Agile Expands PLM Footprint into CPG Space with Prodika Acquisition

Deal adds formulation functionality to Agile's lineup; analysts see win for both companies and their customers

Deal adds formulation functionality to Agile's lineup; analysts see win for both companies and their customers

San Jose, CA — June 29, 2006 — Product lifecycle management specialist Agile Software is set to acquire Prodika, a provider of PLM solutions for the consumer packaged goods (CPG) industry, particularly the food and beverage sector, as part of Agile's strategy of focusing on specific industry verticals.

The deal was slated to close on Friday. AMR Research reported on its Web site that the purchase price was $15 million up front, with the potential for a total payout of $27.5 million over several years. The deal was expected to add $5 million in revenue to Agile's financials this fiscal year.

Founded in 1999, Prodika offers solutions intended to help consumer packaged goods companies accelerate innovation by enabling them to create, manage and collaborate on critical information related to product design, development and introduction, global product specifications and packaging.

By streamlining product development operations across the enterprise and with supply chain partners, Prodika aims to help organizations reduce time-to-market for new products; maximize supplier relationships; manage quality, safety and regulatory requirements; reduce costs of goods sold; and optimize return on research and development (R&D) and new product investments.

The PLM provider's solutions are also intended to facilitate better visibility and collaboration between sales, marketing, executive management, R&D, sourcing, suppliers, partners and customers.

Analysts' Views

According to an April 2006 Gartner note titled "Key Issues for Consumer Goods, 2006," authored by analyst Michael Mahler, "Properly selected and deployed PLM initiatives enable consumer goods manufacturers to maximize the value of their limited resources across functional areas, suppliers and outsourcing partners to rapidly develop and deliver differentiated assortments." Additionally, "PLM solutions can identify quality issues early, preventing obsolete inventory, or worse, consumer returns due to dissatisfaction with branded products."

Jim Brown, vice president of global product innovation and engineering research at technology consultancy Aberdeen Group, said that CPG is one of the largest untapped PLM markets, and currently has little penetration by packaged PLM solutions.

"Food and beverage represents a significant percentage of the CPG market, which is showing signs of early adoption of PLM solutions resulting in double-digit improvements in product revenue and cost," Brown said. "AberdeenGroup research indicates that best in class companies frequently achieve their success by implementing vertically specific PLM solutions, such as Prodika for CPG and Agile solutions for high tech and life sciences industries."

AMR's Michael Burkett and Alison Smith, in a research note on the deal, wrote, "Prodika gives Agile formulation and other process-specific product lifecycle management functionality that many other PLM vendors do not possess, providing Agile a clear, competitive advantage" in deals involving food and beverage and other process industries requiring formulation.

The AMR analysts predicted that the acquisition would be a "win" for both of the companies involved as well as their customers. "Agile fills a void in formula management, and Prodika removes the constraints of being self-funded to gain the resources needed to scale beyond a handful of food and beverage accounts, and to add depth that could take it into chemical-based industries like health and beauty."

Additional Articles of Interest

— For the latest facts, figures and benchmarking data from the supply chain industry, read the "Running the Numbers column in the April/May 2006 issue of Supply & Demand Chain Executive.

— For a quick-read update on supply chain enablement projects and solutions for the busy executive, read the "Supply Chain Executive Briefing" in the April/May 2006 issue of Supply & Demand Chain Executive.