J.D. Edwards Finds Its Inner-Self Within Its 5th Incarnation

Event Summary

The following recent announcements by, J.D. Edwards & Company (NASDAQ: JDEC), a leading provider of collaborative enterprise software and accompanying consulting, education and support services to mid-sized and larger enterprises, should indicate that a reborn company with a new air of confidence has for some time been putting its house in order, expanding its offerings, conveying a more attuned message, executing a more aggressive sales strategy, and improving its cash situation at a critical time.

On August 21, the company reported upbeat financial results for the third quarter ended July 31, 2002. Total revenue for Q3 2002 was $229 million, a 9% growth compared to $209 million in Q3 2001 (See Figure 1). The license revenue grew 10% to $55 million in Q3 2002, compared to $50.0 in Q3 2001, whereas services revenue was $174 million, up 9% from $159 million a year ago. Actual net income, including acquisition-related and other charges, was $9 million the third quarter of fiscal 2002, compared to a hefty net loss of $186 million, in the third quarter of fiscal 2001.

In addition to a healthy number of new license agreements, the quarter was overwhelmingly marked by a new generation of landmark new products and functionality releases. Possibly the most prominent of these was the May 21 announcement of the general availability of J.D. Edwards 5, touted as a new, comprehensive family of collaborative enterprise software products and services for customers and business partners. J.D. Edwards 5 represents the vendor's fifth generation of solutions throughout 25 years of its existence, as it reportedly draws on the best of these architectures and brings the company's comprehensive set of products under one umbrella. J.D. Edwards 5 should also provide a path into the future for customers using the company's older solutions - OneWorld and WorldSoftware. It features modular, integrated, Web-enabled applications that should assist large- and medium-sized businesses in improving their business performance.

J.D. Edwards 5 includes the following seven product lines:

  1. Enterprise Resource Planning (ERP);

  2. Supply Chain Management (SCM);

  3. Customer Relationship Management (CRM);

  4. Supplier Relationship Management (SRM);

  5. Business Intelligence (BI);

  6. Collaboration and Integration; and

  7. Tools and Technology.

Although not currently fully Web services enabled, J.D. Edwards 5 provides the enabling technology for Web services, a rapidly emerging, standards-based paradigm that promises to enable businesses to share data, applications and business processes across the Internet. To that end, the product features software applications developed as reusable components that interoperate with current and legacy technology, enabling companies to match specific software components to specific business requirements while maintaining the value of their IT investments. Combined with a flexible pricing package, this should provide customers the opportunity to purchase software according to their business needs and to evolve and diversify their businesses when they are ready (i.e., "in small bites with a small chew", rather than traditionally "in one big bite and a long chew").

This is Part One of a four-part note on J.D. Edwards. Part Two continues the discussion of recent announcements during and after the J.D. Edwards FOCUS meeting. Part Three will discuss the Market Impact and Part Four will outline the Challenges J.D. Edwards faces and make User Recommendations.

FOCUS Announcements

A few weeks later in June, during its annual FOCUS user group conference, J.D. Edwards announced new and enhanced information technology (IT) services offerings as a follow-up to its May 21 announcement of J.D. Edwards 5. The company hopes to swing the industry's approach to implementing software back into balance, with implementation, education and support services that are both cost effective and tailored to the customer's unique needs, but, at the same time, also a repeatable "standard" implementations that yield better costs and predictability, thereby mitigating risk and minimizing total cost of ownership (TCO).

As many IT services vendors have vacillated in recent years between customized "one-off" and rapid "cookie-cutter" implementation approaches, J.D. Edwards is attempting to blend the best of both approaches. From this philosophy comes OneMethodology, an enhanced implementation methodology, which should offer customers an integrated set of consulting and education services based on their specific business and implementation needs. J.D. Edwards' consultants will supposedly dynamically configure an activity-based implementation work plan based on the customer's unique goals, business processes and desired level of involvement using tools built on a knowledge base of 25 years of experience.

J.D. Edwards Education Services, particularly through the company's so called Process Flow Training, also takes a "listen first" policy to ensure the training plan meets the customer's requirements, then works with the implementation team to coordinate, tailor, and deliver the training needed to provide a custom solution. The ultimate goal is to help each customer achieve self-sufficiency with the software, which, however, should not mean the customer has to carry it on alone. As its customers' long-term partner, J.D. Edwards claims to be bucking the industry trend of reducing support offerings to just one or two levels, as it has not only retained its four levels of support (Bronze, Silver, Gold and Platinum), but it also has introduced several advanced self-service support components available to customers and the new Platinum Premier support offering.

During FOCUS, J.D. Edwards further announced the release of ERP 8.0, unveiling significant upgrades to its widely used ERP software as part of J.D. Edwards 5. Companies in the service industries, which reportedly account for approximately one-third of J.D. Edwards' license revenue, should especially benefit from these improvements, which focus on optimizing employee resources and effectively managing high-value assets. In addition, the company announced that its eXternal Process Integration (XPI) integration platform is now enabled to accommodate the rapidly evolving Web services standards. ERP 8.0 incorporates architectural improvements that should supposedly make it simpler to implement, more user-friendly, and easier to manage, scale, and upgrade.

