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.
Glovia is indisputably past its few restructurings and ownership-change hardships from the recent few years, and the vendor now has verifiable and clear manufacturing-oriented, extended-ERP product and service offerings, and strategies to execute. The extended period of transitions and restructurings has done a gross disservice to the seasoned vendor whose astute products have been available to manufacturers for over 30 years, and yet, nowadays only some might be aware of their long product history.
is Part Two of a four-part note.
One detailed recent announcements.
Three will discuss the market impact.
Four will cover challenges and make user recommendations.
origins 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 applications.
In 1984, XCS introduced XBMS application, an MRP II (manufacturing
resource planning) and financial management software for high-volume discrete
manufacturers with multiple plants, while in 1990, the vendor introduced Chess,
one of the industry's first integrated client/server ERP systems and Glovia's
progenitor. Fujitsu first became the Asian distributor of XCS in 1992, while
McDonnell Douglas Information Systems (MDIS)
acquired XCS in 1994, the same year Fujitsu also implemented the solution globally
in over thirty of its factories. In the late 1990s, the vendor added a focus
on different manufacturing environments and industry requirements. To that end,
in 1995, MDIS jointly developed "Seiban" functionality (to be explained shortly)
with Fujitsu. In 1998 it introduced projects and material supply solutions,
while in 1999 it introduced automotive industry pertinent functionality.
1997, Fujitsu made significant equity in the entity by forming a joint venture
with MDIS, whereby Glovia International was created. Following a few years of
disappointing results, Glovia was fully acquired by major shareholder Fujitsu
from the UK-based, former MDIS (now Northgate) in February
2000 (see GLOVIA
to be Resuscitated (Hopefully)).
Fujitsu Support of Glovia
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 produced a plan for launching its comeback attempt, which is built on its sharp focus and expertise within certain industries, improved new product interconnectivity, and quick and inexpensive e-business enablement. To that end, in 2001, it introduced an XML framework, advanced planning, and scheduling (APS) system, and web-enablement, while recently in 2003, as previously explained, it added collaboration and integration capabilities and enterprise-wide SCM functionality. As a result of its commitment and investment in Glovia as a strategic catalyst for Fujitsu's global growth and a vanguard in Fujitsu's effort to globalize its software and service business division, in 2003, Fujitsu elevated Glovia to a business unit from a mere business group level.
To put things into perspective, the Fujitsu behemoth, with close to $40 billion (USD) in revenues, approximately 160,000 employees worldwide, and $2.4 billion (USD) earmarked for research and development expenditures last year, consists of the following four principal business areas: 1) software and services (including IT consulting; application management; systems integration; IT infrastructure management; outsourcing; network services; business integration and systems management middleware; storage management software; business applications; etc.), 2) hardware platforms (including servers; storage systems; PCs and mobile devices; storage devices and peripherals; mobile and wireless systems, etc.), 3) electronic devices (e.g semiconductors; compound semiconductors; media devices; electromechanical components; displays; etc.), and 4) other products and services.
software and services have become the largest of Fujitsu's four main business
groups, generating $16.8 billion (USD) in revenues for fiscal 2003, which was
43.8% of Fujitsu's overall revenue. For the first time, this group generated
nearly 10% more in revenue than the hardware platforms group with $13.4 billion
(USD) or 34.9% of total revenues. As a matter of fact, Fujitsu is currently
the world's third-largest IT services group, trailing only IBM Global
Services (IGS) and EDS. This remains
a sort of a best kept secret given Fujitsu still remains best known for hardware
(e.g., PCs, servers, disk drives, telecom switches, and mobile phones), not
software and services.
many ways, Fujitsu's recent revenues' breakdown shift resembles that of IBM,
particularly given that IBM's business model was somewhat emulated by Fujitsu's
strategic restructuring in 2002, which included reshuffling several of its businesses,
the withdrawal of the DMR Consulting and ICL
brand names, and introducing new software packages into US and European markets.
Both giant companies are still known mostly for hardware, although their 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
in the various above-mentioned market segments, the company remains the pride
of its domestic Japanese market, either being the No.1 or No.2 vendor in all
these relevant segments (e.g., IT services, IT management, storage software,
PCs, servers, optical transport, routers, etc.).
the last two years, Fujitsu Glovia has even become the second-largest ERP provider
in Japan only behind the ubiquitous leader SAP, and recently
toppling Oracle. Given its fiscal 2003 revenue was around $200
million (USD) in software and related services with a forecasted $250 million
(USD) in revenues for fiscal 2004, Glovia's revenue is less than modest against
the backdrop of its parent's total revenue and of tier 1 ERP vendors. However,
Fujitsu projects $1 billion (USD) in Glovia's revenues by the end of the decade.
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 (Europe, Middle East and Africa
companies). Also, sales of Glovia software generate additional multiple-fold
revenue for Fujitsu in integration software, services, and hardware sales.
concludes Part Two of a four-part note.
One detailed recent announcements.
Three will discuss the market Impact.
Four will cover challenges and make user Recommendations.