Harbinger’s $230m purchase of Premenos back in October (CI No 3,275) unites the two main players in EDI translation software. With a claimed installed base of some 50,000 customers, the combine now own a fair chunk of the estimated 1.5% of US companies that actually use EDI (electronic data interchange) for their business-to-business messaging (at the last estimate, there were six million companies in the US). Both companies have been the most vocal about emerging electronic commerce practices and internet EDI, in particular. But up until now their message for the most part has fallen on deaf ears. With the might of the number two EDI player behind it, Harbinger now hopes that it will be heard. Harbinger, which has 38,000 US companies signed up for its proprietary value-added network products, has become the most aggressive of the value-added network suppliers in embracing the internet. Like most VANs, it now offers internet TCP/IP access to its VAN as an alternative to 0800 dial-up lines. It also markets the TrustedLink family of internet products and services. TrustedLink Guardian has been developed, both to integrate with Harbinger’s VAN, and as an unbundled internet EDI security package to compete with Templar – a rival product which comes from its new partner, Premenos. Premenos has been less successful commercially, but it too has exerted an internet push with the Templar product, offering security and tracking middleware that is designed to work with existing mappers/translators which it targets at organizations wanting to conduct internet EDI on a point-to-point basis in order to bypass third parties. Internet- based EDI offers the attraction of a flat-rate channel for business-to-business messaging between trading partners and should have great appeal for small and mid-sized organizations wanting to dodge the expense of using specialist EDI network carriers who charge a premium for the value-added service. There are all sorts of problems to solve before a company can rush headlong onto the Net with its EDI traffic – the most pressing of which is security. There are several methods for security available one of which is SSLs (secure sockets layers) which are supported by common web browsers.

Determined realignment

However, it seems likely that RSA (Security Dynamics’s subsidiary) will win out. It has a public/private key system which is widely believed to become the standard encryption key. Premenos’ Templar software actually embeds RSA so Harbinger may have a leg up in this area compared with its rivals. There is some obvious overlap between Templar and TrustedLink Guardian and between Harbinger Express and WebDox, Premenos’ similar offering, and the company says it will need to determine how to integrate the best features to provide a stronger product. Both Premenos and Harbinger also offer EDI translators for the AS/400, Unix, and NT platforms – the former takes the lion’s share of the US AS/400 EDI market, while Harbinger’s forte is Europe. In fact, its line is not marketed in the US – it supports the international standard EDIFACT. However, a big plus resulting from the deal is the boost Harbinger will get to its professional services division. With Premenos on board, the company will gain some 270 staff with strong electronic commerce credentials. It will also inherit the market leader for the AS/400 platform – EDI/400 – and add breadth to its overall product strategy with the forms-based web solutions which were Premenos speciality. The new company will be the largest supplier of EDI to the midrange systems market, making for a combined company that will have more than 1,000 employees and projected revenues of more than $120m. Harbinger announced that it would buy UK-based EDI specialist Atlas Products International at the same time as Premenos, capping off a period of determined realignment for Atlanta, Georgia-based Harbinger to lever its way into Europe and international markets and follows earlier acquisitions of two European EDI companies: NTEX Holding BV of Rotterdam in the Netherlands, and Inovis GmbH of Karlsruhe, Germany. The company hopes its move into Europe will help it gain ground on its larger competitor, Rockville, Maryland-based Geis, owned by General Electric Co.

A longer version of this article appeared in M&A Impact.