IBM’s acquisition of Sterling Commerce is a done deal

The May announcement regarding IBM’s $1.4 billion acquisition of AT&T subsidiary Sterling Commerce, a provider of business-to-business integration and cross-channel solutions, has been made official, according to company officials.

With more than 18,000 customers and established more than 30 years ago, Sterling is engaged in more than 1 billion business interactions per year for clients in various industries, including retail, manufacturing, and distribution, among others.

Its software and related services focus on B2B integration, order management, logistics, and cross-channel selling and fulfillment services to help businesses connect, communicate and collaborate with their clients, partners, and suppliers to increase revenues, reduce costs, and streamline the way organizations do business, according to IBM.

IBM officials said that the combination of IBM and Sterling Commerce enables the integration of key business processes across channels and trading partners—from marketing and selling to order management and fulfillment. And they added that this deal will help customers integrate and automate business processes, which will provide improved demand generation, customer experience and fulfillment. Another benefit is that shippers will be able to manage these processes—and business partner networks—through public or private could computing environments, said IBM.

“We now offer a complete platform for multi-enterprise business transactions,” said Craig Hayman, general manager, IBM Industry Solutions, in a statement. “In combination with IBM’s existing offerings, Sterling Commerce, Coremetrics and Unica are expanding IBM’s ability to help companies automate, manage and accelerate core business processes across marketing, selling, order management and fulfillment.”

In a letter to customers in May about the acquisition, Heyman noted that both clients and business partners will have access to extensive B2B integration and multi-channel selling, order management, and logistics capabilities, and IBM’s SOA and business process management solutions. This combination, he said, will enable the integration of key business processes through the entire commerce lifecycle and give clients the flexibility to manage their network of business partners through public or private cloud computing environments, which will translate into more efficient supply chains and superior customer service.

Sterling spokesman Joe Horine told LM that this deal stands to benefit both companies in several ways.

“IBM has an integration product line that complements ours well,” said Horine. “Our products will appear as part of their Websphere and e-commerce side, and we believe our order management suite will complement their products on that side. “There are a lot of synergies between the two product sets that we believe will be beneficial for our existing customers and new customers.”

While Sterling currently processes more than 1 billion business interactions per year, IBM maintains this amount will only grow due to the proliferation of electronic business transactions, including manufacturers sourcing raw materials electronically and retailers automating stock management and managing orders online, among others.

IBM added that Sterling strongly complements IBM’s middleware portfolio, and by acquiring Sterling and its large trading network, IBM is poised to deliver new cross-channel services to its clients. And Sterling’s technology, said IBM, will complement IBM’s software by adding its capabilities to IBM’s frameworks supporting several industries, including manufacturing and retail.

ARC Advisory Group analyst Adrian Gonzalez commented in his Logistics Viewpoint blog that IBM views this deal as a way of growing its Websphere business, which focuses on on-demand business, business integration, application, and transaction infrastructure.

“A subplot of this acquisition is IBM’s further expansion into supply chain software,” wrote Gonzalez. “IBM acquired ILOG back in 2008, a provider of supply chain network design and inventory and transportation optimization solutions. Now it will add Sterling Commerce’s portfolio of warehouse management, transportation management, and distributed order management solutions. This will put IBM in direct competition with key partners like SAP, Oracle, and some best-of-breed vendors. It will be interesting to see how IBM walks this tightrope, and how its current partners respond.”