By William Fellows
Realizing the rug will eventually be pulled out from underneath its traditional plant equipment supply business by a new breed of portals, PSDI is taking the initiative and betting its future on web-based procurement. It’s setting up an MRO.com Inc subsidiary (for maintenance, repair and operating material procurement) with $14.5m funding from MRO behemoth WW Grainger Inc, which is to purchase 500,000 new shares (4%) of PSDI and has options on a 5% stake in MRO.com.
MRO means supplying companies with commonly used office and other spare parts enabling companies to control maintenance expenses, cut inventories and improve purchase efficiencies. The idea, says PSDI, is to become an aggregator of MRO services and information, putting businesses in touch with suppliers (including Grainger), rather than a traditional vertical industry-oriented portal focused on keeping traffic on a site. It will offer part ordering as well as cataloging. The e-commerce backbone of MRO.com is the Mrotransaction Server (nee Mnet) which PSDI acquired with Canadian ISV The Arm Group last year.
Grainger has already paid $2.5m in license fees for that software. It will sell the software standalone for use within corporations as well as creating a portal and charging suppliers a fee. Specifically it will sell buyer, supplier, marketplace (catalog), and the transaction server software. It will also take a cut of every transaction. In addition, MRO.com is linked to PSDI’s core Maximo plant procurement system. PSDI expects MRO.com to be as big as its traditional business with 12 months by growing revenue between 300% and 400% this year. It has 75 of its 650 employees working on MRO.com. The gun has just gone off in this market says Chip Drapeau CEO of Bedford, Massachusetts PSDI. The company recently reported second quarter net income of $4.3m compared with a loss of $6m last time, which included a $9.2m acquisition charge on revenue which rose 17% to $32.9m over $28.2m.
