Intentia's Movex for Food and Beverage: Gaining a Foothold in North America Part Three: Observations and User Recommendations




Introduction

Intentia International AB (XSSE: INT B), a Swedish provider of enterprise business applications for mid-size and large enterprises, has been a major software player off the shores of North America for nearly two decades, developing, inter alia, a well-earned reputation in process manufacturing software for food and beverage industries. Now, Intentia has set its sights on the United States and Canada. This article looks at the functions and features of Movex Food and Beverage (hereafter simply referred to as Movex).

Specifically, this article provides a glimpse of Intentia's Movex software offering by discussing the following aspects:

  • Overview of Intentia (Part One)
  • ERP functions and features (Part One)
  • SCM functions and features (Part Two)
  • Additional functions and features (Part Two)
  • Observations and user recommendations (Part Three)


This is Part Three of a three-part note.

Part One discussed the functions and features for ERP.

Part Two covered SCM and other functions.

Observations

Like other ERP and SCM software vendors, Intentia needs to string together several quarters of profitability in order to restore consumer confidence and long-term stability, which is yet to happen (see figure 3). A major obstacle to this restoration is the unavailability of a seamless migration path from its older and considerable AS/400 customer base to the Java-based Movex product versions. The very recent December 29 announcement of a significant investment in Intentia by California, US-based investment firm Symphony Technology Group is likely to have a significant effect not only on the Intentia's balance sheet, but also in enhancing its ability to penetrate the US market and make further investments in the Movex product. However, the benefits will come at the price of three persons sitting on the Intentia's board of seven, which gives Symphony great voting power for a reasonable price. The fact that the investment has valued Intentia at a fraction of its revenue in 2002 to only around $130 million (USD), might speak volumes about the vendor's difficulties. Nevertheless, the move should produce some positive effects, such as preventing unwanted predators from acquiring the company and alleviating concerns related to the vendor's long-term financial viability--concerns that have been instilled in prospective customers by competitors. These should bode well for new business opportunities, especially in the viability-conscious North American market.

figure 3

Although Intentia has marketed its revamped architecture as being 100 percent pure Java, the architecture was initially (with Movex 11) only converted to Java, as Intentia delivered an RPG to Java code conversion tool called R2J. To make changes to the core product, existing AS/400-based customers still had to make the changes in RPG and run that code through the R2J. Thus, a 100 percent Java-based architecture might be applicable mainly to brand new users of Movex 12. When version 12.5 of Movex was launched mid-2002, its data model was separated into one for RPG and one for Java, allowing the development company to design special functionality for each technology version of Movex. The forthcoming Movex 14 release will be 100 percent Java-based.

Consequently, Intentia can win new business only from the "green field" customers (and there are not many of these customers nowadays) or by attracting existing customers with new components that are only available through its Java product such as Movex Workplace, developed for the Java version only). Given there are hardly a couple of hundreds of existing customers on Java-based releases, one could easily conclude that this up- and cross-sell opportunity is quite limited at this stage. While Intentia is aware of the challenge, it maintains that it has been deliberately timid about migrating customers from older instances due to its unrelenting policy of ensuring customer satisfaction. Namely, the AS/400 version has so far also been more stable, proven, and robust than its more recent Java-based version, although this should change some time in the near future.

Moreover, the Movex's tight integration with modules, such as computerized maintenance management, warehouse management, and logistical management is a double-edged sword. Namely, Intentia's intent to deliver everythingan integrated all-round suite geared to larger mid-size enterprises even via its own implementation channelmight simply be a tall order for its stature, since even SAP had to recently abandon that approach with a heavy heart, notwithstanding. Intentia's scope and coverage encompasses several features. The Movex collaboration application suite includes enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), business performance measurement (BPM), value chain collaboration, and e-business and although tempting to its target market, it may not likely be as profound or able to deal with the same levels of complexity as the best-of-breed concoctions or the industry's leaders' offerings.

