Sterling Commerce users might ‘miss out' in buyout

SBC Communications' attempt to penetrate the e-business market with its $6.3 billion ($US3.9 billion) acquisition of Sterling Commerce could have dire consequences for Sterling customers, a telecommunications expert has warned.

"Traditionally, large telecos like SBC Communications are not good at running small, lean companies such as Sterling Commerce," telecommunications analyst Paul Budde told Computerworld.

"In time, the smaller companies tend to get gobbled up, and their customers miss out on the entrepreneurial level of service."

SBC is the parent company of US-based telecomms Southwestern Bell, Ameritech, Pacific Bell and Cellular One. The company had $US561 million in revenue last year and claims 487 of the Fortune 500 as customers.

SBC's plan to acquire Sterling Commerce for an estimated $US3.9 billion in cash comes just weeks after Computer Associates announced it would buy Sterling Software for $US4 billion.

Sterling Commerce was spun off from Sterling Software in 1996 and has since forged a niche in building business-to-business e-commerce trading communities.

SBC said the acquisition of Sterling Commerce is the latest in a string of deals aimed at offering its customers "end-to-end data and Internet-driven" products and services.

But Budde warned that, with the growth of e-commerce, the telecommunications industry is being pushed into the IT market where "traditionally it has little understanding or experience".

"Suddenly, these telecommunications companies need sophisticated products and services to build e-commerce capabilities, so they are buying thisexpertise to catch up," Budde said.

E-business analysts at Meta Group also predict a struggle for SBC customers, commenting: "The acquisition is of minimal immediate help, because Sterling will struggle another 18 months to become a true B2B electronic commerce player.

"We believe SBC is still missing the pieces necessary to provide customer-required extranet service provider capabilities (such as security, end-to-end network management and performance management)," the analyst company said in a statement.

However, Harris Reichman, financial controller at Sterling Commerce Australia, claimed the acquisition will be beneficial for customers of both SBC and Sterling worldwide.

Tina Harrison, head of Sterling Commerce's local consulting arm, agreed, saying: "The reason SBC bought [Sterling] was because it wants to be the only business-to-business e-commerce provider that supplies a full solution - not only software and business acumen, but communications transport.

"The only impact on our customers will be for the better," she added.

"We'll have access to a lot more money to do R&D because SBC is only concerned with being the most powerful e-commerce solutions provider."

Although SBC has no customers in Australia, Harrison said Sterling's local operations would not be neglected. Instead, she claimed it was likely to attract additional backing because it is SBC's only presence in a market which analysts say offers huge e-commerce potential.

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