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Exact Acquires Vanguard Solutions Group

Written By: Predrag Jakovljevic
Published On: January 16 2006

Exact Acquires Vanguard Solutions Group

Along the lines of enhancing products possibly by acquiring companies for specific products and capabilities, in October, Exact Software announced that the company completed the acquisition of Vanguard Solutions Group, a Glen Ellyn, Illinois-based (US) provider of enterprise business intelligence (BI) solutions. The acquisition should enable Exact Software to better address the growing need for comprehensive business analytics capabilities within the mid-market. These capabilities extend traditional financial reporting and enterprise resource planning (ERP) functionality.

Part Five of the Exact Continues Its Share of Judicious Acquisitions series, which began January 9.

The acquisition is a natural extension of the strategic partnership between Exact Software North America and Vanguard Solutions that led to the development and release of Exact Business Analytics in late 2004. Exact Business Analytics is a business analytics solution that is currently fully integrated with the Exact Macola ERP product line. As a result of the acquisition, Exact Software expects to more tightly integrate Exact Business Analytics with its existing product family, and develop additional capabilities to meet the evolving needs of both Exact and Vanguard customers and prospects.

Also as a result of the acquisition, Vanguard Solutions will become a division of Exact Software North America, which also includes the Macola, JobBOSS, MAX, and Alliance/MFG divisions. In addition, Anthony Balio, Vanguard's president and chief executive officer (CEO), will stay on with Exact Software North America, joining the company's executive team. Vanguard will continue to develop and distribute the Vanguard Graphical Performance Series (GPS) solution and related business intelligence (BI) technology worldwide.

Founded in 1993, with about 35 employees, 125 customers, and an estimated $5 million (USD) in revenues (before the acquisition), Vanguard is headquartered in the Chicago (US) metro area, with additional offices in the UK and affiliates around the world. Companies like Bayer AG, Intertape Polymer Group, Noveon, Wyandot Snacks, and Parker Hannifin rely on Vanguard for enterprise reporting and analysis.

For background information on Exact Software see Exact Software Continues with Its Share of Judicious Acquisitions.

This is Part Five of a multipart note. Parts One through Four, published January 912, explored Exact's strategic groups and global aspirations; and its BPM strategy and products. Part Six present challenges and make user recommendations.

Analysis of Acquisition

Management from Exact Software North America cited several reasons why Exact decided to acquire Vanguard. The first was because BI capabilities have become a mandatory part of any enterprise ERP sale. The second was to accelerate the adoption of the Exact Business Analytics product into the market, and move well beyond the twenty or so licenses that have been reportedly sold since its introduction a year ago. Finally, because Vanguard has always been a small company with a great BI product that is not burdensome for small and medium businesses (SMB) to deploy, it can help Exact better access this market. There may be many new site opportunities with Vanguard as both a dashboard and BI tool, see Contemporary Business Intelligence Tools. Exact's muscles should also give Vanguard the ability to expand its technical and marketing activities.

On the other hand, the acquisition was a defensive move that now will assure Exact will have continued access to the GPS product. Key to all of these objectives is that Vanguard's management, technical, support and services people remain with the company, and Vanguard is expected to become a profitable division at Exact North America almost immediately, after shedding some redundant general and administrative (G&A) staff, and leveraging its corporate infrastructure (including the information available for the corporate-wide instance of e-Synergy and Globe), in a manner that is mutually beneficial.

Going forward, Exact plans to offer the Exact Business Analytics product with its two strategic products: Exact Globe Enterprise and e-Synergy. Exact Globe Enterprise, a multinational ERP product, has been available in Europe for many years, but is only now being introduced to the North American market. e-Synergy is the core of Globe. Indeed, while e-Synergy currently comes with pivot tables that are used to analyze multiple dimensions from sales, customer service, marketing, etc., these pivot tables were not built using online analytical processing (OLAP) cubes, which are now the industry standard for slicing and dicing across multiple dimensions. This is one of the reasons why GPS is vital—it can certainly fill this gap. The company's three other North American ERP product lines— JobBOSS, MAX, and Alliance/MFG — may be considered for a tighter integration, although these products serve different markets. In any case, Exact plans to develop additional capabilities to meet the evolving needs of both Exact and Vanguard customers and prospects.

Namely, Vanguard has historically focused on building partnerships with enterprise software firms, particularly those that concentrate on mid-market businesses. GPS has been sold by Vanguard directly to end users, including to the users of the former J.D. Edwards, MAPICS, Marcam, and other products. Vanguard has also been sold through a number of ongoing partnerships, including Infor Global Solutions (via former Lilly Software and MAPICS), WorkWise, and Asset Point (see Has the Mid-market Found Vanguard BI Solutions?).

Exact not only expects Vanguard to continue to sell GPS through these existing partners, but also expects Vanguard to expand its partner network. Balio, president and general manager of the new division defines the new relationship as "co-opetition", which, as the name suggestions, involves both cooperation and competition. He explains that while "Vanguard's ERP partners will compete with Exact for new accounts they will also cooperate with Vanguard in enhancing their product offerings. It has been and continues to be our objective to provide our partners with a complete, integrated analytics offering. Our partners use our analytics to enhance the value of their products to both their existing customers and new accounts. We are dedicated to maintaining the partnership relationships to the benefit of all involved."

Prior to the Vanguard acquisition, in mid 2005, Exact acquired other companies. In August, it took a majority interest in Modulair Easy Access B.V., a logistics and warehouse software firm, while in June. It also acquired Kooijman Software, a software provider to construction and education organizations, and AllSolutions, a software provider to non-profit and service organizations. In May 2004, Exact acquired the Treadstone Group, a Cincinnati, Ohio-based (US) IT consulting and systems integration firm. All these acquisitions contribute to an incremental, rather than dramatic, revenue increase, and also to a gradual geographic coverage expansion.

The acquisitions follow the appointment of Rajesh Patel as corporate CEO on July 1, 2005. In a keynote address at the Engage 2005 annual user conference in early October, Patel said that Exact was firmly focused on the mid-market and that a core part of the company's growth strategy is not to be "distracted by [the] digestion or integration issues" caused by rampant acquisitions for market share purposes. He also stated that Exact has no ambition to climb up the market.

This concludes Part Five of a multipart note. Parts One through Four, published January 912, explored Exact's strategic groups and global aspirations; and its BPM strategy and products. Part Six will present challenges and make user recommendations.

 
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