JDA Software acquires Manugistics to provide end to end supply chain solution

JDA Software, a leader in the retail software with more than 4,800 customers will acquire Manugistics, a leading supply chain software vendor with over 800 customers. While JDA started by focusing on POS and retail optimization software, Manugistics grew by focusing on manufacturing. Forecasting, demand management, pricing, transportation management, supply, raw material inventory management and supply management are some of the functions from Manugistics. Retail portfolio management, channel clustering, assortment planning, shelf space management, inventory positioning, replenishment management, vendor managed replenishment, retail network planning, performance intelligence, warehouse replenishment are some of the functions from JDA Software. For quite some time both of them were trying to break into each others market. So merger will give both companies access to more customers. There are already more than some 100 customers using both the applications. So it is a strategic acquisition for JDA. JDA has a track record of successfully acquiring and integrating companies. See below for a list of acquisitions in the past.

There will be some technical challenges in integrating both the applications. Manugistics uses Java and J2EE as its platform whereas JDA uses .Net. Initial efforts will focus on providing a seamless user interface and also extending MS SQL support for Manugistics applications. Business components will run on both .Net and J2EE as it is today for some time. But all the components will be eventually migrated to SOA based architecture after time. Overlapping components will be phased out.

JDA will retire the $180 million debt of Manugistics in addition to paying $212 million for the purchase. Deal is financed by internal funds, private equity and debt from UBS and Citgroup. It is good news because Manugistics users had concerns about financial stability of the company.

Combined company will have 1736 full time employees. It plans to expand its employee base. Majority of its developments will happene in India for savings in operational costs. Expected cost savings through operational synergy is approximately $30 million.