Before I begin, I want to take a moment to send my heartfelt sympathy to our friends and readers who have been impacted personally by Superstorm Sandy. I watch the weather a lot, especially hurricanes, and knew early on it was going to be a bad one, but underestimated just how destructive it would be. Luckily my personal friends and family are safe, albeit with a few less trees and some still without power. For those who were not so lucky, my heart goes out to you.

Now, on to the subject at hand. Rumors of JDA’s impending sale have been floating around the industry for longer than a year, and hit the public media early last week. When all is said and done, the buyer was a surprise to us, as was the purchase price (a very high premium over the share price). But the synergies are real, and Red Prairie’s owner, New Mountain Capital, has very deep pockets and a lot of patience.

Five years ago, Red Prairie was a solid warehouse management solution (I actually knew it way back when it was McHugh Freeman). Over the past five years it has expanded its portfolio dramatically through acquisition. It acquired Blue Cube, StorePerform, Vortex Connect, Escalate Retail (which itself was a roll-up of GERS, Escalate, Blue Martini, eCometry, and other, making it a strong supply chain, order management, and clienteling suite. But this is an order of magnitude larger than any other previous acquisition. In one fell swoop, Red Prairie has positioned itself to be the next significant enterprise retail technology – presuming that management can effectively integrate and rationalize the portfolio.

The synergies as described on the analyst call were:

1. JDA’s supply chain planning and Red Prairie’s supply chain execution as a “supply chain portfolio. ” Retailers – note that what folks from the supply chain industry call “supply chain planning ” we tend to think of as “merchandise planning “. Think “Arthur “.
2. JDA’s multi-channel planning and customer engagement management, and Red Prairie’s in-store and fulfillment capabilities morphing into an “omni-channel engagement/execution portfolio “
3. Red Prairie’s workforce management and JDA’s demand planning for a retail resource allocation portfolio.

Of course it’s much bigger than that. Now it’s true that the new, yet-to-be-named company will have two distinct areas of focus: manufacturing and retail, but the retail suite itself has the potential to be quite far reaching.

• Core merchandising (JDA)
• Merchandise planning (JDA)
• Planogramming (JDA)
• Clientelling (Red Prairie)
• Warehouse and transportation management (Red Prairie)

I could continue the list, but you get the point. It might be easier to list the things that Red Prairie’s investors still need to buy or build to complete the portfolio: and the answer is “not much “. I will say that the company plans to move to a cloud deployment model, and what it wants to be known for is “best of breed capabilities with the breadth of a suite. “

All this isn’t going to come together in a day. Management, which we presume to be predominantly JDA’s executives led by Hamish Brewer, has a huge integration task in front of it. It’s easy to say a sentence about “breadth of a suite. ” Actually creating that integration is a big job – one that neither company completed from prior rounds of M&A. Are retailers going to wait another three years to see which POS actually becomes the new company’s offering?

So what does this mean for retailers? It means that in a year or so, we may have a very powerful new contender to go along with SAP, Oracle and Epicor. In the meanwhile, the company still offers some strong platform solutions to tide you over. And we certainly don’t have to worry about financial stability.
Red Prairie had a very strong cross-channel vision. In fact, it trademarked perhaps the best description of all: “All-channel Retailing. ” JDA’s vision was not as clear. We hope that RP’s point of view doesn’t get lost in the integration shuffle.