Consolidation Continues In B2B E-Commerce Industry

In the wake of Commerce One's recent bankruptcy, other SRM (supplier relationship management) vendors have announced strategic mergers while ERP (enterprise resource planning) vendors have launched SRM products and services. Where the industry consolidation ultimately ends is anybody's guess.

Ariba is by far the most firmly established SRM B2B e-commerce vendor, with $250 million in annual revenue, a supplier network exceeding 100,000 suppliers, and its recent acquisition of supply management solution provider FreeMarkets. At the other end of the spectrum there are about 50 niche players, each with annual revenues of less than $10 million. This space is ripe for consolidation.

In November, Perfect Commerce and Pantellos merged to break from the pack of 50 and position themselves as a strong alternative to Ariba. The merger creates a combined company with about $30 million in annual revenue and an install base of 500 clients, including 51 Fortune 500 and 190 Fortune 1,000 companies. Perfect Commerce's current chairman and CEO, Sandy Kemper, will remain chairman and CEO. Jim Neikirk, previously the president and CEO of Pantellos, will be president.

Kemper describes this merger as a logical breakout strategy for both companies. "In addition to being strong financially, the combination plays very well to our respective strengths," states Kemper. "In short, we can now apply Pantellos' deep supply chain expertise to Perfect's broad install base across multiple industries."

Perfect provides the technology platform and trading network, while Pantellos' supply chain consultants address the human side of implementing the technology. "By applying Pantellos' expertise in the areas of change management, commodity consulting, and best practices consulting, we plan to forge deeper and more strategic relationships with our clients," Kemper explains.

When asked whether other mergers and acquisitions are on the horizon, Kemper replied, "We are focused on organic growth, but will remain opportunistic toward potential acquisitions."