Will Recent Acquisition Catalyze Catalyst’s Strategy? Part Two: Current Strategy

Current Strategy

Catalyst International, Inc., a global provider of supply chain execution (SCE) applications, recently finalized the sale of all its outstanding shares to ComVest Investment Partners (www.comvest.com), an institutional private investment firm. As a result of the acquisition, a company formed by ComVest was merged into Catalyst, while the shareholders of Catalyst received $2.50 (USD) per share in cash.

Under the helm of the current CEO and president James B. Treleaven, Catalyst began in early 2002 to execute its turnaround strategy by focusing on two important goals. First, it carefully managed its cash resources, focused on existing customers, re-architected, and expanded its core product; it expanded its services business; and leveraged key partner relationships. Second, as this foundation took hold, Catalyst positioned itself as a long-term player in the consolidating SCE arena by building a platform to support steady growth, and this is where ComVest comes into the picture. As indicated earlier, through its acquisition by ComVest, Catalyst is better positioned to execute a broader supply chain management (SCM) "roll-up" strategy, in which Catalyst would use ComVest's funds to buy complementary vendors to increase its install base, revenue, and market share.

Of late, Catalyst claims to "provide customer-driven software and services that optimize supply chain performance by offering an extended suite of SCE software products and services for execution management (CatalystCommand), process management (CatalystConnect), and performance management (CatalystCompass). The vendor's plan is to improve its position as one of the leading best-of-breed SCE suppliers through growth in two areas. First, it plans to expand its product and services offering to include additional components of SCE through both internal development and ComVest-backed acquisitions. Second, Catalyst plans to continue to add products and services that supplement the SCE offerings of the major ERP companies, but particularly SAP.

The vendor's current strategy is to provide customer-driven, value-added software products, and services that are focused on its customers' business goals and based on an open, modular technology. This supports its vision of being the sole resource its customers would need to install, integrate, and manage SCE software products. The strategy, called "Best-for-Business," is meant to capitalize on Catalyst's arguably unique ability to support heterogeneous SCE environments. In other words, Catalyst is prepared to deliver either a best-of-breed or ERP-centric, WMS solution, depending on the customers' requirements. To that end, some of its more recent SCE solutions include application components that streamline the physical movement of goods, enable collaboration with customers and suppliers, and provide analysis of its customers supply chain, with the aim of improving both financial and operational performance.

Owing to this recent expansion into many WMS-adjacent areas, the company's software products and services portfolio is organized into the following three distinct groups each of which address a specific set of SCE requirements:

1. A collection of SCE products called CatalystCommand that support the efficient operations of warehouses, transportation networks, and yard facilities within the supply chain. Also referred to as supply chain execution management, it manages the physical movement and storage of goods and associated resources at or between locations. It in turn comprises of the following three product suites:
   
   1) Transportation Suite (consisting of the Transportation Planning, Transportation Execution, and Transportation Reconciliation modules);
   
   2) Warehouse Suite (consisting of the Warehouse Management, Yard Management, Intelligent RFID [iRFID], and SAP LES modules), and
   
   3) Resource Suite (consisting of the Labor Management, Simulation, SAP Task and Resource Management [TRM], and SAPConsole modules). SAPConsole is a native radio frequency (RF) data collection application for SAP R/3 and mySAP Enterprise Suite, which SAP users already own as part of the suites. Catalyst has extended SAPConsole's functionality with enhanced transactions for use throughout the entire enterprise.
   
   
2. A collection of supply chain process management products called CatalystConnect that supports the effective synchronization of data and processes between the various parties and systems that comprise an enterprise's supply chain. In other words, it facilitates, coordinates and optimizes the information and product flow in the extended supply chain network, by comprising the following three product suites:
   
   1) Collaboration Suite (consisting of the Supplier Link, Carrier Link, Returns Authorization, and Visibility modules);
   
   2) Control Suite (consisting of the Dynamic Fulfillment, International Trade Logistics [ITL], Returns Management, and Supplier Quality modules); and
   
   3) Optimization Suite (consisting of the Order Fulfillment, Inventory Optimization and Demand Management modules).
   
   
3. A collection of supply chain monitoring and reporting products called CatalystCompass that provides analysis of execution and process activities for the purpose of managing and improving performance of the supply chain. Also referred to as the supply chain performance management solution set, it also comprises the following three product suites:
   
   1) Analytics Suite (consisting of the Reports and Dashboards modules);
   
   2) Event Management Suite (consisting of the Alerts and Resolutions modules); and
   
   3) Consulting Suite, which is a combination of specialized consulting offerings like Execution Consulting, Process Consulting, Wireless Security Consulting, and RFID consulting.

Catalyst products traditionally offer extremely deep functionality in warehouse management, inventory management, yard management, shipping/receiving, order fulfillment, and warehouse optimization. As a result of the above enhancements, Catalyst is one of the first SCE suppliers to offer both the "flow-through" functionality and traditional warehouse management features in one system, allowing a facility to run in either or both modes. Flow-through is commonly used by retailers and provides the capability to receive product and send it directly to shipping without ever being stored in the warehouse or physically handled by humans.

