Merger Ties B2B Integration Tools With Selling And Fulfillment
On May 24th, IBM surprised the market with its $1.4B, all-cash, definitive agreement to buy Dublin, Ohio based Sterling Commerce from AT&T. Sterling Commerce was purchased by SBC Communications in 2000 for its strengths in B2B integration. As an AT&T company in 2005, they acquired Yantra for its supply chain fulfillment and distributed order management solutions (DOM). In 2006, the company acquired Nistevo for transportation management systems (TMS) and in 2007 bought out Comergent, a leader in selling and order management solutions. Sterling Commerce currently employs 2500 people and has 18,000 customers around the world. According to Sterling Commerce’s CEO, Bob Irwin and IBM Websphere’s General Manager, Craig Hayman, the acquisition occurs for a few reasons:
- Integration solutions for dynamic business networks. Sterling focuses on B2B integration and managed file transfer (MFT). B2B integration solutions include offerings such as GenTran, Collaboration Network, Integrator, eInvoicing, Mobile Solutions, and B2B Managed Services. MFT helps organizations move vast quantities of information quickly and securely across data networks. Sterling delivers the services in both on-premise and on-demand.
Point of View (POV): Sterling’s flagship product “the VAN”, brought external business and trading partners together. They built a reputation connecting businesses with their trading community of suppliers, customers, banks and transportation providers. IBM built a strong platform for inter-enterprise integration and SOA governance. Should the acquisition succeed, customers will gain integration across business networks and improve decision making through richer integration. Key Sterling Commerce integration customers include BNP Paribas, Union Bank, Toshiba, Tenneco, Sony, Nordstrom, True Value and others.
- Selling and fulfillment solutions that extend the value chain. Sterling Commerce owns the leading order selling and fulfillment suite in the market. Solutions allow organizations to deliver configure, price, and quote complex products and services (CPQ), cross channel order fulfillment, inventory logistics, and transportation management. Sterling often competed with WebSphere commerce solutions for customers.
POV: Sterling originally made commerce application acquisitions with Comergent, Yantra, and Nistevo to extend the value of the integration network. The result – an end to end order and fulfillment suite that solved the tough issue of delivering a “perfect order”. Sterling Commerce’s order hubs often beat out traditional ERP solutions that tried to force fit end to end processes into their functional focused solutions. Consequently, IBM WebSphere Commerce gains key components to improve its technologies. More importantly, on-demand delivery will play a significant role going forward. Key order hub customers include Best Buy, Walmart, Staples, Lowes, Guthy Renker, LifeTouch, Cabellas, and others.
- Industry alignment that complements IBM’s vision. IBM goes to market by verticals and vertical frameworks in all its divisions. Sterling Commerce’s focus on financial services, retail, telecom, and manufacturing verticals complement IBM’s overall industry strategy and should play a key role in building value in each vertical.
POV: Financial services will benefit from regulatory compliance, high volume integration, and secure file transfer. Retail gains better customer experience, end to end order management, and cross-channel selling capabilities. Telecom providers improve services and product bundling, complex order orchestration, and fulfillment accuracy. Manufacturers obtain cross channel supply chain visibility, improved order management, and better partner on-boarding.
The Bottom Line – Customers Gain A Logical And Stable Home
IBM approached Sterling Commerce because of the rich customer base and its technology leadership in B2B Integration and Order Hubs. Over time, Sterling Commerce customers will gain a much needed middleware platform with a strong set of SOA and BPM tools. While AT&T did provide Sterling Commerce with tremendous autonomy, synergies were limited to channel sales and hosting. In fact, Sterling Commerce played a minor role in the overall AT&T strategy. Ownership by IBM fits into a larger dynamic business network vision which requires integration and is bounded by capabilities to enable commerce. IBM makes more sense as a home for Sterling Commerce and as a partner to AT&T. As with all mergers and acquisitions, customers should stay vigilant about retaining key service and support staff, providing input into product direction, and maintaining favorable software licensing and contract terms.
Are you a Sterling Commerce customer? Do you see the synergy with IBM? If you are an IBM customer, have you ever heard of Sterling Commerce? Do you see the value in this acquisition? Would you like more information on what it means to be acquired by IBM? You can post or send on to rwang0 at gmail dot com or r at softwaresinsider dot org and we’ll keep your anonymity.
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