Fujitsu Poised to (Inter)Stage Glovia's Comeback Part Four: Challenges and User Recommendations


In October 2003, a leading provider of extended ERP solutions for engineer-to-order (ETO) and high volume manufacturers, Glovia International, announced it formed a strategic alliance with Fujitsu Software Corporation to provide manufacturers, customers and suppliers with improved collaboration and integration capabilities. Glovia International is headquartered in El Segundo, California, (US) and is a subsidiary of Fujitsu Limited (TSE:6702), a Tokyo, Japan-based leading provider of international IT and communications solutions with consolidated revenues of $38 billion (USD) in fiscal 2003. The strategic alliance should allow Glovia to improve its customers' ability to collaborate with trading partners and reduce supply chain costs while enabling Fujitsu Software Corporation to further penetrate the manufacturing industry. Fujitsu Software Corporation, based in San Jose, California, is also a wholly owned subsidiary of Fujitsu, and delivers one of the world's broadest lines of application infrastructure software products, including the Interstage Suite and NetCOBOL.

Both Fujitsu and Glovia's big league aspirations are still optimistic at this stage, although both continue to suffer from indolent marketing (at least so far) and consequently low market visibility and brand recognition outside Japan and the Far East. This is despite ownership changes and subsequent restructurings being long past. Furthermore, both companies' channels are still nascent. Glovia has not yet built a reliable and established indirect channel, and, with around 1,000 customers, its client base remains significantly smaller compared to many ERP vendors. Due to Fujistu's established organization of local sales, support, and product delivery enhancements that support Japanese manufacturing styles, the Fujitsu/Glovia relationship has worked well in Japan, an otherwise difficult market for many ERP vendors to penetrate due to cultural and business differences. Despite this success, it may prove to be quite a different case in other markets.

Indeed, the Fujitsu brand name might not be much help selling enterprise applications within other markets. In its fiscal 2003, Fujitsu generated only 8.5 percent and 12.3 percent of revenue from the Americas and EMEA respectively, compared to 71 percent in Japan. Likewise, its has a lopsided global workforce breakdown. It has 8,500 employees in the Americas and 19,000 in EMEA (which are by no means negligible) versus 108,500 in Japan and 21,000 in Asia-Pacific. Other than the vast dependence on Japan, Fujitsu is also plagued by its historic dependence and association with hardware sales, particularly mainframes. Thus it might be a difficult task to convince non-Japanese customers about its global services and software providing capabilities.

The fact is that Fujitsu has software revenues greater than the more prominent respective leading vendors in their software sectors. For example, Fujitsu can claim greater revenues than the business reporting leader Crystal Decisions; the development frameworks leader BEA Systems; the corporate performance management (CPM) leaders Cognos and Hyperion; the enterprise application integration (EAI) provider Tibco; the portals leader Plumtree; and, so on. The fly in the ointment, however, is that not many US or European prospects are aware of Fujitsu's integrated or stand-alone capabilities in these markets. Also, Fujitsu is not necessarily bigger than the above vendors in their respective markets, but rather in the overall software market, and it is still figuring out how to closely align its high-level consultancy and low-level technical infrastructure services arms.

Furthermore, infrastructure and integration are not easy segments to compete within either. Wealthy and viable competitors with strong point solutions or more integrated offerings are coming from the EAI specialists, the infrastructure (platform and tools) providers, and packaged applications vendors. Given that the fragmented and morphing BPM and integration market needs to model, define and develop, deploy and monitor, analyze, and modify business processes, Fujitsu has to act fast to counteract strong competition from many directions such as best-of-breed BPM vendors (e.g. Intalio, Fuego, Handysoft, Savvion, Longview, Cartesis, etc.); business modeling players (e.g. IDS Scheer); workflow management vendors (e.g. Filenet and Staffware); infrastructure providers (e.g. IBM, Microsoft, BEA Systems, Sun Microsystems, etc.); EAI/middleware providers (e.g. webMethods, Tibco, SeeBeyond, and Vitria), and many large enterprise vendors' (e.g. SAP, Siebel, PeopleSoft and Oracle) intrusion into the EAI and BPM arenas, in the manner they have done with the CRM or SCM.

