Hopes To See System21 Shine Again Like 'Aurora'
- September 18, 2002
Part 3: Challenges and User Recommendations
Geac Computer Corporation Limited (TSX: GAC), a large and until
recently struggling Canadian supplier of enterprise management software,
has indicated it might have finally gotten its ducks in the row not
only has it posted a few stable and profitable quarters, but the company
has also shown the intent to move away from its all but failed business
model of selling maintenance and services for outdated applications. As
a result, it has a number of recent new contract wins.
note covers the following recent Geac announcements:
- The Extensity
and EBC Informatique acquisitions
- A contract
with ZPC Mieszko
- A contract
with Ghim Li Holdings Co Pte Ltd
of three new System21 products for automotive manufacturers
details on Project Aurora
response to AnswerLink
Results for fiscal year 2002
is Part Three of a three-part note on recent announcements by Geac. Part
One detailed the announcements. Part
Two covered the Market Impact.
beyond this, although it is functionally strong, System21 has, until recently,
lacked some of the technology and buzzword must haves' that have been
natively provided by many of its rivals such as SAP, Intentia,
IFS and J.D. Edwards. Contrarily, Geac has so far mostly
talked to the outside modern collaborative world through a plethora of
open APIs (application programming interfaces) and remained content (or
forced) to talk in terms of best-of-breed' connectivity. Additional function
suites, like CRM, advanced web-based product configuration management,
business intelligence and e-commerce are largely provided through partner
alliances such as with Cognos for business intelligence (BI), Applix
for its iCRM solution and with Frontstep for its SyteLine
APS and SyteCenter solutions.
intending to further expand the range of partnerships, Geac might partially
allay some customers' fears that System 21 functionality will increasingly
lag that of its major competitors. To that end, however, Geac also will
have to create a rock solid strategy for integrating its product suite
with multiple partners. The company may benefit from picking J.D. Edwards'
and Siebel's brains, and closely partner with a major enterprise
applications integration (EAI) vendor in order to ease integration with
its partners (see J.D.
Edwards Chooses Freedom to Choose EAI and Siebel
Rallies Its Integration Alliance Troops). To that end, the vendor
has strong technology partnerships with IBM and Jacada (for hardware and
partnerships are also intended to enhance Geac's StreamLine Windows NT/2000-based
ERP solution for 5 to 150 users, starting at around the $100,000 price
tag. Geac's customers will benefit from being able to use Eden Origin,
a tool that enables product configuration/product search engine via a
Web-enabled interface. Through Geac's partnership with Preactor International,
small to medium (SME) manufacturers might benefit from advanced planning
and scheduling (APS) and finite capacity scheduling. However, given that
the above functionalities have become all but commodities nowadays, Geac
will have to work much harder on StreamLine's enhancements if it is to
match the functionality from many competitors, as most of the e-business
and CRM components are still lacking. The product's scope still remains
within managing the flow of production through the supply chain, from
purchasing of raw materials to sales and distribution of finished goods.
proverbial problem for Geac has been its preference for acquiring new
products rather than pursuing in-house product development and/or true
strategic alliances. While the strategy might have worked in a number
of esoteric industries with a low penetration of competitors like hotels
& restaurants, real estate and construction, it is indisputably, a completely
different ball game in the global enterprise applications market in the
Modern enterprise applications must be able to support dynamic business
requirements, and every vendor is compelled to add much more value to
its products and services portfolio to attract and retain customers, rather
than mainly investing in the existing bundle of disparate core products
and hoping for endless support revenues. Geac's fierce competitors mentioned
earlier have long grasped the reality and acted accordingly. Realizing
the crying need to change its faltering business model, Geac seems to
be finally addressing its strategic options, with the above product strategy
announcements showing it is serious about appeasing and shoring up its
large customer base. One is only to hope that the Geac's renewed interest
in alliances and acquisition will be to the point of effectively enhancing
prosperous product lines as required by its large installed base.
Extensity and EBC Informatique purchases should seemingly provide Geac
with enhancements to its multiple core ERP systems for a modest price
tag. The companies have technological compatibility (a J2EE-based product
architectures of Geac and Extensity, and IBM iSeries support for Geac
and EBC), which should bode well for the applications integration. While
it is still unclear how the acquisition will affect current Extensity
users and/or its competitors, it should certainly provide important employee-facing
financial tools to Geac such as a portfolio of travel and expense management,
time and attendance, and basic procurement applications.
times when everybody is keeping a close eye on all IT investments, financial
management products that help companies achieve better control of spending
should prove strong value propositions and quick Return on Investment
(ROI). Even Geac's industries of interest such as construction, apparel,
automotive suppliers, financial institutions, and government agencies
have the need to streamline processes involving the procurement and reimbursement
of employee expenses and time. In addition to cross-selling more products
to its existing customers, the acquisition holds the potential of generating
new customers. Given the "once bitten, twice shy" one should believe Geac
will have carefully thought out the rationale for the above two acquisitions.
Although there is still a sizable work ahead of winnowing out the remaining
under performing units/product lines, there is an opportunity too provided
Geac can regenerate new growth strategy.
Geac's balance sheet was boosted by recent events, more positive sign
is the company's intent to become a true software-developing vendor, not
simply a software collector and dealer. The "catch 22" for current and
potential users is to discern Geac's corporate strategy viability within
the product line/industry in question.
will benefit from approaching Geac and informing themselves about what
the company plans for future service & support (or divestiture and/or
product stabilization?) of its individual products are and what would
the ramifications of migrating (or not) to its new product offering be.
Users should vigorously question Geac on its future options and investigate
alternative solutions now to fully understand their situation and options.
E (Expert) and M (Millennium) series, which are IBM S/390 mainframe-based,
will likely not receive major functional enhancements owing to aging technology.
The SmartStream suite that supports client/server-based Unix and NT systems,
the StreamLine series of NT-based back-office products, and System 21
are the most likely recipients of R&D funds. However, overlapping modules
in SmartStream and StreamLine will likely be rationalized as to minimize
duplicated R&D costs. System21 and StreamLine are the likely core systems,
both providing scaleable and flexible ERP and e-business systems built
on IBM middleware technology.
manufacturing companies in a number of Geac System21 vertical industries
of focus, including apparel, electronics, food and beverage, and automotive
supply, which are considering a new ERP system should evaluate the offering,
while observing closely Geac's future plans. Although Geac's partnership
strategy is justifiable given the company's current state of affairs and
as it results in offerings that it may have otherwise never happened,
it places a burden on the company of having to rely on its partners' update
schedules, is problematic in terms of integration issues and potential
If vertical-specific solutions are all the customer needs and are near
a perfect fit, Geac System21 is worth evaluating, but new customers looking
to implement a comprehensive extended-ERP system outside of Geac's traditional
focus of ERP vertical industry applications software may benefit from
considering other options. In any case, make sure that you are feeling
comfortable with Geac's declared product strategy for your industry and
keep a close eye on the future developments.
Extensity customers looking to expand well beyond its financial spending
packages into ERP/supply chain planning should consider evaluating appropriate
Geac's products. Conversely, Geac users with a need for a strong ERM product
should consider Extensity as a high-priority contender although questioning
the level of integration between the products goes without saying.