Click Commerce buys Xelus, continuing acquisition strategy

A reader tipped me off today on the acquisition of Xelus by Click Commerce.

First, some background on the buyer and the seller. Click Commerce started out as one of several up-and-coming supply chain vendors focused on coordinating and optimizing supply chain processes across multiple suppliers, customers, and partners. Its technology is leading-edge, based on open Internet standards and a component-based architecture. Then over the past couple years, it rapidly expanded its product offerings by picking up several niche providers:

• Optum, a leading warehouse management vendor, in February, 2005
• bTrade, a specialist in connectivity and Internet-based EDI (AS2), in 2004
• Webridge, a provider of secure extranet portal solutions, in 2004
• Allegis Corp., a data center and hosting provider, in 2003

So what did Click Commerce see in Xelus? According to the press release, Click Commerce will broaden its footprint with the service parts planning and reverse logistics expertise of Xelus. But, more importantly, Xelus has developed some analytics capabilities that leverage RFID data. RFID, which is being rolled out by Wal-mart and other leading players in various supply chains, are producing a flood of data, most of which is not being fully exploited. Analytic applications, such as those developed by Xelus, are critical in making sense out of all the data being generated by RFID.

My tipster, who has had contact with both companies, provided some insights into both of them. Xelus, as indicated above, is not a young company. They have been in business for over 25 years, but they have never been able to capitalize on their strengths. Their products are good, but they are based on older technology. Therefore, they have been losing market share to companies such as MCA Solutions, which provides solutions for service parts management that may not be as mature but based on newer technology.

Click Commerce is a different story. The management team is young and aggressive. The company has an outstanding list of customers, such as Microsoft, Delphi, Honda, Citibank, FedEx, Carrier, Samsung, Hitachi, and Ryder. The product suite is broad, and getting broader, as Click Commerce continues to pick up weaker vendors, such as Xelus.

My source also indicated that layoffs were announced today at Xelus and that the top management team is for the most part gone or demoted.

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