Sterling Commerce, one of the biggest names in e-commerce and EDI infrastructure, is acquiring Yantra Corp., a move that expands Sterling's reach into the supply chain execution space.
So, who is Yantra? It's a supplier of distributed order management and supply chain fulfillment applications involving multiple trading partners. In other words, Yantra is a good solution for companies that take orders in one location and then fulfill them dynamically from a choice of multiple fulfillment centers, channel partners, and carriers, either within the same organization or from outside trading partners. Yantra has some big name customers in the retail, wholesale distribution, logistics and manufacturing verticals, such as Best Buy, Circuit City, DHL, Dixons, FedEx, Motorola, SYSCO, Target, and Texas Instruments.
Sterling's acquisition of Yantra gives it a big jump on its strategy to move into the applications space. Sterling will incorporate Yantra as a component in its recently announced Multi-Enterprise Services Architecture (MESA), a service-oriented architecture (SOA) that allows composite applicators to be built from various solutions. According to Sterling, Yantra's products work well as components of MESA. Sterling plans to sell the combined solution under both a traditional software license and as a hosted service.
ARC Advisory Group, as usual, has good insight
While Yantra is an applications company, Sterling Commerce has been an Infrastructure supplier offering integration, EDI, and Data Synchronization solutions. One risk to Sterling is that if traditional supply chain application suppliers see them as a competitor in the Supply Chain Application space, then the partnerships with existing Supply Chain application partners could wither. That is a risk worth taking. The larger infrastructure suppliers have built out their offerings into complete technology platforms with EAI, B2B, Portals, Data management, etc. capabilities over the last few years leaving little room for the specialists in those areas. This has forced companies like Sterling Commerce, SeeBeyond and Vitria to either expand their technology footprint (a risky strategy), or move into some form of applications area. One of the difficulties of the application strategy is in acquiring enough domain specific knowledge to compete (create product, market, sell, and support) with the application suppliers who have supply chain processes embedded within their products. Sterling Commerce has taken a wiser approach and moved strongly into the application space.
The fact that the Yantra acquisition is key to Sterling's strategy is seen in the price it was willing to pay: $170M in an all cash deal, about four times Yantra's annual revenue, a pretty fat price tag. Furthermore, Sterling may not be finished yet. ARC Advisory thinks that Sterling will be soon doing other acquisitions to fill out its composite applications more fully.
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