J.D. Edwards Chooses Freedom to Choose EAI

J.D. Edwards Chooses Freedom to Choose EAI
P.J. Jakovljevic - July 27, 2000

Event Summary

At its FOCUS 2000 annual user group meeting, which took place in Denver on June 19-22, J.D. Edwards' top executives unveiled a slew of initiatives that they claim will really change the enterprise applications vendor's direction. According to its press release from June 20, J.D. Edwards announced its "Freedom to Choose" business strategy designed to meet customers' needs for flexibility and choice in the design and assembly of new technologies, solutions and partnerships to enable the next phase of e-business: Collaborative Commerce (C-Commerce).

C-Commerce should be the ability to deliver open, collaborative technologies that allow communication among vendors, suppliers and customers across the supply chain, thereby maximizing value in business-to-business environments. To that end, J.D. Edwards has forged a number of alliances since September 1999 as the company looks to expand the availability of its OneWorld product suite.

Chairman, CEO and President C. Edward McVaney introduced details of the company's strategy to over 8,000 customers and partners at its annual user conference, FOCUS 2000. "In order to succeed in this collaborative world, customers need extended enterprise plug and play, the end game of freedom to choose. They need to have the flexibility to change business processes and accommodate the evolving needs of their partners and customers, and do not want to be dictated to by single-source vendors," said McVaney. "J.D. Edwards' Freedom to Choose initiative is a natural extension of our Idea to Action value proposition, as we move forward to deliver freedom from proprietary standards, freedom to adopt new technologies into an open, collaborative architecture, and freedom of interoperability between all applications."

J.D. Edwards claims that the underlying workhorse for its strategy is the latest release of its flagship product, OneWorld Xe (where "Xe" stands for "extended enterprise"), which provides a flexible architecture, pre-integrated applications, and interoperability to power the J.D. Edwards ActivEra solutions to deliver inter-enterprise collaboration. It will include OneWorld Scripting Tool intended to help users maintain their customizations as they transition their systems and improvements.

The technology behind the company's new interoperability strategy, which should give customers the power to collaborate using multiple extended applications that are shared among numerous enterprises, is Extended Process Integration (XPI). XPI, which will be Web-enabled, will support both HTML and Java, and will offer an Autopilot tool for automating application testing, which uses pre-built testing scripts, will be available in September 2000. XPI allows disparate technologies within an organization to effectively work together using functionality acquired through J.D. Edwards' new agreement with e-business infrastructure provider Active Software, Inc.

Under the long-term development agreement from June 20, the two companies will partner to embed the ActiveWorks open platform into the OneWorld Xe architecture. While the new solution is under development, J.D. Edwards will resell the ActiveWorks product with OneWorld Xe, enabling customers to take advantage of the new agreement immediately, worldwide. ActiveWorks supports major application, platform and networking standards and provides an open platform for building products and solutions that expand a customer's collaboration capabilities.

In order to provide multi-enterprise collaboration among vendors, partners and suppliers, J.D. Edwards will embed Netfish's XML-enabled processes and technology. The company touts that customers will see immediate benefits of the seamless web of processes, intelligence and value of these strategies, with further rapid progress expected over the next 6 -18 months. On June 20, J.D. Edwards and Netfish Technologies, Inc., a leader in XML-based business-to-business eCommerce solutions, announced that the two companies have signed an agreement to embed Netfish XDI B2B process integration technology into future versions of OneWorld Xe enterprise software. J.D. Edwards will immediately begin selling the current version of the Netfish XDI System on an OEM basis to provide its customers with an interim solution while the two companies develop the new, integrated solution.

J.D. Edwards chose Netfish as a leader in XML-based B2B integration, to enable its customers to collaborate across the supply chain with their partners and customers, regardless of which technology runs in their enterprises. As a result, J.D. Edwards delivers fully integrated support for RosettaNet standards, with all published PIPs (partner interface processes), enabling J.D. Edwards' customers in the electronic component and information technology sectors to conduct B2B transactions electronically using the XML based inter-enterprise technology standards, developed by RosettaNet.

