IMI Sees Red In Dawn Of Fiscal 2001
Industri-Matematik had no complaints about its performance during the
first quarter of fiscal 2001 in spite of lower revenues and earnings.
The Stockholm-based maker of supply chain execution and customer service
software reported total revenues of $17.0 million, composed of $4.1 million
in license fees, $12.4 million in services and maintenance revenue, and
$431,000 in hardware sales. License revenue declined 20% from $5.2 million
in the previous quarter but soared 151% over the $1.6 million in license
revenue it achieved during the same period a year ago. Service and maintenance
revenue also lagged 20% behind that of the previous quarter, $15.5 million,
and fell 16% from those in the same period a year ago.
addition to lower revenues, IMI's earnings sank deeper into the red in
the first quarter. Net loss for the quarter was $3.5 million compared
to a loss of $2.7 million for the previous quarter and $7.9 million for
the same quarter a year ago. Positive earnings have eluded IMI since the
quarter ended April 30, 1998. [Fig. 1]
discussing the results, Chief Executive Officer Stig Durlow highlighted
customer successes and cost reduction efforts. "We succeeded in adding
new customers and selling add-on solutions to existing customers while
continuing to reduce costs, primarily by trimming European overhead. This
action removed about $2 million from our cost structure on an annualized
basis," stated Durlow.
its new client success stories were two sales of VIVALDI CRM: one to Domain
Technology, a leading domain name service in Europe; and the other to
Grapes Communication Group, a Spain-based telecom operator rapidly expanding
into other countries in Europe. IMI also announced a new agreement with
a major international logistics company involving other customer-focused
components of the VIVALDI suite. The deal is expected to spawn implementations
in 52 countries.
also has follow-on orders from existing clients include Spicers, Sherwin-Williams
and NMD. Spicers, a UK-based office supplies wholesaler currently uses
VIVALDI Advanced Order Management (AOM) to manage multiple distribution
channels and provide value-added services to its retailers. It has added
VIVALDI Fulfillment Center warehousing management and expanded its implementation
of VIVALDI AOM to other parts of the organization.
with its financial results, IMI announced plans to launch a new product
suite aimed at Supply Chain Event Management (SCEM). Citing its strength
in global logistics execution, IMI believes it is uniquely capable of
delivering SCEM applications that provide visibility to all participants
in a company's extended collaborative network.
also announced that SVP of Worldwide Sales and Marketing, John Geraci
would assume the newly created position of Executive VP and Chief Operating
Officer. The position carries executive responsibilities for sales, marketing,
product development, and customer service.
Past sales execution problems coupled with a stifling Oracle relationship
helped erode IMI's financial position (see Figure 2). Just two years ago,
IMI's four-quarter revenues exceeded $100 million, ranking it first among
supply chain execution software vendors. Since then, four-quarter total
revenues have dropped 27%. IMI blamed Y2K remediation spending among clients
in its core CPG market segment for its lower revenues in fiscal 2000,
but this is unlikely to be a factor today. Though the first quarter has
usually not been IMI's strongest in revenues, the company is plainly continuing
to grapple with sales execution.
Geraci's reappointment may indicate the company is unsatisfied with his
ability to close deals or, at least feels that a larger sales organization
(with Geraci in an operations role) is needed to cope with multiple channels
and revenue models. Further undermining its sales efforts is the company's
arrangement with Oracle, which precludes IMI from pursuing joint deals
with other large-scale enterprise application software providers. At last
report, IMI was still attempting to extricate itself from the arrangement.
resume growth, IMI needs to do build greater brand awareness in the U.S.
and explore possibilities for tapping into the B2B commerce market. The
planned move into SCEM may, in the short term, help associate its name
more strongly with B2B, but may have an adverse effect if it fails to
deliver a viable solution that can work seamlessly with third party products.
Vendors focused exclusively on SCEM such as Saltare.com stand a much better
chance of success in this market since theoretically they have no allegiance
to any particular ERP, SCM, or CRM product.
Distribution-centered companies that sell high-volume, fast-moving goods
via brick and mortar or Internet storefronts should consider IMI's VIVALDI
suite among its short list candidates, especially when looking for advanced
order management and WMS combined with CRM. Companies in Sweden are likely
to find a wealth of support and implementation services at their disposal
as IMI receives 37% of its revenue from this country. U.S.-based and global
companies can also expect implementation help through IBM, which formed
an alliance with IMI in 1999.