ERP Consolidations Continue

PeopleSoft Inc. and Oracle Corp. arent the only ERP software makers looking to expand their offerings through acquisition. Recent deals by smaller enterprise resource planning software developers Best Software Inc. and Epicor Software Corp. point to a smaller number of vendors for IT buyers to choose from.

Best Software, a subsidiary of The Sage Group plc. that sells business automation software for small and midsize companies, this month said it will acquire Timberline Software Corp. for about $90 million. Timberline develops financial and operations software for construction and real estate businesses. Timberline, of Beaverton, Ore., strengthens Bests vertical-industry reach and brings the company 20,000 customers. Best, of Irvine, Calif., has long used acquisitions as a strategy for growing the company.

The Best-Timberline announcement followed by a week manufacturing ERP software maker Epicors $20.7 million purchase of ROI Systems Inc. As in the Best-Timberline deal, ROI Systems, of Minneapolis, brings Epicor, also of Irvine, expanded vertical-industry coverage—particularly in the areas of consumer packaged goods, medical devices and equipment, and transportation products.

In addition to ERP developer PeopleSofts acquisition this month of J.D. Edwards & Co. and Oracles proposed buyout of PeopleSoft, there are other signs of consolidation in the industry. For example, a venture capital group that last month bought The Baan Co. from Invensys plc. said it will combine Baans ERP technology with that from SSA Global Technologies Inc.

Some industry observers say that with stock prices and company valuations at a low ebb, more ERP companies could be looking to make acquisitions. It could be a good time for that, with some analysts predicting that slow sales of enterprise software will pick up. Consultancy Gartner Inc., of Stamford, Conn., urged enterprises not to delay software purchases solely because a developer is an acquisition target. Gartner also said in a report this month that guarantees of monetary reimbursement if an ERP vendor is acquired, such as PeopleSofts Customer Protection Program, are also not the only hedge to consider. “Rather, make sure any contracts are thorough, particularly in areas such as support, upgrades, migration and service,” the report said.