WALNUT CREEK, Calif. Oct. 31, 2000 eBreviate, a provider of online-sourcing tools, announced Tuesday that it is acquiring Procurance, a pioneer in the development and implementation of sourcing management tools for large corporations.
Terms of the acquisition were not disclosed. Procurance co-founders Steven Murphy and Dale Peterson are joining eBreviate as general managers of e-sourcing management technologies. They will lead the sales and implementation efforts of the new products from eBreviates Plano, Texas office.
The strategic sourcing management capabilities of the Procurance technology add spend analysis, sourcing collaboration, deal management and sourcing portal capabilities to eBreviate's current suite of sourcing tools. The two company's products were complimentary, according to Peterson. "Our goal was to develop an end-to-end strategic sourcing support application, and between our tools we found very little overlap," he said. "We feel now that we have a complete e-sourcing suite of applications."
Procurance's application suite includes Spend Manager, which provides initial and ongoing analysis of enterprise spending, as well as spend history reports; Deal Manager, which publishes and markets supplier agreements across a business enterprise so that internal clients can easily access, and buy in accordance with, the company's contracts; and Sourcing Manager, with workflow and collaboration solutions for negotiators to work online around the globe. The browser-based solution also includes portal functionality for central access to all spend analysis functions.
The Procurance application suite, now in Version 3.0, was initially developed and deployed at energy company ARCO (acquired by BP Amoco earlier this year) as the core application in support of ARCO's global procurement strategic sourcing initiative to help reduce costs in its $7 billion annual spend.
ARCO had established a global procurement organization in 1997. Murphy, a 25-year ARCO veteran, primarily in procurement, and Peterson, an information technologies specialist with 21 years of experience, joined the new ARCO organization to develop strategic sourcing tools. ARCO internally rolled out the tools that would become the Procurance application suite in late 1998 and early 1999.
Procurance enabled us to integrate our different accounts payable systems to generate meaningful, real information of our external spend," said Lawrence Aldridge, former chief procurement officer at ARCO. "This information was an essential building block in the strategic sourcing process that drove over $50 million in savings at ARCO. In addition, the tool enabled ARCO to monitor compliance within the company, ensuring these savings were realized year after year. No company can successfully implement sustainable strategic sourcing without this type of management tool.
After BP Amoco announced in early 2000 that it was buying ARCO, Murphy and Peterson formed Procurance in June, bringing along the team that had developed the sourcing tools and acquiring the rights to the software. The acquisition by eBreviate will allow the Procurance team to bring their software to eBreviate's current client base.
eBreviate says it will target its newly enlarged eSourcing suite at Global 3000 companies, as well as at large global Net markets that are seeking technology solutions for their individual members.
We see these new sourcing management tools best suited to customers with center-led procurement organizations," said Sarah Pfaff, executive vice president of sales, marketing and strategy for eBreviate. "Where there is a proliferation of back-end legacy systems, when there has been recent merger and acquisition activity, or where an ERP solution does not enable strategic procurement decision-making, Procurance is the answer. With disparate systems, the seemingly simple question of what a company has spent, on what and with whom leads to tedious analyses of current spend.
Added Murphy: "We like to say that you can use our product if you can't answer one of these three basic questions: What do I spend? Who do I buy from? And what do I buy? If you are going to really get serious about e-procurement, you need to have the data available."
eBreviate reports that it has facilitated purchase negotiations and auctions for more than $2.9 billion, and counts marketplaces, exchanges and companies such as Procter & Gamble, Delta Airlines, Sprint and Bosch among the more than 40 clients using its tools.
eBreviate, an EDS company, is headquartered in Walnut Creek, Calif., with regional offices in Plano, Texas, and London, England.