J.D. Edwards' QUEST To End Its String Of Pyrrhic Victories
1: The News
During this year's FOCUS conference, which ran from June 11 -- 14, J.D.
Edwards & Company (NASDAQ: JDEC), one of the leading providers of
enterprise applications, demonstrated a somewhat more galvanized strategy
than the one it initiated and less successfully executed during the last
year (for more information, see J.D.
Edwards Chooses Freedom to Choose EAI), with its renewed mid-enterprise
focus and commitment to deliver customer-driven solutions. At FOCUS, J.
D. Edwards gathered its QUEST User Group, over 8,500 customers from around
the world and partners that include IBM, Sun, Andersen,
Accenture, Compaq, Ariba and nearly 100 other technology
and consulting companies. However, the event attracted much less attention
and glitz compared to those organized at almost the same time by PeopleSoft
and SAP, which might also serve as an indication of the current
moods within the vendors' teams.
Edwards has been trying hard to reverse a continuing decline of license
revenue against the backdrop of its direct competitors' upbeat postures.
this Article: This note is a two-part note, the first part discusses
the news from the J.D. Edwards conference. Part two discusses the Market
Impact of this news and how it affects Users.
J. D. Edwards pledged to refocus significant energy and resources on its
traditional mid-enterprise marketplace. During his keynote address at
FOCUS, J.D. Edwards' Chairman, President and CEO Ed McVaney, referenced
the need for an integrated Customer Relationship Management (CRM) solution
as a part of the mid-enterprise strategy, which should reinforce the value
proposition J.D. Edwards presents to mid-enterprise customers seeking
comprehensive integrated solutions. McVaney admitted that the company
still has a lot of work to do to regain its stature in the industry. He
pointed specifically to CRM applications, a crucial area in which the
company has been undeniably remiss. McVaney did hint, however, that a
major announcement concerning its CRM capabilities would be forthcoming
very soon. Contrary to recent rumors in the media, J.D. Edwards will not
dissolve the relationship with Siebel, but will rather jointly refine
that relationship to more effectively serve the needs of their joint customers
and the enterprise marketplace.
the conference, the company highlighted three additional announcements
related to the its renewed focus on serving mid-enterprise customers:
Edwards will deliver its advanced planning solution (APS) to the mid-enterprise
via four key modules:
Collaborative forecasting and demand management
Supply chain planning
Edwards announced that it has partnered with Andersen to meet the
rapid growth in the automotive industry. Together, they plan to deliver
a highly tailored, industry-specific solution for mid-enterprise suppliers
and OEMs in the automotive industry.
Edwards continues to realize strong growth in its hosted applications
business. In the month of May, the company booked 50 new customer
wins with its Vertical-Focused ASP Program.
Integrated with OneWorld
Possibly the most crucial was the announcement of the real-time integration
of the company's real-time APS technology to its flagship OneWorld ERP
system. Real-time connectivity between planning and execution has become
essential with the advent of Internet for Supply Chain Event Management
(SCEM) that allows customers to respond almost instantaneously to events
anywhere in the supply chain. Previously, J.D. Edwards has offered only
a batch integration of APS and OneWorld. Traditional batch-based solutions
require 4-5 days to achieve the similar result - thus significantly limiting
the ability of a company to respond to change in an extended supply chain.
company also pledged full technical support for the collaborative planning,
forecasting and replenishment (CPFR) standard and plans to deliver tailored
collaborative applications to mid-market companies. The new OneWorld APS
that debuted at the conference include collaborative forecasting and demand
management, supply chain planning, order promising, and production scheduling.
