Accellos-HighJump Merger Could Position Supply Chain Vendors for Growth

G00268768

Analyst(s): |

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Summary

The merger between Accellos and HighJump Software will create a larger, more financially viable supply chain execution firm. But it may add complexity to the task of selectively integrating two wide-ranging product lines.

News Analysis

Event

On 7 July 2014, Accellos and HighJump Software announced they have agreed to merge. Both companies focus on supply chain execution software (SCE) and trading partner itegration technology. The combined entity will operate under the name HighJump, but will continue to use the brand name Accellos for midmarket solutions.

Analysis

This synergistic merger creates a larger, more viable SCE software vendor with a broader portfolio of SCE offerings, but it is unlikely to shift the competitive landscape in the near term. With combined annual revenue of approximately $160 million, and around 11,000 customers, the new HighJump will be in a stronger position to invest in growth. According to 2013 market share, it will be the No. 10 largest supply chain management technology provider and the No. 6 largest SCE software provider.

The combined entity has the potential to cross-sell across a larger customer base, but we expect both entities to maintain their focus on the customer types they historically served, as HighJump has said that it plans to "preserve the technology architecture" for each market segment. Also, the markets for each product set have minimal overlap. For example, although the combined entity will have three warehouse management systems (WMSs), Accellos One focuses on the small and midsize business (SMB) space, Accellos One 3PL focuses on third-party logistics service providers and HighJump Advantage serves the midsize-to-large market. But if HighJump elects to create a global business-to-business integration network, as Gartner believes would be prudent, the vendor must examine its offerings for business-to-business integration and electronic data interchange functions, which serve the same markets, only divided by geography.

In realizing the full potential of this deal, HighJump will face challenges similar to those faced by other vendors involved with mergers like this:

  • Successfully serving two market segments simultaneously is difficult. Each segment requires a distinctive approach to sales, support, R&D and pricing. High-end customers focus on breadth and depth of functions while low-end customers are more concerned with ease of use, implementation time and effort, and total cost of ownership.

  • It must rationalize and integrate several product sets (such as the HighJump WMS and Accellos transportation management system). Both vendors grew largely through acquisitions and had integrated some portions of their solution portfolios. This merger adds more products to the mix, increasing the difficulty of attaining one fully and seamlessly integrated platform.

  • Both vendors mostly focused on the North American market, with nascent international expansion. To exploit the international SCE growth that Gartner expects in the next several years, HighJump must accelerate its plans to build an international distribution and support infrastructure.

Recommendations

Accellos and HighJump customers:

  • Monitor whether HighJump continues to invest in and support the products you use. Where appropriate, evaluate the vendor's other offerings, particularly those integrated with your current products.

  • Ask HighJump for its product map and the timeline for any product integration plans.

Prospective HighJump customers:

  • If you are a midsize to large company, evaluate the HighJump WMS offering. Consider other HighJump solutions if they meet your needs and can provide customer references. For the near term, do not assign too much value to integration as an evaluation criterion before it is proven and you have completed an architectural analysis.

  • If you are an SMB, focus on Accellos offerings, especially if an Accellos partner provides your ERP system and it includes prebuilt integrations.

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