"Embedding Netfish's best-of-breed B2B integration technology as a core component of our collaborative applications will help our customers reach beyond their enterprises, giving them the opportunity to gain tremendous cost and time-to-market advantages through cross-enterprise process automation," said Ed McVaney. "This agreement will enable our customers to communicate across the supply chain, no matter what technology their suppliers, distributors and customers use to conduct business. We believe that this will help us deliver sustainable competitive advantage to our customers."

Using the two companies' technology, J.D. Edwards plans to integrate its ERP software, OneWorld, with its older AS 400-based WorldSoftware. It also plans to integrate OneWorld with third-party applications from companies such as Siebel and Ariba. As announced at the beginning of the year, the J.D. Edwards' storefront for e-business will be powered using IBM's Websphere Commerce suite. J.D. Edwards has also reviewed its reselling agreement with Siebel to include Siebel's entire suite of front office applications. Moreover, JDE has decided to enter the arena of B2B electronic exchanges with Active Marketplace. The TRADEX Commerce Center platform is the basis for this and as with other exchanges, the idea is to link trading communities in an on-line marketplace. Yet another earlier partnership is with Extensity, a vendor that delivers automated travel and expense reporting software.

Noteworthy for Supply Chain Management (SCM) users is the general availability release of the Active Supply Chain suite of applications, which was originally developed by the former Numetrix group, which J.D. Edwards acquired last year (for more details, see TEC's News Analysis from July 7 "J. D. Edwards FOCUSes on Active Supply Chain").

Another notable announcement was its agreement with i2 Technologies whereby i2 will host J.D.Edwards' One World suite within i2's TradeMatrix marketplaces and will become the first worldwide distributor of OneWorld (for more details, see TEC's News Analysis from July 12 "i2 Technologies' Latest Offering: J. D. Edwards OneWorld").

Last but not least, on June 27, J.D. Edwards announced its support of MicroStrategy 7, the latest offering from MicroStrategy Incorporated, a leading worldwide provider of Intelligent E-Business software. J.D. Edwards' business-to-business software combines the Intelligent E-Business Platform of MicroStrategy 7 with open, collaborative business intelligence capabilities that will enable customers to enhance analytical/decision support capabilities and make better decisions across the supply chain. J.D. Edwards claims it has selected the MicroStrategy 7 platform because of its analytical richness, wireless capabilities, capability to scale to the largest databases, ease and extent of customization, and enterprise manageability.

"Our goal is to support the decision-making process from business to business across the extended enterprise in an open, collaborative manner to deliver sustainable competitive advantage for our customers," said Ed McVaney. "MicroStrategy's Intelligent E-Business platform combined with our open, collaborative technology will offer organizations the ability to receive strategic insight about the operation of their company by delivering the right information to the right employees at the right time, no matter where they are."

Market Impact

The good news is that J.D. Edwards seems to finally have a clear-cut strategy and direction, however thorny and harrowing the path may be. The company made the point at its annual user conference both to explain to users and analysts its dismal financial performance over the last 18 months and to outline its significantly different tack for the future. While we were moderately impressed by the announcements, some customers might have been relieved to a degree by J.D. Edwards' invigorated posture and determination.

In 1999 and in the first half of 2000, J.D. Edwards spent a hefty amount of its R&D expenses on resolving quality inconsistencies, missed functionality, poor performance, and Web-enablement of its OneWorld flagship product and on building its relationships with Ariba and Siebel Systems. To further rub a salt in a wound, the company had to acknowledge the existence of notable quality problems associated with the above-mentioned endeavors. The only light in the tunnel was the completion of integrating Numetrix with its OneWorld ERP suite and re-branding it as Active Supply Chain (ASC). We believe ASC has a potential of becoming a strong foundation for building upon the necessary components of inter-enterprise collaboration, order fulfillment, and digital marketplaces.

