ERP vendor QAD acquires vendor Redzone, providing a foothold in the market for connected worker software that helps manufacturers improve productivity.
Manufacturing-focused ERP vendor QAD built onto its product portfolio with the acquisition of Redzone, a connected worker application vendor. Terms of the deal were not disclosed.
QAD, itself, was acquired by software investment firm Thoma Bravo in 2021 and is, in turn, growing by acquisition. In addition to Redzone, QAD bought Paris-based process mining firm Livejourney in December 2022.
Redzone, based in Miami, is a 10-year-old company that provides connected worker software aimed at improving the productivity of frontline manufacturing workers. Connected worker applications include tools like digitized work instructions and collaboration capabilities that enable workers to understand and work together on issues like machine status, productivity targets and machine capacity.
Analysts said the acquisition provides QAD with a potentially valuable stake in the growing connected worker applications market.
Redzone is growing at a faster rate than QAD will get from its ERP products and addresses a neglected area in manufacturing, said Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers.
One reason for the growth opportunity stems from labor shortages and rising labor costs in the manufacturing sector, which are only expected to worsen as the population ages in major manufacturing areas such as South Korea and Japan, according to Jakovljevic.
A growing market
Research firm Adroit Market Research estimates that the market for connected worker applications will grow from $3.19 billion in 2021 to $23.4 billion by 2029.
The market is growing because manufacturers are addressing not only labor shortages but also skills gaps in safely and productively using automation and Industry 4.0 technologies, according to Adroit.
Empowered workers are more resilient and engaged, and they will solve problems.
Predrag JakovljevicPrincipal industry analyst, Technology Evaluation Centers
Redzone is similar to other connected workforce applications, including Rever Inc., which is also manufacturing focused, and Zebra Technologies' Reflexis, which focuses on retail but could be oriented to manufacturing, Jakovljevic said. Manufacturers that empower frontline workers will do better than those that treat their workers like machines.
"Empowered workers are more resilient and engaged, and they will solve problems," he said.
Some ERP vendors have workforce management capabilities that are similar to connected workforce applications, Jakovljevic said. He cited Epicor's acquisition of eFlex Systems, a manufacturing execution system provider, and Infor's Workforce Management software as examples.
Improving productivity in an era of scarcity
QAD's addition of Redzone's connected worker applications makes sense now because labor has become a pressing issue in manufacturing, according to Jon Reed, co-founder of Diginomica, an enterprise industry analysis firm.
"If you get 20 manufacturing leaders in a room, they'll all tell you that labor is their biggest pain point, and this is even with the advances in automation that have been made in those environments," Reed said. "Companies that play in manufacturing have to have an answer for workforce management and how they can address that in a manufacturing context."
Redzone's connected worker tools can help manufacturers deal with some of the issues that stem from labor and skills shortages, but QAD also believes it will help with issues like the scarcity of components and the increasing costs of materials and energy, according to Anton Chilton, CEO of QAD.
"You want to maximize the return on all of that investment, because the cost of [materials and energy used in production] are increasingly high," he said. "That's basically what Redzone does by giving the frontline worker the information they need to be as productive as they possibly can to make sure that what they're working on is being used effectively to the right result."
Redzone will be integrated into QAD ERP, but it will also be able to connect with other ERP systems or work as a standalone application, Chilton said.
"QAD ERP is heavily focused on manufacturing industries, so a lot of the data that's inside the ERP comes out through Redzone," he said. "But Redzone also connects to machines on the shop floor and work centers, so it can gather data from any system that it needs to in order to provide those workers with what they need to do their jobs."
QAD will also eventually integrate the Livejourney process mining functionality into Redzone, according to Chilton.
"We're working on combining AI and machine learning on top of the Redzone application to even further boost things like predictive maintenance on machines," he said. "As well as looking at algorithms around that to manage the predictability of when a machine might be heading toward a point of failure or breakdown."
New capabilities add competitive edge
Adding connected worker capabilities can help a smaller ERP vendor like QAD stack up better against larger competitors like SAP and Oracle, Reed said, although those giants can always look to acquire companies in specialized markets if they see a gap that needs to be filled.
"It's one of those things where they have to decide whether they're going to build versus buy in areas like this," he said. "Both Oracle and SAP have some workforce management components, but a Redzone is much more specialized than what SAP or Oracle have. If a QAD starts to win some business because of this, it starts to force the hand of the larger vendors to have a response to that."
Jim O'Donnell is a senior news writer who covers ERP and other enterprise applications for TechTarget Editorial.
