J.D. Edwards Fires Siebel, Hires YOU
J.D. Edwards announced plans to acquire CRM vendor YOUcentric,
Inc. for approximately $86 million to "help companies capitalize
on customer and market demand for integrated CRM applications." At the
same time, they have severed their 18 month relationship with Siebel
and ended integration plans between J.D. Edwards core functionalities
and Siebel's eFrontOffice capabilities. Abrupt? Yes. Unexpected?
Possibly. In the best interests of J.D. Edwards and their customers? Wholeheartedly
Edwards and Siebel Joined at the Hip
Until this announcement, it appeared that J.D. Edwards and Siebel were
joined at the hip and moving forward together.
a statement released by J.D. Edwards in June of this year, Chairman, President,
and CEO of the company Ed McVaney referenced the need for an integrated
Customer Relationship Management (CRM) solution as a part of a mid-enterprise
strategy. This would fortify the value proposition J. D. Edwards presents
to mid-enterprise customers seeking comprehensive integrated solutions.
goes on record as stating that, "contrary to recent reports in the media,
J. D. Edwards is not dissolving the relationship with Siebel, but is jointly
refining that relationship to more effectively serve the needs of their
joint customers and the enterprise marketplace."
D. Edwards will continue with its plans to deliver its second integration
of J. D. Edwards software with Siebel software in June, 2001 and will
deliver an enhanced version of this integration in December, 2001. It's
important that as we move forward, we continue to support our joint customers,
and one of the best ways to do this is to continue building out the integrations
we are scheduled to release," said Hank Bonde, Chief Operating Officer
of J. D. Edwards.
Midnight Surgery on the Siamese Twins
On August 15, J.D. Edwards announced its intentions to acquire YOUcentric,
Inc. of Charlotte, N.C. YOUcentric is a privately held provider of Customer
Relationship Management (CRM) software, including applications for Sales
Force Automation (SFA), Campaign Management, Contact Center Management,
and Partner Relationship Management.
adding YOUcentric's capabilities, J.D. Edwards plans to deliver a "comprehensive
set of integrated collaborative commerce applications that enable companies
to electronically manage their business relationships from supply chain
planning all the way to customer services." A mouthful, but it boils down
to collaborative commerce.
Edwards' collaborative commerce product set brings together Enterprise
Resource Planning (ERP), Advanced Planning and Scheduling (APS), and Supplier
Relationship Management (SRM; otherwise known as Supply Chain Management),
with traditional CRM functions.
Edwards also announced its intention to sever its relationship with Siebel,
though it vows to maintain support for those customers that purchased
the Siebel solution from them (numbering approximately 50 companies).
It's expected that J.D. Edwards will quickly provide an incentive for
those customers to move to its new, integrated solution as soon as it
In the World is YOUcentric?
Actually, we've known about YOUcentric for quite some time now. Their
basic offering, called YOUrelate, has four major components: Marketing,
Selling, Servicing, and Partnering. They have gained considerable acclaim
by being named to several "Best" lists:
- Top 100
Emerging Companies to Watch in 2000 (ComputerWorld, November
- Top 15
CRM Software Packages for 2001 (ISM, February 2001)
- Hot 100
Private Companies (Upside, May 2001)
YOUcentric didn't invent the term or the concept; they only applied it
in the CRM application space. "Mass Customization" is a phrase that was
coined by Stan Davis in his book Future Perfect in 1987. The idea, as
opposed to mass production, where the same thing is produced in large
quantities, is to create pre-defined, flexible components, which later
can be modularly fit together, and further refined, based on specifications
from the customer. This is exactly YOUcentric's approach to software design.
They have over 110 components in the CRM space; everything from Account
Management, to Contact Management, to Customer Service Call Handling,
to CTI support, to Support for wireless data access (WAP-enabled cell
phones, Palm platform, pagers).
even disdaining, the traditional "best-of-breed", or "best practice" approach,
YOUcentric describes their approach toward software development as akin
to Dell's make-to-order approach to computer manufacturing. They start
with the customer's strategic business processes (which are hopefully
well-aligned with the company's strategic goals and vision), pick among
their 110 components, customize where they need to, even create new components
if necessary, and thread them all together for a perfect fit.
is quite negative on the one-size-fits-all approach being promulgated
by the likes of Larry "Thou Shalt Not Touch My Code" Ellison at Oracle
and even Tom "I'm Gonna Beat Larry At His Own Game" Siebel of Siebel Systems.
With a best-practice approach, if an automated software process has worked
well for a group of companies or an industry, then logic should hold that
it would work well for any company similarly aligned.
problem is, claims YOUcentric, this approach forces you to follow the
pack rather than capitalize on what processes make your company unique.
If the top companies in an industry all have the same "best practice"
software and inherent processes, then none of them has a service solution
that gives them a competitive differentiation or advantage. That may be
OK, if a company believes strongly that business processes don't matter
given their products' overwhelming superiority in the marketplace. But
many products are starting to look awfully alike in terms of features
and pricing, and in our opinion, companies better well worry about business
process reengineering, mapping appropriate technology to their very own
best processes, and finding competitive wins for their customers through
addition, it's pretty darn difficult to work with a pre-defined data model
when every company has its own, unique legacy data in different places,
as well as organizational silos and heterogeneous technologies. Which
brings us to the next point:
Model Independence and Inheritance
YOUcentric does have its own data model, but it doesn't force it on any
customer. If a customer already has core pieces of their data laid out
in an ERP data model, (for example, the J.D. Edwards suite), YOUcentric
can sit right on top of that data model - something called Data Model
Inheritance. They conduct data mapping to the foreign data model, extend
the data model if need be, and their application is none the worse for
leveraging work already done. This could dramatically facilitate integration
between YOUcentric modules and the core application modules by sharing
data in the same data model.
of YOUcentric's code is written in Java and is fully compliant with J2EE
(Java 2 Enterprise Edition). This means it's natively Internet friendly,
and generally platform and database independent.
