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A Veteran Enterprise Resource Planning Vendor Makes a SaaS-y Statement

Written By: Predrag Jakovljevic
Published On: January 22 2007

The first complete and flexible, enterprise resource planning (ERP), software-as-a-service (SaaS) solution that is geared to manufacturers has been unveiled by a veteran vendor that, despite its long history as a software solutions provider, has not received its due recognition. The vendor maintains a conservative marketing approach, which is likely the cause of its low-key presence in the global enterprise applications market. The fact that it has been owned by different corporations and has been through several name changes throughout its history may also be a factor.

This veteran vendor is Glovia International. In October of 2006, this subsidiary of Fujitsu Limited announced the opening of Glovia Services Inc. This new company may very well be the first provider of on demand, or SaaS, solutions created to assist small and medium businesses (SMBs) in the management of their manufacturing processes. Fujitsu, the parent company of Glovia International, is a well-known and well-established provider of solutions for information technology (IT) and communications worldwide. It is a longtime provider of extended ERP solutions for engineer-to-order (ETO) and high-volume or repetitive manufacturers. Fujitsu's headquarters are located in El Segundo, California (US).

Along with Glovia Services Inc., Glovia International introduced GSInnovate. This manufacturing solution is based on Glovia's current and well-known, on-premise manufacturing product—glovia.com. Because this application supports the management of various manufacturing processes, it is considered to be an advanced delivery model. GSInnovate offers a SaaS technology platform that assures overall business performance delivery while reducing investment and risk. Glovia Services is a company that offers a full-fledged SaaS solution specially geared to SMBs. The company helps these businesses manage such major business processes as procurement, order management, financial and accounting management, and inventory management

Based on a SaaS delivery model, the solution requires no physical software, hardware, or infrastructure that must be purchased (and maintained) by the SMB. Simply accessed with an Internet browser, the solution eliminates all up-front costs, including hardware and licenses, as well as the need for the IT personnel normally required to maintain such systems. Recognizing that SaaS solutions are becoming an increasingly important option for smaller manufacturers, Glovia Services plans to concentrate its efforts and products on this market. Specifically, the company's focus is aimed on manufacturers with annual revenues of $10 million to $50 million (USD), including such businesses as discrete, job shop, and ETO.

The GSInnovate solution leverages the rich technology heritage and deep industry expertise of both Glovia and the entire Fujitsu Group. Specifically, Glovia has a thirty-year history and currently serves more than 1,000 manufacturing companies worldwide, primarily in the automotive, electronics, and complex industries markets. Its distinguished customer list includes such leading brands as Avery Dennison, Carrier, Dunlop, RadioShack, Panasonic, Caterpillar (CAT), Honda, Dell, Xerox, Honeywell, and Bridgestone Americas, among others. The vendor has achieved success in the manufacturing industry by offering comprehensive solutions that are used by many manufacturing companies of various sizes—from small and midsized companies to global enterprises (for example, Dell has about 4,000 users). The functional and flexible glovia.com extended ERP suite provides for the needs of ETO, make-to-order (MTO), high-volume, and mixed-mode manufacturing environments through its broad functionality that can handle almost each stage (from "design" and "make" to "fulfill" and "service" stages) of a product life cycle.

To its merit, Fujitsu is the world's third largest IT services company and a leading provider of customer-focused IT and communications solutions for the global marketplace. Comprised of more than 500 subsidiaries and affiliates, the Fujitsu Group operates in over sixty countries across the globe. Cutting edge electronic device technologies, reliable computing and communications platform products, and a worldwide corps of systems and services experts position Fujitsu well to deliver comprehensive solutions to its customers. Established in 1935 and headquartered in Tokyo, Japan, Fujitsu reported consolidated revenues of about $40.6 billion (USD) and an operating income of $1.5 billion (USD) for the fiscal year ending March 31, 2006. The company is listed on several stock exchange listings including those in Tokyo, Osaka, and Nagoya, Japan; Frankfurt, Germany; London, England; and Geneva, Switzerland.

For a discussion of the trend to SaaS, see SaaS-ing the Manufacturing Opportunity. For the specifics relating to full-fledged ERP vendors and SaaS, see Vendor Reservations, A Full-fledged SaaS ERP and User Recommendations.

Glovia Background

To flesh the above out a bit, Glovia's origins and strong manufacturing heritage stem back to 1970, when it was founded as Xerox Computer Services (XCS), which then introduced Xerox Business Management (XBM), an in-house manufacturing and financial management application. In 1975, XCS introduced time-sharing applications similar to the proverbial services of General Electric Information Services (GEIS). This pedigree of design-building and management of mission-critical IT in aerospace & defense (A&D), hospitals, and law enforcement markets has come in handy for the company's most recent SaaS initiative. The vendor has long learned how to deliver IT within environments where availability and performance are critical.

