Procurement and Supply Chain Professionals

Monday 8 February 2010

Capgemini and IBX deal to shake up procurement outsourcing

Capgemini and IBX deal to shake up procurement outsourcing
Posted on Tuesday, February 2 by David Rae in Procurement Outsourcing, Procurement Technology, Technology | 2 Comments While not quite on the scale of Kraft Foods' acquisition of Cadbury, news that Capgemini is to acquire Swedish procurement technology company IBX is, in its own way, a fascinating development which points to interesting times ahead for the procurement outsourcing space.

According to Hubert Giraud, global leader of Capgemini BPO, the deal means that potential clients only need seek a single partner for procurement outsourcing. "Not only does the fully integrated approach achieve significant savings faster, the required investment to recognise and achieve the saving is also less," he says.

This maybe true, but the likes of Accenture or IBM would argue that by partnering with technology companies such as Ariba and Emptoris, they are in a similarly strong position. They could also argue that, in the long term, they will benefit from the advantages an independent company brings (more focus and innovation, for example).

But if we were to don the speculative hat for a moment, could this finally be the move which triggers a wave of consolidation in the e-procurement and sourcing space?

With outsourcing/consulting firms potentially in the market to pick off specialist e-procurement players, traditional enterprise software vendors could well be forced into a move. Oracle's strategy has always been growth by acquisition. SAP's has always been organic, a trend which shifted with its acquisition of Business Objects a couple of year's ago.

But SAP already has a relationship with IBX where the latter provides some enabling capabilities for SAP software; while SAP sells on-demand technology provided by IBX (and Hubwoo, as it happens). Oracle is also a player, with its own on-demand procurement solution.

Currently, it's all a bit of a mess, with lots of small IT providers partnering with the giant software, outsourcing and consulting vendors.

But the Capgemini/IBX deal shows that at least one giant consulting and outsourcing vendor has seen the potential rewards that on-demand e-procurement can bring to its offering. And that could shake things up nicely.

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