For exis0ting customers of the Java-based product or for new customers who already made the decision to implement this product, such integration can be a powerful motivator in the selection process. However, because some of these modules are not componentized to readily coexist with third party components, some prospective customers may face an all-or-nothing proposition. In fact, at this stage, the only products that Intentia sells successfully on a stand-alone basis are the enterprise asset management (EAM), advanced production planning (APP), and e-commerce modules. If the vendor was able to offer additional modules to other vendors' customers, it might be able to "hijack" customers from the competitor and gain a bigger foothold worldwide, including the United States. This sort of "cuckoo nest" strategy is lately being deployed by the likes of SAP, PeopleSoft/J.D. Edwards, and IFS, as a response to customers buying enterprise applications increasingly in a piecemeal fashion.

As for Movex Food and Beverage, the penetration of the North American market will be contested by the fierce competition from the above-mentioned incumbent vendors. A dozen or so of food and beverage customer references in the region is not going to help either in that regard. Namely, so far in the region, Intentia has gained a notable customer base mainly within the apparel and fashion vertical, which it has captured opportunistically and mostly owing to good word of mouth, a dearth of suitable products, and the bad publicity of some competitor's failures (see Intentia's Intents To Be More Fashionable). However, reliance on these certainly does not grant coveted sustainable growth and expansion within other non-related verticals.

Therefore, although the company's biggest challenge remains its still nascent toehold in North America and Asia/Pacific (although lately they have been better performing regions), without which no vendor can have a strong global competitive position, another area of weakness has been the dearth of its prominent product alliances (both technology and functionality wise) and system implementation partners. The company has been tardy to partner with any non-IBM technology provider, and its partnerships in the past have been rather reactive to sporadic opportunity or customer request than really strategically proactive. While Intentia's direct model (except in Asia where it utilizes channel partners) helps create customer intimacy, it nevertheless hampers Inertia's faster expansion through distribution channels, visibility, and noise created by system integrators (which, in fact, will have likely promoted competitive products).

User Recommendations

Companies looking to replace their legacy system or upgrade to a full functioning and integrated ERP and SCM software should definitely include Intentia's Movex offering on their shortlist of vendors. Intentia's functionality footprint, technological innovativeness, expertise, and sharp vertical focus should be attractive to mid-size and large global enterprises within the food and beverage industry. However, companies, that are looking for best-of-breed solutions may not find it overly cost-effective to decouple components within Movex and slot them with their existing systems. This is despite Intentia's claims of leveraging extensive numbers of application program interfaces (APIs) in Movex with the Movex e-Collaborator software to customize the interface to their requirements. In any case, these claims might be worth checking out.

Enterprises that run on iSeries or Sun servers are still the best candidates to benefit from deploying Movex. However, many companies running on other platforms, are located in different geographic regions, and are within the Intentia's industries of focus may benefit from Intentia giving other vendors in the selection a run for their money. Still, customers in countries where Intentia is not well established or where it uses distributors might find the quality of local service and support uneven.

On top of Intentia's challenge to manage brand recognition and channel development, the company will have to carefully balance its new technology strategy with a more aggressive marketing effort to gain acceptance as a cross-platform provider of enterprise applications without impairing its strong functionality development and reputation.

About the Authors

Predrag Jakovljevic is a research director with Technology Evaluation Centers, Inc. (TEC), with a focus on the enterprise applications market. He has over fifteen years of manufacturing industry experience, including several years as a power user of IT and ERP, as well as being a consultant/implementer and market analyst. He holds a bachelor's degree in mechanical engineering from the University of Belgrade, Yugoslavia, and he has also been certified in production and inventory management (CPIM) and in integrated resources management (CIRM) by APICS.

Joseph J. Strub has extensive experience as a manager and senior consultant in planning and executing ERP projects for manufacturing and distribution systems for large to medium-size companies in the retail, food & beverage, chemical, and CPG process industries. Additionally, Mr. Strub was a consultant and Information Systems Auditor with PricewaterhouseCoopers and an applications development and support manager for Fortune 100 companies.

He can be reached at JoeStrub@writecompanyplus.com.

 
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