Inovis Delves into PIM by Snatching QRS Part One: Event Notes

Event Summary

As recently discussed in Not All Acquisitions Happen: JDA and QRS, the initially seemingly well thought out acquisition between JDA Software Group Inc. (NASDAQ: JDAS), a prominent global provider of integrated software and professional services for the retail demand chain, and QRS Corporation (NASDAQ: QRSI), a leading provider of collaborative commerce and trading community building solutions, with nearly 10,000 retail and manufacturing customers, was never completed. Namely, with little more than a month left for JDA to close the acquisition, QRS broke off the "engagement" in favor of a better-priced acquisition by another suitor.

To be exact, on September 3, Inovis International, Inc., a QRS' fellow electronic data interchange (EDI), business-to-business (B2B), and value-added network (VAN) connectivity specialist (and often times a competitor too), and a leader in providing e-business commerce automation solutions that facilitate the more effective management of retail, supply, and manufacturing partnerships, and QRS announced a definitive agreement to merge.

As a result, QRS announced that on September 28, 2004, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to QRS' proposed merger with Inovis. On the same day, QRS also announced that it would mail its definitive proxy statement for the special meeting of QRS stockholders to be held mid-November, in connection with the merger.

This is Part One of a five-part note.

Parts two and three will continue to detail the event.

Part four will discuss the market impact.

Part five will cover challenges and make user recommendations.

Inovis Background

Inovis emerged in 2002 as the supply chain enablement arm spin-off from a then cash-strapped Peregrine Systems to Golden Gate Capital, and it has initially contained global trading community management products from former Harbinger Corporation and Extricity. With more than twenty years of experience (beginning with the 1984 formation of former Harbinger) and over 17,000 customers, Inovis now provides a much broader line of global trading community B2B software and managed services for supplier and customer e-commerce connection and interaction. These solutions aim at enabling companies to optimize profitability through timely and efficient communications with their trading partner communities.

Further attempting to differentiate itself from a mere supply chain connectivity provider, on September 21, 2004 Inovis announced a significant upgrade to its BizManager family of products with the release of BizManager 2.5, a more comprehensive solution for trading partner connectivity and integration. The latest version provides a more complete B2B gateway with improved support for large organizations conducting commerce electronically with trading partners, enabling enhanced hub automation capabilities to simplify partner management and deliver even greater return on investment (ROI).

With the growing adoption of the Applicability Statement 2 (AS2) Internet-based EDI standard, Fortune 100 companies reportedly face many intricate connectivity and network integration issues as their trading partner networks expand with the influx of business partners. Namely, many large retailers must support multiple users, while coordinating high-transaction volumes. As retail trading hubs grow, it becomes increasingly difficult for organizations to monitor the activity of each member connected to the real-time trading community, as well as each business transaction taking place.

To address these challenges, Inovis embedded new features and functionality into the BizManager suite of solutions to provide a central point of management, allowing organizations to more easily manage trading partner relationships and measure business performance on one accessible platform. Inovis' BizManager suite is a web-based solution available for trading partner and business messaging, connectivity, and integration, which includes managing the flow and secure transport of electronic data, documents, and information. Its newly added functionality should allow organizations to take more control of their trading partner relationships, since, by improving visibility throughout the hub and establishing a central point of management, organizations should be able to monitor and track transactions in near real time, thereby minimizing critical errors and exceptions as they occur.

Inovis believes that centrally managing B2B interactions gives companies deeper insight into the technical aspects of transactions delivery; provides a central reusable repository for partner profiles and processes; and provides support for the myriad emerging and existing transport and communications protocols and security standards and mechanisms. Thus, with BizManager 2.5 companies could strengthen relationships with their trading partners and grow revenues by improving communications processes and increasing the volume of business handled electronically. To that end, more detailed key enhancements include

• Certification Management Enhancements and Certificate Monitor: These features should enable users to minimize the number of errors associated with expired business certificates and prevent subsequent loss of business, as users should securely and accurately track the authenticity of certificates and generate ongoing reports in accordance with expiration dates.
  
  
• Exception Dashboard: This should allow users of BizManager to more efficiently track errors by providing information relevant to each specific case or the scope of each user's responsibility. The transaction-based view of the dashboard provides a central location from which users can coordinate and manage business activity.
  
  
• Transaction Archiving and Data Aging: For high-volume hubs, organizations can categorize and archive transaction data to ensure active database records are current and maintained at an optimum operational level, while still providing access to historical information. The feature archives EDI and electronic business XML (ebXML) transactions, maintaining the latest application status for each transaction.

The above new BizManager 2.5 features are available with BizLink, an enterprise-level, server solution for scalable business commerce automation, BizManager400, built for the IBM iSeries (formerly AS/400) platform and BizConnect Professional, Inovis' desktop solution for companies or divisions handling a limited number of trading or business partners.

What Does QRS Bring?

On its hand, QRS is also a technology company that serves the retail trading community with collaborative commerce solutions by managing the flow of critical commerce information between companies and by also leveraging its retail technology expertise to address fundamental industry challenges such as global data synchronization (GDS), compliance mandates, transaction outsourcing, product sourcing, store-level information gathering services, and product information management (PIM). QRS thereby solutions aim at helping customers expand into new markets and channels, improve operational efficiency, and differentiate their brand.

Currently, the vendor has nearly 10,000 customers, as measured by the number of total, unique corporate customers that have so far purchased or licensed QRS' products and services. It also offers solutions that help meet the diverse needs of members of the global retail trading community, regardless of company size, technology infrastructure, or retail segment including general merchandise and apparel (GMA), consumer packaged goods (CPG), health and beauty, consumer electronics, hard-lines, do-it-yourself (DIY), sporting goods, and grocery. These products and services are typically used with the customers' existing enterprise systems in order to deliver greater benefits and efficiencies to these customers.

QMS' mission has been to enable retailers, suppliers and brand manufacturers, and their business partners to connect, transact, collaborate, and differentiate within their global trading community to significantly improve business performance and global brand execution. To ensure that, QRS focuses on meeting customers' current and emerging collaborative commerce needs, whereby it believes that its customers' competitive advantage is built on their ability to differentiate both their brands and their operational capabilities. To do this, they need to collaborate effectively with other members of their trading community, whereby internal optimization of a customer's business is unlikely to be enough to differentiate itself in the current marketplace, which is also in tune with the Inovis' thought process of late.

Both QRS and Inovis claim that to collaborate, trading partners must interact and transact business efficiently, and automation of transactions helps make collaboration effective and differentiation easier. On the other hand, to transact, companies must be connected or networked. Thus, QRS believes that it adds value to its customers because it offers the products and services that companies need to connect, transact, collaborate, and differentiate themselves, ultimately driving overall business performance improvement and improved brand equity as measured through customer awareness, image, preference, and loyalty.

This concludes Part one of a five-part note.

Parts two and three will continue to detail the event.

Part four will discuss the market impact.

Part five will cover challenges and make user recommendations.