said. (Learn why Emptoris was one of Managing Automation's "Ten Companies to Watch".)
The new Emptoris 6 release includes a Contract Management Solution which can be licensed separately or as part of a suite linked with Emptoris's Supply Management Suite. The Contract Management offering supports multiple contract types, including procurement and sales contracts.
Emptoris 6 also includes a Compliance Solution that companies can use to manage and monitor financial, contract, and procurement controls. Using the module, manufacturers can compare spending against contractual commitment, identifying overcharges as well as opportunities for rebates. Users can also use the module to track and compare spending levels against established financial controls.
That, Schneur said, can help companies identify such problems as fraudulent payment activity.
Emptoris 6 also supports regulatory compliance by, for example, automating Sarbanes Oxley 404 contract reporting. Manufacturers can use the reports to reduce audit costs associated with Sarbanes Oxley reporting. (SOX compliance check list.
The new release of the Emptoris suite also includes tighter integration with SAP AG's ERP platform. Using SAP's NetWeaver Application Server and NetWeaver Portal technologies, Schneur said, Emptoris has created links between the new compliance module in Emptoris 6 and the Materials Management module in SAP's procurement solution. The integration allows sourcing and contract decisions managed in the Emptoris suite to be directly reflected in a company's procurement transaction processes managed by SAP, Schneur said.
(Attend our three-part, on-demand webcast series on compliance management.)
Emptoris 6 is available now either as licensed software of on a hosted software-as-a-service basis, the company said.
In addition to rolling out the latest version of its procurement suite, Emptoris also unveiled a couple of new service offerings. A Spend-to-Contract Compliance Fastrack service offers customers spend analysis deployments within 90 days. And a new ValueNow Program offers customers incentives and migration services to companies switching to Emptoris from another supply management software product.