May 17, 2017
SAP Ariba & IBM today announced a partnership that had been a rumour for a few days now. Part of the deal includes IBM gradually retiring Emptoris and encouraging its customers to migrate to SAP Ariba.
It’s an ambitious move by SAP Ariba. IBM Emptoris’s leadership had an exciting vision of next gen digital procurement but decided they couldn’t deliver it without a cost prohibitive replatforming of its various products. SAP Ariba has a good suite of products and a captive market, but now its leaders have shown that they also have a vision for digital procurement. The partnership makes sense for both companies.
· IBM can now convert its digital procurement vision into revenue streams. By linking up with SAP Ariba it will be able to create a royalty stream for IBM Watson and implementation work for IBM GBS. Gracefully retiring Emptoris is a pragmatic decision and avoids wasting money trying to shore up a revenue stream that was doomed to decline anyway.
· SAP Ariba will benefit from IBM’s vision, technology, and influence. It will get some new ideas about the opportunities for digital procurement. IBM GBS’s procurement transformation practice will become a source of leads for SAP Ariba. IBM’s own procurement department may be a proving ground for its innovation, (assuming that it eventually migrates from Emptoris to the Watson-enhanced SAP Ariba platform).
The problem with this announcement, as with so many SAP announcements, is that it is about plans and hope rather than actual software. The press release does not say when the collaboration will deliver anything that customers can actually implement. SAP has a long history of premature announcements and releases, so I’ll wait to see actual software being used by real customers before I get excited about this initiative.
IBM Emptoris customers will be wondering what the announcement means for them. SAP hopes to persuade them all to migrate to SAP Ariba, since many of them are already SAP ERP customers. However, those customers should also look at what else is available, because there is a wide choice of alternatives to SAP. There are many independent SaaS providers that are innovatively applying AI to digital procurement, particularly in the areas of supplier risk management, employee enablement, and invoice validation. Moreover, there is no rush for customers to do anything, because IBM will continue to support Emptoris until at least 2020.
Bottom line: I’m optimistic that this collaboration will help SAP Ariba accelerate its delivery of a next generation digital procurement platform, but skeptical about the likely timescale. Emptoris customers should wait and see what innovation comes out of the joint IBM/ SAP Ariba “Cognitive Procurement hub”, and what else is then available in the market, before deciding to which product to switch.