Solvoyo Blog

M&A Trends in supply chain

Aug 25, 2016 10:48:58 AM
Nilufer Durak
Written by Nilufer Durak
Nil is the COO of Solvoyo. She works closely with clients helping them achieve their supply chain goals using the Solvoyo platform.

That acquisitions often fail is a well-known fact. We all remember the horror stories that were the coupling of SprintNextel or AOL Time Warner. So the last few weeks when news of two major software acquisitions (Oracle’s $9.3B bid for NetSuite and Honeywell’s $3B offer for JDA JDA's $570M Blackstone Group led recapitalization) arrived in midst of the peak summer holiday season – I was both a little terrified (suddenly rivals have a blank check R&D budgets) and excited that the industry was finally waking up to the supply chain realities of today.   

Nothing captured for me the predatory nature in business that M&A often seems to bring out than an email I received last week from a business development agency (don’t ask who they are) promising a list of current clients at acquisition target ‘x’ who are right for picking, for a fee. Unfortunately for them, that’s not the vision for us at Solvoyo about how we want to grow and spread the word on innovative supply chain technology. Instead, I want to take this moment to talk about four realities that are driving the present and future of supply chain technology, fueling these billion dollar shopping sprees, and that inspired the vision for Solvoyo. 

I was motivated to write this post because I want the supply chain community to understand that it does not take millions of dollars to realize these four truths shaping our world of supply chain technology.

Solvoyo was founded 10 years ago, long before it was fashionable to say so, because our founder - Koray Dogan, saw the cloud as the best platform to deliver a predictive and prescriptive supply chain planning solution that automates planning and analytics, and that feeds and works off existing ERP systems in a tightly integrated front-office-to-back office solution. Allow me to discuss this in further detail: 

(i) Cloud computing: The cloud is increasingly the medium du jour for functional business leaders and IT managers across a suite of business functions from CRM, ERP, HR to SCM. The scalability, mobility, and affordability of cloud underpin its growing preference in this increasingly digital world. The growing adoption of cloud solutions means that cloud based solutions are expected to see around a 20% compounded annual growth rate (CAGR) until 2019. Oracle’s bid for NetSuite is no doubt a part of its effort to remake itself for this modern world of cloud computing. Likewise, JDA has indicated that the new equity injected besides repaying some of the current debt will be used to help JDA build its SaaS offerings.     

(ii) Front office to back office integration: Increasingly SMB to mid-market to even enterprise companies are looking for integrated solutions between their front office systems (CRM, ERP, Fulfillment systems) and back office solutions (accounting, finance,  supply chain planning). Integration means better synchronization across business functions and the creation of a feedback loop that enables machine learning and intelligence which hopefully results in better decision making and financial results. Oracle no doubt senses an opportunity to sync up some of its leading applications with NetSuite’s to offer a tempting front-office-to-back office combo solution. Similarly, speculation was rife that Honeywell sought to merge JDA’s front office e-commerce fulfillment software with its recently acquired warehouse systems company Intelligrated.      

(iii) Need for predictive and prescriptive analytics: In this era of big data science
 and machine learning, companies are looking outside the traditional ERP systems for predictive and prescriptive analysis that help them anticipate and plan for the future. The next generation of supply chain leaders are looking to finesse their supply chain plans down to individual fulfillment deadlines and inventory targets which demand a level of deep and continuous analytics that ERP’s have not and cannot deliver. The Oracle-NetSuite combination is being marketed as a marriage of a good ERP system (NetSuite) with analytics FrankenCloud?solutions from Oracle all hosted on the cloud. Among others, this thinking has prompted Jeremy Roche, president and CEO at FinancialForce to call this (rather cheekily) “the FrankenCloud.” The reality however is that today's IT landscape has gone through a paradigm shift towards the use of best-of-breed crowdsourced building blocks that easily communicate with each other than a locked-in bulky solution tied to specific technology providers.         

(iv) Automation: At the end of the day technology is all about productivity gains and nothing delivers that more than automation. Minimizing human intervention by building an exception management based planning system promises to deliver much needed productivity gains to supply chain departments across various industries. Honeywell’s JDA play is an attempt to build an automated e-commerce fulfillment system to meet the needs of the growing omni-channel / e-commerce driven retail world. Innovation in supply chain technology is about a relentless effort to automate planning, analytics, ordering, manufacturing or fulfillment and these billion dollar purchases are a part of a strategy to buy innovation and in turn sell automation.

I was motivated to write this post because I want the supply chain community to understand that it does not take millions of dollars to realize these four truths shaping our world of supply chain technology. So before the well-oiled Oracle and JDA sales team reaches out to you with a prospectus highlighting these billion dollar deals and the benefits of them – I ask you to give us a shot. Reach out to me or my team and learn how Solvoyo can deliver these realities to your supply chain planning process today before the FrankenCloud even enters your radars.       

 

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*This post has been updated since its original publication on August 25th 2016

 

Topics: Supply Chain Planning, Cloud, Mid-market companies