Demand chain vendors in demand as acquisitions

The growing importance of item data synchronization in the consumer goods market is driving further consolidation of "demand chain" management software vendors. The moniker arises from the fact these solutions can help manufacturers manage distribution channels, and a host of other sell-side issues including control over product item data and online catalogs.

The segment—which can be traced back to more generic sell-side e-commerce applications—continues to consolidate, but there may be limits on how much more concentrated it can get. In January, Comergent Technologies, a demand chain management vendor, acquired Profile Systems, a provider of product information management software and automated inventory replenishment tools. The same month, Global eXchange Services, a former GE subsidiary, purchased HAHT Commerce, a software vendor strong in item data synchronization.

"While we've seen some consolidation with the HAHT acquisition, we haven't seen a tremendous amount," says Gene Alvarez, a VP with Stamford, Conn.-based analyst firm META Group. The gating factor on further consolidation, he adds, is that some other vendors that have built up demand chain functionality over the last few years—Manugistics, i2 Technologies, and Siebel Systems—are too large to be likely acquisitions for the sake of demand chain functionality. Says Alvarez, "That's kept the level down, unlike the content management field where some of the weaker players already have been picked up."

Comergent contends the Profile acquisition bolsters its own financial position—Profile has experienced 74-percent and 42-percent revenue growth in the past two years—and expands the company's software tools. Alvarez concurs the move strengthens Comergent. "It's good for customer acquisition, and it's beneficial to the companies' shared customers," he says.

Alvarez notes that Comergent is well placed with Profile, since the data-sync issue is heating up. "Product synchronization is increasing, especially with data synchronization mandates from companies like Wal-Mart," says Alvarez. "Profile helps Comergent because its solution is geared toward the indirect channel."

Comergent also was interested in Profile's vendor managed inventory (VMI) tools, as well as its base of Fortune 1000 customers. "They have well-known customers that use VMI and product synchronization," says Tom Mescall, a Comergent VP. Mescall also likes Profile's participation on industry committees in the automotive aftermarket, lighting & electrical, and Canadian consumer goods markets.