Competitive forces: Emptoris wastes no time pursuing Ariba-Procuri customers

The same day Ariba announced plans to broaden its appeal to medium-size companies by purchasing Procuri, which offers spend management applications via the Software-as-Service (SaaS) model, Emptoris issued a news release containing a special program for Ariba and Procuri customers.
By Rachael Young, MBT staff September 25, 2007

It has become almost common practice in the software industry for competitors to offer special incentives in an attempt to lure customers from two companies in the midst of a merger. But spend management software supplier Emptoris may have set a new speed record in rolling out its offer to customers of Ariba and Procuri .
The same day (September 20) Ariba announced plans to broaden its appeal to medium-size companies by purchasing Procuri, which offers spend management applications via the

Software-as-Service (SaaS)

model, Emptoris issued a news release containing a special program for Ariba and Procuri customers.
Under terms of the offer, which runs for 90 days, Procuri and Ariba enterprise customers adopting the Emptoris supply and contract management suite can receive credit for up to a year of subscriptions purchased from Procuri or Ariba. Emptoris also promises complimentary migration services including initial training, a spend analysis evaluation, pilot program, and a limited number of managed sourcing events.
“Everyone knew that Ariba had plans to purchase Procuri,” Avner Schneur, president and CEO of Emptoris, told MBT , when asked how the company formulated its offer so quickly. “We were just waiting for the announcement so that we could offer our program.”
Ariba has agreed to pay $93 million for Procuri, in equal amounts of cash and stock. It also has pledged to put $14 million of the cash in escrow to secure indemnity obligations of Procuri stockholders. An additional $8 million will pay off Procuri’s debt. The transaction is expected to close in January, 2008.
Ariba CEO Bob Calderoni says the acquisition will accelerate Ariba’s growth, particularly by strengthening its position among the small and medium-size companies that are likely to be attracted to the Procuri SaaS offering.
Additionally, Procuri CEO Mark Morel states that the “combination of Procuri and Ariba creates the clear leader in the global market for on-demand spend management solutions.
“The combined company will deliver a spend management platform and services that enable companies to control spend, mitigate risks, and improve performance across global supply chains,” he continues.
However, Emptoris holds a different view. “This is a forced transition [for Ariba and Procuri customers],” Schneur says. He also argues that when previous mergers and acquisitions are taken into account, Ariba is “adding its third or fourth different platform/offering.”
By contrast, Schneur says, “Emptoris has a single platform that can scale easily from a basic software SaaS offering to an enterprise offering, which is exactly what the customers are demanding.”