IBM Goes the Extra MarketMile

Alliance joins Big Blue's procurement service with MarketMile's software, supplier network for indirect goods

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San Francisco, CA  February 20, 2002  In a match made in brick-and-click heaven, software mega-provider IBM is teaming up with American Express-backed MarketMile to make e-procurement software and services available to customers of IBM's Leverage Procurement Service.

IBM announced its Leveraged Procurement Service last May. Under the LPS program, IBM Global Services uses its sourcing expertise and relationships with suppliers to source goods and services, negotiate contract pricing and assemble customized catalogs and pricing for indirect goods and services that are then made available to LPS customers on a subscription basis.

MarketMile launched in August as a hosted service that allows customers to manage, through a Web interface, the procurement process for various indirect goods and services from a current stable of 60-plus suppliers.

Under the latest alliance, LPS customers will have access to MarketMile's hosted e-procurement application, supplier network and critical services such as catalog management, supplier enablement and adoption management. The new partners are promoting the joint offering as a way for companies to quickly realize the benefits of e-procurement and to manage their indirect spend through the Internet.

"This alliance will leverage IBM's expertise in e-business and strategic sourcing with MarketMile's e-procurement model and supplier network to help customers smoothly transition to e-procurement," said Ed Gilligan, chairman of the board at MarketMile and group president for American Express Global Corporate Services.

"MarketMile is an ideal business partner to help expand IBM's Leveraged Procurement Service," said William Schaefer, vice-president of procurement services at IBM Global Services. "MarketMile's hosted delivery model meets our requirements for e-business on demand applications, and their supplier network provides IBM Leveraged Procurement customers ready access to an additional set of national suppliers."

The two companies will jointly market the offering. Financial terms of the arrangement were not disclosed.

Tim Minahan, vice president of supply chain research at technology consultancy Aberdeen Group, suggested that the new alliance marked an evolution in the development of e-procurement. "If widespread adoption is proof of market maturity, then e-procurement is entering adulthood with the new Leveraged Procurement Service offering from IBM and MarketMile," he said. "Leveraged Procurement Service overcomes existing cost, resource, and skill burdens to deliver a business-ready procurement solution that is rapidly deployable and accessible to midsize enterprises."

Customers utilizing the new MarketMile-powered Leveraged Procurement Service can access pre-enabled IBM suppliers along with MarketMile's network of more than 60 suppliers. IBM and MarketMile assert that, together, their suppliers cover 95 percent of the standard products in categories such as office products, computer hardware and software, and certain categories of maintenance, repair and operations (MRO) materials.

In addition, MarketMile's catalog management service allows suppliers to customize pricing to reflect existing contracts. IBM's Leveraged Procurement Service will also take advantage of MarketMile's new search and catalog management functions, based on a customized version of Requisite Technology software.

MarketMile views the alliance as a key in helping the company become a leader in the e-procurement market, according to Brian Desmond, director of marketing for MarketMile. "If you look at what we're doing, partnering with American Express and now IBM, we are partnered with the tier-one players in the middle market," Desmond said. "So from our point of view, it elevates us to being a key player in the industry."

John Corsi, vice president of alliances at MarketMile, seconded that view, suggesting that the partnership with IBM would make his company's value proposition more compelling, given IBM's procurement clout and strategic sourcing expertise. "We see this alliance as taking us to a new level," Corsi said.

From IBM's perspective, the alliance will provide Big Blue with a path into the mid-market. "We've traditionally focused on larger customers," Schaeffer said. "By combining with MarketMile and American Express, we're able to present an end-to-end, prepackaged solution at an attractive price point that we think will be well received in that mid-market segment."

The first announced customer for the joint service is The Moore Company, a diversified manufacturer. Jim O'Connor, director of purchasing at the company, said that the joint solution offered a practical solution for Moore with the potential for a speedy implementation cycle.