Event Challenges Agilisys
unnoticed or tersely reported by market observers was a recent merger of two
seemingly unlikely enterprise software providing matrimony candidates. On December
2, Agilisys International, a provider of business software
solutions almost exclusively to the process manufacturing industries (and the
recently spun off former Process Manufacturing and Distribution
division of SCT Corporation, see Agilisys
Continues Agilely Post-SCT), announced the acquisition of BRAIN
AG, a German provider of specialized ERP and Supply Chain Execution
(SCE) software primarily to automotive suppliers and other selected industries
worldwide. Jim Schaper, Agilisys Chairman and CEO, has appointed Ernst Gemmasmer
to the post of Senior Vice President (SVP) to lead the European operations of
BRAIN Automotive. Post-transaction, the BRAIN Automotive and
the BRAIN Industries subsidiaries will reportedly operate as
separate business units of Agilisys International. The acquisition was financed
through funds managed by Golden Gate Capital and Parallax
it remains dubious how the acquisition can mitigate the fact that Agilisys'
product exhibits at best only adequate multi-national capabilities and supports
only a few languages beside English. Further, Agilisys will have to demonstrate
substantial progress in developing an indirect channel to supplement its strong
direct sales and product implementation force, as without it, its growth and
international expansion will be hampered. To that end, while Agilisys' and BRAIN's
business model for distribution, vertical market orientation and harnessing
Web-based technology leadership have been somewhat similar, the acquisition
will not that simply solve the above challenges.
While utilizing BRAIN's facilities and infrastructure worldwide should help in creating presence and some brand awareness, it takes much more painstaking effort to deliver a localized product and viable service & support; not to mention dealing with the diversity of their industrial expertise. Most of the vendors' blending challenge typically revolves around personnel and industrial experience. Merely cross training of BRAIN's staff members to serve process industries will not fly, and vice versa. In fact, it will only fly in the face of providing tightly focused vertical solutions by using half-baked industry experts. Agilisys' current staff members know as much about automotive industries as mere car drivers or sporadic spare parts consumers. And, vice versa, when it comes to BRAIN's staff expertise in e.g., the food & beverage industry, the industry savvy rests with Agilisys' current staff.
Although the business dynamics of BRAIN's automotive and Agilisys' process customers may have some touching points, i.e., very thin profit margins, increasing the level of service to their customers, competitive market consolidation, collaboration through vendor managed inventory (VMI) and order visibility, a need for supply chain planning (SCP) and SCE tools, business analytics and customer relationship management (CRM), we are still talking about many different issues and business processes. To that end, it remains to be seen how Agilisys will leverage some opportunities to promulgate SupplyWEB into its process markets where it has good channels and domain expertise. For instance, while the Agilisys management will have grasped the exacting requirements (e.g., FDA regulatory compliance and handling of unanticipated issues supply chain-wide) of these verticals, whose time-to-market is often constrained by the idiosyncrasy of handling natural resources (e.g. seasonality and perishability), the speed of communications promised by Internet has evolved into a new era of competitiveness that is not that typical within the discrete manufacturing sector.
the other hand, BRAIN's customers care about quite different issues, which are
not regulated by legislation, but rather by more influential trading partners
and/or consortium. To that end, SupplyWEB is a product to manage supplier relations,
procurement, performance, and keep manufacturers compliant with automotive industry
requirements. Many automotive suppliers have reportedly felt stuck with the
traditional methods of using just electronic data interchange (EDI), which is
demanded by their original equipment manufacturers (OEMs). Issues like: "Does
the system support my trading partners (e.g., General Motors
(GM), Honda, DCXnet (DaimlerChrysler
exchange), etc.)?"; "If yes, as part of that, does it have fully integrated
EDI, Barcodes, Payment Processing, and other customer mandates?"; and "Is it
specifically designed to the dictated standards of each of my trading partners?"
Most of these items, since they are specifically designed for Automotive Trading
Partners, are of little value outside of the automotive marketplace.
is Part Two of a two-part analysis of the acquisition of BRAIN by Agilisys.
One detailed the acquisition and discussed the Market Impact.
