GXS Acquires HAHT Commerce for More Synchronized Retail B2B Data Part One: Event Summary

Event Summary

A refutation of the claim that the ongoing consolidation in the enterprise application space has of late largely been about pilfering install base, increasing market share, and saving the costs of "economy of scale"-based product, might be the recent merger of two players in the business-to-business (B2B) e-commerce arena, which claim that the rationale for their merger is to provide a more comprehensive solution for accommodating increasingly global business relationships.

Namely, on January 15, Global eXchange Services, Inc. (GXS, www.gxs.com), the large, privately-held B2B e-commerce software, services, and solutions pioneer, which operates one of the largest B2B e-commerce networks in the world, managing one billion annual transactions for more than 100,000 trading partners, announced that it signed a definitive agreement to acquire HAHT Commerce (www.haht.com). HAHT Commerce is based in Raleigh, North Carolina (US) and is a privately-held provider of demand chain management applications (DCM) that strategically automate, integrate, and optimize order management, product information management (PIM), channel management, business intelligence (BI), and customer services functions between manufacturers, their channel partners, and end customers.

Under the terms of the agreement, GXS would acquire all the capital stock of HAHT Commerce through a merger for approximately $30 million (USD) in a combination of cash and shares of GXS Holdings, which is the parent company of GXS, headquartered in Gaithersburg, Maryland (US). The transaction was subject to the approval of HAHT Commerce's shareholders and other customary conditions, and the acquisition was completed in February. CIBC World Markets Corporation acted as exclusive financial advisor to HAHT Commerce with respect to the transaction.

The acquisition was hailed as bringing together two providers of complementary B2B e-commerce solutions that should help retailers, manufacturers, and suppliers of all sizes expand collaboration and expedite time-to-market for new products. GXS believes the addition of HAHT Commerce will enable it to provide businesses of all sizes with the industry's most comprehensive solution for PIM and data synchronization, which should enable retailers, manufacturers, and suppliers to manage product information from concept to consumer. With more than thirty-five years experience, GXS provides supply chain services and software to 60 percent of Fortune 500 companies. With this acquisition, the company hopes to be able to deliver a complete solution suite that would include software to integrate data into and out of back-end systems, management tools to publish and syndicate product information accurately, transaction delivery services to move the information, and community enablement to electronically connect all trading partners in the global retail supply chain.

GXS touts that this combination is all about improving the quality and consistency of product information data flowing throughout the retail community, since nowadays the lack of accurate product item information between buyers and sellers in the community remains a significant and costly problem. By combining its products, services, and staff resources, GXS hopes to establish itself as a "one stop shop" to address this emerging multi-billion dollar opportunity. On the other hand, HAHT Commerce hopes to immediately benefit from GXS' worldwide customer reach and broad transaction management capabilities to rapidly accelerate the adoption of its DCM software solutions.

GXS plans to rapidly integrate the following key components within its potentially all-encompassing data synchronization solution:

  • Feature-rich product information management—The PIM solution of the HAHT Commerce Suite features a powerful UCCnet-interoperable catalog capable of aggregating, organizing, structuring, and managing item-related content. The solution can aggregate data from multiple internal sources including leading ERP systems, create a scalable data repository (catalog) for centralized management, and optimize data flow to multiple destinations. UCCnet is a subsidiary of the Uniform Code Council, a nonprofit organization that manages a standards-based item registry for companies' product data as a platform for collaborative commerce.

  • Simple syndication with UCCNet—HAHT Commerce's Quick Connect Package is a fast and cost-effective entry point for smaller suppliers and manufacturers seeking to leverage a machine-to-machine extensible markup language (XML) interface to synchronize items with retail partners through the UCCnet foundation service.

  • Hosted catalog services and data pools—The GXS Global Product Catalogue (GPC) provides a multi-community, multi-industry data repository of more than 65 million line items, comprehensive trading partner profiles, and synchronization services supporting over 17,000 trading partners.

