This is Denver-based J.D. Edwards's first acquisition since going public in September 1997. Under the deal, which involves a cash transfer and stock swap, Premisys's 28 employees will continue to work at the company's Chicago-based office. Premisys CEO Art Roldan plans to step down following a 90-day transition.
The deal is a good one for J.D Edwards, which has, to date, been more reluctant to take on the complications of partners or acquisitions than its rivals SAP, Baan, and Oracle, said Lisa Williams, analyst with Boston-based Yankee Group.
"J.D. Edwards has been solid, conservative," she said. "They really want to make sure the product works and doesn't require tons of services. They don't really have a lot of patience for super-long install times." Acquiring Premisys was easier for the company, as it was already a partner, she said.
Premisys's flagship product, CustomWorks, is a visual configurator used to help design made-to-order products--such as furniture or heating systems--on computers using three dimensional modeling. Through its previous partnership with Premisys, J.D. Edwards has already installed CustomWorks with its OneWorld manufacturing software.
Combined, CustomWorks and OneWorld enable manufacturers to integrate sales automation capabilities, including technical drawings, product data management, quotes, proposals, manufacturing, customer service, field service, and financials. The product is available now through J.D. Edwards.
The acquisition is part of J.D. Edwards's strategy to build up the vertical business model the company shifted to last November when it split into three divisions: industrial, consumer products and goods, and general services, marketing, and development.
That trend started several years ago, led by German software giant SAP responding to customer demand for software designed specifically to meet the needs of a particular industry.
J.D. Edwards's industrial division, which includes the firm's electronics and automotive business, now represents between 50 to 60 percent of the company's revenues, said William Goodison, vice president of worldwide sales and marketing for the division. Key to their business today is adding sales force automation and supply chain offerings to further tap their targeted middle market, he said.
"As ERP licenses slow, one thing the ERP vendors need to do is provide sell-on additional functionality to customers who have already gone to their platform," Yankee's Williams said. "It provides a more healthy revenue stream and customers have already shown they want supply chain and sales force automation [software]."