EDS's eBreviate subsidiary has expanded its online auctioning and sourcing services with the acquisition of Procurance, a developer of Web-based sourcing-management software. Although EDS has not disclosed the financial terms of eBreviate's first acquisition, the deal will allow eBreviate to provide software and services that cover online procurement from strategy development through supplier contract management.
Procurance developed its spend manager, deal manager, and sourcing manager applications to help customers better understand what they're spending on certain items, identify and consolidate suppliers, and negotiate contracts, all over the Internet. Whereas eBreviate's services are designed to help companies participate in online auctions and marketplaces, Procurance's applications are directed at analyzing how a company is spending its money, communicating the terms of a supplier contract with employees, and creating a central repository of existing contract and procurement information.
Procurance grew out of a global procurement sourcing initiative that oil and gas producer Arco established in late 1997 to improve the company's bottom line. A number of acquisitions over the years left Arco with disparate purchasing systems that made it extremely difficult for the company to track spending, says Dale Peterson, a co-founder of Procurance and now general manager of sourcing for eBreviate. The team of IT and procurement professionals that Arco assembled eventually helped the company save more than $50 million in corporate spending. When BP Amoco acquired Arco earlier this year, Peterson and co-founder Steve Murphy took the opportunity to spin Procurance out as an individual company.
The acquisition of Procurance adds 10 procurement and IT professionals to eBreviate's staff of about 80 employees. By expanding its business to include Procurance's spend-analysis and supplier-contract management applications, eBreviate is looking to fall in step with the future of online marketplaces, says Hurwitz Group analyst Bob McCullough. Online "marketplaces will become less of a place for transactions and more of a place for developing relationships between buyers and suppliers," McCullough says. Sourcing is a way to develop these relationships so both parties feel more secure about the underlying technology.