IBS Software announced the acquisition of Accenture Freight and Logistics Software (AFLS) this week, in a step that will not only “bolster air cargo capabilities” and “accelerate digital transformation and innovation,” as the press release says, but also literally enable the SaaS solutions provider to set sail into new territories: namely, Ocean Freight & Logistics. CargoForwarder Global went fishing for a few answers.
“AFLS provides technology platforms to help airline and ocean transportation companies manage their freight operations and grow through digital transformation and innovation,” the press
statement explains. In an increasingly multimodal world that has seen the emergence of shipping company airlines, the acquisition of established ocean freight technology (alongside experienced
air cargo solutions – Accenture has, for example, worked with AirFrance KLM Martinair Cargo, IAG Cargo, and LAN Cargo during the past decade or so) is more than a smart move – and one that could
rock the boat for IBS Software’s peers. The acquisition is all part of IBS Software's vision to establish itself as an end-to-end player in the global freight supply chain.
V K Mathews, Executive Chairman of IBS Software, explained the decision: “The acquisition of AFLS is a strategically important milestone for our cargo and logistics business to broaden its global footprint, with ocean transportation being a natural adjacent industry in which to expand our expertise. It is a synergistic opportunity to bring our decades of experience and expertise to the ocean cargo business, as well as strengthen our own capabilities to provide greater value to the air cargo customers.” Not only AFLS’ “strong heritage in ocean freight innovation with a suite of new generation platforms that enable ocean carriers to automate critical business functions and make data-led decisions for commercial operations,” but also its “cloud-based collaboration platforms which deliver advancements in airline partnerships” are of particular interest when it comes to accelerating freight logistics digitalization.
Anand Krishnan, CEO, IBS Software, added: “Cargo and logistics are vital to the global economy. It's an area ripe for growth and hungry for transformation. Recent moves by logistics businesses to enter air cargo as they seek to influence the supply chain at every level are evidence of the growing disruption in the sector. AFLS will be pivotal in our wider mission to transform the global supply chain through digital innovation.”
A net-load of answers
While IBS kept quiet about how much money had changed hands for this deal, and whether any potential rebranding will take place, CargoForwarder Global was given the opportunity to ask a number of other questions.
CFG: How does the deal affect the market power of IBS? i.e. Where does IBS then rank amongst its SaaS peers?
IBS: We believe we have been on the top of the pyramid as far as SaaS providers in the air freight space are concerned. This deal helps consolidate that position and strengthen the offering set, which will help our SaaS Software leadership position.
CFG: "The acquisition brings together complementary solutions and a shared vision for innovating and transforming the air cargo businesses." Could you detail what is meant by this and specify the additional services for freight airlines resulting from this step, please?
IBS: The acquisition brings together capabilities from what are two of the leading solutions in the market, especially on the commercial operations. We expect to start to offer significant new additions to the core platforms, enabling new business models. The Exchange platform being acquired fits neatly into our iPartner Suite and will offer digital capabilities for airlines to execute joint ventures or business models that enable partner networks to be effective. And finally, the diversification and our presence in both Air and Ocean could potentially see a number of interesting solution offerings come to light.
CFG: Is this deal a game changer? Since IBS will acquire significant market power through the move, could Thiruvananthapuram be considered the new Luxembourg (CHAMP)?
IBS: We would characterize it as the acquisition powering us further in the direction of eventually being the digital backbone of the logistics industry. Locations and geographies are blurred in this digital world – so rather than Thiruvananthapuram, I would say IBS Software's cargo and logistics business is the place to be if you are in pursuit of rewriting the digital future of our industry.
CFG: How many additional airlines will switch to the IBS platform once the acquisition is completed, in your estimation?
IBS: We expect all of the existing AFLS customers to switch to either an existing or a new IBS platform over a period of time working with these customers. Conversations with customers on how and when this will be achieved are already underway.
CFG: Has IBS been involved in Ocean before? Does the Accenture acquisition open up multimodal development opportunities for IBS? And does/will IBS have customers such as CMA CGM, Maersk, air-sea clients?
IBS: Ocean as an industry is not alien to IBS. We have built solutions for ports and are now implementing a game-changing product for the leaders in the cruise industry. Ocean freight is something we are now venturing into.
CFG: What is the air/sea weighting of AFLS? And how will AFLS connect with IBS software?
IBS: Both the air and sea parts of the business are of equal importance to us at IBS as they help drive different parts of our strategy forward. The technology and functional collaboration between various existing, new and future platforms of IBS are being finalized as we speak, and we will be able to talk about it more in a future conversation.
CFG: Will all Accenture staff be kept on and integrated? Where are they based?
IBS: AFLS specialists working for Accenture were given the option to either transfer to IBS Software or stay with Accenture. A good number of employees including the majority of the techno-domain leaders are transitioning to IBS. While staff transfer was voluntary, most of the products specialists have with great excitement decided to join IBS and we are in the process of bringing in significant expansion into those incoming teams as we embark on a number of strategic initiatives. While the teams are spread out geographically and will work from one of the many IBS offices around the world and remotely, we are also opening a brand-new center in Chennai that will be home for a big part of the product teams.
CGF: What happens now, post-announcement?
IBS: We are currently in the process of on-boarding the new team into the IBS Software ecosystem and at our new development center in Chennai. The technical and account teams are laying out the future roadmap for the solutions and how we can deliver maximum value back to the existing IBS customers and the AFLS customers.
Cramping Champ’s software style?
Coming back to the Champ question above, CargoForwarder Global also asked an independent industry expert for their opinion on IBS Software’s acquisition of Accenture, and what effect this will have on the air cargo IT software providers’ market. Here is what they said: “This is a big move. IBS is buying itself major customers and thus making a platform change ‘easier’. After all, as an airline, you only change something like this every 20 years or so, unless you absolutely have to. Champ will thus come under even more pressure than before. Champ will also lose essential elements of its Cargohub messaging services in the medium term, because they can be replaced with API, EDIFLY, and One Record (API). Of course, this will increase the market power of IBS, which is rarely good news in the long run, see Champ.”
Digital waves are breaking…
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