J.D. Edwards appears to have finally pulled itself together, although in the nick of time. All that remains to be done is to execute the strategy flawlessly. Do we even have to mention that it will take some serious doing?!

While we condone J.D. Edwards' move to position itself as an ERP vendor to convince mainly medium sized manufacturing enterprises that it is necessary to extend their activities into e-collaboration, we also believe that managing this large application portfolio (a kind of a software Frankenstein), much of which involves partnering or extensive integration and customization, will be cumbersome despite its highly marketed flexible product architecture.

One should never neglect the inevitable intricacies of managing softer, people issues with multiple levels of indirectness. An illustration can be a demonstration that one could have seen at FOCUS 2000. That showed Ariba CommerceCenter (Tradex) marketplace take an order and pass it into OneWorld (ERP back-office) and from there into Active Supply Chain (ASC). After performing all necessary collaboration with alerts and equivalent responses to a problem, the sale was updated via Siebel and due analysis was conducted with MicroStrategy modules. Finally, required materials were ordered via Ariba e-procurement. While impressive, it is mind boggling at the same time. It is not that easy to remember all those disparate products' names and their respective functions, let alone to make this concoction work seamlessly in the long run!

Complementary product alliances can often be a good thing. E-commerce trends are by nature very dynamic, and no single vendor can provide all required components. Native integration is becoming less of an issue, particularly in the higher end of the market - acquiring the best products at the acceptable price to meet an e-business strategy is the major issue. Nevertheless, it is still intriguing why J.D. Edwards needs more 3rd party partnerships than most of its competitors - a double-digit number of alliances have been announced since September 1999.

While the best-of-breed approach can have its merits, we believe it consistently leads to additional integration costs and complicates service & support arrangements. Interfaces between significant components like ERP, CRM and/or e-business usually require significant tailoring. This can be a barrier to future changes as further modifying already modified code is notoriously time consuming, costly, and risky. J.D. Edwards' heavy reliance on other vendor's software, therefore, contradicts its aggressive positioning around flexibility, which customers may find somewhat disconcerting.

Furthermore, the EAI market is currently a nascent and fragmented one, and is burdened with difficulties. While there are a lot of vendors vying for a position, there is no single company that offers a complete product set that can deal with all the issues an enterprise faces when trying to integrate either internal or external applications.

The caveats also lie in the complex nature of EAI software and the power struggles that are currently taking place in the market. There are indications of existence of more than several dozen of 'versions' of XML. Keeping track of these will be a gut-wrenching work and J.D. Edwards will need to ensure it can provide enough technical resources to the job.

Having known the company's quality difficulties with earlier releases of OneWorld as well as having witnessed the recent staff attrition, the market may, with a good reason, have serious reservation regarding the company's capabilities to successfully deliver and support significantly more complicated product set. Furthermore, its direct sales force, indirect channel and parts of its operations in Europe, Latin America and Asia will have to undergo a serious education and training drill.

However, these are not necessarily insurmountable obstacles, given the fact that even SAP had to abandon its purist 'one-stop-shop' product strategy. While JD Edwards' move into the EAI arena is indisputably risky, we commend its determination to bite the bullet. The sooner the issues are tackled, the greater probability that they will be resolved. Some of its competitors, who are still convinced that they can deliver most of the necessary functionality themselves, may find themselves seriously lagging once they finally realize the need for interconnectivity and EAI.

The name of the game will be to find a perfect balance (critical mass) between a company's own components and 'borrowed' 3rd-party products. A mitigating factor is also that J.D. Edwards has made a strong commitment to only two EAI vendors, Active Software and Netfish. The company will be much more in control of the arrangements by licensing source code, which is by far more efficient and reliable than liaisoning with a slew of vendors that provide similar integration systems.

Even so, since the source code is typically not licensed perpetually, J.D. Edwards will have to confirm the agreement with WebMethods (which meanwhile acquired Active Software) in order to keep abreast of latest source code releases. And what about current and completed implementations where another EAI vendor product (e.g., Oberon Software) has been used?

