Find Research
Our World View
Industry Perspectives
Research Program
Parallax View Magazine
> Emerging Applications of Blockchain for Supply Chains

View our collections of research around key subject areas:
>
>
>
>
ERP
>
>
>
>
>
>
>
SRM
>
>
WMS
 
 
Article
Wheelers and Dealers in Supply Chain Solutions for 2012

In the quest for ever bigger companies and broader footprints that integrate more processes, we're seeing mega M&A deals in supply chain and retail solutions this year, enabling investors to cash in. But will these deals make a difference to the customers? And more importantly, will they create innovative solutions?


Full Article Below -
Untitled Document

Several recent mergers and acquisitions have caught our attention. Here we touch on what each of those means.

RedPrairie /JDA Merger Changes the Competitive Landscape

First, let’s take a look at the pending (as of this writing) merger between two of the oldest and largest companies in the supply chain, RedPrairie and JDA. RedPrairie is going to pay $1.9B to investors to acquire JDA. But that will just be the beginning of a long and expensive road to integration to try and create a ‘mega supply chain solution’ with a comprehensive portfolio that serves many, many industries. Though their key message was one of multichannel, we feel that in reality part of the motivation may be satisfying the investment market’s quest for ever bigger companies. In addition, with firms like SAP and Infor selling standalone supply chain modules, competition in supply chain is tough—and getting tougher. You can read more about this merger in “JDA RedPrairie Merger.”

NCR—Will They Finally Become Interesting?

NCR Corp. (NCR) announced their intention to acquire Retalix for $650M.1 This puts NCR squarely in the software business. Like many hardware companies that are ‘software wannabes’ (IBM, HP, for example), the ancient NCR has had a consistent presence in the retail market. But they lacked pizzazz!

Retalix, whose presence seems ubiquitous, yet in another way quiet, may see continued investment from their new owner as NCR’s ambitions are to be a 'game changer’ in retail, creating a full enterprise platform. Those are big ambitions. Certainly, retailers need a solution that really was designed for them, not a manufacturing ERP solution that has been retreaded for retail. In particular, we can hope that with the expertise of NCR, Retalix, and the Radiant expertise, some revolution in point-of-sale, customer experience, and the mobile store can emerge.

Retalix has had their foot in many of the attractive segments in retail from the customer (promotion) to the store (POS2 ) to the supply chain (warehouse). That is a lot to digest on your own. So, on the surface, the NCR investment might be good for Retalix’ existing customers. But sometimes old line companies lose interest and energy, and often don’t have the culture or the finesse to let upcoming entrepreneurial types thrive. We will stay tuned until the deal is done… and after.

Perspective: Retail Competitive Battles Ahead in Supply Chain and Multi-Channel

It is interesting to look at the Red Prairie, Aldata (acquired by Symphony last year), and NCR (Retalix) deals in aggregate. Each of these mega-deals creates an individual company with a broad footprint. Taken together, they create a highly competitive retail solutions market. So though at one level, each deal looks predictable, from a broad market perspective, the drive to expand the competitive picture is exciting! All these companies have very hard decisions to make on where to focus their investments to create innovation that has value and avoid getting bogged down in integration for integration’s sake.

Descartes—Acquiring Segment By Segment

Descartes is another firm that has largely chosen acquisition as the route to expanding its solution portfolio. This year’s acquisitions included:

  • GeoMicro—GIS3 services such as map display, geo-location, and route calculation for vehicle routing, address verification, navigation, field service, shipment tracking, etc.
  • Integrated Export Systems (IES)—Enterprise system for customs brokers and freight forwarders for processing warehouse receipts, POs, commercial invoices, airfreight bookings, and regulatory compliance services for shipment security filings.
  • Infodis—Transportation management system handling European logistics requirements.
  • Exentra—Driver compliance solutions for the European Union.

Descartes has created a broad and deep portfolio of logistics solutions covering the key logistics functions (primarily transportation)4 and spanning the major global geographies. Much of the building out of that portfolio has been through acquisitions of focused, modest-sized firms (this year’s acquisitions ranged in size from $3.7M to $35M). This has allowed Descartes to build out functional and geographic capabilities quickly, in a targeted way, leveraging the expertise and customer bases of the acquired firms. The challenge is all the integration time and effort required to make it work together. In order to make the sum greater than the parts, Descartes will need to continue to invest heavily in integration.

PTC—SLM + PLM = Winning Forumla?

PTC’s acquisition of Servigistics is based on the idea that so much of service is about the product. PTC’s solutions already create and manage specs, drawings, maintenance manuals, etc., so why not extend it to the use of that data in the context of service, delivery, and use by the customer? This marks the further evolution of PTC from being a tools company to being an enterprise solutions firm. One of the challenges for them will be the ‘integration of the integrations’—i.e. Servigistics itself is comprised of a large number of acquisitions (MCA, ClickCommerce/Xelus, Kaidara, TransDecisions, Conduit, ProfitScience, and more). Many of these are recent and are still being integrated into Servigistics. The service solutions market has never taken off the way CRM, supply chain, PLM, and other enterprise markets have. It will be interesting to see if PTC has the magic to make this market into something substantial (see Who Owns Service?).

___________________________________________

1 The ‘net price’ for Retalix and JDA is actually less than the amount paid, since both of those firms have hundreds of millions of dollars in cash.-- Return to article text above
2 Point-of-Sale systems-- Return to article text above
3 Geographic Information System-- Return to article text above
4 At least for now, Descartes is a transportation-focused company. They do have some WMS capabilities, but the lion’s share of their solution is transportation related.-- Return to article text above

To view other articles from this issue of the brief, click here.




MarketViz powered.