Geographical, .NET synergies, in Epicor's deal for Scala
By Paul Mann, contributing editor -- Manufacturing Business Technology, 1/1/2004 12:00:00 AM
If, as expected, regulators and shareholders sign off on a proposed $87-million deal, enterprise suite vendor Epicor Software Corp. will acquire enterprise suite vendor Scala Business Solutions during the first quarter of 2004.
"The anticipated transaction will create an entity with approximately $250 million in annual revenues, and with more than 20,000 customers, which makes us the eleventh-largest ERP provider based on annual revenue," says L. George Klaus, Epicor chairman, president & CEO. "The largest independent midmarket provider based on Microsoft technology with leading .NET and Web services technology also will be created by this transaction."
Both companies share the same Microsoft technology foundation, but management cites other synergies as well. Both vendors have a midmarket manufacturing focus, and product suites that include ERP, customer relationship management, and supply chain management solutions.
In fact, the key difference between the two vendors is their geographic focus. While Epicor has focused on the North American market, Scala has focused on the European market with its iScala suite. Post-merger, Klaus looks for a combined organization with a nearly equal revenue contribution from both markets. In the European market, Scala has showed strong growth in Eastern Europe, and often positions iScala as an ideal solution for a "two-tier" ERP strategy in which a larger vendor's ERP suite is used at the corporate level, but iScala handles operations at the division or plant level.
On the product front, Epicor promises continued development and support for iScala. Longer term, the company says the combined company's product suite will be developed using the "functional synergies of all products, and the integration advantages of .NET and Web services."
Although Epicor isn't discussing detailed product plans until the deal goes through, the vendor already has announced a strategy for the next generation of the ERP suites it currently offers. That strategy revolves around an initiative code-named Sonoma that will allow for one common development effort and broad support for XML Web services (see below), but multiple ERP products.
The Scala announcement comes close on the heels of other Epicor acquisitions, including its purchase last July of ERP vendor ROI Systems, and another July 2003 move in which it acquired a suite of warehouse management software from TDC Solutions. Epicor traces its roots back to the merger of DataWorks and Platinum Software in the fall of 1998.
