MAPICS, Inc. to Acquire Pivotpoint, Expanding e-business Offerings for Mid-Sized Manufacturing Establishments

Event Summary

On December 15, MAPICS, Inc. a provider of enterprise business applications for mid-sized manufacturing companies, announced a definitive agreement to acquire Pivotpoint, Inc., a company whose technology and e-business solutions cius on the extended enterprise application space. With this aggressive move, MAPICS immediately expands its offerings across multiple platforms, including Windows NT, UNIX, Linux and AS/400. In return, Pivotpoint gains access to MAPICS' worldwide network of affiliate sales organizations, long recognized as one of the best in the industry.

"An important advantage of this partnership is that it positions us as the e-business leader in our combined markets," said Dick Cook, MAPICS' president and chief executive officer. "Pivotpoint applications are unmatched in their ability to utilize the latest Internet technologies. Combined with MAPICS' advanced e-business framework, our customers will derive significant business value from current and future Web capabilities. We will also leverage a unique combination of applications for the extended enterprise that allow our customers to build tighter relationships throughout their supply chains," said Cook.

As part of this business combination, Steve Haley, Pivotpoint's president and chief executive officer, will assume the new position of chief operating officer of MAPICS. Haley will have worldwide responsibility for product development, marketing, sales and customer service. Plans call for products from both organizations to be sold and implemented by the MAPICS affiliate network. Pivotpoint's experienced direct sales and service professionals will team with MAPICS' affiliates and its Major Accounts organization that works with large, multi-site and multi-national customers.

Through this combination, MAPICS expands its foothold in the growing market for integrated manufacturing solutions beyond the AS/400, to include Windows NT, UNIX and Linux. "MAPICS has become one of just a handful of enterprise software providers to offer fully integrated solutions on all of the industry's leading platforms," said Doug Bulla of Guide Technologies, a MAPICS affiliate in Cincinnati, Ohio.

Market Impact

We expect a synergistic combination of these two compatible corporate cultures that have strong ERP products and e-business strategies, one in which each can leverage the others' sales channels and complementary vertical markets. We believe this was one of the best strategic moves that MAPICS could have made given its current state of affairs. With this move MAPICS is in a position to resolve the burning issues pointed out in our November 3, 1999 news analysis (See TEC News Analysis article: "MAPICS Reports Solid Profitability Despite Dismal Fiscal 1999 4% Growth" November 3rd, 1999). These issues were 1) confinement of its maturing product to the AS/400 platform, and 2) a dismal organic growth in fiscal 1999. This merger creates a company with combined revenue of $160M and a product portfolio that can run on all major hardware platforms, thereby leapfrogging most of its competitors in the mid-range ERP market.

User Recommendations

This event does not significantly change our view (See TEC Technology Research Note: "MAPICS: Will Customer Satisfaction be Enough?" October 1st, 1999) that MAPICS should be included on the selection list for mid-market companies (with $50M-$500M in revenue), where discrete and batch manufacturing and logistics modules are the main pillars of an enterprise application. MAPICS is a renowned mid-market ERP vendor, with a long tradition and a large, loyal and satisfied customer base. However, since we expect growing pains in merging disparate product lines within the current affiliate channel, potential clients should conduct a preliminary research on industry expertise and reference sites of a regional MAPICS affiliate service provider when the MAPICS/PivotPoint product is selected.

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