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  Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - May 26, 2010 -  

Supply Chain News: Keep an Eye on IBM in Supply Chain Software Market, as Big Blue Acquires Sterling Commerce in Another Deal that Adds to Its Capabilities


Acquisition further Expands its B2B Integration Capabilities and Presence, but also Adds TMS and Distributed Order Management to Growing Portfolio of Supply Chain Solutions

 
     
     
  by SCDigest Editorial Staff  
     
 
SCDigest Says:
Add it all up, and IBM already has a lot of supply chain applications, and we suspect will be on the hunt for still more – all of which can leverage the B2B network capabilities and customers in the Websphere group.

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Somewhat quietly, IBM is building a formidable portfolio of supply chain software solutions that has the potential to shake up the existing market.

 

In its latest move, IBM announced this week that it was acquiring Sterling Commerce from AT&T for some $1.4 billion.

 

Largely, the deal was driven by IBM’s interest in Sterling’s Collaborative Network, developed from its roots as one of the largest EDI networks for business-to-business integration, upon which it has added a number of other integration-related solutions.

 

But along for the ride with the deal also come Sterling’s supply chain applications in such areas as transportation management, distributed order management and more. Sterling had acquired these applications over the past years to leverage its presence in corporations for B2B integration and the cross-sell those customers these more direct supply chain solutions, with some but not yet outstanding success to date.

 

Now, the Sterling Collaborative Network will be folded in to IBM’s Websphere group, along with another acquisition that IBM recently made of Cast Iron, a company which provides “Cloud” integration services. The net of all of this is that between the existing Websphere integration, workflow and ecommerce solutions and the newly acquire traditional (Sterling) and Cloud (Cast Iron) integration services, IBM offers a substantial amount of B2B capabilities – on top of which certainly can be added additional supply chain applications with likely more clout and savvy in gaining these synergies than Sterling was able to achieve.

 

But this is just the latest in a series of IBM supply chain software moves. In 2007, Big Blue acquire Cognos, a provider of business intelligence and analytic solutions, which can and often do play a key role in Sales & Operations Planning (S&OP) processes at its customers, and which can also be used for supply chain analytics and performance management.

 

In 2008, IBM spent $340 million to acquire ILOG, which itself had acquired Dr. David Simchi-Levi’s LogicTools not long before that. That acquisition not only gave IBM ILOG’s optimization and rules engine technology, but also its growing array of supply chain applications in such areas as network design and optimization, inventory optimization, factory scheduling and more. IBM has been very aggressive in promoting these solutions, such as by adapting them for new opportunities into the retail sector.

 

(Supply Chain Trends and Issues Article - Continued Below)

 

 
 
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Sterling developed its supply chain solutions through acquisition as well, first by buying warehouse management and distributed order management vendor Yantra, and later TMS provider Nistevo and order and sales software provider Comergent.

 

Add it all up, and IBM already has a lot of supply chain applications, and we suspect will be on the hunt for still more – all of which can leverage the B2B network capabilities and customers in the Websphere group.

 

At press time, SCDigest had not yet discussed specific product strategies with IBM, but from the press release it sounds as if Big Blue is indeed envisioning an end-to-end strategy.

 

“IBM's products and services complement the world-class business-to-business capabilities of Sterling Commerce and together enable the integration of key business processes through the entire cross-channel solution lifecycle -- from marketing and selling to order management and fulfillment” the company said.

Lasst year, even before the Sterling acquistion, Andrew White, an analyst at Gartner wrote: "It is important to grasp the scope and depth of IBM's SCM portfolio, and to understand that IBM has finally organized itself for the long term. This will help users in their
evaluations of IBM as an SCM innovation partner, as well as a provider of solutions to support SCM process automation."

We will given you an updated view of IBM's supply chain software plans very soon.

What do you make of IBM's latest acquisition, and and its increasingly aggressive supply chain software strategy? Do you expect it to become a major provider of supply chain software solutions? Let us know your thoughts at the Feedback button below.

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