WALTHAM, Mass.—Consolidation among supply chain software companies shows no sign of slowing down.

Among the notable deals that took place this year were JDA’s purchase of Manugustics; ERP giant Oracle’s purchase of G-Log; and four acquisitions by RedPrairie in the last 10 months.

Much of this activity is being driven by vendors’ need to improve their value proposition by providing “end-to-end” solutions to customers. “A lot of these vendors are looking at their product portfolios, and some are seeing weaknesses in certain areas,” said Adrian Gonzalez, director of ARC’s Logistics Executive Council. Rather than develop new products themselves, large vendors are finding it more cost-effective to acquire smaller providers that can fill specific needs, such as customer relationship management (CRM) and inventory planning.

Such acquisitions often translate into good news for both parties, but there can be drawbacks, said Greg Aimi, research director at AMR. “Before an acquisition, smaller companies are going to be more nimble, and it is generally more conducive for them to work more closely and quickly with customers,” he said. “Things get more difficult when small companies get aggregated into larger ones, because there are more priorities to juggle with only certain resources. But they need to consolidate because the only other option may be going out of business.”