This is Part Two of a four-part note.

Part One presented the event summary.

Part Three will cover Catalyst and SAP.

Part Four will provide market analysis, challenges, and user recommendations.

Part Three and Four will be published October 28 to 29.

RFID Capabilities

Further, CatalystCommand iRFID provides the ability to add radio frequency identification (RFID)-enabled processes to warehouse management, ERP or standalone operations. This electronic product code-compliant solution might provide immediate benefits and can be leveraged to support wide range uses of RFID across the extended supply chain, since it does much more than handle all RFID technical and transactional requirements. (for more information, see Electronic Product Code (EPC): A Key to RFID) Namely, somewhat resembling but possibly exceeding some of its competitors RFID approaches (see RFID—A New Technology Set to Explode?; Part Two: Early Adopters, Challenges, and User Recommendations), the intelligent subsystem features an embedded business process rules engine to ensure that RFID business logic is applied at the most appropriate decision level in the solution architecture.

For example, it makes certain that SCE applications, such as WMS or transportation management systems (TMS), are only given RFID information relevant to that application's business process. Additionally the intelligent subsystem gives users the flexibility to modify RFID business processes without having to modify the application per se. The componentized system enables customers to start small and grow later, while modular business process "plug-ins" allow customers to go beyond shipping compliance to support a variety of supply chain processes including receiving, put-away, shipping, picking, packing, and loading. Users may also integrate iRFID with many types of devices and standards, including active or passive, in a mixed use environment. The solution provides both stand-alone and integrated capabilities to provide the specialized processes that support the implementation of RFID at various points within the supply chain. This is possible through a powerful combination of open integration capabilities using open applications group (OAG)-based extensible markup language (XML) transactions, a business rules engine that supports runtime application level plug-ins and event-driven workflow management of multiple input devices (e.g., RFID, barcodes, voice, etc.) and user screens.

Platform Independence and Open Integration

The relatively recently adopted component-based architecture aims at easily integrating with all pieces in a total SCE solution, including manufacturing resource planning (MRP) and ERP systems, such as SAP and Oracle, and SCP and TMS systems like Manugistics and i2 Technologies. CatalystCommand also interfaces with a wide range of automation technology interfaces, such as RF-based scanning and data collection devices, bar coding devices, and material handling equipment (such as conveyors, sorters, and carousels), and Catalyst resells these to some of its customers. The product also interfaces with several add-on, third-party software products that deliver specific functionality, including shipping management, warehouse optimization, and warehouse simulation. Catalyst also resells a variety of hardware products developed and manufactured by third parties in order to provide its customers with an integrated distribution center management solution. These products include computer hardware, RF terminal networks, bar code printers and scanners, and other peripherals.

CatalystCommand currently runs on UNIX servers from Sun, Hewlett-Packard (HP), and IBM with Oracle RDBMS and others as needed. Building on the proof-of-concept work that was done back in 2002, Catalyst has developed its new products using an open standards based Java 2 Enterprise Edition (J2EE) technology foundation that supports zero footprint browser operations on Windows, Linux or UNIX-based hardware. Its adoption of OAG standards (whereby its senior vice president of product development, Nigel Davies, has recently even taken the position of the chairman of the OAG's board) and next generation Java technology, aim at enabling all components to "plug-in" seamlessly to any legacy-based, best-of-breed or ERP infrastructure providing true integration both within and across platforms.

As mentioned earlier on, this is the underpinning of Catalyst's "Best-for-Business" strategy, which addresses the industry's need for platform independence and open integration across possibly any infrastructure. Catalyst even claims that the adoption of this new technology has expedited the introduction of new products in response to market and existing customer needs, with typical release cycles being reduced from 1824 months down to even less than six months.

To that end, in 2003, the vendor made a number of releases to expand its product offering, particularly with CatalystCommand Warehouse Management 9.1, which was released in June 2003. This release was the next step in offering a fully converged version of CatalystCommmand Warehouse Management, and it gives customers the above-mentioned flexibility to flow product through the warehouse or run the facility in a standard put-away mode. It also supports enhanced functionality to support vendor quality management (VQM) and lean warehousing practices, which are currently being deployed heavily in the automotive vertical market. Included are enhanced standard mappings to support deployment of CatalystCommand Warehouse Management in SAP environments.

Additionally, the product laid the groundwork for several new complementary software products, including CatalystCommand Labor Management, the CatalystCompass Analytics Suite, CatalystConnect SupplierLink and CatalystConnect Returns Authorization, to name only some. Further, CatalystConnect Supplier Quality 2.0 and CatalystCommand Yard Management 2.0 were released in July 2003, and this release extended the ability of the solution to support real-time management of dock doors, remote yards, and processing of shipment in a stand-alone manner without integration with CatalystCommand Warehouse Management.

This concludes Part Two of a four-part note.

Part One presented the event summary.

Part Three will cover Catalyst and SAP.

Part Four will provide market analysis, challenges, and user recommendations.

Part Three and Four will be published October 28 to 29.