These solutions are available on a component basis. Each component will
be priced at $147,000 and can supposedly be implemented and running in
16 weeks or less. The price tag of $147,000 is significantly less than
the $400,000 charged for similar components designed for the upper end
of the company's mid- and large-enterprise market. J.D. Edwards' collaborative
supply chain solutions have recently been a driving force in the license
to other offerings in the marketplace, J.D. Edwards claims that the real-time
integration of APS and OneWorld provides:
enterprise execution system with over 1,500 customers worldwide.
real-time event management system capable of high-performance monitoring,
simulation and decision support to users both internal and external
to a company supporting over 60 alert types.
optimization capability that can automatically determine the best
course of action while considering finite capacity, costs and profits.
box integration between planning and execution at the transaction
level, allowing any transaction created by OneWorld (from purchase
orders to advanced shipping notices to back-order notifications) to
be processed by the APS system immediately.
external integration capability (XPI and XBPs) that delivers pre-packaged
connectivity and collaboration to customers, trading partners and
business intelligence capability with pre-packaged Key Performance
Indicators (KPIs) to measure the results of real-time, integrated
supply chain processes.
Availability of XBPs
Following up on its interconnectivity mantra, the company also announced
the general availability of eXtended Business Processes (XBPs). Building
on J.D. Edwards' XPI (Extended Process Integration) middleware product,
XBPs are predefined, fully executable business processes that tie disparate
applications and enterprises together. Released in January, XPI laid the
groundwork for XBPs that would ideally allow multiple applications, including
CRM, e-procurement, supply chain, financial management and fulfillment,
to share and integrate data in real time across the enterprise and beyond
to trading partners.
the near future, J.D. Edwards plans to make its pre-determined XBPs available
for business software applications from a wide variety of vendors enabling
customers to choose the best-of-breed individual software products. XBPs
are also slated to be made available for self-service and supply-chain
applications to deliver collaborative solutions tailored for vertical
industries. For instance, J.D. Edwards will be able to deliver this multi-faceted
product package to the high-tech electronics industry pre-integrated for
the RosettaNet standard used widely in that space.
XBP's designed to integrate J.D. Edwards OneWorld software with e-procurement,
CRM and storefront applications are available now. In addition, J.D. Edwards
plans to offer consulting, maintenance and upgrade services for companies
looking to build new XBPs that would tie existing systems into the common
XPI fold irregardless whether these are legacy-based or not in order to
help customers leverage investments already made with existing systems.
Alliances and Partnerships
In addition, J.D. Edwards has formed key alliances and partnerships to
increase the exposure and adoption of OneWorld products. Possibly the
most prominent of these is the recently expanded partnership with IBM
into a prospective powerhouse alliance. Under the agreement, the two companies
will jointly market and sell a specialized IBM eServer designed to run
J.D. Edwards' collaborative commerce software for small to medium businesses.
J.D. Edwards hopes the IBM alliance alone will boost its annual revenue
for J.D. Edwards' OneWorld applications, the IBM eServer for J.D. Edwards
is apparently the first server co-branded with an independent software
vendor. The solution is tailor-made for small- and mid-sized businesses
looking for ways to reduce the complexity of their e-business infrastructures.
The IBM eServer for J.D. Edwards will be pre-configured to run HTML, Java
or Linux. In addition, as an IBM eServer this specialized offering shares
the same technology that helped establish a world record of Java performance
on a single IBM eServer iSeries system. Also, the IBM eServer iSeries
established a new industry record of 6,000 concurrent users in a recent
benchmark running J.D. Edwards' OneWorld Xe applications. General availability
is expected sometime during the third quarter 2001.
However, the announcements came only a month after the company laid off
8% of its workforce as a revitalization effort pursuant to the string
of losses and management changes (see J.D.
Edwards Saved By SCM, Narrowly, And Only For Now).
May 23, J.D. Edwards reported financial results for the second quarter
ended April 30, 2001. Revenue for Q2 2001 was $216.7 million, a 6% decline
compared to revenue of $231.0 million in Q2 2000. The optimism was definitely
tempered by a dismal license fee revenue of $62.3 million, a 24% drop
compared to $81.7 million in the same period last year (see Figure 1).
At least, services revenue grew 3% to $154.3 million, from $149.3 million
in the second quarter of fiscal 2000. Net income from normalized operations
improved significantly over last year though, to $2.9 million, compared
to a net loss from normalized operations of $9.6 million in the second
quarter of fiscal 2000. Amounts from normalized operations exclude amortization
of acquisition-related intangible assets, restructuring and other related
costs, and gains on sales of equity investments and product line.
concludes part one of two- part note. Part two discusses the Market Impact
of this news and how it affects Users.