GT Nexus goes ERP route

Software company Infor looks forward to offering supply chain solutions.    The fast-growing enterprise resources planning software provider Infor took a major step toward becoming a supply chain solutions provider in mid-August by buying the well-regarded global commerce platform GT Nexus for $675 million.
   Analysts expect Infor to leverage GT Nexus’ strengths in cloud-based global transportation execution, visibility, order management, and supplier financing. Among GT Nexus’s customers are Adidas Group, Caterpillar, Columbia Sportswear, DHL, Home Depot, Levi Strauss & Co., Maersk, Nike, Pfizer, Procter & Gamble, and UPS, while its network boasts most of the top ocean carriers and global third party logistics providers.
   Privately-held Infor is trying to gain market share from the established global ERP software leaders Oracle and SAP by focusing on cloud-based solutions and ease of deployment. It’s led by Charles Phillips, a former Oracle executive, who has overseen a period of substantial growth. The company defines itself as an ERP that is easier to implement than its competitors.
   “This is postmodern ERP software—instead of being for one company it’s for multiple companies,” Phillips said in an interview with Bloomberg. “We go in where there’s fatigue and shelf-ware. It’s a big market.”
   GT Nexus prides itself on its multi-tenant cloud-based network of shippers, logistics companies, transportation providers, and suppliers. Company executives often liken the structure of their platform to LinkedIn, where when a user updates his or her information, those updates are immediately available to all connections. GT Nexus’ network means that if the status of a shipment is updated, all parties connected to that shipment and in the network get updated simultaneously. As with other multi-tenant solutions, the network aspect also means that improvements to its solutions are available to all users.
   The crux of this approach is that partners added to the network by one user are added to the network for all users, creating a multiplier effect that helps companies make their logistics processes more efficient by being able to essentially immediately onboard their supply chain partners.
   Infor said its architecture is similar to that of GT Nexus.
   “Both have a single canonical map for orders, are event driven, and make use of open source components,” the company said in a statement. “Unlike other B2B information exchanges, GT Nexus is a network cloud service with one code base for all customers providing a single view of the order across the value chain. The canonical map allows suppliers to join the network once and talk to all buyers, as opposed to implementing custom maps and portals for each buyer, which is required in legacy networks.”
   GT Nexus significantly expanded its capabilities in the order-to-cash realm in early 2013 by merging with TradeCard, a deal that means it facilitates more than $20 billion in transactions annually between buyers and suppliers.
   GT Nexus’ platform is seen in the market as a top-end global transportation management and visibility platform, providing execution capabilities that evade many TMS providers that are more domestically focused. It is typically suited to larger organizations with large global footprints, complex supply chains, and hundreds of transportation lanes.
   “Together, Infor and GT Nexus will provide customers with unprecedented visibility into their supply chains to manage production and monitor goods in transit and at rest,” Phillips said in a statement. “In a complex, high velocity supply chain, all partners need to know what was ordered, when it was built, where it is in transit, if the order has changed, and has it cleared customs. Specialization and speed are moving the future of manufacturing into the commerce cloud.”
   James Cooke, principal analyst at the consulting firm Nucleus Research, said the motivation for Infor is clear. It wants to compete with SAP and Oracle by creating a more effective platform for global supply chain orchestration.
   “The ERPs of old were financial systems of record,” he said. “But now orders come in from the web and the most important thing is to be able to orchestrate that order with all the supply chain partners around the world.”
   He said GT Nexus’ multi-tenant cloud-based structure is suited to that ordering environment.
   “Infor is an ERP solution within the walls,” Cooke said. “The motivation for buying these guys is they’re realizing that ERP as systems of record worked 10 years ago when one company was the dominant one in the supply chain. But now it’s about coordination between all the trading partners in the supply chain. Infor obviously recognizes this.”
   For GT Nexus, the deal gives them access to more programmers and development dollars to take the next step in both companies’ evolution, what Cooke described as supply chain control towers (and not logistics control towers).
    “As you move toward outsourced manufacturing, you need a global cloud network to orchestrate production,” he said. “But you have to incorporate demand so the supply chain can respond and react to reconstitute itself. Control tower is matching supply with changing demand.”
   GT Nexus provides the visibility and execution pieces—the logistics side of the control tower—but lacked the demand-sensing and production-scheduling pieces.
   “Infor has a real opportunity to become a leader in supply chain software if it puts development dollars in and turns it into full-fledged control tower,” he said.
   Cooke cautioned that Infor has let other supply chain acquisitions, in supply chain design and optimization, languish. Other analysts have called it a graveyard for outside software. But the sense, at this early stage, is that it plans to more fully utilize GT Nexus.
   Indications are that GT Nexus will remain a separate business unit within Infor, at least for the time being. The company was founded in 1998 with private equity firm Warburg Pincus, which owned 40 percent of the company and was a key investor through the years.

This article was published in the September 2015 issue of American Shipper.