Manugistics Lays Groundwork For Talus Integration

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Manugistics Lays Groundwork For Talus Integration
S. McVey - December 7, 2000

Event Summary

Manugistics Group CEO Greg Owens announced that Greg Cuhady, formerly a partner with Andersen Consulting, would lead the integration effort in his new position as Vice President, Pricing and Revenue Management. Under Mr. Cudahy Manugistics is continuing work to integrate applications from recently acquired Talus Solutions, Inc. into its NetWORKS suite for supply chain management and B2B collaboration. Manugistics acquired Talus in September for approximately $336 million in a stock-for-stock transaction. Talus' price and revenue optimization software helps companies determine the best pricing given factors like product availability, customer demand, and margins.

While a partner at Andersen, Mr. Cuhady strategically applied supply chain technologies across a variety of industries including consumer goods, high technology, and media and entertainment. His most recent work focused on the integration of SCM and Customer Relationship Management (CRM) technologies to help support margin optimization, as well as deliver Internet fulfillment capabilities.

Market Impact

While most observers viewed the Talus acquisition as a prudent one, many called attention to the Herculean task required to integrate the two applications in the absence of previous partnerships or joint implementations. Talus' profit and revenue optimization (PRO) solutions are targeted primarily for reservation-oriented hospitality industries, such as air travel, car rental, hotel & casino, and even apartment rental, where a variety of factors influence the optimal price. The solutions analyze historical data, make predictions of consumer demand, and provide algorithms to maximize revenues and profits using parameters such as availability, product margins, and seasonal factors. One unique aspect of Talus is the initial segmentation of the customer base according to buying habits, price thresholds, and responses to changes in availability. This improves the accuracy of subsequent optimization.

One area of interest for both Manugistics and Talus is e-commerce, which may represent the most promising application for their integrated solution. Manugistics has found a potential gold mine in Talus' price optimization capabilities that can help differentiate its digital marketplace offering from those of its competitors. Talus' products enable companies to consistently determine the prices and availabilities of all products to all customer segments through all channels, including the Internet. This can be of great value to brick-and-mortar enterprises that want to implement a new Internet storefront and manage the channel together with its legacy channels. It also holds promise for Internet B2C companies. For example, in a digital B2C marketplace that uses PRO, sellers can quickly determine the optimal prices for its products and immediately see how customers respond to price changes.

Given the excellent possibilities in applying profit and revenue maximization abilities to B2C companies, it would not be surprising if Manugistics makes recent customer a beta site for the planned integrated solution.

User Recommendations

We feel that the integration of Manugistics and Talus products has great potential, but users are advised to remain patient. Manugistics must first outline a high-level strategy for combining the various parts of each product suite, including a plan for reconciling any overlap in functionality. Following the initial groundwork, Mr. Cuhady and his team will need to engage developers and application engineers in the work of bridging the solutions and creating prototypes for further testing. It is likely that Manugistics will elect to beta test the integrated solution prior to a general release and time will be needed to incorporate feedback and bug fixes to the final product. It is unlikely that a stable, integrated solution will be generally available before the third quarter of calendar 2001.

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