J.D. Edwards shells out $86 million for CRM vendor

J.D. Edwards & Co. on Wednesday announced that it will purchase Youcentric, developer of Java-based CRM software, for US$86 million in stock and cash.

Youcentric's product suite includes applications for sales force automation, campaign management, contact center management, and partner relationship management, J.D. Edwards noted in a statement. By including these applications in its own product suite, J.D. Edwards will be able to offer applications that let customers manage their business relationships, from supply-chain planning to customer services, the company said.

This is not the first time J.D. Edwards has maneuvered to offer CRM. The company forged a partnership with Siebel Systems about two years ago that was not a good fit because of J.D. Edwards' focus on the mid-market, said Jim Shepherd, a senior vice president at AMR Research Inc. in Boston. Although Siebel focuses on the high end of the market, Youcentric's technology is a good fit for the mid-market, Shepherd said.

"They're got a product they can integrate into the [J.D. Edwards'] OneWorld suite, that they can price to fit into their customer base," he said. "J.D. Edwards is getting good technology."

The acquisition comes at a critical time for mid-market ERP vendors, most of which are either developing or acquiring CRM applications, Shepherd added. "In the future there's going to be an expectation that an ERP vendor provide CRM as part of its core product."

Erin Kinikin, vice president of CRM at Giga Information Group Inc. in Cambridge, Mass., agreed, saying mid-market enterprises are looking for a single, integrated solution for e-business. This acquisition will give J.D. Edwards the "complete application footprint" the mid-market is looking for, she said.

But the companies differ drastically on culture and approaches to the market, she added. This could impede technology integration, she said. Youcentric is a young company known more for its flexibility than its functionality, she said. But J.D. Edwards is an older, code-generating company known for its functionality, Kinikin said.

"It's kind of like Generation X meets Leave it to Beaver," she said. "The success of the merger is going to depend on how rapidly J.D. Edwards can communicate its mid-market values to Youcentric and how closely ... they can get the architectures integrated. It's going to take two to three years to really get the architectures ... integrated together."

In a statement, J.D. Edwards said the first phase of integration between the two companies is expected to be complete by the end of 2001.

The companies expect most of Youcentric's executive team and employees to remain with J.D. Edwards in Charlotte, N.C.

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