How Has Made2Manage Systems Been Managing Itself?

How Has Made2Manage Systems Been Managing Itself?
P.J. Jakovljevic - August 22, 2000

Event Summary

According to a press release from July 25, Made2Manage Systems, Inc., a provider of enterprise business systems for small and midsize manufacturers, and Click Commerce, Inc., the provider of Enterprise Channel Management software and services, announced a new offering to enable small and mid-sized manufacturers to leverage the Internet to support their sales, inventory and service networks.

Under the agreement, Made2Manage will license Click Commerce's Enterprise Channel Management software technology to build an Application Service Provider (ASP) offering - the first for Click Commerce. Enterprise Channel Management solutions connect enterprises with each member of a business partner network - distributors, dealers, purchasers, suppliers, consumers and employees - with real-time access to services and information, regardless of language, time zone or currency.

Made2Manage Systems will use this Enterprise Channel Management technology to deliver customer care, commerce and collaboration to small and mid-sized manufacturers. Together, Made2Manage and Click Commerce will provide the manufacturers' customers the ability to generate request for quotations, place orders online, search product catalogues and many other services. This new service will help manufacturers improve customer satisfaction by making it easy for them to do business using the Internet.

"Our bottom-line goal is to help our manufacturing customers strengthen their relationships with their customers," says Christopher Clapp, vice president of Made2Manage's e-business division. "This Internet service will allow manufacturers to deliver great customer service while taking advantage of the cost effectiveness that the Internet provides. By working together, we can serve our manufacturing customers by moving customer management from an expense to an asset. This will give manufacturers the ability to develop strong customer loyalty - a strategic issue in the New Economy."

Earlier, on July 19, Made2Manage Systems, Inc. reported second quarter 2000 results. For the quarter ended June 30, 2000, total revenue was $7.7 million, an 11% decrease from second quarter 1999 revenue of $8.6 million. Software license revenue of $3.3 million reflected a 14% increase over the first quarter 2000. Compared to the prior year, software license revenue for the second quarter decreased by 21% and service revenue decreased by 1%. Net loss was $596,000 or $0.13 per diluted share, in the second quarter of 2000, compared with a net income of $108,000, or $0.02 per diluted share, a year ago (See Figure 1).

Figure 1

Figure 2

"As we stated in our preliminary earnings release on July 7, we have now achieved sequential revenue increases in three consecutive quarters. We also increased our software license revenue by 14 percent over the first quarter," said David B. Wortman, chairman and chief executive officer, "Looking forward, we are encouraged by what's in the pipeline for new business opportunities. We continue to invest in our business solution for manufacturers. From our back office system to our new e-business applications, we are meeting the needs of manufacturers who want to thrive in the years ahead. It is not a matter of if manufacturers will invest in a business solution, but when. They know they must use e-business tools and processes to attract and retain customers, improve their partnerships with suppliers, integrate their supply chains, educate their employees and streamline their operations if they want to survive in the New Economy. Made2Manage has what these manufacturers need to reduce costs and remain competitive. We have the total integrated business system available today and we intend to capitalize on the opportunities ahead."

Market Impact

Made2Manage has joined the myriad of Tier 2 and Tier 3 vendors that have only recently felt the Y2K-caused pinch, while their bigger brethren seem to have gotten over that malaise. This was not unexpected, as Tier 1 ERP vendors were hit first, primarily due to much longer implementation times required for larger implementations and customers had to put their plans on hold much sooner. We believe that the smaller vendors are now in for a rough time as they continue to expand their products, refine their marketing message and defend their turf from each other and from ever more intruding bigger vendors, while coping with much scarcer resources. Made2Manage CEO's bland message speaks in that regard.

Nonetheless, Made2Manage has shown a good understanding of the needs of its target market, SMEs that wish to acquire most of their business applications from a single source while coping with very limited IT resources. To that end, Made2Manage still offers its core ERP solution, which has recently been enhanced with extended enterprise capabilities like advanced planning & scheduling (APS). The company has also made a notable effort to provide e-business solutions with the launch of m2mEport, Web-based community offering information, tools, and services to meet the e-business requirements of SME manufacturers.

Possibly differentiating Made2Manage from its main competitors is the company's ability to provide smaller discrete manufacturers a portal that incorporates a broad range of collaborative, interactive, and communications applications including collaborative engineering design, tools, trading exchanges, and access to information resources. The site also hosts a full range of education, consulting and support services, and includes a virtual classroom capability for delivering instructor-led classroom education over the Web. While manufacturers usually prefer to keep their ERP systems in-house, many may opt to use Made2Manage hosted applications for collaborative commerce, which is available through portal.

As for the latest partnership announcement in case, we foresee a benefit for both parties. Made2Manage and its customers' potential benefits are obvious, whereas the partnership has the potential to increase the market reach of Click Commerce's suite of Enterprise Channel Management software and services via an Application Service Provider (ASP) model.

User Recommendations

Made2Manage's target market, general discrete manufacturing companies and/or their divisions with up to $50 million-a-year revenue range, should consider the company's value proposition, but avoid selecting it without looking at what the other vendors have to offer. We generally recommend including Made2Manage in the long list of vendors considered for an enterprise application selection by the lower-end of mid-market companies. These companies generally have a limited IT budget, a conservative IT strategy, and less complex discrete job shop manufacturing, supply chain and B2B e-commerce requirements. The industries that would most likely benefit from using its products are electronics, instrumentation, machinery, fabricated products, and transportation equipment.

Furthermore, companies within the above-mentioned industries may benefit from evaluating the Made2Manage's portal offerings on a stand-alone basis for their e-business needs and leverage that information against other vendors in the selection. As for the new added functionality through partnerships, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of combined product functionality.

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