Infor continues its acquisitions, the latest of which is Datastream Systems, one of the top vendors of enterprise asset management systems. The deal is expected to close in Q2 2006.
Datastream is a good catch for Infor. It has more than 6,700 customers in 140 countries, including (it claims) 60% of the Fortune 500. It has deep expertise in asset intensive industries, targeting sectors such as manufacturing, hospitality, health-care, transportation, telecom, facilities management, and government. Its primary offering, Datastream 7i is its new Web-based product, allowing users to view maintenance activities across multiple plants. Datastream is strong in asset tracking, work order management, scheduling, preventive maintenance, parts inventory, and MRO procurement. It is built on a service oriented architecture (SOA).
Datastream also has a separate e-procurement package (iProcure), which is integrated with 7i to provide automatic requisitioning of parts as reserved to maintenance orders, with access to catalogs of hundreds of MRO suppliers, plus support for internal catalogs.
Infor now has something like 30-plus individual software offerings. Infor's business model appears to be to let the software vendors that it acquires continue to be managed as standalone businesses, which could allow it to continue to acquire companies indefinitely. One has to wonder exactly where the economies of scale are, however.
Nevertheless, asset management is a high-value segment, and Datastream is a well-respected name in this space. Infor made a good move with this deal.
The press release has details.
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1 comment:
"One has to wonder exactly where the economies of scale are."
Frank,
My guess is that the economies of scale are primarily in marketing, sales and professional services and secondarily in internal overhead; technical support, accounting, HR and Senior Management. These line items are about 75% of total costs for a small product company.
One marketer and one sales person can push one product or 30 as long as all 30 are aimed at the same industry. More importantly, sales efforts are shorter when a company is an incumbent; especially when selling to prospects that are further along the G. Moore Crossing the Chasm market curve.
So, the immediate effect of acquiring the 30th software product company is that the other 29 products now have incumbent status at the 30th companys' list of accounts.
There are nearly no economies of scale in product development as IBM and SUN and other larger companies demonstrate.
Allowing the product companies to stay relatively separate enables them to continue to use the lean software development practices that helped them evolve their products rapidly when they were small companies. When they become part of a larger entity, their development priorities become a bit clearer in that they know which other related products they have to integrate with first; those that are owned by their own holding company.
Of course, there are plenty of examples of software companies that cobbled together multiple products and were never able to make them work together at the client. Maybe SOA is the layer of abstraction that will get some product companies over this hurdle.
Let's hope so.
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