Home
 > Research and Reports > TEC Blog > MAPICS Red Ink Stained While Extending Its Offering

MAPICS Red Ink Stained While Extending Its Offering

Written By: Predrag Jakovljevic
Published On: June 20 2000

MAPICS Red Ink Stained While Extending Its Offering
P.J. Jakovljevic - June 20, 2000

Event Summary

As published in the company's May 9 press release, MAPICS Inc., a leading provider of e-business enterprise applications for manufacturers, announced the controlled delivery of the Point.Man Extended Enterprise Edition, which enables customers, suppliers, distributors and partners to collaborate via the Internet. MAPICS has provided Enterprise Resource Planning (ERP) solutions to the manufacturing community for more than a decade, and with the latest version of the Point.Man release, MAPICS endeavors to become one of the first Extended Enterprise Application (EEA) providers to offer true thin-client, appliance-independent connection through the Internet directly to the ERP backbone.

"MAPICS' Point.Man product improves on typical EEA models by providing data security down to the field level," said Linda Brooks, MAPICS' vice president of extended enterprise solutions, "In the new e-business market, where data is shared directly with customers and value-chain partners, content-sensitive security is a critical element of the solution."

Earlier, on May 4, MAPICS Inc. reported results for the second quarter of its fiscal 2000 that included earnings of $640,000, or $0.03 per share, excluding special charges and goodwill amortization. Total revenue for the second fiscal quarter increased 14 percent to $34.5 million from $30.3 million a year ago. In the year-earlier period, net income was $2.0 million, or $0.09 per share (See Figure 1).

Figure 1.

During the three months ended March 31, 2000, the Company recognized special charges and goodwill amortization, primarily as a result of the purchase of Pivotpoint in January 2000. These items amounted to $18.3 million before income taxes, of which $12.3 million were non-cash items. Including these special charges and goodwill amortization, the Company reported a net loss of $12.3 million, or $0.69 per share, for the second quarter.

"These results are in line with the expectations we released last month," remarked Dick Cook, president and chief executive officer, "but far short of what we initially had hoped to report for the quarter. We continued to find some industry-wide hesitancy by customers in placing software orders during the quarter. Additionally, much of our managerial focus was dedicated to a rapid, efficient integration of Pivotpoint. This effort consumed meaningful time and energies not only from our organization but also from our sales Affiliates. Although this commitment clearly had an impact on our revenue this quarter, we are receiving enthusiastic feedback about the new offerings that MAPICS now has available. Continuing the development of these extended enterprise solutions will require a considerable investment, but we expect them to account for an increasing proportion of our total business and anticipate improved corporate performance over the remainder of this fiscal year."

Cook added, "As a result of the acquisition of Pivotpoint, MAPICS now offers mid-sized manufacturers integrated e-business solutions for all of the industry's leading platforms. We intend to expand our capabilities aggressively through new product offerings and strategic marketing alliances. We did record special charges for the second fiscal quarter, principally related to the acquisition of Pivotpoint, but these were largely non-cash items reflecting the opportunity to shift some of our research and development resources from existing projects toward enhancing the established Internet technologies that we acquired."

Market Impact

While there may be a reason for concern due to flat license revenue and a tainted profitability track, which has long been impeccable, there is no real cause for serious users' concern. We concur with MAPICS' justification of its Q2 loss and also believe the company's decision to deal with acquisition charges all at once was brave and wise.

The combination of MAPICS and Pivotpoint has a potential of a formidable player within the mid-market for business applications, with a notable combination of customers and channel partners. There may be a synergy from a focus on the same market segment (mid-sized manufacturing companies) but with different products strengths in different manufacturing segments. And while MAPICS XA runs only on AS/400, Pivotpoint's Point.Man runs on Unix, NT, and Linux, which rounds up the set of the most commonly used platforms.

Besides obtaining another ERP system, Point.Man, MAPICS has also benefited in adding the Maincor enterprise asset management (EAM) system, the Thru-Put advanced planning system (APS), and a slew of e-business modules to its fold, as part of the deal. These products are in tune with the MAPICS focus and can help it mine its existing customer base.

The biggest challenge for MAPICS and its affiliate channel will be the management of dual flagship product lines. It will be difficult to support existing customers and existing products, while juggling competitive product lines. Since the product lines seem to remain separate in the long run, it will add additional development costs, as well as provide a challenge in explaining the position of the different products. The company will have to revise its sales strategy of how to optimize the sales of two product lines with somewhat overlapping functionality and avoid a likely internal competition. Not to mention the need of showing 'one face' to customers. Finally, MAPICS can expect growing pains in merging disparate product lines and training the newly extended large affiliate channel.

User Recommendations

MAPICS should be included on the selection list for mid-market companies (with $50M-$500M in revenue), where discrete, batch manufacturing, engineering 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. They should also familiarize themselves with products' strengths/weaknesses within certain vertical industries.

Furthermore, companies outside of above-mentioned industries may benefit from evaluating MAPICS non-core ERP product components on a stand-alone basis for their e-business needs and leverage that information against other vendors in the selection. As for the new added functionality through partnerships, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of combined product functionality.

 
comments powered by Disqus

Recent Searches
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z Others

©2014 Technology Evaluation Centers Inc. All rights reserved.