A big fat geek wedding- JDA weds i2
On Nov 5, JDA Software Group announced its plan to acquire i2 Technologies in a cash and stock deal of $396 m. The merger is said to bring in net annual cost synergies to the tune of $20m and help elevate JDA as a leading supply chain management software company with combined revenue of $617 m and EBITDA of $179 m. Unlike last year, when the much touted deal broke off due to JDA stating inability to borrow money, this time around, the deal has been structured to ensure a high degree of completion certainty (through Plan A- Intended Structure and Plan B-Alternative structure). The deal is expected to close by Q1 of 2010.
JDA has a history of acquiring market leaders such as Arthur, Intactix, E3 and Manugistics and has successfully used these acquisitions to firm its footprint in retail, process manufacturing (mainly food and beverage with some foothold on consumer goods) and transportation space. Manugistics aquisition in 2006 helped JDA expand from Retail to process manufacturing (which accounts for roughly 50% of the overall manufacturing space). The other half is accounted by discrete manufacturing, where i2 has a stronghold. In addition to that i2 brings in strong solution in the transportation management space and managed services model. Through this acquisition, JDA would be able to offer a solution that links the extended supply chain through an integrated suite of planning, execution and optimization solutions. In addition to product offering, JDA would be able to leverage from i2’s focus on service based offering such as on demand capabilities and managed services.
JDA brings in strong marketing focus. For example, before JDA acquisition, Manugistics was facing the problem of customers showing unwillingness to upgrade to their latest 7.x version due to perceived product performance issues, leading to loss of upgrade revenues. JDA has done well in terms of stopping Manugistics customer defection. At one point in time every CPG/F&B company I knew was in the process of evaluating SAP APO as replacement for Manugistics, but now I am hearing about more companies going the Manugistics way, even in the retail industry where JDA Arthur/E3 products have had a stronghold traditionally. This leads me to believe that post acquisition, i2 will experience similar upturn in sales through JDA’s marketing and cross-selling abilities (JDA and i2 have 133 common customers as of today from a customer base of more than 6000).
What does all this mean for Infosys? Infosys has deep supply chain and domain expertise in Retail, CPG/process manufacturing and discrete manufacturing space, and package expertise in JDA/Manugistics and i2. We are structured in a way that every functional consultant gets to work on multiple packages within similar process areas- for example, a demand planning functional consultant can get to work on JDA/i2/SAP/Oracle. If i2 and JDA evolve towards a similar architecture, functionalities and look & feel, I believe, this would flatten the learning curve to pick up a new product, while at the same time provide exposure to an increased breadth of industries. We would also be able to gain synergies through merging our JDA/i2 Center of Excellence which would help our consultants and clients turn around implementation, upgrade and support projects much more quickly and effectively.