Sterling Commerce Shifts from EDI to the Supply Chain

Acquisitions of supply chain vendors paces Sterling's integration strategy.

The one constant in the supply chain technology marketplace ever since it blossomed in the 1990s has been change, namely market consolidation. While the acquisitive enterprise solution providers -- particularly SAP, Oracle and Infor -- have rapidly expanded their portfolios by purchasing other companies, that strategy has worked out well for other technology companies, too. According to analyst firm Frost & Sullivan, the global market for supply chain management software and services was $6.5 billion in 2006, and that number is expected to reach $11.6 billion by 2013.

Sterling Commerce's pathway to its current status as a vendor of supply chain execution solutions is representative of the fast-paced and often overlapping evolutionary corporate maneuvers that characterize the supply chain landscape. Sterling Commerce began as a subsidiary of
Sterling Software, built its reputation on electronic data interchange (EDI) offerings, and went public in 1996. In 2000 the company was acquired by SBC Communications, a telecommunications provider, which was itself gobbled up by telecom giant AT&T in 2005. Along the way, Sterling itself acquired a number of point solution vendors, such as Yantra (order management software), Nistevo (transportation management systems) and Comergent (catalog management).

Today, while EDI still represents 45% of Sterling's business, the company now is focused on what it calls multi-enterprise integration solutions. Its latest offering, for instance, is an integrated selling and fulfillment solution designed to offer an end-to-end view of marketing, lead management, selling, orders, inventory, delivery and supply, as well as returns, repairs and settlement.

"Chief information officers are accelerating their pace on how quickly they can reduce the number of companies they have to deal with," explains Bob Irwin, Sterling Commerce's president and CEO.

According to AMR Research analyst John Fontanella, the success of Sterling's new offering rests on the answer to one question: "Is the value created by the sum of its parts greater than that of its individual components?" Based on AMR's research as well as the experiences of its clients, Fontanella believes that "integrating processes within sales and fulfillment is an absolute requirement for successful cross-channel management."

Adds Dushyant Mehra, research analyst with Frost & Sullivan, "There is an increasing preference for supply chain solutions that integrate planning, execution, and coordination of the entire supply chain network. By using technology to decide on the appropriate courses of action and acting rapidly on these decisions, businesses can satisfy their customers' requirements better and deliver products at the appropriate place and time."

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