GXS & Inovis Merger

Kevin Pierce

GXS & Inovis Announce Merger

Yesterday, two of the largest VANs in the EDI industry announced plans to merge in 2010.  Both GXS and Inovis have long histories serving global EDI customers, and in some capacity their combination will likely affect most companies conducting B2B e-commerce.  GXS’ equity owner, Francisco Partners, will be the majority shareholder of the combined company, and GXS CEO Bob Segert will run the company.

With GXS clearly positioned to be in control of the combined company, I spent some time looking through blogs and EDI-related user groups to gauge the marketplace views on the merger.  The opinions being articulated were divergent based on source. 

 

Analysts’ Views

“After covering the B2B integration market segment for 10 years, I can say from the top of my head that this merger is, stated simply, a game-changer,” Gartner analyst Benoit Lheureux wrote.

 

“The proposed merger between GXS and Inovis will combine the resources of two of the largest business-to-business (B2B) service providers. Forrester does not believe that this development should be any reason for concern among existing customers or those who are considering becoming customers of either of these two B2B providers,” Forrester analyst Ken Vollmer wrote.

 

Customers’ on “Main Street” Views

When at General Electric, one of the concepts drilled into my mind was “Voice of the Customer.”  While the “voices” of other constituents are important, customers’ voices ring the loudest, as they are the ones who ultimately purchase a company’s products and services.   Here’s a representative sample of the customer postings I found (http://tech.groups.yahoo.com/group/EDI-L/)

"I will be surprised if anything good results from this." – Dan

“I wonder if this is really a ‘merger’” – Edward

“The Inovis users who are on a VAN other than Inovis are the ones I pity.  They and their Mgt. staff are about to get a slick sales job about how great/dependable the GXS system is.  They have my utmost pity, for the rest of us know the truth re GXS.” – Bob

“To rephrase: Is GXS getting better or is Inovis getting worse?”  - Travis

“I’m afraid it is the latter.” - Darrell

“Just wish the new company would adopt Inovis support model and not the other way around.  We (my last employer) had more issues with maintaining connectivity with GXS (sometimes several times a month) and they wouldn't acknowledge anything until we had called and told them.” - Ken

“We see similar problems.  Just a friendly non-scientific survey: GXS probably acquired Inovis for the VAN customer base. If they switch us to the GXS infrastructure, how many current Inovis customers will stay on?”  - Darrell

“uuugh !!!  That is all I can muster. We left GXS for Inovis...” - Steven

 

What is Reality?

The analyst community has not commented fully as yet, but early indications show they believe this combination is a magnificent occurrence, one that will hold nothing but positive outcomes for all.  Customer comments, however, show almost a polar opposite view.  

Where is the truth?  My guess is the ultimate reality will lie somewhere in the middle.   Here’s what we do know:

 

1. A merger and integration this large has never occurred in the VAN world.  This is new territory!
2. Merger integration is challenging, regardless of the industry.
3. History has already shown that VAN integrations, resulting from mergers, are very challenging.  GXS and Inovis have each lived through previous VAN mergers and integrations, with each having its challenges.
4. No one really knows the future benefits or challenges with this merger – there is uncertainty.

 

How to Navigate Uncertainty and Risk

Often, when thinking through corporate strategy (and even personal decisions), one realizes the future contains uncertainties and risks.  There is a basic decision tool when facing these situations.  It’s one where decisions are made based on the selection that will provide greater options - and thereby reduce risks – in the future.  As a real life example, let’s say you are making a choice regarding two quotes to replace the brakes on your car.  Both repair shops will use the same type and quality of brakes; both have similar pricing and capabilities; and both will perform the job in the same timeframe.  In essence, you have similar quotes on all fronts.  One of the repair shops, however, indicates that if your brakes fail or wear out during a defined period, they will replace the brakes free of charge.  This repair shop provides you with more options in the future; an option that will definitely reduce your risk and financial impact.

 

GXS-Inovis Merger – How to Increase Your Options & Reduce Your Risks

I generally prefer to read blogs (and to write blogs) that don’t pitch a certain product or company, but considering the magnitude of the announced merger and the number of companies who may be impacted, I’ll deviate slightly from the norm. 

ANX Velocity, the ANX multi-VAN solution, has a unique “option” not found in single-VAN solutions.  ANX Velocity is currently composed of three, ANX-certified VAN partners.  ANX Velocity clients utilize the VAN infrastructures and tools of GXS, Inovis or Easylink, while the contract, service level guarantees, customer support and billing are all provided by ANX.  This scenario allows ANX Velocity clients a choice regarding which VAN infrastructure will process their transactions, while allowing ANX to add value by providing premium levels of customer support, service level agreements and cost reduction.

So you ask, “How does ANX Velocity increase my options and reduce my risks?” 

Simple.  ANX clients not only have a VAN infrastructure choice when they initially sign a contract, they continue to have a choice and an “option” to move to another ANX-certified VAN partner throughout the life of their relationship with ANX.  

As an example, let’s consider a current Inovis client.  If this client moved to ANX Velocity, the client could choose to place its transactions on any ANX-certified VAN partner (if the client elected to stay on Inovis, the transition to ANX would require no migration or switch for the customer).  In the future, let’s say 18 months out, if the GXS and Inovis merger is completed and all goes well, the customer would have enjoyed ANX’s customer support, SLAs and value for that period of time, and all would essentially be the same.  If, however, the technology integration between GXS and Inovis has “hiccups,” resulting in outages and reduced service, the client would have an option with ANX.  The client could simply ask to be migrated to another ANX-certified VAN partner while still under contract with ANX.  Rates stay the same, customer support is the same, SLAs are the same – all at no cost to the client.

Navigate the GXS-Inovis merger (with potentially no change required), receive greater service guarantees, premium ANX customer support, and have an option to transition quickly if the uncertain future turns bad.  ANX Velocity seems like a perfect choice.