Analyzing the GEP/Enporion Acquisition (Part 1: Company and Solution Overview)

On Monday morning, GEP announced it had acquired Enporion. For Spend Matters' initial coverage of the deal and background on the two organizations, you can read our first take immediately following the announcement from yesterday. We'll continue our analysis in this post, taking a look at some additional details about the transaction and the acquired organization. We'll also look at what it means for customers and competitors in the final posts in the series covering the deal. Late last week, GEP shared with Spend Matters that the ink had just dried on the transaction and they were excited to immediately get started on the work of integrating the two companies and application suites. GEP executives noted the transaction brought eleven new customers to the organization, include Duke, Progress and a range of other large customers in the utilities industry.

The GEP acquisition follows an employee buyout that occurred in 2009, when George Gordon, Enporion's CEO, led a buyout of the company's initial investors. At the time, according to press reports, the transaction gave Enporion's 23 employees 90% ownership of the organization. The previous owners (at various stages of evolution) included CMS Energy, Allegheny Energy, National Grid, PPL, UGI Utilities, Ameren and Allete. Following this transaction, National Grid remained a minority investor, and Gordon remained at the helm. For those who have met Gordon (including Spend Matters, starting when our team was just one person), his passion, technology savvy, subject matter expertise and humility came across loud and clear in both the core efforts of Enporion as well as curious diversions (e.g. we once recall a conversation around tree-trimming scheduling and planning optimization software for utilities where surprisingly, millions and millions are wasted every year).

Interests in esoteric and wasteful spending in the utilities industry aside, GEP told Spend Matters that the primary reason for the acquisition was to provide technical enhancements to its own P2P suite (more on the Enporion offering in this area in a minute). GEP was also impressed with Enporion's supplier network and contract management capabilities (even though in both cases, the usage of the tools was limited to one industry, in certain cases with specific unique requirements which may or may not be extensible to other areas directly). GEP shared that upwards of $20 million had been invested in Enporion technology and R&D over the years, owning to its roots as an exchange with significant capital backing in its early years. Yet ironically, one of the strengths of the current Enporion platform is the speed and nimble nature of the development environment, our own research suggests.

In the core P2P area, Enporion developed a range of capabilities, all of which were capable of providing tight integration linkages into back-end utility ERP systems including SAP, Oracle, PeopleSoft, Deltek, Ventyx (Indus) and others. While Enporion favors a cloud deployment approach with both buyers and suppliers, they focus quite a lot of energy on P2P and supplier order management systems integration. In cases where P2P systems have to integrate behind the firewall with a selection of non-Enporion tools on the front-end, Enporion would provide an XML-driven integration approach. On top of its solution capability, Enporion also offers a range of supplier enablement services including supplier outreach, training, help-desk functions and related services for initial on-boarding and ongoing vendor management focused on P2P enablement.

Front-end Enporion P2P tools consist of four primary modules:

1. Procurement Manager eProcurement toolset (including the ability to create requisitions, shopping cart capability, workflow, approval routing, ERP integration, etc.)
2. Catalog Manager (including punch-out capability and search capabilities)
3. Hosted Supplier Portal capabilities (the ability to manage supplier-facing activities for self-service, like POs, invoices, ASNs, remittance advice, payment status, etc.)
4. Transaction Manager (providing a replacement for EDI for document routing, integration and translation between buying organizations and suppliers)

These capabilities also enable Enporion to support a range of closed-loop buying and payment activities, including the ability to flip an order into an electronic invoice via a supplier-facing portal or to have supplier billing and AR systems integrate directly with Enporion in a direct connection (via XML) manner. All in all, Spend Matters considered it a very comprehensive suite during our last briefing on it a few years back, although it was not one Enporion shared with those outside of its small customer set in a consistent manner (which likely explains our infrequent interactions in recent years). But perhaps this transaction will take them from behaving like a shared service software provider for a captive customer base -- albeit one with solid technical and functional capability -- to a provider that deserves to get significantly more at-bats on the global P2P playing field.

- Jason Busch