Software vendor Peregrine puts B-to-B unit up for sale

How hard is it to integrate e-commerce with the rest of your business? So hard that even some vendors can't do it.

Peregrine Systems Inc. is an example. The San Diego-based software vendor last week put its business-to-business technology and services unit up for sale as part of a plan to focus on its core infrastructure management applications.

Peregrine bought its way into the business-to-business market in April 2000 through an acquisition of Atlanta-based Harbinger Corp. But Peregrine CEO Steve Gardner said the operation never meshed with the rest of the company, despite a daily processing rate of 1.3 million transactions on its systems and expected revenue of US$120 million during the fiscal year that ends this month.

Peregrine made more than a dozen acquisitions during the past two years "and that's really the only one that didn't fit," said Michele Hudnall, an analyst at Meta Group Inc. in Stamford, Conn. "The integration didn't play out as well as they thought it would."

Karen Peterson, an analyst at Stamford-based Gartner Inc., noted that when Peregrine bought Harbinger, vendors and end-user companies alike were enthralled by the B2B concept and became convinced that electronic trading had to be part of their future strategies.

"What people discovered was that it's not that simple to have e-commerce work alongside the rest of your business," Peterson said. The difficulty of making e-commerce technology work sandbagged growth projections for the business-to-business market, she added.

Peregrine, which expects total revenue of about $700 million this fiscal year, will operate the e-commerce unit as a stand-alone operation starting April 1. If Peregrine is unable to find a buyer, Gardner said he would be willing to spin the unit off as a separate company.

No timetable has been set for completing a sale.

Despite the sell-off plans, Gardner said the business-to-business unit is profitable.

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