This is Part Four of a four-part note.

Part One detailed recent announcements.

Part Two covered Fujitsu's support of Glovia.

Part Three discussed the market impact.

International Competition

Many mission-critical integration undertakings will still likely go to seasoned companies with proven track records and large customer reference bases. Possibly a best global example would be IBM, which might soon have a flexible integration framework that can provide BPM across data management technologies (i.e., directories and databases) and applications. Holosofx was IBM's third integration-oriented acquisition in the first nine months of 2002, which started with CrossWorlds in January and Metamerge in June. Consequently, Metamerge should provide integration technology (Metamerge Integrator integrates directory services, databases, and messaging systems rather than providing direct application-to-application integration) that should complement IBM's growing line of integration products, including BPM product from Holosofx, the application connectors and workflow rules of respective Extricity and CrossWorlds acquisitions. As IBM further strengthens its position and expertise on the B2B and supply chain management (SCM) side, there will be more pressure on all integration aspirants to provide simpler internet-based options at lower prices. Another example could be BEA, which has recently announced its WebLogic 8.1 platform that features several components (application server, portal, integration engine, security components, etc.) all running under the same run-time.

The Interstage set of infrastructure products should still be examined as an alternative to the likes of IBM's WebSphere and SAP's NetWeaver in mid-tier markets where the price/value ratio is the key. However, while Fujitsu can boast a strong lineup of products covering everything from hardware, storage management, system management (the SystemWalker product), to application servers and software tools, it has only recently unleashed these outside Japan. Also, it has not taken a uniform, top-down approach to these in international markets, given it has set up several subsidiaries with separate charters to target specific software sectors (e.g. the Fujitsu Softek subsidiary for storage management). Given that in Japan Fujitsu mostly provides the "entire enchilada," and offers a complete turnkey solution as a matter of course, it will have to convey a clear message that each of its products can be bought separately.. However, the dangers always lurk in the confusion resulting from overlapping with other vendors' comparable solutions and the lack of the current mind share for the brand among senior-executive decision makers.

By the same token, Glovia's strategy going forward may be impeded by Fujitsu/Glovia brand confusion because they are associated with different markets such as ERP versus automation. Some may be deterred by the ".com" suffix with its wrongly implied association with the failed business models of many startups, although any discerning customer should look-under-the-hood, and thoroughly examine any company rather than fall for or be repelled by the product name. Also, Glovia will face fierce competition even in Japan, let alone elsewhere, by a slew of competitors that have lately become lean manufacturing and JIT savvy. Glovia's value proposition has been offered (at least in a great part) by many upper mid-tier ERP players such as Intentia, SSA Global, IFS, QAD, and MAPICS to name a few. These all have much more fertile client bases to up-sell their components outside ERP, not to mention the competition from SAP, PeopleSoft and Oracle in the upper mid-market and tier 1 market.

Additionally, a slew of vendors that enable companies to efficiently manage trading relations and fulfillment processes, such as Prescient Systems, Escalate, SoftChain, webplan, VCommerce, Ortems, SeeCommerce, in demand planning, supply chain event management (SCEM), visibility, or performance monitoring and optimization are also able to connect disparate systems to provide all the parties with near-real-time information on current movements and trends. True collaboration will continue to focus on planning-related activities but significant integration among all supply chain participants will be necessary to enable the event-driven execution necessary to meet irregular customer demand. In addition, companies participating in new collaborative commerce chains will seek out supply chain partners with similar technology, comparable SCM functionality, and the same level of complexity.

