By Ian Hobkirk
Managing Director of Commonwealth Supply Chain Advisors
Accellos and HighJump Software announced today that they are merging, bringing together two well-known brands in the Warehouse Management Software (WMS) space. The company will operate under the HighJump name, but with Accellos founder and CEO Michael Cornell at the helm as CEO of the new entity.
The merger is one of competing, rather than purely complementary companies, with significant areas of product overlap. While both companies have developed some degree of peripheral offerings (HighJump’s EDI and direct store delivery solutions, and Accellos’s business intelligence applications), both companies are WMS providers first and foremost. HighJump’s solution is frequently listed among “top tier” providers, while Accellos has targeted small and mid-market companies, with a focus on third-party logistics (3PL) providers as well. While most analysts would probably agree that HighJump is the more feature rich of the two solutions, both companies essentially specialize in the same type of software.
In a press release as well as a private interview today, the newly merged company revealed a strategy that acknowledges these areas of overlap, and lays out a plan to keep both platforms alive, with each targeting different sized enterprises: “HighJump WMS provides large and upper mid-market companies including 3PL companies one of the most scalable and adaptable WMS platforms in the market…The Accellos SMB WMS product is uniquely positioned in terms of price, product complexity and go-to-market approach for small and medium sized businesses.” If the company is loyal to this plan, then this should allow the joint entity to have a very coherent message to its customers, not having to stretch one of the solutions to try to up-sell or down-sell potential clients.
An interesting lesson can be taken from a similar merger in 2010, with RedPrairie’s acquisition of cloud-based WMS provider SmartTurn. At the time, the merger was hailed as having created the “only software company with a WMS solution for distribution operations of all sizes and levels of complexity.” However, the SmartTurn product was rarely if ever sold by RedPrairie (now JDA) in the following years, and was recently spun-off again to DiCentral in April of 2014. Jean-Francois Gagne, Chief Product Officer, JDA, stated recently that the SmartTurn product “contains functionality that is redundant with JDA’s core warehouse management solution and does not fit into our go-forward product portfolio.”
It is, of course, unfair to compare this merger with any other, but a look back at numerous WMS mergers over the last two decades shows that in most cases, one of the two platforms emerges as the dominant one and continues to be enhanced, with the other platform being relegated to maintenance mode. If this was the case, the HighJump platform would be the likely survivor. HighJump has consistently touted their flexible architecture as a means to allow customization without touching source code, and has largely delivered on this promise. The company has also developed strong native modules for slotting and labor management software, which will doubtless be continued. It will remain to be seen whether a secondary technology platform will be retained to be positioned to the mid-market over the long-term.
It will be interesting to see whether Accellos’ dominant financial investor, Accell-KKR, has any appetite for additional acquisitions. The new company would be well-served to have a strong Transportation Management Software (TMS) offering for parcel, LTL, and truckload freight optimization – something long missing from both companies’ suites. There are several potential partners in the marketplace that might be good fits in this space. Additionally, with the rise of omni-channel commerce, Distributed Order Management (DOM) technology is a key capability many retailers are seeking. There are no obvious acquisition targets in this area, but it will be interesting to see if Accell-KKR makes a strong investment in developing this functionality natively. It would be a strong complement to the “in-store fulfillment” capabilities that HighJump has been piloting with companies like Sears. It is functionality like DOM that is most likely to be in high-demand by retailers of all sizes in the years to come. The “new HighJump” might be just the company to bring it to them.
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