True, the pressures of the '90s on both automotive suppliers and food manufacturers to streamline manufacturing operations in order to reduce inventory and costs in general, and to increase the overall speed of production, have increased recently by the current economic slump, and these issues are common to both BRAIN's and Agilisys' users. However, to deal with these, many discrete ERP systems have added new functionality to meet these needs, such as bar-code labels printing for both parts and containers, and advanced shipping notices (ASNs). With SupplyWEB Enterprise, suppliers can log-on via the web for access to suppliers' latest inventory levels, allowing for supplier-managed inventory (SMI). Suppliers can view releases and purchase orders, view and respond to quality and delivery performance issues like Delivery Performance Reviews (DPRs) and Production Parts Approval Process (PPAPs), view overall supplier ratings, enter invoice detail and view payment information.
the recently released Agilisys Collaborative Replenishment
(CR) product that can be implemented as part of a comprehensive
Agilisys offering, or integrated with existing supply chain or enterprise systems,
comprises a comprehensive solution that Consumer Packaged Goods (CPG) manufacturers
might need. These manufacturers have long recognized the importance of effective
distribution and inventory deployment in assuring point-of-sale (POS) performance
and the repeat purchases of loyal consumers. To achieve optimal deployment thereof,
they have banded together to define collaborative business processes that leverage
emerging technologies. The most visible and successful example of this cooperation
has been the Voluntary Inter-industry Commerce Standards Association's
(VICS) establishment of the Collaborative Planning,
Forecasting and Replenishment (CPFR) Committee.
To that end, Agilisys CR supports the modeling of upfront defined collaborative
processes with rule-based and role-based policy definitions (e.g., stocking
policies, timing of routine tasks, alerts, exceptions & approval boundaries,
performance metrics & benchmarks, etc.), which could be applicable within BRAIN's
client base, but with a carefully attuned approach.
is subsequently handled by the Agilisys Supply Chain & Optimization
suite, which consists of modules for advanced planning, advanced scheduling,
and demand planning the areas where BRAIN has not traditionally been strong.
The Agilisys Supply Chain Planning & Scheduling products are
especially functionally strong, as they enable users to improve their supply
chain management (SCM) performance and make their manufacturing execution process
more efficient by applying mathematical techniques to optimize the supply chain.
the scheduling product provides specific and very required process functionality,
for example, variable changeovers and clean-out time considerations, tank scheduling,
complex routing constraints (both equipment- and materials-related), quality
control (QC) specs considered as part of available-to-promise (ATP), etc., which
would be of a little value to automotive suppliers. Likewise, Agilisys
Advanced Planning modules take care of planning divergent production
processes which start with one product and end up with multiplicity of different
end items (so called inverted' bills of material (BOM)), which is quite the
reverse to most discrete production processes.
addition, the recipes have variable elements to them, and the planning process
also has to match an often fixed supply of ingredients with variable seasonal
demand to maintain the highest levels of customer service and responsiveness.
In total, the planning solution includes the optimization of production within
capacity constraints, seasonal stock build, shelf-life constraints, using alternate
formulas and assistance with forward promotional planning. Finally, Agilisys
Internet Commerce addresses the sell side applications with many of
the unique features required by the process enterprise, including collaborative
promotions execution for consumer packaged goods (CPG). It also provides self-service
order management, order status and process industry-specific parameters (e.g.,
catch-weights, lot tracing) visibility, and customer service functionality such
as rebate promotion tracking and account management.
Agilisys Applied Relationship Technology (ART),
its broad-ranged answer to CRM, designed to manage the complex relationship
networks of B2B-oriented companies (i.e., customers, distributors, c-packers,
brokers, agents, suppliers, and other partners) and includes a suite of strategies,
services and enabling technologies, may provide some mutual benefit going forward,
given its recent inception and consequent opportunity to be vertically oriented
a summary, the merger looks initially like a positive move for both companies
and their customers, since Agilisys obtains a foothold in the discrete manufacturing
and a solid SCE product that it might embed into its own SCM suite and cross-sell
into many industries, BRAIN finds a savior and a solid management team, more
certain R&D budgets, and some SCP capabilities from the Agilisys side, while
both companies needed increased visibility and clout. Users should benefit from
BRAIN's financial stability and a possible products' streamlining between BRAIN
and Agilisys. If for nothing else, the acquisition could result with almost
no functional overlap or possible adversarial competition between Agilisys and
BRAIN products and target industries. BRAIN should add diversity in terms of
new market opportunities (being rather a thorn in flesh of the likes of SAP,
QAD, J.D. Edwards, MAPICS,
SSA GT, Baan, PeopleSoft,
Geac and the rest of the army of discrete manufacturing vendors),
while also expanding functionality and customer base, which has become important
possibly more than ever nowadays for all software vendors in a shrinking economy.
other words, an arranged marriage like this one traditionally can take different
turns. One is that the partners will over time develop some feelings for each
other and will start producing offspring with the genetics of both parents.
