Ross Systems, a process-manufacturing ERP vendor, is being acquired by Chinadotcom and will operate as a part of its CDC Software unit. It's an perplexing move. Ross’s iRenaissance suite is one of the few ERP packages focused purely on process industries, such as food and beverage and chemicals. Although, like most enterprise software vendors, Ross been through some hard times recently, it has become profitable in the last few quarters. Just three months ago, it signed up Chinadotcom as a reseller in the Far East. Now, it's selling them the store.
So who is Chinadotcom? Based in Hong Kong, it was originally a Web hosting provider. But it has been turning itself into a software developer and offshore services provider, competing with the large India services firms. Therefore, I suspect that cost savings from offshore software development is the driving force at work here. In the Chinadotcom press release
, CEO Peter Yip hints at this: "Ross Systems is expected to achieve certain cost savings and synergies by outsourcing to our low cost software development center in Shanghai and developing synergies in various aspects including cross selling within the chinadotcom group of companies."
There is a nearly universal trend for enterprise system vendors to move software development offshore, avoiding high programming costs in the U.S. and Europe. Ross, selling itself to an offshore provider, just takes this trend to the next level.