Strategic Alliance Offers JustSystems Cash and Market Opportunity

By David Roe | Published Apr 30, 2009

justsystems logo.png It has often been said that necessity is the mother of invention. In current times, with recession depriving many businesses of the barest survival necessity – cash - invention is key to getting through the next 12 months.

In this respect then, the recent announcement from XML and Information Management software vendor JustSystems (news, site) that Keyence Corp, a developer of sensors for factory automation, is to take a 44% stake — worth US$ 44.7m — in the Japanese vendor is logical.

The logic in this case being take the money where you can find it.

However, this does not appear to be an act of desperation, but rather a strategic financial and knowledge-based alliance that will support JustSystems’ plans for continued expansion in North America and Europe.

The alliance, JustSystems says, will provide financial stability into the future.

Continuing Growth Strategy

Last year, JustSystems stepped up its growth strategy by designing new partnership levels for the integration of their software into a growing number of organizations.

These value-added partners included three levels of partnership arrangements including:

Associate - initial commitment and basic support
Authorized - More formalized and predictable sales of JustSystems products
Premier - Designed for system integrators who want to build a solution offering around their technology

The aim was to recruit more vendors and system integrators in its specialist area of structured authoring and dynamic publishing.

The principal in this case was that the higher your partnership level, the more you got from JustSystems in terms of product discounts and sales opportunities.

Developing XMetal

At the same time, they continue to work on their flagship XMetal, a product that provides a streamlined content life-cycle solution accessible across entire enterprises.

In fact, in this month alone, they announced the development of a XML and DITA authoring tool that can be used with SharePoint.

Extending the SharePoint platform, XMetal Author Enterprise is an easy-to-use content creation solution that manages content more efficiently through a straightforward interface.

And while they’ve had a busy 2008, 2009 already looks hectic with the announcement that they are taking XMetal on the road.

Beyond Recession

All this to put things in perspective. JustSystems does not appear to be a company in trouble — it appears to be a company that is looking beyond the recession and upping the ante with their expansion plans.

The bottom line is that by acquiring approximately 44% of JustSystems Corp. for US$ 44.7 million, Keyence provides JustSystems with financial stability and enterprise opportunities into Fortune 2000 manufacturing companies.

With the money, according to Aaron Deitcher, vice president of North America and EMEA, JustSystems will continue the expansion drive, and to maintain their firm grasp on the XML content creation market.

“The XMetaL group in North America and Europe has been able to maintain a stronghold as leader in the XML content creation and collaboration market,” he said. “The working capital infused into our Japanese parent company provides us confidence to continue to build on our momentum and create strong growth for the XMetaL business.”

Partnership of Equals

For practical purposes, three Keyence directors will now sit on the JustSystems board of directors, with the JustSystems management team intact.

From Keyence — apart from the cash — JustSystems will get the business know-how and open a wider market for it on its own stomping ground in Japan.

For its part Keyence is picking up a partner that can provide end-to-end software know-how that also includes some hardware experience.

In the current economic conditions, you find your partners where you can and a partnership like this really does make sense. While not working in the same areas, many of the IT day-to-day requirements for both companies will be the same.

And by combing resources in this respect not only are there significant savings to be made, but there is also significant strategic advantages in economies where IT department cut-backs are the rule rather than the exception.