SaaS drives the RedPrairie acquisition of ShipComm

Editor’s note: This article originally appeared on the web site of LM’s sister publication, Modern Materials Handling.

Last week, RedPrairie announced that it had acquired Shippers Commonwealth, a provider of transportation management solutions (TMS) in an on-demand, Software-as-a-Service model to leading companies like Bon-Ton Stores.

While the acquisition is news, acquisitions have become regular occurrences among technology companies as the industry consolidates. What really caught my attention was a sentence in the e-mail from RedPrairie’s public relations rep:

“The most interesting point is that RedPrairie becomes the only supply chain execution company with a complete On-Demand (SaaS) suite for TMS, WMS and Workforce Management programs for enterprise operations of all sizes and levels of complexity.”

SaaS, the cloud, on-demand, hosted model. Those are some of the hottest marketing buzz words among software providers today. They’re all trying to figure out which segment of the market prefers the traditional model of licensing software versus a subscription fee and which applications work best when they’re accessed over the Internet. That’s especially true for the big best-of-breed providers, like RedPrairie, Manhattan Associates and HighJump. All three were leaders in Modern’s annual look at the Top 20 providers of supply chain software.

PR speak aside, it does appear that RedPrairie has put more energy into the SaaS market than its rivals, first by announcing a partnership with NetSuite, the on-demand ERP provider, and then by its acquisition of SmartTurn last spring.

So who benefits from this deal? I put those questions to Doug Braun, president of global operations for RedPrairie, and Dawn Salvucci-Favier, president and COO of ShipCom.
First, the ShipCom perspective. The two companies already know each other, since ShipCom is a reseller of RedPrairie product. Now that the two companies are joining forces and integrating their products, Salvucci-Favier says customers of both companies will see increased functionality. More importantly, ShipCom will have an opportunity to reach a broader market. “We have primarily been a North American-focused company,” she said. “We want to expand globally, and we have North American customers that operate globally or want to expand globally.” RedPrairie, meanwhile, has a global sales and partner network.

Next, the RedPrairie perspective. What it gets is entrée into the market of Tier II and Tier III TMS users. “We have been focused on the Tier 1 TMS user and we do that well,” said Braun. “ShipCom knows how to serve the Tier II and Tier III market with reoccurring processes, standardized setups and fast implementations. That is not a marketplace that RedPrairie has served well.” Moreover, Braun said, ShipCom simply has more experience in providing on-demand software in a multi-tenant model, that is one instance of the software serving multiple customers. “We’re going to increase our technical knowledge in both TMS, SaaS and multi-tenant solutions,” Braun said.

RedPrairie customers will also gain access to two new products introduced by ShipCom in the last year. One is a bidding and contract award tool; the other is a benchmarking application that provides a user with real-time market information so it can benchmark the rates its shipping costs against similar-sized companies. Both can be sold as part of an integrated suite or as standalone applications.

Will ShipCom be a complement to SmartTurn, an on-demand WMS targeted to the small fry? Braun said that’s still to be determined. “Part of my task is to figure that out,” he said. “ShipComm serves the Tier II market. SmartTurn serves the Tier IV and Tier V markets. Our challenge is to adapt ShipComm to the lower tiers and adapt SmartTurn to the higher tiers. We need to find a happy medium between the two.”

If RedPrairie gets that happy medium right, Braun believes there is an opportunity to provide more service to its Tier 1 base. “Right now, I have customers with 50 large warehouses that I can service well, but 150 small facilities around the globe that I don’t service well,” Braun said. “I want an environment where I can offer them some kind of offering that serves all of their facilities and transportation needs and gives them total visibility into their supply chains.”

Braun says a clear strategy is probably six months away. For now, ShipComm will go to market as Shippers Commonwealth.

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