  • Rapid, worldwide community enablement—From electronic data interchange (EDI) to AS2 and XML formats, GXS claims the ability to allow on-board businesses to quickly and easily exchange product information electronically in more than thirty-six countries with multilingual support.

This is Part One of a four-part note.

Part Two will continue the event summary.

Part Three will discuss the market impact.

Part Four will cover challenges and make user recommendations.

Expanding Product Applications

In the future, additional applications from HAHT Commerce that will enhance GXS' potentially end-to-end data synchronization solution include order management, business intelligence, customer services, and channel management, but GXS has yet to articulate the detailed product roadmap for these. In order for us to discern the merits of the impending merger, it might be beneficial to analyze the relatively recent developments that the both parties achieved separately, developments that were possibly aimed to facilitate their merger.

To that end, last fall, GXS announced two key offerings in its Data Synchronization suite. The first, Data Sync Manager (DSM), is a new software solution that streamlines the internal, manual steps typically associated with gathering and distributing product data to trading partners. Deployable as either a standalone, inside a firewall application, or as part of a hosted solution, DSM is compliant with UCCnet Foundation Services 2.1.

The second product, Global Product Catalogue (GPC) also provides full compliance with UCCnet Foundation Services 2.1 with its latest version that is now commercially available. Working in partnership with its largest retail clients, GXS has been and continues to be an active contributor to both UCCnet enhancements and certification testing for Version 2.2 and beyond. Launched in 1988, today the GPC is serving as the engine for active data synchronization communities in a number of major countries. On the other hand, UCCnet's GLOBALregistry is a global product directory aimed at connecting independent data repositories to achieve seamless, accurate, consistent data synchronization for multi-industry supply chain partners. To that end, GXS provides a transparent framework that allows multiple users to access product information data through any communication standard and exchange needed information with UCCnet.

Furthermore, last summer, leveraging its natural position as a transaction delivery provider to expand into facilitating collaborative commerce within its customers' supply chains, GXS announced the availability of a new set of services that should give customers visibility, event management, and supply chain collaboration capabilities. The solutions were thus designed to offer proactive alerts, order status tracking, and reporting functionality. Consequently, in addition to providing the connectivity platform for the exchange of business documents, GXS claims the ability to now provide critical information about the status of those documents, thereby maximizing the efficiency of the various applications. The solution benefits include

  • functional acknowledgement (FA) management services, which facilitate tracking, reporting, and event notification and supposedly increase operational efficiency by providing visibility and analysis of critical transaction information;

  • intelligent collaboration and event management, which should help achieve a streamlined management of supply chain processes through improved inventory planning, lowered transportation costs, and increased internal productivity;

  • aggregated supply chain data and shared visibility spanning multiple trading partners, back-office systems, and various data formats; and

  • entire order life cycle management, which should expedite document turnaround and allow for self-service status inquiries and the ability to manage by exception.

The above products' delivery came after the prior acquisition of the business of Celarix, Inc., a privately held multi-modal supply chain visibility, collaboration, and event management provider headquartered in Cambridge, Massachusetts (US). The former Celarix' logistics provider, integration, and data quality management service aim at helping Global 2000 organizations to quickly connect to logistics trading partners and retrieve, use and share timely and accurate shipment status information throughout the supply chain. The solutions have allowed GXS to expand its value-added services to its core vertical markets, particularly in the retail, hi-tech, and automotive industries. Meanwhile, former Celarix' customers including, Agilent Technologies, Lowe's Companies, Sharp Electronics, and ShopKo Stores, have also become part of the GXS customer base.

AS2 Trading Connectivity Options

As for its trading connectivity core competency, recently in January, GXS announced that it has more than 1000 companies that are experiencing the benefits of real-time communications with their trading partners by using various solution offerings from its comprehensive AS2 portfolio. Companies ranging from the largest retailers to the smallest suppliers can choose from hosted, traditional onsite software or a hybrid AS2 option to address their specific AS2 needs. Clients using these services include Pepsi Bottling Company, Swisher International, National Fruit Products, Inc., Koss Audio & Video Electronics, Bormioli Rocco Glass Company, Van Mar, Inc., and Hibbett Sporting Goods, Inc. The GXS AS2 portfolio includes both services and software as follows:

  • AS2 Mailbox Service enables clients to connect to GXS using the AS2 protocol and obtain the improved productivity resulting from this faster, more efficient connectivity option.