In 1984, XCS introduced XBMS application, a manufacturing resource planning (MRP II) and financial management software for high-volume, discrete manufacturers with multiple plants. Then, in 1990, the vendor introduced Chess, one of the industry's first integrated client and server ERP systems—the glovia.com's progenitor. Fujitsu first became Asian distributor of XCS in 1992, while McDonnell Douglas Information Systems (MDIS) acquired XCS in 1994, the year in which Fujitsu also implemented the solution globally in over fifty of its factories. In the late 1990s, the vendor began to focus on different manufacturing environments and industry requirements. To that end, in 1995, MDIS jointly developed seiban functionality with Fujitsu within the Version 3 product release, and in 1997, the Version 4 added service management and product management modules. Seiban is an identifying number or label attached to all parts, materials, purchase orders (POs), and manufacturing orders that identifies them as belonging to a particular customer, job, product, or product line. This identification results in having separate MRPs within the overall materials requirement planning (MRP) process. Such lean and just in time (JIT) manufacturing approaches enable manufacturers to handle configured items, even if in batches of one. Many other functions aimed at inventory optimization and waste management, streamlined planning, and control for specific products, models, and sequenced production are offered by Glovia. Its many competitors have yet to emulate them. In 1998, the company introduced the projects and contract management and material supply solutions, while in 1999, it introduced the customer management and automotive industry pertinent functionality.

With Version 5, a versatile manufacturing-focused ERP system was renamed in 1999 to Glovia to further reflect the idea of globalization, optimization, and visualization, as Glovia stands for GLObal Value Integrated Applications. The later addition of the ".com" suffix reflected not only the product's Java-based, thin client interface, but also advancements in its object-oriented component architecture and key e-commerce-oriented functional enhancements.

In 1997, Fujitsu made a significant equity in the entity by forming a joint venture with MDIS, whereby Glovia International was created. However, following a few years of disappointing results, Glovia was fully acquired from the UK-based former MDIS (now Northgate) in February 2000 by major shareholder Fujitsu (see GLOVIA to be Resuscitated (Hopefully)). After several years of focusing on the manufacturing and field service-oriented, upper mid-market as the Chess division of former MDIS, Glovia, as a part of Fujitsu, has since regrouped substantially. Leveraging its sharp focus and expertise within certain industries, Glovia has improved new product interconnectivity and quick and inexpensive e-business enablement. To that end, in 2001, glovia.com 6 introduced an extensible markup language (XML) framework, advanced planning and optimization (APS) for factory planning, the MRP by entity capability, and Web-enablement and e-commerce. In 2003, within glovia.com 7, it added collaboration and integration capabilities, program cost accounting, and enterprise-wide supply chain management (SCM) functionality.

Fujitsu Elevates Glovia

As a result of its commitment and investment in Glovia as a strategic catalyst for Fujitsu's global growth, and as a vanguard in Fujitsu's effort to globalize its Software & Service Business division, in 2003, Fujitsu elevated Glovia to a business unit from a mere business group level. See Fujitsu Poised to (Inter) Stage Glovia's Comeback.

To put things into perspective, the Fujitsu behemoth, with close to $46 billion (USD) in projected revenues in fiscal 2007, close to 160,000 employees worldwide, and with an earmarked $2.4 billion (USD) research and development (R&D) expenditure last year, consists of the following four principal business areas:

  1. software and services (which generated 57.4 percent of total revenues and includes IT consulting; application management; systems integration; IT infrastructure management; outsourcing; network services; business integration and systems management middleware; storage management software; and business applications)

  2. computing and communications hardware platforms (which generated 20.4 percent of total revenues and includes servers; storage systems; personal computers [PCs] and mobile devices; storage devices and peripherals; optical transport solutions; mobile and wireless systems submarine network solutions; internet protocol [IP] network solutions, IP telephony and voice over internet protocol [VOIP]; and retail and financial products)

  3. electronic devices (which generated 20.4 percent of total revenues and includes semiconductors; compound semiconductors; media devices; electromechanical components, and displays)

  4. other products and services. Japan remains by far the main market, with 67 percent of total revenues (over $27 billion [USD]), trailed by Europe, Middle East, and Africa (EMEA) with 14 percent or $6.8 billion (USD), Asia-Pacific region with 11 percent or $4.4 billion (USD), and the Americas with the remaining 8 percent or $3.3 billion (USD).

Lately, the Software & Services division has become the largest of Fujitsu's main business areas in terms of the revenue it generates for the company, dwarfing the other groups (the Hardware Platforms group had long been the breadwinner). As a matter of fact, Fujitsu is currently the world's third largest IT services group, trailing only IBM Global Services (IGS) and Electronic Data Systems Corporation (EDS). This remains a sort of a "best kept secret" given Fujitsu still remains best known for hardware such as PCs, servers, disk drives, telecom switches, and mobile phones. Like IBM though, the fastest growing business divisions are in software and services. Fujitsu indeed holds leadership positions in several key sectors of the IT, communications, and microelectronic markets. While globally it often trails the likes of IBM, EDS, or Hewlett-Packard (HP) in the various above-mentioned market segments, the company remains the pride of its domestic Japanese market, either being the number one or number two vendor in the following relevant segments: IT services, IT management, storage software, PCs, servers, optical transport, routers, etc.

