Earlier today, Accenture announced that it was taking ownership of Ariba’s sourcing services business (you can read our initial take on the deal here). As one sell-side analyst noted succinctly (and appropriately) in quick e-mail to me this morning, the legacy “FreeMarkets asset has found a new home.” I had previously worked at FreeMarkets for five years between 1999 and 2004 and during this time — and following the Ariba acquisition — the firm’s underlying structure changed dramatically as it transitioned from a project delivery structure that mirrored those of many other services firms to a new type of sourcing services delivery “factory,” with each stage of the strategic sourcing process sub-divided between different resources to maximize Ariba’s margin while delivering the best and most consistent result to the client.
Even though Ariba did a less-than-stellar job in making the most of the asset in the end from a commercial perspective — hence, the ultimate deal with Accenture — the underlying group remained capable of delivering, in my view, one of the best sourcing services products in the market. But what does this deal mean for Accenture, Ariba and current and potential customers? Here’s our quick take in a multi-part series exploring the topic, followed by a more detailed research brief (for free download) later this week. We’ll start first by looking at the implications of the transaction from the Accenture perspective.
Accenture Procurement BPO Implications
- Accenture has essentially acquired an asset at 10% of the value that Ariba paid for it six years ago
- With the acquisition of Ariba’s sourcing services group, Accenture gains a unique services asset whose only real process equivalent (but not necessarily equal) in the market is ICG Commerce. In our view, this will certainly enable Accenture to become more competitive in BPO deals (where they have not been seen as much recently as competitors including IBM, ICG Commerce, Infosys and others)…