For some time now, demand for supply chain software has been less than robust. However, that might be shifting based on a recent report from ARC Research ( www.arcweb.com) that calls for expanding demand this year. Against that background, many software suppliers are seeing opportunities to diversify their offerings with merger/acquisition activity.

As industry leaders position themselves for the future, some of the best-known names in the business have been in play. The past two years have seen SSA Global purchase EXE Technologies; RedPrairie buy LIS; 3M acquire HighJump Software; Infor purchase Lilly Software; Optum purchase V3 Systems and WorldChain before selling out to ClickCommerce; and Sterling Commerce acquire Yantra. As recently as late February, Tecsys, Inc. acquired Application Solutions, Inc. At press time, Oracle had outbid software giant SAP to purchase software applications provider Retek.

Most of these deals have allowed the purchaser to fill a gap in its existing solution set or expand its market: RedPrairie, for instance, boosted its reach into the UK and Europe, where LIS was one of the dominant players.

Likewise, Yantra's warehouse, transportation and distributed order management solutions will expand supply chain execution options available to Sterling Commerce's customers. "We believe that over the next three years there will be a focus on B2B computing—we see an opportunity for software companies in high growth areas to collaborate effectively," comments Nolan Rosen, Sterling's chief marketing officer.

Peter Brereton, president and Co-CEO at Tecsys, notes that his company's addition of Application Solutions adds AS-400 capabilities to the repetoire. "The outlook in supply chain execution market is improving we believe," Brereton says. "We believe [Application Solutions] would be stronger and our market penetration would be enhanced," through the consolidation, he comments.

And although the WMS market remains static, software suppliers are having success with other software products. For example, HighJump is seeing positive returns with its supplier enablement application, which allows trading partners to more easily share information. Likewise, RedPrairie currently supplies a good deal of labor management software to users while Manhattan is seeing growth in its transportation and reverse logistics packages.

"The WMS market is evolving into a supply chain execution market," says Chris Heim, president of HighJump. "While core WMS may be flat, supply chain execution ais healthy."

In fact, Heim, like many of his competitors, believes that the shakeout will continue. Tomorrow's leaders will be the ones that adapt to the evolving needs of their customers.

"The world is changing," says Heim. "It's incumbent on us as suppliers to come up with solutions that are reflective of the market today to avoid being boxed into these neat little categories, like WMS."