  • AS2 Outsourcing Service offers proactive, event-driven document exchange via the Internet with 24x7 server availability for synchronous communication in a hosted environment, which should enable clients to comply with their trading partners' requests for AS2 communications without investing in the hardware, software or expertise they would otherwise need.

  • AS2 Software Suite includes the Enterprise System AS2 add-on module for users of GXS' supply chain integration platform, as well as the AS2 Comm Link software for small to medium-sized businesses. The suite comes pre-configured for both a variety of EDI translator packages and operating systems and for trading partners, including Wal-Mart, Wells Fargo, Procter & Gamble, UCCnet GLOBALregistry, and many others.

This portfolio was the result of the mid-2003 announcement of the launch of a suite of AS2 Comm Link software solutions for suppliers of all sizes, which has complemented the existing above-mentioned GXS AS2 offerings including AS2 Outsourcing and AS2 Enterprise Systems software. The AS2 standard combines the traditional benefits of EDI to smaller companies, while reducing the cost of on-line transactions for larger enterprises. Whether using AS2 via the Internet or the GXS network, the AS2 Comm Link enables suppliers to connect quickly and easily with their trading partners in a real-time environment, by leveraging GXS' expertise in internet-based transactions, security, scalability, and reliability. AS2 has been widely adopted by the retail industry to take cost out of the supply chain, while other industries are also considering the use of AS2 to exchange EDI or XML e-commerce messages over the Internet or via the transaction services network.

As indicated above, GXS offers pre-configured AS2 Trading Partners designed for companies that want to trade with other companies and organizations including Wal-Mart, Food Lion, Wells Fargo, Proctor & Gamble, U.S. Army/Air Force (AAFES), and others. For ease of customer use, the pre-configured Trading Partners have been formatted with all of the technical information of their trading partners to get users up and running easily and quickly. While, unlike in the case of radio frequency identification (RFID), huge retailers have not yet issued a mandate or a deadline for using AS2; however, many manufacturers are expected to adopt AS2 primarily to satisfy their largest customers with cost savings being an extra bonus. Frequently used EDI documents, such as purchase orders (PO), acknowledgements, advance shipping notices (ASNs), and invoices, are seen as the target for the first phase of AS2 implementation.

Interchange Services for Smaller Enterprises

At about the same time, in an attempt to appeal to smaller enterprises, GXS added automatic monitoring and integration capabilities to its Interchange Services transaction service to make electronic trading more flexible and less complex for small and medium-sized businesses (SMBs). The Interchange Services division, in addition to allowing businesses to exchange business documents electronically by supporting electronic trade through various standards, such as XML, EDI, and other industry-specific standards, also includes audit trails, user-controlled access, and local language support twenty-four hours a day to ensure business documents are protected in a secure environment.

The new Trading Partner Client desktop software uses Web Services technology to automate the exchange of data between back-office applications and trading partners' systems via Interchange Services, and comes equipped with a QuickBooks plug-in. The software picks up purchase orders, invoices and other data from a company's back office system, sends them to its trading partners in their preferred formats—EDI or XML. In the same way, the software scans and picks up business documents from trading partners and delivers them in the receiver's preferred format, directly to a specified directory, or integrates them into a back-office application. A company can set up monitoring to take place from every ten seconds to once a month. By using Web Services, Trading Partner Client accelerates the electronic trading set-up time by providing access to more detailed information on trading partners, such as data preferences and standards compared to what could be made by available using alternative technologies. The software is available free of charge for Interchange Services subscribers.

This concludes Part One of a four-part note.

Part Two will continue the event summary.

Part Three will discuss the market impact.

Part Four will cover challenges and make user recommendations.

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