At first read, I laughed at the idea filed in a Securities and Exchange Commission (SEC) F-1 on July 16 by CDC (CHINA) that the old Ross, Pivotal, and Industri-Matematik brands might rise like Phoenixes (or should it be Phoeni?) out of the far eastern mists. Can these old enterprise-application war horses really return to the main arena to do battle again with SAP, Oracle and—more important—newer enterprise software companies that were founded two or three decades after Ross Systems was founded in 1972? In fact, much of CDC’s competitive lineup for its disparate brands was probably founded by guys that had not been born yet themselves when Ross started as a DEC VAX value added reseller.
But on second read I recall Ross’ long experience in Asia/Pacific and its dedication to process manufacturing. CDC of course does not stand for Customer Driven Company. Maybe there is something to this investment. Ross had useful distributorship arrangements around the rim in the early 1990s. And according to the F-1, Gartner forecasts double-digit 5-year CAGRs for that geography for ERP (Ross), CRM (Pivotal) and supply chain management (Industri Matematik).
Worldwide the three markets mimic the overall enterprise software market with CAGRs in the mid single digits. But Gartner's numbers are too aggressive in my humble opinion. I think all three markets in more developed countries should look for the 2.5% CAGR Gartner forecasts for ERP in Europe (according to CDC) and be happy.
The new company proposed by CDC, which would trade as CDCS, did not even grow that well in 2008 as compared to 2007. And it’s down 15% in the quarter ending March 31, 2009 vs. the same period a year earlier. Further I don’t see a coherent plan in the CDCS F-1 to tie the three brands together with the lesser lights in its multiple-brand stable, a must for success in any geo. In fact, it appears that part of the growth plan involves additional disparate acquisitions.
And Oracle and SAP will not stand still in A/P; they subscribe to the same Gartner forecasts as CDC.
More important, the shareholder power arrangement is that awful EMC/VMware play where CDC still holds almost 99% of voting control. So it is totally a bet on the sorts of share increases EMC had hoped for VMware. But the new company is not competing in markets that are likely to grow at all as dynamically as virtualization.
-- Dennis Byron
(Please don’t write me to day the Ross, Pivotal and Industri-Matematik brands never went away. I mean rise like a Phoenix figuratively.)
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