SAP
Announces Investment in Catalyst International
S. McVey - September
1st, 1999
Event
Summary
ERP giant SAP
AG announced on September 1 that it had acquired nearly a 10% stake in warehouse
management system (WMS) vendor, Catalyst International Inc. In return, Catalyst
will drop its NT platform development plans, and provide customer training,
consulting and product customization services for SAP Logistics Execution System
(LES), at its Supply Chain Execution (SCE) Competency Center.
Market
Impact
In return for
an insignificant portion of its capital, SAP gains an experienced consulting
partner. The alliance will help SAP expand its already huge market footprint
into warehouse management execution, by leveraging certified interface partner
Catalyst. Although the strengthened relationship stands to significantly accelerate
Catalyst's business, having a big investor like SAP carries a price. It remains
to be seen just how much longer Catalyst can continue to market its Catalyst
WMS and CatPack products for use by other ERP systems, given the resource commitment
the new alliance will demand. As part of their reorganization efforts, Catalyst
will cease development on its NT version of Catalyst WMS. This allows Catalyst
to focus entirely on UNIX. History indicates that their departure from NT may
be a good move in the short term. Catalyst has tried repeatedly to deliver a
Windows NT product without success, most recently through the acquisition of
Kearney Systems Inc. (KSI). A previous attempt to deliver an NT-based WMS was
abandoned when management scrapped development on a product acquired from Information
Strategies Inc. (ISI) in early 1997.
SAP's move
is another example of the rapid consolidation and partnering underway in the
ERP and supply chain planning/execution markets. There are varying degrees of
commitment in these relationships and the SAP-Catalyst deal is stronger than
many. SCM powerhouse, i2 Technologies maintains alliances with Industri-Matematik
International Corp., and EXE Technologies, Inc., that involve joint marketing
and development aspects, but not an equity investment. Though strategies differ,
these moves ultimately provide tighter integration of the packages, more comprehensive
services and support, and lower installation costs for companies who seek to
benefit from new technology.
User
Recommendations
Current SAP
LES users should benefit short-term from the consulting and training services
available through the SCE Competency Center. More advantages will come later
as Catalyst leverages experience from its SAP integration projects to scale
Catalyst WMS to larger and larger enterprises.