June 20, 2006

RedPrairie Software, a niche B2B software vendor in the supply chain execution segment, has agreed to acquire all the shares in BlueCube, a software developer that sells retail management solutions.

"BlueCube's retail-specific inventory management, workforce optimization, and business intelligence expands RedPrairie's footprint into uncharted territory: the store," notes an alert from AMR Research.

Of course, retail has been hotly contested by much larger e-business vendors for the past few years, with SAP and Oracle being particularly ambitious in their intentions. Oracle in particular has acquired many small retail software specialists; RedPrairie's acquisition of BlueCube is one of the few cases in recent memory in which consolidation in this sector was driven by a smaller vendor.

The new combined company, to be called RedPrairie, will do about $200 million in annual revenue.

It's important to note that, even in engagements with big retail customers, niche vendors can have a small footprint.

Sears, for example, runs BlueCube labor scheduling and time and attendance, but uses Oracle for data warehousing, database, forecasting, merchandise allocation, merchandise planning, trade management, enterprise resource planning (ERP), human resources (HR), and payroll.

The big question in the wake of RedPrairie's acquisition of BlueCube is whether the move is a way to present a more important acquisition target to a larger vendor in the future (remember how interested Oracle is in both retail and the supply chain) or whether it plans to accelerate its independent competition with the majors.

One way or the other, RedPrairie has an expanded portfolio on its hands, with AMR noting that "RedPrairie can now control inventory information from the shelf back through the supply chain to the consumer product manufacturer and its suppliers."

Source: Line 56.