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June 11, 2001 |
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Adidas Is On Track Despite Changes
Progress buys Allegrix, which hosted footwear maker's apps
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he race for survival in the application and managed service provider market has taken a number of turns during the past year, but Adidas America is taking the changes in stride. Allegrix Inc., the most recent service provider to host and monitor Adidas' retail applications, was acquired last week by The Progress Co. The $1.6 billion footwear and apparel designer is determined to make the transition as smooth as possible.
Adidas has trod this ground before. The company began relying on ASPs to host its software early last year when it signed with Pandesic, a joint venture between Intel and SAP. Dieter Schoenegger, Adidas' chief technology officer, got his "Dear John" letter from Pandesic last July when the service provider decided to close shop after seeing that the market for hosting business-to-consumer E-commerce applications wasn't profitable. Pandesic continued to host Adidas' SAP retail applications until earlier this year, when the company was able to migrate to its current Cutsey Business Systems Ltd. retail distribution applications hosted by Allegrix.
"We have certain service levels that need to be met, whether it's by Allegrix or another company," Schoenegger says. The acquisition even has positive implications for Adidas, he says. Cutsey's FDM4 application was developed using tools from Progress Software Corp., which is The Progress Co.'s parent. "Progress is in an even better position than Allegrix was to manage our application service levels," Schoenegger says.
Schoenegger says he suspected for months that Allegrix, a service provider that specializes in helping independent software developers prepare their applications for hosting, would soon end its bid for a second round of funding and look to be acquired. The nearly 2-year-old company hadn't received any funding since it got $5.6 million in first-round financing early last year (see "On Shaky Ground," Feb. 19, 2001).
Progress wouldn't disclose terms of the deal but says it bought Allegrix to supplement its Progress ASPen Program, which it began two years ago to help independent software vendors that use Progress' app-development tools enable their software for use in hosted environments. Of Progress' 2,000 software-vendor clients, more than 300 are part of ASPen, including Cutsey.
Progress plucked the ASP market's low-hanging fruit to increase the revenue it derives from ASPen, says VP of market development Bob Palumbo. "Our [independent software vendor] clients have seen a 20% increase in revenue over the past year as a result of offering a hosted version of their software, and Progress shares in benefiting from this revenue growth," he says.
Chris Clabaugh, Allegrix's former CEO, becomes VP of The Progress Co.'s Allegrix unit and will report to Progress president David Ireland. Employees within ASPen will report to Clabaugh.
Progress' acquisition of Allegrix follows the move late last month by E-business consulting firm Application Technologies to acquire Apprio Inc., an ASP and systems integrator that specializes in Oracle applications.
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