News reaches us that IBM is sun setting its Contract Lifecycle Management product, Emptoris, and will be encouraging its users to migrate to the CLM module within SAP Ariba over the next three years. They will be working on joint sourcing and procurement solutions in the future and this is the first step of their partnership. As a partner of Ariba’s we believe that IBM has made a great choice – Ariba are a class act and their software is being used by many of the largest institutions in the world.
As a company focused on contract discovery and analytics, Seal has more than a spectator’s view on the world of CLM. We have been providing contract migration services to and from CLM systems for the last 7 years, and these have included both Emptoris and SAP Ariba. More importantly, we have been providing a world-class contract analytics platform that has been adding value to CLMs of all hues and colors, including those two. And so, at an inflection point like this it is always good to reflect on where the CLM market is right now.
The first question one needs to ask is why is IBM doing this. Is it an acknowledgment that Emptoris has run its course? The then 12-year old sourcing and procurement software business was acquired in 2011 by IBM in a deal that was rumored to be around $600m. Roll on 6 years and IBM has decided to call time on it. Analyst estimates put the annual combined revenues of the CLM vendors at between $375m and $400m. IBM does not disclose publically the annual revenues of point products like Emptoris, but putting two and two together one could infer that the revenues from Emptoris probably are not stellar.
Secondly, one might also ask whether the functionality provided by Emptoris is actually fit for purpose in today’s AI driven world. Whilst CLM has been predominantly used to manage the review and approval process of contracts, including redlining, library services and workflow, its success has been somewhat muted. Searching contracts within the repository has proven to be a challenge (as it is driven by using static metadata usually created at the time of creation or ingestion), and therefore a key business benefit – being able to react immediately to assess clause instances or identify revenue opportunities buried within contracts – has not been available. That is where Seal has been delivering an edge for many Fortune 100 companies. In reality, CLM systems have largely been used as repositories for contracts and a single source of truth for those contracts that have been imported or created within. As part of an overall procurement software implementation, CLM certainly has its place for most companies, but it isn’t the whole story.
And so organizations that have implemented Emptoris have an opportunity today to consider their options. Firstly, they can really look at how they are using their CLM and decide whether it is primarily a repository for contracts with some basic document creation functionality, or whether it is being fully utilized with workflows and deep categorization/classification of contract data.
For organizations that fall into the first category then I would suggest a highly-sophisticated contract discovery and analytics platform like Seal would be a good place to start. This will provide a quantum leap from where they are today, certainly in terms of understanding what exactly is contained within their contracts, which after all is where core value is generated. Seal’s analytics capabilities are award-winning and highly sophisticated, and by using Natural Language Processing models together with Deep Learning and Latent Semantic Indexing, our users are able to derive answers to highly complex and specific questions on the data contained within their contracts. Utilizing Analyze This Now (ATN) users are also able to validate contracts based on standard clauses right from within the familiar interface of Microsoft Word.
For the set of users that are deriving as much benefit as they want out of their current Emptoris system and want to migrate to the Ariba platform, Seal can provide significant added value in several ways. First, the migration of contracts from Emptoris into the new platform is in our wheelhouse, is how the company started, and is still a core competence. Secondly, as the migration and ingestion is done, the extraction process can deliver the understanding at the word, clause and paragraph level into what is actually stated in the contracts. This can then massively enhance the target CLM solution. We have plenty of use cases of companies using Seal and Ariba’s CLM together to great effect.
It is our view that Seal Contract Discovery and Analytics can be an ideal first step to put control around contracts especially when looking at moving off of Emptoris. What many users care most about is understanding what contracts they have and what data are contained within them. They want dynamic querying of the economic data trapped in their contracts – and most importantly, they want actionable insight on what they should do next, given that data. Seal does this. Seal provides an important solution to help companies not only migrate to the Ariba platform but ensure AI access to unstructured data in contracts is available ongoing.
As Emptoris users consider their next steps, perhaps they need to re-examine what they are trying to achieve with their implementations, take a look at the new innovative analytics based solutions out there and consider an overall contract solution including AI which will provide much better overall data and outcomes.
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