Contact: Tejas Venkatesh, Carl Lehmann
On-demand supply chain management (SCM) vendor E2open has acquired icon-scm for $34m, its first purchase in almost eight years. The deal is complementary to E2open’s SCM platform, adding supply chain planning software. But it does bring a significant challenge – icon-scm’s only channel partner, SAP, through which the startup generates all its sales, is killing the partnership as a result of the acquisition.
Despite the (presumably temporary) revenue plunge at icon-scm, E2open appears confident that it can resuscitate the company’s business, both in term of growth and how the startup sells its software. Icon-scm generated $10m in sales in 2012 through perpetual license sales, but in laying out plans for icon-scm, its new owner said it will convert the delivery to a subscription model, in-line with how it sells its core products.
The rationale for the acquisition makes sense. E2open’s strength is in building supply chains and integrating supply chain partners with a secondary dimension of value in SCM services. Icon-scm’s strength is in developing the software and analytics required for supply chain decision-making. The acquisition by E2open also brings a supplier collaboration hub and data hub developed by icon-scm, expanding its market footprint.