So much for deal stickiness. ACI Worldwide bidding on top of Fundtech for S1. When I blogged about the Fundtech-S1 deal last month I asked the question, “wasn’t this ACI’s dream? ” I wondered why ACI Worldwide hadn’t made a go for S1 considering it’s platform has many of the moving parts ACI Worldwide was missing with its last home-grown attempt at the “global” platform. Any way you look at either deal, S1 wins. Maybe cash in the hand is worth more than paper. Fundtech, however, has a robust payments business and clientele and regardless of how this drama ends, I do not believe they will be too bruised by the outcome. In many ways, the ACI Worldwide deal may be the best thing to keep smaller agile competition and deal targets open.
Maggie Scarborough on XML and treasury management in Treasury and Risk Magazine September 2010, “FAST FORWARD ON XML” by Richard Gamble. Click here for the article
IBM Plans to Acquire Sterling Commerce for $1.4 Bn: Good News – Good News
Byline: Maggie Scarborough, FinServ Strategies
May 25, 2010
In a good news-good news announcement on May 24, IBM announced its plans to acquire Sterling Commerce from AT&T in a deal valued at $1.4 billion. Former and new parents will remain friends. Sterling Commerce will benefit from new parent, IBM, keenly focused on B2B and banking spaces and in need of applications. IBM, with a ready cloud computing model, gets much needed business applications from Sterling Commerce that extend across all major industry verticals including financial services.
Big deals don’t always have a big impact in financial services, but in this case the potential is large. The proposed IBM acquisition of Sterling Commerce from AT&T has a lot of good news in it for IBM, Sterling Commerce, and financial services. Instead of a prior mis-aligned and fruitless partnership deal with ACI to get into the payments business, this time, IBM is betting on cloud computing, business process management, and applications to put smack dab in the middle of B2B commerce, including banks, which are in the middle of the business relationships – the virtuous 4-corner model, with IBM in the cloudlike middle enabling all. Sterling Commerce has a combination of tools including a budding bank payments hub system and well established B2B commerce transactions software and services that will allow them to extend services further into the business processes of the customers, partners, and institutions.
In the bigger competition between IBM, Oracle, and HP, this acquisition gives IBM an advantage over Oracle, which has been spinning in the core market of financial services, and gives the company added application power when competing with (or facilitating) with newly extended services of companies like SAP, which recently announced its $5.8 bn acquisition of Sybase, which hinged on mobile applications.
Why buying Sterling is a good deal for IBM:
1) Gets IBM lift across all industry segments, not just banking. Sterling’s foundational supply chain and B2B commerce business reaches 18,000 customers across the globe in financial services, retail, manufacturing, communications, and distribution.
2) IBM also gets a direct connection into global payments through Sterling Commerce’ SWIFT solutions and MEFG.
3) IBM has a cloud foundation ready to go and recently tested with SAP.
4) IBM’s Global Services needs both cloud and integrated business applications to better sustain growth. In the age of an “app for that,” IBM needs applications for its cloud and Sterling has plenty of core B2B applications that need a cloud facelift – something IBM can do and better do if it’s their own assets they can control.
5) IBM can leverage Websphere’s business process management and middleware assets including orchestration, and analytics capability with Sterling Commerce’ trading partner network and B2B supply chain capabilities to build collaborative cross channel applications.
Why this deal is good for Sterling Commerce:
1) Although AT&T has been a good parent for Sterling Commerce, its new parent better understands and is closer to the business process management and collaboration needs of the Sterling customer base.
2) IBM will provide sustained investment in Sterling’s product and network portfolio needed to complete its modernization of B2B commerce applications and network products.
3) Sterling Commerce’ B2B network will ultimately have a home in the cloud, which should enable the firm to more quickly execute in the marketplace and extend applications into the mobile cloud. IBM has a cloud foundation ready to go and recently tested with SAP.
This deal between IBM and Sterling in Commerce makes sense. IBM will help bring Sterling Commerce into the bank at the highest strategic levels and Sterling will help bring IBM into the applications market in a cloud market where there is an “app for that”. At the deals center, though, is the idea of cross collaboration (B2B), bank to B, B to bank) is a critical need for institutions wishing to keep their largest corporate customers happy and the mid-market stickier, and the small business market more engaged and a source of new revenues. We have been talking about the integrated financial supply chain for years, this combo may work. But like everything, the devil is in the execution.
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Maggie Scarborough, Managing Director
Maggie@FinServStrategies.com, +1 410.685.2324