J.D. Edwards should also consider having notably different marketing approaches for the higher end of the market and for its smaller and mid-market fragments, given the different requirements and mindset of decision makers in these respective niches. The 'freedom to choose' message will most likely strike chords with some more aggressive CIOs of larger global companies, who would be unwilling to get locked into the inflexible, proprietary technology that Oracle's value proposition seems to inherently offer.

The increase in new licenses and reportedly increased J.D. Edwards pipeline seem to speak in that regard. However, this should be backed up with much more vigorous marketing and market awareness creation than it has been done so far. Also, the company should publicly allay any pangs of doubt the market might still have regarding its product scalability, which have plagued its endeavors in the higher end of the market in the past.

On the other hand, the company will have to provide more out-of-box integration for the small-to-medium enterprises (SME) market. These CIOs are very likely to get disconcerted by the prospect of having to deal with a dozen of disparate interfaced applications and may rather consider a solution that requires only a couple of critical bolt-on applications. Therefore, it will be very important that J.D. Edwards at least completes seamless integration of Siebel and Ariba components with OneWorld suite as a matter of urgency. Great Plains would be a case point in this regard with the successful incorporation of Siebel within its eEnterprise product suite.

Last but not least, to allay recent negative publicity, the company must emanate a convincing e-commerce message to assure the market and its customers that it will continue to be viable, regardless of which the target customer is. It is also needless to say that the execution will have to be flawless because the leeway for making mistakes has rapidly been shrinking; this may possibly be the last 'make-or-break' opportunity for J.D. Edwards.

User Recommendations

Existing J.D. Edwards' customers should certainly consider the new offering, but avoid selecting it without looking at what the other vendors have to offer. We recommend identifying your clear e-business strategy and conducting a thorough comparison-shopping, at least for the negotiation leverage sake.

As for potential customers, we generally recommend including J.D. Edwards in an enterprise application selection long list for mid-market and low-end Tier 1 companies (with $100M-$2B in revenue). Organizations whose requirements fall within the scope of the standard ERP and SCM offering, where manufacturing, logistics and financial modules are main pillars of an enterprise application, would benefit from considering J.D. Edwards. One should bear in mind the company's proven fair treatment of customers as well as its expertise within some industries like automotive, consumer packaged goods, electronics, manufacturing & distribution. Nonetheless, if a complementary product beyond core ERP and SCM (e.g., CRM, e-Commerce, BI, etc.) is of a critical importance, users should think carefully about the possible EAI implications and may benefit from considering competitors' value propositions too.

As with all new releases, users should employ a critical approach in their evaluation of OneWorld and require all potential vendors to demonstrate specific business processes. Though demonstrations do not guarantee a trouble-free implementation, they can go a long way toward helping users understand how the software might behave in their environments. Future clients are also advised to request the company's written commitment to promised functionality, length of implementation, and seamless future upgrades, particularly for recently announced partnered offerings.

The following are only some of the issues associated with EAI that users should be aware of: different security systems and keys, package interfaces that do not provide the information in a preferred format, systems may operate in different time zones and be geographically dispersed, scalability, performance, disaster recovery and contingence. Users for whose solutions J.D. Edwards partnered with other EAI vendors may benefit from informing themselves what the company plans for future service & support are and what would the ramifications of switching or not to its above-mentioned strategic EAI partners be.

Improved technological integration is seldom guaranteed by joint marketing arrangements, and only comes after the arrangement yields considerable implementation experience. Therefore, users are advised to ensure that J.D. Edwards is the main contractor that will assume overall accountability for the project. Failing to do so may result with customers being caught in a middle of contractors' recriminations and finger pointing when things start to go awry. The company's readiness to provide a number of reference sites where the installation of its partnership-enhanced product has gone without major glitches would additionally alleviate existing anxieties within users' community.

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