Still, one has to be careful, as continuation of an unfocused, multi-product
and multi-technology strategy in the markets with diverse dynamics typically
multiplies and overstretches sales, R&D, and service & support resources jeopardizing
the chances its products could stand a chance of long-term success in their
respective niches. Geac, Epicor, Ross
Systems, and SCT Corporation are recent examples of
companies where this strategy has failed: all have had to eventually resort
to divestiture and to a focus on core competencies (it may even be ironic that
Agilisys has been a consequence thereof). To that end, as long as both the Agilisys
and the BRAIN side remain focused on their industries and do not become too
distracted with each other's verticals, everyone should do well. That might
indeed be the case here, as there are seemingly no intentions of combining the
two divisions except for some general & administrative (G&A) and some secondary
marketing resources (i.e., web and graphic design). Thus, all service delivery,
development and sales will continue to be vertically focused and delivered by
different divisions. As mentioned above, there might be some applications (i.e.,
parts of SCM, SCE and ART) that may crossover with a handful of joint development
resources, but it will be up to each vertical development and product strategy
team to assess what may work for their vertical.
the other scenario, of the partners continuing to live in separate rooms and
live their separate lives might not sound that grave either. An example thereof
would be former Marcam Corporation's acquisition of MAPICS
in the mid 1990s. The analogy with Agilisys-BRAIN combination might even be
striking, although a more apparent synergy had been then than now due to both
Marcam's and MAPICS' focus on IBM AS/400 platform. While the merger had never
been really consummated, MAPICS' spin off price was a multiple of its buying
price at the time of the acquisition, and the company has been quite viable
ever since. That was not the case with Marcam though (now part of Invensys/Baan),
but its subsequent troubles had certainly not stemmed from the merger.
Combined respective Agilisys and BRAIN customers and partners should consider this event as a move toward a more viable position for their IT investment, and treat it in a business as usual manner' but with open eyes. Existing customers should respectively evaluate the possible add-ons emanating from the alliance (e.g., Agilisys SCP and ART modules, and BRAIN SCE modules) as a way to add value to their existing applications although preferably by waiting for the companies to figure out and to supply a generally available integrated solution.
customers contemplating future investments in Agilisys' solutions need to meet
with company executives and understand the management team, the company's financial
picture and how Agilisys plans fit with their future. They should clarify and
enforce their support status and the long-term product alliances, product development
and migration strategy with the new management. Users will also benefit from
approaching Agilisys and informing themselves about what the company plans for
future service & support of its older product releases (i.e., still based on
CA's OpenRoad tool on Agilisys' side and on AS/400 platform
on BRAIN side) are and what would the ramifications of migrating (or not) to
its new product offering be.
As usual, users should employ a critical approach in their evaluation of the products, and require the company representative to demonstrate specific technological and germane functional capabilities. At least, BRAIN should be evaluated to raise the bar for other vendors in the contest in terms of demonstrating their EDI, ANX (Automotive Network Exchange, supported within BRAIN-eX, a TCP/IP Message Broker), release accounting, Just-in-sequence (JIS), repetitive purchasing, integrated barcode printing, lean manufacturing, and other e-Business processes pertinent to the automotive industry.
the products' compliance with the most common industry standards such as Ford
MS-9000, Automotive Industry Action Group (AIAG),
Manufacturing Assembly Pilot (MAP), or International
Automotive Sector Group (IASG) QS-9000
should be probed. The lower tier automotive suppliers in need of a plant-focused
ERP system and of getting quickly and affordably on their e-Business feet would
be the most likely beneficiaries from evaluating BRAIN and like products. Also,
make sure that the system supports the practices and dictated standards by your
likely big-brother trading partners (e.g., General Motors, Ford, Honda, etc.).
Sharp industry focus and domain expertise, product interconnectivity, and quick
and inexpensive e-commerce enablement have been BRAIN's bargaining chips in
the game against its peers.
Process manufacturing enterprises from the food, beverage, pharmaceuticals, chemicals, biotechnology, and CPG industries in the $50 million - $2 billion-a-year revenue range that are looking for a full enterprise solution or just e-commerce or other SCM components should place Agilisys on their initial list of prospective vendors. Potential and existing users should be aware of the fact that it is a long journey from vision to execution though. Therefore, prod new company executives about firmer product availability dates and bear in mind typical issues associated with immature product releases.
For process manufacturing companies, Agilisys should be placed on the short list for most functional areas of the business. Mid-sized companies should view is as a single source vendor for all ERP, SCM and significant portions of their e-commerce and CRM needs. Large companies should consider Agilisys as a single source vendor for divisional level systems and as a SCM and plant level provider to corporate level systems. Since requirements differ significantly among different types of process manufacturing companies, users should focus on those functions that make their kind of process industry unique. From Agilisys and any other vendor in the contest, get in-depth demonstrations of those functional areas.
detailed information about the Agilisys ERP product is contained
in the ERP Evaluation Center