Geac Gets Its Commonsense Share Of Consolidation, With Revolving Door CEOs No Less

During the last few years, Geac Computer Corporation Limited (TSX: GAC), a large Canadian supplier of enterprise management software has had a roller coaster ride. It started with a rampant acquisition stint during the 1990s (see Geac Computer Corporation: Mastering Growth by Acquisitions), followed by a subsequent near-death experience and causal resorting to lifesaving divestitures in 2001 (see Geac Decomposes To Survive), only to see the company come back around, achieve stable financial performance, and articulate a clear strategy to move away from its all-but-failed business model of selling maintenance and services for outdated applications. The result is a number of recent new contract wins, rejuvenated product launches and a return to the acquisition trail amid the ongoing consolidation slugfest, but this time in a seemingly more thought-out and digestible manner.

To that end, Geac announced that on July 15, 2003 the Federal Trade Commission granted early termination of the waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to Geac's proposed acquisition of Comshare Inc. (NASDAQ: CSRE), a provider of corporate performance management (CPM) software. On July 1, Geac announced that it has commenced, through its indirect, wholly owned subsidiary Conductor Acquisition Corp., a cash tender offer to purchase all of the outstanding shares of common stock of Comshare. The tender offer was made pursuant to the previously announced definitive merger agreement between Geac and Comshare for US $52 million in cash, dated June 22. Under the terms of the definitive agreement, Comshare shareholders will receive US $4.60 in cash for each share of Comshare common stock held, representing a 31% premium to Comshare's trailing 20-day average share price at the time. The Board of Directors of Geac has received a favorable independent fairness opinion respecting the financial terms of the Comshare merger from Yorkton Securities Inc.

Geac believes this latest acquisition should broaden its business performance management (BPM) offering with the addition of the Comshare MPC ("Management, Planning & Control") suite of planning, budgeting, forecasting, financial consolidation, and management reporting and analysis solutions. The Comshare acquisition follows the successful purchase of travel and expense management software provider Extensity on March 6, 2003. Geac plans for the tender offer to close by August 2003 and expects the transaction to be accretive to earnings 90 days following completion of the merger as the business is integrated into existing Geac operations.

With its 500 customers and 300 employees, Comshare is expected to add roughly 12% to Geac's annualized revenue, based on the last twelve months of reported revenue from each company, and Geac aspires to participate in a new US $1 billion market that is growing more than 10% per year based on some analysts' predictions. Following the close of the transaction, Geac plans to "eat its own dog food", i.e. to standardize on Comshare MPC for internal use by its divisions worldwide and begin to implement the suite, replacing Geac's current budgeting and consolidation applications. Comshare products will be integrated into Geac's existing application offerings through the use of Geac's application integration framework, which is designed to facilitate integration and interoperability between disparate applications.

The rationale for the acquisition was based on a global assessment of Geac customers' IT requirements, in which approximately 33% of the company's ERP customers surveyed said that they were interested in acquiring improved business intelligence (BI) and reporting tools, such as budgeting, planning and forecasting. These organizations are looking for products that enable them to extract more value from their investment in various Geac's ERP products to monitor and manage overall performance more effectively. Additionally, enterprises face the increasing need for integration, analytics and real-time data access to comply with stricter public disclosure mandates of late.

This is Part One of a three-part note. Part Two will discuss the Market Impact. Part Three will cover Challenges and make User Recommendations.

Geac System21 Aurora

In addition to pursuing strategic acquisitions, Geac has demonstrated a reliance on internal development as well. In April 2003, the UK division of Geac launched Geac System21 Aurora, a culmination of the most significant investment in the System21 product in recent years (see Geac Hopes To See System21 Shine Again Like 'Aurora'). Combining solid ERP functionality with real-time process management capabilities, System21 Aurora is designed to improve enterprise performance at many levels including operational, process and corporate. It also offers a collaborative supply chain management (SCM) solution that will supposedly leverage the newest technologies and provide users with access to all their business applications through a single web-based user interface (UI).

System21 Aurora is scaled for mid-sized enterprise needs, particularly in the food & beverage, apparel & textiles, fast moving consumer packaged goods (CPG), wholesale distribution and manufacturing sectors, where Geac already has a strong market presence, with a global customer base of approximately 1,600 companies. The product is the culmination of extensive product development, with a strong focus on customer requested enhancements. It provides a process-modeling engine that should enable organizations to map out key operational processes, streamline them, and then activate them to become live business flows of activities and data, with the software automatically generating alerts for manual intervention when required.

In addition, Geac is backing up the System21 Aurora value proposition with an introductory business review service to ensure that customers realize all of the solution's potential benefits. Specifically, as part of the Aurora launch, the company is making its business consultants available on a shared cost, shared investment basis to work with customers to target quantified business improvements and process solutions.

With more than 100 new angles for improving productivity and mid-market users' experience, Geac System21 Aurora offers the following major features and benefits:

* Front-to-back BPM capabilities — Including visual process automation, workflow and exception control/management.

* Enhanced order capturing — Featuring an intuitive and information rich order capture portal for the staff dealing with customers, aimed at ensuring visibility across the supply chain of stock levels and the customer's current orders, as well as easy views of customer history, with higher levels of customer service as an ultimate result.

* Flexible sourcing — Featuring new flexible sourcing rules in the new order capture engine ensuring that demand can be sourced from the stockroom, site, and/or country in the optimized way, taking account of the nature of the item and the customer service level, all with the aim of maximizing customer fulfillment and inventory performance.

* New enterprise (multi-company, multi-national supply chain) functionality — Enabling a wide range of industrial concerns from a single plant floor to a complex or multi-national supply chain network to maximize customer fulfillment and inventory performance.

* Demand planning capability — Ensuring that minimal safety stock is held, while balancing fluctuating customer demands.

* Web-based applications — Providing self-service tools for both customers and suppliers in order to reduce administrative costs and provide enhanced levels of customer service.

* Improved employee data access and global information visibility — Offering a new browser-based portal, utilizing a thin client' interface, which provides end-user access to all of the above applications, plus the functionality of the ERP kernel and capabilities provided by strategic software partners.

* Strong middleware and messaging foundation — Fully exploiting IBM WebSphere leveraging the J2EE (Java 2 Enterprise Edition) component model and many of IBMs WebSphere applications, such as Commerce Suite (the catalog and storefront application) and MQ Integrator (the XML message mapping and transformation product).

* Product Lifecycle Management (PLM) — Allowing customers to keep tight management of a product's lifecycle, particularly from an inventory point of view.

The Aurora product also incorporates an update to the Geac System21 code from the traditional RPG to the modern Integrated Language Environment (ILE) code, providing a modular development language with flexibility, ease of upgrade and speed not only for Geac's development but also for customers' internal IT departments. The modular nature of ILE, together with Geac's Java-based commerce.connect applications, should create an open ERP system extended to suppliers, customers and mobile employees, a foundation for full supply chain collaboration in local or global trading situations. Geac's commerce.platform further underpins commerce.connect by providing all the necessary security, workflow and integration capabilities typically required by companies operating in complex supply chains.



SOURCE:-
http://www.technologyevaluation.com/research/articles/geac-gets-its-commonsense-share-of-consolidation-with-revolving-door-ceos-no-less-17030/