Voyager in B2B Collaborative Commerce
S. McVey - February 7th, 2000
Logility originated as the Supply Chain Planning division of ERP vendor American
Software, Inc. American, founded in 1971 by James C. Edenfield and Thomas Newberry,
saw increasing demand for the distribution and logistics components of its mainframe
and client/server-based enterprise software. In January 1997, American gathered
its increasingly popular supply chain solutions under a new entity, Logility.
A wholly owned division at that time, Logility accounted for 40% of American's
The fledgling company inherited a comprehensive product suite that included
demand planning, inventory planning, replenishment planning, manufacturing planning,
and collaborative planning modules. Transportation management (from 6/92 acquisition,
Distribution Sciences, Inc.) and warehousing (WarehousePRO) were added in August
1997. Two months later, American conducted an IPO of 16% of Logility's shares,
which raised $32 million despite the fact that Logility had never had a profitable
has achieved an impressive 33% total revenue growth over the past five years,
demonstrating that it can compete effectively in a business-to-business (B2B)
software market dominated by much larger players (see Figure 1). Of its $32
million in revenues (last four quarters), 48% derives from sales of its Voyager
solutions, with the remainder from services and maintenance activities (see
B2B collaborative commerce solutions sprang from its foundation in Supply Chain
Management. These solutions still compete with offerings from i2 Technologies
and Manugistics (see Table 1). Of the three, Logility ranks a distant third,
placing it more comfortably with Paragon Management Systems and SynQuest. Logility
sells its planning and execution solutions primarily to food & beverage, chemicals,
apparel, and retail companies and its warehousing products to a broad range
of industries. Voyager is especially effective for clients with standard business
processes who require minimum customization.
1: Best-of-Breed SCM Vendors
Year-End Revenues ($M)
4 Quarter Revenues ($M)
comparing latest 4 quarter revenues with those of the previous 4 quarters
of the first vendors to offer a collaborative planning solution, Logility maintains
a strong lead in this area with its Voyager XPS and i-Community products.
Strategy and Trajectory
on the mid-market ($100 million - $2 billion in revenues), Logility derives
90% of its revenues from companies in the process manufacturing industries.
At present, Logility seems satisfied to continue in the SCM and B2B markets,
focusing on maintaining and enhancing existing functionality of its Voyager
solutions (see details in sidebar) and in expanding Internet deployment capabilities.
applications run on Windows NT and Unix, but little demand exists for Unix.
Logility entered the ASP and application hosting markets with i-Connection,
announced in July 1999, although only a few clients have signed up to date.
with its strong position in CPFR (Collaborative Planning, Forecasting and Replenishment),
the application services business is expected to drive revenues over the next
3-5 years. Logility plans to invest in alliances with ASPs to further its penetration
into this increasingly popular marketplace.
supply chain planning product offering: Logility's Voyager SCM solutions
cover a wide area within SCM (see "Product Information"). Its distribution
planning is especially strong in consumer packaged goods. Its strategic
network planning application, Value Chain Designer, uses embedded technology
from INSIGHT, a leading provider of optimization technology for supply chain
modeling and logistics systems.
product: A chief advantage of Voyager over competitive offerings, most notably
i2's Rhythm and Chesapeake's MIMI, is the ability to provide a competent solution
with little or no customization. Standard interfaces with major ERP and legacy
systems enable faster implementations. Logility's pre-packaged functionality
also gives it an edge over other candidates in demonstrations for prospective
Headstart in collaborative planning: Logility's Voyager XPS was one of the
first applications to embody Collaborative Planning, Forecasting and Replenishment
(CPFR) as devised by VICS, the Voluntary Interindustry Commerce Standards
organization. Resource Chain Voyager, a precursor to the current application
was installed at client sites as early as 1996.
Building the foundations under its castles: Logility has invested heavily
in its move toward application hosting, a market that can have considerable
impact on its future livelihood. Though its applications possess attributes
that make them well-suited to Internet deployment (e.g. configurable product,
mid market focus, CPFR), considerable investment in product development,
marketing, and alliances are necessary to turn Logility's vision into reality.
Poor visibility at highest levels: Although Logility has achieved small-scale
success with its marketing approach, it admits to having difficulties selling
at the highest levels of management. To effectively compete and grow its
business, Logility's sales execution needs to break into senior management,
a goal that can be attained through a proper shift in marketing strategy.
to exceed $20 billion by 2001, the ASP market could be a major growth area
for Logility in the next 3-5 years. To support its hosted applications,
Logility will continue to form partnerships with ASPs over the next six
months, similar to the one recently announced with eBaseOne. (80% probability).
In order to widen its indirect channel, Logility may want to partner with
smaller integration firms with e-business services, such as Cap Gemini or
Origin. Logility's preconfigured software and relatively short implementations
has made it unpopular with Big 5 firms that rely on longer, labor-intensive
Logility wins many of its contracts from clients that have implemented ERP
systems and found the supply chain planning functionality lacked sophistication.
This advantage will fade as ERP vendors continue to develop and acquire
supply chain management capabilities. To stay competitive, Logility should
bring new enhancements to its suite, such as route optimization or product
Users with relatively uncomplicated business processes in process manufacturing
industries, such as food & beverage, chemicals, and other consumer goods
should certainly include Logility on shortlists.