IBM sunsetting Emptoris signals the beginning of a new era for contract management specialists
Earlier this year IBM announced that it was to retire its Emptoris contract and sourcing supply management tool, but does that mean the death knell has sounded for contract management? After all, if IBM with all of its experience and resources can’t make it work, can anyone?
IBM acquired Emptoris in 2011, but after just six years it recently announced a deal that will see the technology giant foster a closer working relationship with SAP and migrate its Emptoris customers to the SAP Ariba platform. Although Emptoris customers will be supported for the next several years, there will be no product updates and the software is effectively no more. But rather than the demise of contract management, this signals it is best left to the specialists who operate in the arena. IBM is simply unloading a technology it didn’t create in-house and no longer has the inclination to develop. Instead, it will focus its attention on the fast-moving enterprise technology and services sector, leaving the specialists players to thrive and innovate in the market.
The future of contract management
With its exit, IBM leaves the contract management sector in a very healthy position. While Ariba and Emptoris are great sourcing and procurement technologies, they offer a vast array of features that, in reality, many organizations neither need nor want, but are paying for regardless. This can lead to customer dismay at investing in technology they are not using.
Additionally, Ariba and Emptoris have traditionally focused on the procurement side of contractual obligation and, while effective for the procurement department, they don’t have the specialist knowledge to cover the legal, HR or finance departmental contract management requirements. This means many organizations were paying for not just under-utilized technology, but also losing the advantages that cross organizational contract management can offer.
A clear mandate towards effective contract management from the senior leadership is one of the best ways to quickly remove work silos, promote cross-departmental collaboration and impact positively on a company’s bottom line. Investment in contract management technology will deliver considerable ROI once it has moved on from being just an add on for one team (be it procurement, finance or legal). The key to get unstuck is to start small- choosing one area of your contrct portfolio-, create a meaningful target and work towards it. To do this, companies have to find a contract management supplier that can customize technology to their needs, provide consultancy services and act like a partner in the journey towards the target. Only after success has been proven can contract management be truly embedded across an organization.
For IBM Emptoris’ customers this could be the best moment to change gear and re-evaluate what their business really needs to implement effective contract management. Having already used Emptoris for a number of years, customers are by now experts in their contract management requirements. They are better equipped to make smarter decisions, and this time around will know exactly what they need to look for.
Migration or migraine?
Migration will undoubtedly be a high priority. IBM is encouraging customers to migrate over to Ariba, but without timeframes or cost implications, how are businesses to evaluate the longevity and value of yet another system? SAP is not, after all, known for its quick implementation times. Ensuring the right data is migrated in the right way to guarantee that value can be derived from the information is crucial.
For a successful migration companies need to choose providers who offer quick and seamless integration into their business. Automization, combined with highly qualified reviewers, can make all the difference in a migration project. Contract experts should work with GCs to identify what data needs meta-tagging, how to conduct system uploads quickly and which data points should be included for any future litigation and risk management; and not just from procurement contracts, but from across the business.
While Emptoris and Ariba are focused on procurement, the data within HR, legal and finance contracts is also part of a portfolio that requires management and mining for valuable insights. A migration to a new system is an opportunity to realize that contracts are not just a risk portfolio that need managing, but can drive value to the bottom line. Specialist contract management software can actually help companies save money, while renegotiating contracts to help drive more revenue.
Opportunity for procurement, legal and finance to collaborate
This raises another question: will Ariba help internal teams collaborate for interdepartmental advantages to the bottom line? As we mentioned, the focus on procurement means other departments may assume contract management is not within their remit. But IBM’s move gives procurement, legal and finance functions the opportunity to work together to meet shared business strategy. It’s worth considering a system that gives each team member access to shared information and insights, personalized reports and customizable data to help with board and senior commercial decisions.
Contract management is more than just procurement; it’s more than just a single storage repository where dumb data sits; and it’s more than just long implementation cycles and migration headaches. Contracts are the very DNA of business; they help create, maintain and run business relationships. As organizations transition through digital transformation, digitizing those contracts and mining them for the valuable data within will ensure life and growth in the contract management sector for many years to come.