Infor to Acquire GT Nexus: ERP + Global Trade = New Network Vision


Infor announced Tuesday it was acquiring GT Nexus for $675 million. The transaction is expected to close before the end of September, based on regulatory approval.

Infor, a large ERP and business applications vendor, has primarily focused on delivering capability within the 4 walls of companies – core financials, supply chain planning, etc. – and has grown almost entirely through acquiring a range of technology assets in the past 2 decades.

In contrast, GT Nexus has focused outside the 4 walls, with a primary emphasis on enabling global trade. GT Nexus serves both buyers and suppliers as customers, which also differentiates it from ERPs, and counts 25,000 businesses today as customers.

These include, “6 of the top 10 logistics services providers and 30 global financial institutions, all managing more than $100 billion in goods each year using its cloud-based business network,” according to the press release announcing the transaction. “GT Nexus customers include Adidas Group, Caterpillar, Columbia Sportswear, DHL, Home Depot, Levi Strauss & Co., Maersk, Pfizer, Procter & Gamble and UPS.”

Fashion and apparel represent approximately 60% of the GT Nexus book of business, and in the category of ocean freight, “90% of management and tenders today” leverage GT Nexus’ capabilities, according to Infor.

As we noted in previous coverage of GT Nexus on Trade Financing Matters, “GT Nexus helps corporates with documentation on compliance instructions, customs manuals, routing guides, human rights guidelines, process updates and training materials. Given the data from purchase orders, packing and shipping documents residing on the GT Nexus Platform, it can assist importers in complying with the US government’s 10+2 trade regulation and help expedite the customs document creation and filing process.”

Further, “GT Nexus also has developed chargeback modules to help corporates manage shortage, quality or warranty issues by enabling credit notes.”

Making the Network Argument

GT Nexus brings both application and connectivity capability to Infor. Charles Phillips and Duncan Angove, CEO and president of Infor, respectively, spoke with industry analysts Tuesday about the combination of the 2 providers. The word “network” came up many times during the discussion.

Phillips described the day as the “start of postmodern ERP” by enabling a truly global commerce cloud for direct goods. As he noted on the call, most products are designed, manufactured and shipped by different companies today. Given this, his argument suggests, the concept of what an ERP or order management system should be must evolve.

This ties into the network business strategy – but one that stands in contrast to Ariba and SAP. Infor had “been thinking about building a buyer network … [and getting] closer to the customers we have already,” including 3,000 organizations in fashion, retail and apparel as well as the manufacturing base within its customers.

But the network vision Infor has with GT Nexus is centered on delivering direct and trade connectivity rather than just PO and invoice-based document exchange and supplier identification. The goal is to focus on “mission critical in terms of how companies are run,” including showing visibility into the status of inventory and goods.

As we noted on Trade Financing Matters, “GT Nexus provides a way to connect many of the parties critical to international transactions – including the logistic folks like brokers, forwarders, 3PLs, etc., as well as financial institutions like banks. That’s their strong value proposition, visibility into the counterparties, details around the transaction, document, events, etc.”

GT Nexus will also bring trade financing capability to Infor. Our past coverage noted that GT Nexus’ platform offers this capability in 2 ways:

  • “The platform enables international purchase order financing, similar to what Asian suppliers do off of a letter of credit order (e.g., packing loans). Suppliers can request pre-export financing on an approved purchase order to get the working capital they need to produce the order. A purchase order is signed by both buyer and supplier in the GT Nexus system. GT Nexus partners with banks in local markets to enable this financing.”
  • “The GT Nexus system can take approved invoices and enable the vendor to receive funds before due date.”

The Spend Matters Take

Infor has a long history of financially-driven acquisitions that keep investors happy and deliver enough innovation to customers to keep them on their systems. But the GT Nexus deal appears to be something more – it has to be. The worlds of ERP and global trade are so sufficiently different that to combine 2 companies serving these markets effectively will require a new approach and vision – or as Phillips labels it, “postmodern ERP.” Indeed it is.

Spend Matters will be providing deeper coverage of the transaction on Spend Matters PRO and Trade Financing Matters in the coming weeks, but in the meantime, our initial analysis suggests:

  • The transaction will create a new network opportunity for Infor – and one that is sufficiently different from the Ariba/SAP vision. Moreover, it is easier for Infor to add “back-in” indirect and basic e-invoicing capability than it is for other network and application providers to target direct procurement.
  • The deal synergies within fashion, apparel and retail will create a range of logical upsell and cross-sell capabilities
  • Cross-suite and platform integration should be accelerated based on the various architectures in play. As noted in the press release, “GT Nexus and Infor CloudSuite have similar architectures; both have a single canonical map for orders, are event driven, and make use of open source components … 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.”

Stay tuned for further coverage.

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