Aegis Heats Up Supply Chain Outsourcing

The offshore supply chain outsourcer adds new corporate customers while acquiring technologies from a pair of software and service specialists.

In a flurry of recent activity by supply chain outsourcers, India-based start-up Aegis InterWorld has acquired technology from a couple of different software vendors: Modus Operandi Inc. and InterWorld Holdings Inc.

Along with the supply chain software and services technology, Aegis has also obtained access to two blue-chip customer rosters, said Aegis CEO Mark Skoda, during an interview.

The software bought from Modus Operandi, Modeler, is a long-time process-modeling tool for analyzing businesses, systems, and projects.

Meanwhile, Aegis has been using software and services technology purchased from InterWorld Holdings to form a platform and security and transactional backbone for Internet-based order and workflow management.

Launched earlier this summer, Aegis already started working with customers that include Verizon Wireless, Okidata, and clothing retailers Ann Taylor and Joseph A. Bank, Skoda said.

Aegis two acquisitions will help give customers of the offshore outsourcer the ability to design and carry out business process improvements in real time, bringing cost savings of 15 to 30 percent over existing processes, according to the CEO.

Aegis is targeting its outsourcing services at business ranging from SMBs to multinational enterprises, in markets that include high tech, retail, and auto manufacturing.

Services range from supply chain application hosting to inbound call centers, transportation management, sourcing, purchase order processing, order delivery and transportation management, for example, Skoda said.

"We also offer deep domain expertise, particularly in international [supply chains]," according to the Aegis chief. Many members of the Aegis staff arrived at the start-up company with 15 to 30 years of supply chain experience already in hand, he said.

Supply chain outsourcing is nothing new, and neither are acquisitions of supply chain technologies. But as some analysts see it, the time is ripe right now for outsourcing, so long as it focuses directly on saving money for customers.

"Over the past 10 years, the supply chain has experienced its moment in the sun. Theres also been some ensuing disappointment," said Sree Hameed, an analyst with ChainLink Research.

"But if you listen to [earnings] conference calls, the supply chain is getting mentioned more and more these days."

Back in 1993, for example, Lamar Software bought supply chain ASP hoster BHR Software, and began integrating BHRs Info.Net software into its own hosted supply chain service.

In June of this year, IBM Corp. added a new supply chain outsourcing unit to its Business Process Transformation division, bringing together its already existing 8,500 supply chain consultants with another 15,000 IBM employees who have worked on building IBMs own internal outsourcing arm.

Other competitors to reckon with include services giant Accenture, along with i2 Technologies Inc., which recently started its own services program; and smaller supply chain specialists such as Prescient Systems and Chainalytics, said Lora Cecere, an analyst at AMR Research, during another recent interview.

/zimages/2/28571.gifKatrina had the supply chain in a chokehold. Click here to read more.

In a report issued last May, Cecere pointed to several reasons why customers might want to outsource supply chain services. Businesses can gain supply chain planning expertise, while saving money by avoiding unnecessary IT spending and aggregating costs with fellow customers, according to the AMR analyst.

But for supply chain outsourcing to succeed, service providers need to help solve customers real business problems, analysts agree.

"A lot of [traditional supply chain] vendors have been talking solutions," while really just writing contracts for software. [These other vendors] are too technology-centric," said ChainLinks Hameed.

"Folks like Aegis, though, are taking a business process approach to the supply chain. Customers want to see business results. Theyre not interested in [supply chain] technology [alone]. Customers are interested in what the technology can do for them."

In the supply chain and logistics arenas, customers worry over problems ranging from the rising costs of shipping services to "insufficient numbers of truck drivers," said Aegis InterWorlds Skoda.

"We will focus on benchmarking and diagnostics, to identify improvements [that will be useful] to current supply chains," according to Skoda.

Based on results, the company is prepared to recommend and implement changes in areas that run the gamut from workflow and Web commerce applications to management of transportation contracts, he said.

Customers have been getting underserved in the supply chain space by service providers such as IBM, Accenture, and EDS, Skoda said.

Yet other offshore providers, such as Winpro Inc. and Tatar Group, "havent been focusing on supply chain," according to the Aegis CEO.

In evaluating Aegis business model, ChainLink has found advantages across a spectrum that encompasses supply chain functionality, (software or service) delivery functionality, and domain expertise, said ChainLinks Hameed.

Mitrix Inc., another recent entrant into supply chain hosting, "just doesnt have all that," according to the ChainLink analyst.

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