Sterling Software Buys Maxxus in EDI Play

Sterling Software Inc., the leading provider of electronic data interchange software, has acquired Maxxus Inc., a San Francisco-based developer of cash management software for small banks.

The acquisition adds 225 bank customers to Sterling's nearly 40,000 customer installations. Maxxus' electronic data interchange packages will complement Sterling's products, which are used by 98 of the top 100 U.S. and overseas banks.

The deal, whose terms were not disclosed, also brings Dallas-based Sterling several remarketing agreements with Visa U.S.A. of San Mateo, Calif.; Electronic Data Systems of Plano, Tex.; and Automatic Data Processing, Roseland, N.J..

"Maxxus is a very attractive company from the standpoint of their success in the marketplace," said Bob Heard, vice president with Sterling. "We think it's a real strong marriage."

Another byproduct of the deal will be Sterling's involvement with the alliance of Maxxus and Washington, D.C.-based MCI Communications Corp. to develop a low-cost electronic data interchange remittance product for the National Automated Clearing House Association.

Financial electronic data interchange is the exchange of payments plus trade-related documents, such as purchase orders and invoices, in standard computer formats.

Sterling's acquisition of Maxxus comes as a surprise to MCI, which formed an alliance with Maxxus following the recently awarded contract with the clearing house group.

In April 1994, the Herndon, Va.-based association issued a request for proposal for an affordable remittance delivery product for banks.

The request was an effort to jump-start the stalled use of financial EDI, a potentially lucrative cash management service whose systems investments are highly expensive.

The association received 14 responses to the request, including one from Sterling, but awarded the contract to the alliance of MCI and Maxxus.

Officials said the acquisition will not affect the development product, called Rapid EDI. It is slated for an April pilot program.

Martha A. Hanlon, MCI's director of electronic commerce product development, was "hopeful" that the new relationship with Sterling would benefit all parties but nevertheless remained wary.

"We'll take a look at the contract to make sure that we don't give anything to Sterling that might be wildly interesting to their network brethren," Ms. Hanlon said.

"We intend to live up to any and all commitments that were made by Maxxus prior to the acquisition," Mr. Heard said. "We see Maxxus' role in the Nacha initiative to remain exactly status quo."

Sterling has had an eye on Maxxus' respected products for some time. The company has been on a nearly yearlong drive to acquire Maxxus. Sterling has figured that the acquisition would be cheaper and faster than developing products to compete with those Maxxus offers.

Sterling, which employs over 3,600 people in 75 offices, will fold Maxxus' 20 employees and its two offices into its banking systems division.

Meanwhile, Mr. Heard said Sterling will continue with its own low-cost EDI product.

Maggie Scarborough, senior director with the National Automated Clearing House, welcomed the newest member to the association's efforts to develop the low-cost product.

"Nacha views the announcement positively at this time, and we see no major impact to our Rapid EDI service offering," Ms. Scarborough said. "Sterling and Maxxus are known for their EDI capabilities and seem like a good set to us."

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