During last two years, Fujitsu Glovia has even become the second-largest ERP provider in Japan (with about 450 corporate customers) behind the ubiquitous leader SAP, and even toppling Oracle (even if one counts its recent slew of acquisitions). Although Glovia's revenue is less than modest against the backdrop of its parent's total revenue and of other tier one ERP vendors, its fiscal 2006 revenue was around $230 million (USD) in software and related services. This amount still promotes it into the top ten global ERP providers. Furthermore, Glovia is essential for Fujitsu's recently minted "one company, one solution" strategy, whereby enterprise applications are becoming the way for Fujitsu to penetrate North American and EMEA companies. In the meantime, sales of Glovia software generate additional multiple-fold revenue for Fujitsu in integration software, services, and hardware sales.

As a recap, Glovia attributes its recent ebullience to its experience of more than three decades in helping manufacturers manage, improve, and grow their businesses. Glovia's reliance on Fujitsu, the $46 billion (USD) global technology leader and world's third largest IT provider, comes in handy to allay any viability concerns. Further, with the help of its parent's deep pockets and technology infrastructure products, Glovia can now boast Web-based software capabilities and domain expertise in business to business (B2B) collaboration. This is because the company now offers a fully, technologically revamped suite with more than seventy integrated modules that support nearly every area of manufacturing business functions. The major functional areas are

  • product management—including the engineering, engineering change, tool and gauge, estimating, costing, configurator, and plant maintenance modules;

  • customer management—including the contact and opportunity management, bid process management, sales quotes, sales orders, contract management, customer releasing, and customer portal modules;

  • SCM—including the factory planning, order management, supply chain partnership (SCP), and forecasting capabilities;

  • supplier management—including the supplier quotes, POs, contract purchasing, supplier releasing, procurement, material supply, and supplier portal modules;

  • manufacturing management—including the material production scheduling (MPS), MRP, seiban, work orders, repetitive manufacturing, advanced capacity planning, shop floor control, electronic kanban, kanban, and inventory and physical inventory modules;

  • financial management—including the billing, accounts receivable (AR), accounts payable (AP), cash management, fixed assets, financial integration management, general ledger, and time and attendance (TA) modules;

  • projects management—including the project definition, project management interface, project requirements planning (PRP), project accounting, and program cost accounting capabilities;

  • service management—including the installation management, field service, service and repair, and service orders modules;

  • connectivity and business intelligence—including the electronic data interchange (EDI), XML, application adapters, external interface facility, Interstage, Visual-ARMS, ActionDESK, Publisher, and Cognos BI capabilities; and

  • tools and technology—including the audit manager, security manager, shop floor data collection, web client, application development tools, and code comparison tools.

Possibly most beneficial for Glovia is the availability of Fujitsu's underlying technologies, from infrastructure up. These technologies include system management; storage management; application development suite; application server; portal server; content management server; business process manager; integration manager and server; XML search engine; extensible business reporting language (XBRL) tool; integration navigators; traffic integrator; and security integrator—all provided by Fujitsu.

Owing to the above bevy of mostly native functionality, the product is also flexible and one of only a few to serve the needs of "to order" and high-volume manufacturers with one solution. Although the glovia.com suite covers nearly every functional area of the extended ERP scope and nearly all the processes within the entire product's life cycle (although it is flexible enough to serve the gamut of manufacturing modes), the vendor is not trying to be all things to all manufacturers. Glovia still targets mixed-mode manufacturers in the high-tech and electronic, capital equipment, and automotive sectors. Mixed-mode manufacturing includes a medley of ETO and project and contract handling (via MTO), and assemble-to-order (ATO) to high-volume, or repetitive, or make-to-stock (MTS) practices within the same organization. In the high-tech and electronics industries (that is, components and consumer electronics), Canon, Dell, Xerox, Fujitsu, Panasonic, RadioShack, and Seiko are some exemplar customers. Customers falling into the capital equipment category include Carrier, CAT, or Daihatsu. Finally, automotive customers consist of Yamaha and Honda.

The product is also scalable, with more than 1,000 mid and large size manufacturers in over 5,600 sites worldwide. After Japan, with over 440 corporate customers, the US is the second strongest market for Glovia, with over 370 customers. The product is also global by being localized in twenty languages in double-byte code, and with support for multiple currencies, implemented in over one-hundred countries (including nearly 200 corporations in EMEA and over a dozen in Latin America). To that end, Glovia has about 650 employees worldwide, with dedicated customer support centers and professional services teams in North America, Europe, Japan, and Asia. Although it originated in the US market, the vendor has enjoyed its greatest success with Japanese companies, owing this to Fujitsu's involvement as of the 1990s. The support for serial effectivity, kanban and seiban, and its virtual manufacturing capabilities still give the vendor a functional edge over many other products for the mid-market. Also, given the current appeal of lean manufacturing concepts and benefits within the North American manufacturers, many might be at least curious to see how the Japanese ERP market vice-leader could help them continue to reduce costs and increase operational performance. For more information, see Enterprise Resource Planning Vendors Address Lean Manufacturing.

 
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