Sterling Commerce customers needn't panic over news that the company has agreed to be bought by IBM, according...
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to industry analysts. Sterling's software and services are unlikely to disappear anytime soon, and the combination could give manufacturers new networking, analytics and business process management (BPM) cloud computing tools to transact with customers and suppliers.
IBM and Sterling parent AT&T announced the $1.4 billion agreement in a joint press release on Monday, saying IBM plans to support Sterling's clients and enhance its technologies. Sterling's 2,500 employees will join the WebSphere organization in IBM's Software Group.
But overlap could threaten some products, according to Benoit Lheureux, research vice president at Gartner Inc. "IBM, for its part, already has at least a half-dozen integration products in its portfolio," Lheureux said. "What are they going to do with Sterling Integration, which is their flagship middleware product? Is it really going to enhance and nurture and invest? IBM did not need the integration middleware."
That said, IBM has a history of supporting the legacy applications of companies it acquires, according to Lheureux. "It will probably keep that product [Sterling Integrator] for years to come," he said. "But I'm not sure it will get the same love and care as the WebSphere products."
Lheureux said the fate of Sterling's product lines won't become clear until IBM releases a roadmap after the deal becomes final, possibly in the second half of this year after regulatory approvals, according to the companies. Sterling's selling and fulfillment and business-integration suites are the lines most heavily used by manufacturers, according to Joel Reed, the company's senior vice president of product management and marketing.
Cloud computing and supply chain integration
Manufacturers that already take advantage of Sterling's strengths in order management, product configuration and pricing could gain from the superior sales features of WebSphere Commerce, said Gene Alvarez, a Gartner research vice president who specializes in e-commerce and customer relationship management (CRM). Alvarez said manufacturers tend to use many elements of Sterling's broad product line, from sales configuration and fulfillment to value-added networks (VANs) and other integration mechanisms. Alvarez said Sterling is especially good at handling orders for products like refrigerators that incorporate multiple partners, including service technicians, warranty providers and shipping carriers.
"On the sales side, there's not a lot of overlap between Sterling Commerce and IBM WebSphere, except for some of the B2B e-commerce capabilities," Alvarez said, adding that IBM will have to decide whether to merge the two technologies.
What IBM needs, according to Lheureux, is Sterling's global trading partner network. "It's a compelling story for solving multi-enterprise processes," he said. Sterling claims that more than 18,000 global customers use its connectivity and collaboration tools, such as electronic data interchange (EDI) and secure file transfer. IBM said it expects dramatic growth in these "intelligent transactions," which include raw-materials sourcing by manufacturers and online stock replenishment by retailers.
"This acquisition will give IBM new tools to help clients build dynamic business networks that connect partners, suppliers and clients and deliver a consistent customer experience across channels," WebSphere general manager Craig Hayman said in the announcement. "In addition, the fact that much of this can be done in the cloud will make it compelling to large numbers of our customers."
Lheureux said the IBM move mirrors those of its biggest enterprise competitors, including Oracle, which partners with E2Open to gain a trading network, and SAP, which recently entered a similar arrangement with Crossgate.
Reed characterized the marriage as uniting IBM's intra-company middleware with Sterling's inter-company middleware. "We have an opportunity to bring together a real end-to-end solution," he said.
Sterling customers have been requesting BPM features like WebSphere's, according to Reed. The IBM deal should also help augment Sterling's order-management and transportation management system (TMS) products with optimization technology from IBM's ILOG division.
Lheureux agreed that Sterling customers could benefit from WebSphere's BPM features, especially pre-built solutions for such vertical markets as manufacturing and healthcare.
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