The technological foundation disparity of Glovia products has also likely taken its toll by bloating development expenses and in delivering products integration. Namely, with its original ERP system, Glovia had, until lately, been a market follower regarding product technology. It has belatedly tackled the delivery of support for Windows NT, internet enablement, and product componentization of its core ERP system. Moreover, it had been remiss in opening the product and delivering applications programming interfaces (APIs). Contrary to this, the new B2B products (former glovia.e, and glovia.hub) are based on Java and other contemporary web-based open technologies. Given that Glovia has to attract customers outside its limited ERP customer base, the back-office platform agnosticism of its e-business products should be its highest priority. However, lately, the vendor has made notable steps to rejuvenate (as witnessed by its ability to converge all the products) by web-enabling it, providing connectors and adapters to other applications due to coexistence, and providing tools user enterprises can leverage to customize Glovia applications.

Thus, the company has managed to maintain its existing customers' satisfaction level while successfully re-inventing itself. As a result, it has maintained a presence within the top 10 manufacturing ERP vendors in several markets. One cannot help feeling that Glovia's knowledge of its target market has always been deeper than its market visibility and share. However, while Glovia will not become a dominant market player any time soon, the abundant finances, a new focus and a revived spirit could grant a better future for the vendor. Also, given the current appeal of lean manufacturing concepts and benefits within the North American manufacturers, many might be at least curious see how the Japanese ERP market vice-leader could help them continue to reduce costs and increase operational performance.

User Recommendations

Glovia is well suited for upper mid-market companies with multiple locations and multiple business units in diverse markets. It is also suited for such companies with versatile discrete manufacturing styles (mixed-mode) within the automotive, capital equipment, electronics, telecommunications, and industrial products industries. Companies needing software to address mixed-mode manufacturing (from ETO/complex projects through to high-volume/repetitive), projects and contracts, and service management, may want to include Glovia on an initial list of vendors for a particular ERP software selection. Companies that may benefit the most from evaluating Glovia's ERP product are mid-market companies with up to $1 billion (USD) in revenues that are not necessarily seeking to implement a centralized global financial, purchasing and inventory management system, but are rather operations-centric. Manufacturers with a need to respond to quick changes in product mix, product configurations, delivery dates or order quantity, should leverage Glovia to challenge other vendor participants in the selection.

However, due to a relatively fledgling channel worldwide, potential clients should conduct thorough research on available resources and reference sites of a regional Glovia office or an affiliate service provider. Existing Glovia customers should review the above-mentioned collaborative B2B enhancements with the local Glovia representative with an eye towards extending the value of existing back-office applications. Glovia customers with custom systems or products from other vendors should review the affiliate's development capabilities in order to gain data integration between their various systems.

New customers evaluating Glovia should consider the new modules as an essential part of the product and insist on reviewing them as part of their evaluation. Current users should position glova.e,, and glovia.hub central to their collaborative B2B e-Business strategies. Being informed about competitive offerings is recommended as well. Non-Glovia users may benefit from evaluating the above products for their collaborative needs, as Glovia's ability to create a collaborative business process, dynamically configure and run it within the bounds of the system, and dynamically reconfigure it as required (e.g., when the business process changes) sounds compelling and might up-the-ante for other contesting vendors.

On a more general note, manufacturers that are only managing simple projects and merely need to track project schedules and occasionally run billings do not necessarily need tightly integrated back-office and project management solutions. If ensuring that every project is completed as quickly and efficiently as possible is of major importance, than a stand-alone project management solution should have the right of way. However, deploying an ERP system with a tightly integrated project management module, like Glovia, Cincom, Baan or Jobscope to name only a few, is more appropriate for companies that build peculiar complex products to exact customer specifications, often under strict regulatory requirements. In that case, a link with engineering or procurement departments needing to design or procure long lead-time components is beneficial. The fact is also that only a minority of all ERP vendors properly support the ETO environments. For more information, see Caution! Will A Traditional ERP System Help You Deliver Projects?.

As for similar considerations regarding lean/flow/JIT capabilities, see "Pull vs Push, A Discussion of Lean, JIT, Flow and Traditonal MRP.".

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