Geac Metamorphosises JBA Into Gear, but Cuts 20% of Staff

Event Summary

On November 12, Geac Computer unveiled its plan to turn its UK-based JBA Holdings acquisition into a new division, dubbed Gear, that will focus on the midrange enterprise resource planning (ERP) applications market. In the process, the firm plans to cut 500 people, or 20 percent of its staff as part of an attempt to reduce overhead. The aim is to cut annual costs by about C$90 million, effective from this current quarter. Douglas Bergeron, Geac's president and chief executive officer, also said he was now in the process of evaluating the company's research and development (R&D) programs. "We have 4,500 global customers who see great value in the JBA product suite. Customers want R&D refocused back on the core products to make them even better," he claimed.

The Canadian applications giant intends to focus its efforts on JBA's AS/400 System 21 product line, its @ctive Enterprise e-commerce packages and its Windows NT based Streamline ERP application suite. Bergeron added that sales and marketing would also be realigned to get back in touch with customers, to provide vertical sector expertise and focus on promoting e-commerce software.

Market Impact

This announcement is not a surprise to us. On the contrary, it reinforces the prediction we outlined in our research note on JBA on November 1, 1999 ("JBA: Will it remain '@ctive Enterprise'?"), where we expressed a serious concern due to the imminent post-acquisition restructuring and divestiture of some of JBA's obsolete product lines. Nevertheless, Geac's management deserves commendation for tackling the unpleasant issues swiftly. We also regard Geac's pursuit of JBA's AS/400 System 21 product line and its @ctive Enterprise e-commerce packages as wise, and in tune with vendor recommendations in the note. However, Geac has yet to resolve its lack of CRM functionality in its product portfolio, and we believe that the Company will have to attend to it within the next 12 months at the latest.

User Recommendations

As a summary of our recommendations in TEC's note on JBA ("JBA: Will it remain '@ctive Enterprise'?"), we generally recommend including JBA in a long list of an enterprise application selection to mid-market and low-end Tier 1 companies (with $50M-$1B in revenue), within the following industries: Automotive Components, Apparel & Footwear, Beverage, Food, and Electronics. However, until the merger is consummated, any organization evaluating JBA should exercise moderate caution and consider existing functionality only.

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