Acquisition interest focused on integrated supply chain planning and execution technology has indeed re-energized during this Q3 period. We previously alerted our Supply Chain Matters readership to last week’s published report indicating that Honeywell was in talks to acquire JDA Software. Also last week, mid-market ERP technology provider Plex Systems announced that it had acquired supply chain planning technology provider DemandCaster.
Last week’s blockbuster news regarding the potential acquisition of JDA Software came from an exclusive report published by Reuters which cited unnamed sources familiar with the negotiations. Today, The Wall Street Journal, further citing its own sources, reports that a deal is near among the two parties. The report further highlights JDA’s former strategy for integrating planning and execution including its prior acquisition of RedPrairie. The WSJ confirms that the deal values JDA at around $3 billion and could be announced rather shortly. The acquisition would reportedly boost Honeywell’s efforts to enter the software area with an integrated supply chain planning and execution provider.
Our Supply Chain Matters view of this latest report leads us to believe that Honeywell may be making a play to penetrate the Internet-of-Things (IoT) segment with a concentration on supply chain management and execution focused processes, We will know more once a deal is announced and consummated. Keep in-mind that another suitor could surface by the revelation of the very significant $2 billion debt burden of JDA places a high hurdle, one that only a large enterprise software vendor would undertake.
Plex’s Acquisition of DemandCaster
Plex’s acquisition, on the other hand, is focused on further enhancing its Cloud-based ERP platform with broader capabilities in supply chain and sales and operations planning support for its traditional manufacturing based customers. Since both firms are privately-held, no financial terms were disclosed.
For those unfamiliar, Plex has its original roots in support for the Automotive industry supply chain, specially multi-tier suppliers that constantly respond to changing component demand and replenishment signals from various OEM’s. The firm’s technology has had an end-to-end focus that includes a strong concentration and linkage of ERP to manufacturing execution systems (MES). The mid-market ERP provider has since branched out to other manufacturing industry verticals including after-market services and support.
DemandCaster was founded in 2004 principally by a former manufacturing operations executive who had a vision for a more user-friendly approach in supply chain and manufacturing support needs. Many former supply chain planning providers were founded by entrepreneurs with operations research or academic resumes. Its approach to the market is somewhat novel in that DemandCaster offers all of its customers the option to cancel their subscription at any time if the service is not providing expected value. The firm and its founders pride themselves in their intuitive end-user interfaces included within applications. The firm’s technology is native Microsoft Cloud multi-tenant based, providing a familiar MS Office and Microsoft Azure based look and feel. The founders additionally have shunned external financial investment partners electing a pure organic growth strategy.
Supply chain focused technology applications include support for basic forecasting and inventory planning, inventory optimization, distribution requirements planning (DRP) and capacity planning. A sales and operations application includes support for demand and supply planning. DemandCaster actually partnered with Plex about a year ago in an OEM arrangement. Earlier, the firm also partnered with Cloud-based ERP provider NetSuite as a supply chain planning focused extension application in a referral arrangement.
This author had the opportunity to directly speak with Jim Shepherd, Plex’s Vice-President of Strategy who confirmed that Plex had initiated its interest in DemandCaster prior to the recent announcement by Oracle of its intent to acquire NetSuite. Most all of Plex’s customers have global based supply chains that require more responsive capabilities to constantly changing product demand and supply needs. Plex was further attracted to the user-friendliness of various supply chain planning modules, the native Cloud based technology as well as the built-in integration to other ERP or best-of-breed SCM focused platforms. Plex having the established one-year relationship provided further awareness to the attractiveness of DemandCaster’s approach to supply chain planning and execution capabilities.
We would quickly add that from our lens, DeamndCaster has more appeal to line-of-business buyer teams who often weigh user-friendliness and time-to-technology value higher in the ultimate buying decision. Shepherd further confirmed that DemandCaster will remain an independent brand, as well as an inherent part of Plex’s future ERP capabilities. This is a similar strategy that ERP providers such as Oracle and QAD have employed in acquisitions specifically related to supply chain management focused technology. Such a strategy opens the door for cross-selling into other ERP or best-of-breed supply chain dominant environments.
Shepherd reiterated that a long list of planned additional investments is planned for DemandCaster, investments that could not be achieved without an external investor. Mentioned were building-out comprehensive analytics capabilities directly related to S&OP focused processes, and that DemandCaster would part of future supply chain focused analytics down the road.
What it Means
While both of these new developments come from somewhat different strategic motivations, they point to renewed and building market interest in integrated supply chain planning and execution capabilities that can be tied to future needs in enhanced analytics driven decision-making, more integrated business planning and abilities to support future IoT based business models that provide enhanced decision-making based on connecting physical and digital processes. By our lens, it will place additional pressures on existing best-of-breed supply chain technology players to further enhance their integration to physical supply chain execution.
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