For users, ERP 8.0 delivers the following major new functionality:

  • Enterprise Asset Management (EAM) technology typically allows enterprises to maximize the value and productivity of capital-intensive assets, as it can reduce operating costs, increase asset utilization and decrease inventory, resulting in a direct increase in incremental revenue. New EAM functionality in ERP 8.0 includes Resource Assignments, which optimizes staff deployment using human resources calendars to select and assign staff to projects based on their availability, current backlog, priorities and workday schedules.

  • J.D. Edwards Workforce Management, on its hand, provides a suite of products that meets a broad range of human resource needs, as more functions are pushed out via the Internet to the employees and managers of a business. Select Workforce Management functionality highlights for ERP 8.0 include Time & Expense Management, and Multi-currency Time Accounting.

  • Using J.D. Edwards Project Management, organizations should effectively manage the complex projects with all the detail required to see a realistic picture of a job's progress, as users can track the status of a job, examine contracts and explore scenarios. It also gives companies an integrated view of subcontract activity for multiple projects in order to monitor the combined efforts of all players involved. Select Project Management functionality highlights for ERP 8.0 offer strong billing capabilities, allowing for customized service, timely billing and efficient account management, including Not-To-Exceed functionality, and Contract Retainage processing.

  • Finally, announced as part of the rollout of J.D. Edwards 5, J.D. Edwards Real Estate Management should give companies the power to strategically manage property, space and square footage use and increase the visibility into tenant sales to improve revenue potential. Select new features improve retail portfolio management capabilities, including Sales Forecasting (the forecasting of tenant sales information to maximize occupancy) and Lease Option Tracking.

Enhanced Advanced Planning Offerings

Furthermore during FOCUS, J.D. Edwards announced the updates to its Advanced Planning offering, including significant enhancements to its "Supply Chain Management (SCM)" and "Collaboration and Integration" offering groups within J.D. Edwards 5 for companies in manufacturing and distribution industries. Relevant to both mid-market and larger enterprises, businesses should benefit from new applications and capabilities, including:

Demand Consensus is a collaborative forecasting application that combines human projections with historical data. While statistical forecasting methods can create certain forecast improvements, J.D. Edwards' research indicates that the addition of collaborative human forecasts can improve the accuracy by another 20%. To that end, Demand Consensus is a Web-based application that brings planners, sales, executives, operations, customers, and suppliers together in a collaborative conference room environment to produce better forecasting results. This application shares information with other J.D. Edwards planning applications, such as Demand Planning, which might create a powerful combination of forecasting applications and short-range planning. Significant enhancements to Demand Consensus include:

  • A new reconciliation tool that tracks and measures each stakeholders' historical forecast accuracy, weighting more accurate forecasters' projections to generate more accurate forecasts for the enterprise;

  • Message board capabilities to collaborate and track forecast changes; and

  • The flexibility to import and export data from Microsoft Excel spreadsheets directly into or from the Demand Consensus application

Based on its Strategic Network Optimization (SNO) application, Tactical Network Optimization (TNO) provides a simpler interface to this powerful solution, giving mid-sized enterprises the power to plan and optimize the design of their production and distribution networks, and thereby reduce overall operating costs. By providing a simpler graphical interface, visualization tools, wizards, templates, and removing such complex functionality as scenario planning, J.D. Edwards is again targeting mid-sized enterprises, which need a simpler solution for their limited needs which also tightly integrates to their existing ERP backbone. Using TNO, these businesses should be able to make critical supply chain decisions and increase efficiencies by, e.g.: Visualizing the full supply chain, Optimizing supply chain profit, Viewing supply chain costs in detail, and Examining manufacturing constraints by plant.

New collaborative capabilities in J.D. Edwards' Production & Distribution Planning (PDP) application now allow customers and suppliers to share detailed information over the Internet, as Web access to company supply chain data lets many more partners directly participate in the supply chain planning process. Using PDP, trading partners can review, add or change production schedules as needed, based on their role in the supply chain.

J.D. Edwards Warehouse Management, part of ERP 8.0, provides information about where products are located as well as how they should be moved to reduce costs and maximize space and labor resources. A new workflow engine in Warehouse Management now allows users to optimize and fully automate the product pick-up, packing and shipping process. Appropriate cartons and containers are selected, and optimal shipment configurations are designed, whereas information on the shipment can then be automatically sent to customers, improving customer satisfaction.

J.D. Edwards delivers Collaboration and Integration capabilities with XPI, the company's integration platform that has been enabled to support the evolving Web Services interoperability standards, and with XBPs (eXtended Business Processes), a set of pre-defined business processes designed to expedite the connection with disparate systems and reduce costs. In addition, J.D. Edwards is announcing:

  • A new packaged set of XBPs for supply chain integration, providing enhanced real-time order promising capabilities for manufacturers and distributors

  • An enhanced package of XBPs for the high-tech and electronics industries, based on RosettaNet standards

This concludes Part One of a four-part note on J.D. Edwards. Part Two will continue presenting recent J.D. Edwards FOCUS and post-FOCUS announcements. Part Three will discuss the Market Impact and Part Four will describe the Challenges faced by J.D. Edwards and make User Recommendations.

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