Gets Punched in the Eye
Wyatt, Chief Marketing Officer of J.D. Edwards, pulled no punches when
discussing the disintegration of the relationship between his company
and Siebel Systems. As he explained during the corporate web conference
call on the YOUcentric purchase: "We entered that [the Siebel] relationship
18 months ago with high expectations. Unfortunately, when they delivered
the solution, we found it was not a great fit; the product is complex,
difficult to implement, and our business relationship was not win-win.
We were not meeting the requirements for the market nor supporting our
business model to be successful. Siebel does not mean long-term success
for us. In fact, we have announced that we are terminating our relationship
though continuing to support our customer base." A mere 50 J.D. Edwards/Siebel
customers later, they pulled no punches, and pulled the plug.
Treated with Kid Gloves
In the same web conference, corporate executives at J.D. Edwards couldn't
stop saying good things about YOUcentric. They cited three major wins
in the YOUcentric acquisition:
J.D. Edwards and YOUcentric would present an "unmatched comprehensive
collaborative commerce solution".
J2EE technology means tremendous flexibility and fits in nicely with
J.D. Edwards' OneWorld Xe's workflow integration toolkit called
speed of implementation and faster Time To Market
the Chairman, CEO, President, and Co-Founder of J.D. Edwards sees YOUcentric
as helping them craft a much more vigorous CRM strategy, which is very
important to their manufacturing and distribution customer base (the company
sited a study in which a full 1/3 of their current customer base of 6,000
were interested in CRM solutions over the next two years). He claimed
that customers want a broader, deeper version and vision of CRM than that
which is propagated today (and which he called "CRM Lite.") Stating that
Sales Force Automation, and Marketing Campaign Management, and Contact
Center and Customer Self-Service functionality, and Product Configuration,
and Business Intelligence and those sorts of things satisfied only "part
of the need for manufacturing and distribution customers," he's looking
forward to providing customers exposure into the complete supply chain
with such functionality as order Status, Self-Quoting, ATP (Available
To Promise), shipping and delivery status, Joint Planning, graphical configuration
of products, customer "dossiers," and even a customer view into Accounts
Receivable. He called it "Total CRM Relationships," which, he says is
much broader than the traditional view of CRM.
in their pocket, J.D. Edwards plans to aggressively peddle both its collaborative
commerce and standalone CRM solutions. They quoted from an AMR research
note which stated that the CRM market alone is expected to grow at a compound
annual growth rate of 29% over the next five years.
Edwards has publicly stated very aggressive integration plans between
the two companies' technologies. They expect that by the end of the year,
they will have integrated YOUcentric's SFA components with J.D. Edwards'
order processing - "from a business process perspective." In 2002, they
expect to fully integrate all other pieces.
saw the handwriting on the wall for a breakdown in the J.D. Edwards -
Siebel relationship (see J.D.
Edwards' QUEST To End Its String Of Pyrrhic Victories, Part 2). There
was too much difficulty in integrating the two companies' technologies,
cultures, and even sales strategies.
need to take a moment and considerably disagree with Mr. McVaney's definition
of traditional CRM. Take one look at Siebel's offerings, for example,
and you'll find virtually all the additional pieces he's talking about,
maybe save for the A/R view. Could he be trying to put distance between
J.D. Edwards and other major ERP vendors who are also pushing themselves
as the leaders in Collaborative Commerce? If so, this argument falls thin.
could certainly argue that someone like SAP has an equally or even more
impressive story to tell in the collaborative commerce space than J.D.
Edwards, and we could quibble about how YOUcentric integration and Time
To Market improvements with J.D. Edwards software are yet to be seen.
through the marketing hyperactivity and excitement that is often involved
in high profile M&A activity such as this one, there seems to be promise:
J.D. Edwards now has a truly flexible CRM solution that they OWN and which,
though not complete in its scope, should be quickly adapted into J.D.
Edwards OneWorld environment, as well as quickly expanded with additional
is a major, Tier 1 ERP vendor that is making a leap at the Collaborative
Commerce brass ring. Now that it has brought the second of three key components
in house (Internet-enabled Supply Chain Management comes from Numetrix),
they have a better shot at providing a compelling, well-integrated solution
to both their existing customer base, additional collaborative-commerce-thinking
customers, as well as customers interested in standalone CRM. The key
for J.D. Edwards, and in turn the key factor for users and potential users
to watch, is integration. J.D. Edwards still has a mix of third-party
vendors providing bits and pieces of the overall solution (for example,
Knowledge and Information Management from Open Text and
FileNet; Business Intelligence from Microstrategy, as well
as the aforementioned Numetrix SCM). Their ability to integrate the solutions
smoothly and ultimately provide quick implementation programs will prove
their true worth in the marketplace.