You may not have heard of CDC Software, but that's about to change.
Having found success in the Asia-Pacific region, the mid-market ERP vendor, a subsidiary of Hong Kong-based holding company CDC Corp., has been making acquisitions in the enterprise software market that have increased its global presence.
The company first drew attention in 2003 when it began buying North America-based companies, including CRM vendor Pivotal Corp. (Vancouver, BC) and SCM vendor Industri-Matematik International Corp. (Atlanta). In August 2004, CDC bought Atlanta-based Ross Systems, which markets a range of enterprise products for process manufacturers.
While not the size of an Infor or SSA Global, two of the more acquisitive mid-market players in recent years, CDC, with $200 million in annual sales, is starting to build a critical financial mass. Earlier this year, CDC made two acquisitions that rounded out its suite of ERP, SCM, CRM, and human resource management applications for CPG, food and beverage, and pharmaceutical manufacturers.
The acquisitions of JRG Software Inc. (San Mateo, CA), which offers an on-demand SCM product, and Horizon Companies Inc. (Edison, NJ), an IT consulting organization, will help CDC reach its growth goal of 10% this year, but much of that will be organic, officials say. "We estimate we'll bring in 300 new customers to the company on the software side of the business in 2006," said Scot McLeod, senior vice president of marketing at CDC. Customers are attracted to the company's high degree of industry focus and specialization, he said in an interview.
JRG's product for CPG manufacturers is called One Plan. It is based on a hosted model, commonly referred to as software as a service (SaaS). The product combines interactive graphical planning with business intelligence to share production plans across the organization. For CDC, One Plan is an important addition. "Our core customer base ... has rather specialized needs that generic on-demand solutions couldn't [help]," said CDC Corp.'s acting CEO Steven Chan in an interview. "To go after specific verticals you have to have an on-demand solution that is fairly tailored and adaptable."
The Horizon acquisition rounds out the company's existing services arm, which accounts for $40 million of the company's $200 million software business. In addition, Horizon has a strong presence in India, which plays well into CDC's global message.
According to Chan, the holding company looks to acquire companies that have solid earnings and strong management teams. The acquisition of Ross brought along McLeod and Rick Marquardt, who is now president of CDC Software.
Not all pursuits end in success, however. In January, CDC dropped its bid to combine with a reluctant Onyx Software Corp., a developer of customer process software. But CDC seems undeterred. Given its strong balance sheet -- over $200 million in cash on hand -- more acquisitions are in the plan, Chan says.
This article originally appeared in the April 2006 issue of Managing Automation magazine.