Company Makes Good On B2B Collaboration

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Company Makes Good On B2B Collaboration
S. McVey - March 8th, 2000

Event Summary

Business-to-business collaborative planning software company, Logility recently announced financial results for the third quarter ended January 31, 2000. Corporate revenue growth achieved its highest level since a decline that began in the first quarter of fiscal 1999 (Figure 1). Although software license fees at $3.9 million dropped 3% from those reported in the second quarter, they represented a 59% improvement over the same period last year. Services and maintenance revenues were $8.5 million, a 16% improvement over the comparable period last year. Most notably, Logility generated a net profit of $1.2 million for the quarter, its fifth consecutive positive earnings.

J. Michael Edenfield, President and CEO of Logility, attributes the strong performance to demand for his company's B2B collaborative commerce solutions which enable customers to collaborate with trading partners on forecast and replenishment orders via the Internet. Voyager XPS is an HTML thin client application that provides the framework for conducting Collaborative Planning, Forecasting, and Replenishment (CPFR). XPS is vendor neutral and can use sales and order forecasts from third-party applications like other supply chain forecasting modules and ERP systems.

Other events of note are a strategic alliance with integrator Tompkins & Associates, several new customers, and an appearance in Computerworld magazine's list of "100 Emerging Companies to Watch in 2000".

Market Impact

Unlike many other enterprise application vendors, Logility seems to have moved largely unscathed through the recent Y2K market turmoil. Although revenues and earnings show a marked decline amid rising expenses four quarters ago (Figure 1), Logility has rebounded to near record revenue levels, outpacing the storm that wreaked havoc on Manugistics and ERP poster child, Baan. The strong quarter performance indicates growing market acceptance for Logility's collaborative forecasting and replenishment planning applications available for in-house deployment or hosted through i-Community.

Though Logility has capitalized on its early lead in CPFR (Heineken, 1996), its transition to a B2B software provider has opened it to a vast new competitive landscape that will require further investment in product development, marketing, and sales.

Logility needs to concentrate on marketing its lineage as a supply chain management vendor and emphasize its expertise in CPFR to distinguish it from the host of similar players, many of which are newcomers to the supply chain management arena with limited operating history and unproven applications.

Logility also needs to strongly champion the adoption of CPFR for manufacturers and clarify for prospects the distinction between its XPS application and those for vendor managed inventory (VMI) and related practices. Logility must also convince the B2B market that CPFR is superior to online trading networks, a difficult task in lieu of all the hype surrounding these exchanges.

User Recommendations

Users with relatively uncomplicated business processes in the process manufacturing industries, such as food & beverage, chemicals, and other consumer goods should place Logility on their shortlists. Also, third-party logistics companies should find benefits in Logility's transportation and warehousing products, especially when coupled with expertise of new partner, Tompkins & Associates.

Users with very particular business requirements that defy simple implementation should still involve Logility in the selection, at least through the scripted scenario demonstrations, but should ask for quotes that detail additional costs involved in customization. Other products like Rhythm (for high tech, semiconductor) or MIMI (for chemicals, metal industry, food & beverage) may prove better when extensive modeling is in order.

Small to mid market companies evaluating application service providers for collaborative planning will want to seek references from Logility and its ASP partners AmQUEST and ebaseOne.


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