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Made2Manage Takes Micro Vertical Path Sign Up to receive Daily News Alerts in your E-mail Inbox
Posted on Monday, June 05, 2006 12:02:00 AM |
By recently closing its fifth acquisition in the last two years, Made2Manage Systems Inc. (Indianapolis) is making a statement regarding the quickly consolidating ERP software market: Less is more.
In acquiring Encompix Inc. (Cincinnati), the 15-year-old ERP vendor gains a provider of enterprise software and services aimed at manufacturers with project-based, engineer-to-order (ETO) operations. The deal underscores the revitalized enterprise software vendor's laser focus on building a portfolio of ERP products aimed at underserved micro verticals. And unlike voracious acquirers like Oracle Corp., SSA Global, and Infor, whose takeovers are predicated on creating operational and technological economies of scale, Made2Manage plans to keep its acquired product lines separate, at least for the time being.
CEO Jeff Tognoni, in fact, vehemently disagrees with the notion that manufacturers across discrete, process, and hybrid markets see the value of a single integrated software line that spans all aspects of their operations. Instead, the company believes that certain manufacturing niches that rely on unique blends of discrete and process manufacturing prowess -- such as metals and plastics -- require software that is easily tailored to their business-process particulars. "Our concept of consolidation is different than other vendors," Tognoni said in an interview. "We are keeping products separate, not trying to fuse them. We are injecting capital strength and infrastructure into [acquired software products] to provide better support services in a way that is more economical and better than before."
The company sees the Encompix deal as a means to bolster its ETO roots, a segment which accounts for roughly half of Made2Manage's native customers, notes Tom Millay, vice president of industry solutions. In fact, Millay sees the acquisition as an "if you can't beat 'em, join 'em" opportunity. "We would lose to Encompix if it was truly a project-based deal," he says, pointing out that many original Made2Manage customers belatedly realized this before jumping to Encompix.
Made2Manage was rescued by a $16 million buyout that took the then-struggling company private in August 2003. The acquisition of Encompix continues a spree which began in September 2004 when Made2Manage purchased professional services purveyor ADS Information Systems. Since then, it has acquired: DTR Software International (ERP for plastics processors) in August 2004; Cimnet Systems (ERP for printed circuit board manufacturers) in December 2005; and AXIS Computer Systems (ERP for metals, wire & cable producers) in January 2006. (The company recently agreed to acquire CRM vendor Onyx Software, a move that represents an expansion of its micro-vertical ERP strategy.)
And the company isn't done acquiring. Earlier this year, Made2Manage assembled a $50 million war chest with the backing of M&A investment specialist Thoma Cressey Equity Partners, which also acquired a minority interest in the company.
Millay says Made2Manage has an "active pipeline" of ERP vendors focused on specific micro-verticals. One area of focus is international: The company is looking to acquire assets to help it sell and distribute existing products and services overseas.
This article originally appeared in the June 2006 issue of Managing Automation magazine.
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