Intent on delivering customer relationship management products tailored to specific industries, CDC Software today announced that it will acquire privately held CRM provider Saratoga Systems for an undisclosed sum.
The transaction, which is expected to close by the end of this month, is the tenth acquisition of a software provider by CDC Software, a subsidiary of CDC Corp. of China. Since 2002, the company has bought up enterprise resource planning, CRM, and supply chain management providers with expertise in vertical markets such as chemicals, consumer product goods, food and beverage, financial services, and healthcare. CDC Corp. reported revenue of $240 million in 2006.
Saratoga Systems was founded in 1987 and closed its most recent fiscal year with $25 million in revenue. The Saratoga CRM product offers a user-definable and -configurable environment based on the Microsoft .NET architecture, and is installed on premises. The application features modules for marketing, sales activity monitoring, sales pipeline management, and analytics, including analysis of real-time data that can facilitate sales forecasting. Saratoga also offers industry-specialized applications that include, for instance, management of samples for chemicals companies. Saratoga CRM can be integrated with ERP and other systems, a task usually accomplished through Web services.
The product also features a mobile client application that can be deployed on handheld devices and integrated with an onsite database. Users of the Saratoga mobile application can configure their reports and send and receive images, among other functions.
Ray Wang, an analyst with Forrester Research, noted that the mobile application has set Saratoga apart. "Their mobile disconnected support has been one of their huge strengths," he told Managing Automation. Another feather in Saratoga's cap is its Microsoft Gold Partner status, which Wang said will give CDC skilled .NET developers. And Saratoga's data integration technology, he said, has proven adept at interacting with SAP systems, a strong selling point in discussions with subsidiary companies that may run SAP ERP but are looking for a smaller CRM footprint, he noted.
Where he said CDC could be clearer is in detailing how it will differentiate the Pivotal and Saratoga CRM products. Both have a presence in the manufacturing, healthcare, and financial services sectors, among others. And although Wang noted that Saratoga presents a sound technology profile, he said he would reserve judgment on the merits of the deal until he learned how much CDC spent on the company.
CDC said it will maintain the Saratoga CRM name, as it did when it acquired Pivotal Corp., whose product has been the anchor for CDC's CRM portfolio since 2003. Pivotal CRM has made its mark as a strong product for home-building companies and financial services firms, mostly in the mid-market space. Saratoga's vertical bona fides are in manufacturing, energy, healthcare, and insurance, according to Bruce McIntyre, vice president of business development at CDC Software and now general manager of Saratoga.
Saratoga brings CDC 355 maintenance-paying customers, each of which holds multiple licenses to the CRM product. Most of those customers, including BASF, Johnson Controls, and Konica Minolta, are larger enterprises, and none are customers of CDC's Ross ERP system.
"That's one of the interesting synergies we're looking at — the potential for crossover between this CRM product and the Ross customer set," McIntyre told Managing Automation. He noted that a number of chemical and materials manufacturers that use the Saratoga product represent solid leads for sales of the Ross ERP product.
McIntyre also indicated that CDC plans to keep to its acquisitive ways.
"We certainly are going to continue down the vertical path," he said. "We want to be building out expertise based on as many verticals as we can logically support at any point in time — both on the ERP side and on the CRM side."
For the manufacturing sector, McIntyre pointed to an emerging push into the consumer product goods area that will be led by a yet-to-be-released application devoted to the "agile factory" concept. Designed to automate plant floor activities, the new product will be based on technology acquired in CDC's purchase of MVI Technology in October 2006.
CDC Corp.'s coffers show support for its growth-by-acquisition plan. At the end of its most recently reported quarter — which showed strong increases in overall revenue and license sales — the company had cash and cash equivalents of $223 million.
Although McIntyre said the pending deal precluded an official announcement about the transfer of Saratoga employees, he said CDC was hopeful that the 100-person staff would become part of CDC. "We have had discussions that indicate that all the management team is staying, and we're looking forward to their active participation going forward," he said.