IBM is buying Emptoris, (s IBM) a specialist in supply chain and contract management analytics, in what is the latest example of an entrenched IT provider’s buying analytics and cloud capabilities.
Emptoris bills itself as an analytics supplier, and, according to its website, it delivers its software in on-premise, hosted and Software-as-a-Service (SaaS) models. This news comes just a week after IBM announced its $440 purchase of DemandTec, a supplier of web-based analytics for retailers.
This advent of cloud computing — including SaaS — and the big data boom means that the need for analytics to help business users sort, filter and visualize all of that information is exploding. Last week SAP bought SuccessFactors, (s sap) a SaaS-based human resources specialist. Part of the appeal there was SuccessFactors’ workforce analytics know-how.
This overwhelming need for better, glitzier analytics helped drive IBM’s earlier purchase of Netezza, EMC’s (s EMC) acquisition of Greenplum, SAP’s development of the well-regarded HANA and Oracle’s (s ORCL) decision to build Exalytics. Netezza, Greenplum, Hana and Exalytics are all data analytics appliances.
In its statement about the Emptoris deal, IBM said:
With this acquisition, IBM extends its “buy” portfolio of solutions focusing on the needs of procurement and sourcing professionals. Procurement and sourcing professionals increasingly need better supplier management, spend analysis and contract management solutions to lower sourcing costs, improve contract compliance and help meet growing customer expectations of supply chain efficiency.
Emptoris, based in Burlington, Mass., claims 350 customers, including blue chip accounts like Delta Airlines (s DAL), Keyspan (s KSE), Motorola (s MOT), Kohler, Heinz (s HNZ) and UnitedHealthcare (s UNH).
Terms of the deal were not disclosed. And there is some doubt whether Emptoris is as cloud-savvy as portrayed, at least partly because it’s an older company, founded in 1999, before the advent of cloud computing or SaaS.
“If you look at this compared to DemandTec, Emptoris has 725 employees versus 350 [for DemandTec] which means they have 107 percent more employees but 28 percent fewer customers,”said Marty Wolf, the president and founder of Martin Wolf M&A Advisors. That scenario smacks more of the old-school software-license-sales-and-support model as opposed to SaaS. That means IBM bought vertical expertise that it can repurpose to the cloud itself, he said.
And it got a bargain. “I expect they paid 1.5 to 2.5 times trailing revenue [for Emptoris] compared to 4.5 times trailing revenue for DemandTec,” Wolf said.
Here is an interesting aside for those of us in the Bay state: As of now IBM has bought 20 companies in Massachusetts since it snarfed up Lotus Development Corp., in 2003.
This land grab for analytics — especially in specialized areas — is bound to continue into 2012. Comments from industry leaders over the past few months show that this M&A will only continue in this arena. Pat Gelsinger, the president of EMC’s information and infrastructure products unit, said he expects more action in what he called a $70-billion-and-growing market for analytics. Many visualization, data transport, and extract, transform and load (ETL) tools still “have to re-emerge in this big data domain,” he said.
In other words: Buckle your seat belts.