IBM Beefing Up for Matrix Commerce in 2012

In the past two months, IBM has made three strategic moves that bolster its SmarterCommerce portfolio.  Acquisitions of Emptoris and Demandtec expanded sourcing and pricing portfolios while the new version of IBM ILOG LogicNet Plus XE further enhances supply chain network capabilities.  These actions move IBM closer to achieving the technology requirements to support matrix commerce.

New channels such as social, mobile, and virtual goods create new business models that disrupt and expose the weaknesses and rigidity in existing models.  Our research helps guide clients on how to optimize and deploy Matrix Commerce for the right customer audiences. Matrix Commerce extends beyond the sales and customer focus to include management and optimization of supporting sourcing and supply chain facets.

Specific focus of the Matrix Commerce research theme at Constellation Research will be:

  •   Market landscape of next generation products
  •   Relevant use cases by customer type
  •   Nature of Matrix Commerce
  •   Vendor selection criteria
  •   Future of Matrix Commerce

Stay tuned for more details as we prepare to launch Matrix Commerce and see summary of the three IBM announcements mentioned above and our POV in relation to Matrix Commerce.

 

Summary: IBM Completes Acquisition of Emptoris to Expand Smarter Commerce Initiative

“IBM today announced it has completed its acquisition of Emptoris Inc.  The acquisition expands IBM’s cloud-based analytics offerings that provide supply chain intelligence leading to better inventory management and cost efficiencies. Emptoris solutions bring more intelligence to procurement and supply chain operations with spend, supplier and contract management for Smarter Commerce.  Smarter Commerce helps organizations that are struggling to meet the demands of a rapidly changing market.  The acceleration in online connectivity and speed, combined with the explosion of information and unprecedented access to it, is reshaping globally interconnected commerce systems.” Link to the Press Release

Additional capabilities Emptoris brings to IBM’s Smarter Commerce include:

  • Automation of buying processes allowing companies to respond rapidly to customer demands of new digital marketplace.
  • Extends Smarter Commerce capabilities to Chief Procurement Officers
  • Improved supplier management, spend analysis and contract management
  • Automation of vendor selection, negotiation, management and compliance.

My POV: The emergence of Matrix Commerce means the procurement and sourcing process must become more flexible, rapid and automated, period. Costs, terms, lead times and available delivery format and timing information must be readily available and always up to date. Only in this way can all potential delivery service and pricing options be profitably supported, while at the same time reliably meeting the Perfect Order mandate.

IBM’s acquisition of Emptoris adds these capabilities to their Smarter Commerce offering.

 

Summary: IBM to Acquire DemandTec to Expand Cloud-Based Analytics for Smarter Commerce

“The acquisition of DemandTec will extend IBM’s Smarter Commerce initiative by adding cloud-based price, promotion and other merchandising and marketing analytics to help companies better define the best price points and product mix based on customer buying trends.

Organizations are struggling to meet the demands of rapidly shifting customer buying patterns in the era of mobile and social networks. This new digital marketplace requires companies to be highly responsive to consumer demands on the fly.” See the full Press Release here.

Specific relevant capabilities for Matrix Commerce:

  • Examine different customer buying scenarios, both online and in-store.
  • Spot trends and shopper insights to make better price, promotion, and assortment decisions that increase revenue and profitability.
  • Merchants and suppliers can work together to understand how one shopper segment differs from another to craft the best merchandising plan.
  • Connect retailers and manufacturers for collaborative planning through the cloud

My  POV: Perhaps one of the greatest complexities surrounding the advent of Matrix Commerce is profitable product selection, assortment, promotion and pricing. Never before have manufacturers and merchants of all sorts been faced with such a dynamic and competitive environment. Add to this the unprecedented information access customers now have to instant pricing, promotion and delivery options comparison to complete these aspects of the matrix. By completing the acquisition of Demandtec IBM will be positioned to deploy a collaborative cloud solution for rapid analysis and optimized resolution of these issues.

 

Summary: Announcement Letter for IBM ILOG LogicNet Plus XE

“IBM ILOG LogicNet Plus XE V7.2 is a packaged decision-support solution for supply chain strategic planning such as network design and sourcing optimization. IBM ILOG LogicNet Plus XE V7.2 enables you to more easily address both strategic and tactical supply chain decisions through enhanced ease of use and improved network design, sourcing optimization, and transportation modeling capabilities.” Link to announcement.

Specific improvements in this release include:

  • Speedier development of recommendations for more rapid business value and agility.
  • New navigation structure to understand context and relationships of data tables, for faster model building and scenario comparison.
  • Introduces first multi-objective optimization technology
  • More accessible and intuitive solution for effective use by general business analysts.

For more details, see Michael Watson’s blogpost on the Smarter Commerce blog.

My POV: Procurement and pricing are critical components of Matrix Commerce but the supply chain is where the rubber meets the road. The proliferation of customer channels and product sources increases the potential supply chain network and delivery options geometrically. Additionally, the past complexity around supply chain network analysis needs to be simplified allowing more general business analysts to participate in the decision and deployment process.  Addition of multi-objective optimization capability will allow the many tradeoffs present in these networks to be optimally sub-optimized across the competing variables of cost, carbon and service present in these increasingly complex scenarios.  The LogicTools LogicNet tool was already a quality Supply Chain Network Strategy product in 2007 when acquired by ILOG which company IBM acquired two years later in 2009.  With these upgrades and advances IBM has demonstrated their commitment to enhancing and advancing this key component of leading edge Matrix Commerce readiness.

 

Conclusion:

With these three moves IBM again demonstrates their vision and commitment to meeting the current and future challenges surrounding Matrix Commerce. IBM customers should take comfort as these moves signal ongoing investment and capabilities extension to rapidly meet and respond to emerging commerce complexity. By acquiring and further developing these leading edge solutions this ongoing commitment by IBM has once again been validated.  Competitors should be tracking and responding to these commerce shifts to ensure capabilities are in place to address Matrix Commerce. Marketers, merchants and manufacturers need solutions that address the new volatility of the Matrix Commerce environment. Only in this way can they rapidly sense and effectively respond to channel and pricing shifts that may threaten their business. Here at Constellation we are committed to tracking and identifying providers and solutions that will allow merchants and suppliers to most effectively understand and manage Matrix Commerce. Watch this space for upcoming detailed definition, reports and webinars as we continue to build out our Matrix Commerce research theme.

Jeff Ashcroft