Event

On 7 January 2013, GT Nexus, a cloud-based supply chain execution provider, and TradeCard, which offers a cloud-based sourcing and order visibility platform, announced that they plan to merge. Financial terms of the deal have not been disclosed.

Analysis

This merger is a milestone in the global trade management (GTM) and supply chain multienterprise application markets. Until recently, the limited focus of cloud-based supply chain visibility and collaboration platforms, which have concentrated on specific verticals and specific transactions and processes, forced many enterprises to employ multiple platforms to meet their requirements. In response to users' demand for combined platforms, fewer vendor relationships and more cross-process synergies, vendors are expanding their platform capabilities through development (such as E2open) or through acquisitions, mergers or partnerships, as GT Nexus has done with, respectively, its merger with TradeCard and partnership with Kinaxis.

Both GT Nexus and TradeCard specialized in a single major area of GTM, with GT Nexus offering global logistics and TradeCard offering trade finance/sourcing and purchase order management. Both needed to develop additional capabilities. The combined entity could leverage the GT Nexus analytics capability across the TradeCard platform and could leverage TradeCard's application development work across the GT Nexus platform to support potential system innovations. In addition, the continued private funding of the new company will help protect its cloud/software-as-a-service revenue model. The deal will also enable both vendors to benefit from:

• Increased market presence, as their markets have limited overlap, and potential expansion into Tier 1 and more mature supply chain organizations
• Geographical expansion and a larger network (which nevertheless remains modest, at 20,000 businesses)
• A potentially broader marketing message for multienterprise business process platforms, which offers competitive differentiation

For this merger to fulfill its promise, the two companies must address several technological and operational challenges. First and foremost, they still lack a global trade compliance capability, the third major pillar of GTM. Integration of existing capabilities within the two platforms will be key to achieving an effective system of record to drive multienterprise processes. They will also need to support users at different levels of maturity and with widely varied requirements, and attract new customers that may already have high levels of sunk costs. Their marketing efforts also face several obstacles:

• The combined offering may be too early, too sophisticated and too high-priced to attract others beyond a small number of very large enterprises.
• GT Nexus/TradeCard could face renewed competition from the application megavendors, as its offering highlights the gulf between multienterprise platforms and traditional on-premises business applications.
• They must convince customers outside of the apparel industry that TradeCard's functionality is applicable to their industries.

• Current GT Nexus and TradeCard customers: Monitor the progress of integration after the vendors release their product road map in 2Q13, and evaluate opportunities to leverage new capabilities and rationalize platforms.
• Prospective GT Nexus-TradeCard customers: Use your current multienterprise needs when evaluating the combined entity's offerings, but consider future growth and potential requirements if assessing multiple vendors. Clearly setting forth functional requirements and the scope of your network will improve the accuracy of pricing proposals.

Some documents may not be available as part of your current Gartner subscription.

• "Gartner's Model for Holistic Multimodal Transportation Management Suites" — Planning and optimization capability depth, breadth and sophistication remain major differentiators for transportation management suites. By Dwight Klappich
• "Moving Beyond ERP With Multienterprise Process Enablement" — The shift to outside-in orientation will require IT leaders to address support for multienterprise processes in most new enterprise software projects. By Deborah Wilson and Alexander Drobik