The Big Blue is to acquire the supply chain software vendor from AT&T in a sign of further B2B market consolidation
The Big Blue is to acquire the supply chain software vendor from AT&T in a sign of further B2B market consolidation
IBM and AT&T today announced they have entered into a definitive agreement for IBM to acquire Sterling Commerce from AT&T for approximately $1.4 billion (£972 million) in cash.
The technology giant said the acquisition of the Ohio-based company would expand its ability to help organisations create more intelligent and dynamic business networks by simplifying and automating the way they connect and communicate with customers, partners and suppliers both on-premise or through cloud computing delivery models.
It added that IBM’s products and services complement the business-to-business (B2B) capabilities of Sterling Commerce and together enable the integration of key business processes through the entire cross-channel solution lifecycle – from marketing and selling to order management and fulfilment.
Raising the B2B stakes
Just on the heals of IBM acquiring cloud integration tools specialist, Cast Iron Systems a few weeks ago, Gartner analyst Benoit Lheureux said this new deal once again ups the ante on B2B. In his initial comments he said IBM was “decisively assembling a lotta B2B horsepower” and that the Sterling acquisition gives its WebSphere middleware group even more integration software. “Hey, has anyone seen my software roadmap GPS?” added Lheureux.
As to the possibility of a Sterling Collaborative Network and Cast Iron Cloud, the analyst saw this as a “viable integration as a service offering for both traditional e-commerce and cloud services”.
Sterling Commerce has more than 18,000 global customers and enables more than one billion business interactions a year for clients in the financial services, retail, manufacturing, communications and distribution industries.
IBM sees these interactions growing dramatically due to the proliferation of electronic business transactions, from banks exchanging transaction data and manufacturers sourcing raw materials electronically, to retailers automating stock replenishment and managing orders online. Such intelligent transactions, and the software that supports them, help deliver the agility businesses need to be successful.
Exploiting middleware synergy
Sterling Commerce offerings strongly complement IBM's middleware portfolio. By acquiring Sterling Commerce technology and its large trading partner network, IBM anticipates it will be able to deliver powerful new cross-channel solutions to its clients. In addition, Sterling Commerce technology will complement IBM’s industry-focused software offerings, enabling the addition of capabilities to IBM’s frameworks supporting the retail, manufacturing, communications, healthcare and banking industries.
“Businesses today are operating in a highly competitive global environment in which lines between actions taking place within and outside an organisation’s four walls are blurring,” said Craig Hayman, IBM WebSphere general manager. “This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers and clients and deliver a consistent customer experience across channels. In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers.”
According to IBM, the combined technologies and expertise of IBM and Sterling Commerce will make business and partner networks smarter and more efficient by enabling integration beyond the enterprise. The company believes that through this acquisition, clients will be able to extend the capabilities of their existing systems using, for example, IBM’s rules management, analytics and business process management software. This can enable these organisations to respond more nimbly to sudden business challenges as they happen.
Providing new scope for expansion
"The broad global reach and additional capabilities IBM offers make this acquisition great news for our customers and partners,” said Bob Irwin, Sterling Commerce chief executive officer. "The combination of IBM’s products, services and skills with the Sterling Commerce B2B integration and cross-channel capabilities resulting from this acquisition is unparalleled.”
IBM and AT&T expect the transaction to close in the second half of 2010, subject to regulatory approvals and the satisfaction of other customary closing conditions. AT&T expects to record a one-time pretax gain of approximately $750 million (£521m) in the quarter in which the transaction closes. Following the close of the acquisition, approximately 2,500 Sterling Commerce employees will be integrated into the WebSphere organisation within IBM’s Software Group.
