Because the future of manufacturing is distributed, Infor acquires GT Nexus

Manufacturing and supply chains used to be vertically integrated and coupled. That is changing forever, and this acquisition is an indication of that fact.

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This week ERP vendor Infor announced that it is acquiring GT Nexus, a vendor with a global commerce platform. Beyond the impressive economics of the deal (a $675 million acquisition, even in these frothy times, still gets attention), it is an indication of general changes in the business world, and what that means specifically for technology vendors.

Only a few decades ago, the manufacturing process was a generally homogeneous one. Automobile companies, for example, tended to own the majority of their manufacturing plants and, at least for the critical elements, controlled manufacturing processes from soup to nuts. The world has changed seemingly overnight, and manufacturing, like business in general, is a far more organic and distributed structure. Companies like GE and BMW no longer call themselves manufacturers of industrial items or automobiles, but rather design and software houses that control the processes and system that produce those outcomes.

So let's look at the players in this deal. Infor builds rock-solid business applications for organizations in the healthcare, manufacturing, fashion, wholesale distribution, hospitality, retail and public sectors. Its customer list really is a who's who of the biggest organizations — 18 of the top 20 aerospace companies, all of the top 10 high-tech companies, all of the top 10 pharmaceutical companies, 17 of the top 20 industrial distributors. If you're big, complex and heavy, chances are you run some or all of your operations on Infor.

GT Nexus is different. It focuses specifically on managing the supply chain. Companies like Adidas, Catepillar and Pfizer, which leverage massive and massively distributed supply chains, rely on GT Nexus to provide the tools to do so. This is no small challenge — these companies need to effectively navigate the increasingly porous edge between corporate and external data, and do so in a way that minimizes risk and meet regulatory requirements. They also need to do so in a world that works 24 hours a day and seven days a week. Real-time, always on and massively distributed supply chains are what GT Nexus runs. GT Nexus has 25,000 business customers, all managing over $100 billion in goods each year on the GT Nexus platform.

So this is, it would seem, a match made in heaven. Infor does a stellar job of orchestrating production within the walls of the enterprise, GT Nexus does similarly for organizations with a distributed model. Put the two together and you not only have a far wider prospective customer base for the pair but, perhaps more importantly, you have a combined solution that helps organizations navigate their move to a new way of working.

“Together, Infor and GT Nexus will provide customers with unprecedented visibility into their supply chains to manage production and monitor goods in transit and at rest,” said Charles Phillips, CEO of Infor. “In a complex, high velocity supply chain, all partners need to know what was ordered, when it was built, where it is in transit, if the order has changed, and has it cleared customs. Specialization and speed are moving the future of manufacturing into the commerce cloud.”

In terms of how it works, the GT Nexus network integrates directly into the order management system of the buyers and suppliers.  Buyers transmit order information through GT Nexus to their suppliers, financial institutions, freight carriers, and logistics providers. GT Nexus becomes the order management system for the entire network by and the master record of the order across multiple partners. GT Nexus also facilitates more than $20 billion in payments between buyers and their suppliers in 90 countries and in eight currencies. Buyers and financial institutions offer pre- and post-export financing and payment protection through the GT Nexus cloud.

Of course, there are questions. These are two mature offerings, and integrating them is difficult at many levels. From an internal process perspective, aligning sales comp between the two product is one of the easier challenges, but at a technology level, ensuring that two products, with two separate code bases, play together nicely is another challenge.

At a conceptual level, this is an amazing opportunity for both organizations. it will be interesting to see what fruits are born of the tie-up.

Copyright © 2015 IDG Communications, Inc.

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