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Manugistics: An Old Dog Learns New Tricks

Written By: Steve McVey
Published On: April 17 2000

Manugistics: An Old Dog Learns New Tricks
S. McVey - April 17th, 2000

Event Summary

Manugistics Group, Inc. recently announced its fourth quarter and fiscal year-end results. License revenues grew 51% over the third quarter to $22.0 million, while services and maintenance revenues remained largely flat at $21.7 million, a 2% rise over the third quarter. The company signed a substantial number of new clients, an effort that resulted in a 17% increase in sales and marketing expenditures over the last quarter for building its global sales organization. At $1.1 million, net loss for the quarter was smaller than expectations, fueling a 9-point surge in Manugistics' stock, which closed at 65 on Friday, March 24.

Market Impact

A pioneer in supply chain management, Manugistics has for many years possessed the expertise to "enable e-business" but lacked the strategy and infrastructure necessary to effectively apply this knowledge. Over the past year and a half, it has taken important steps toward rectifying this, including:

  • Restructuring its business in early 1999, including a significant headcount reduction

  • Assembling a new management team comprised of former industry participants in mid 1999

  • Launching Internet products designed for e-commerce, bstreamz.com and bnetworks.com in January 2000

  • Allying itself to complementary software providers, including Siebel for CRM in January 2000

In spite of its fourth quarter success, Manugistics remains a long way from recovering its former dominance in the supply chain management market and has certainly has fallen short of its own growth projections. In April 1997, then CEO William Gibson mused that if his company could maintain its market share, Manugistics had the potential to grow to ''close to three quarters of a billion dollars'' in revenue by 2000. Unfortunately for Manugistics, it lost much of its market share to more aggressive players in the intervening years. The "close to three quarters of a billion dollar" vendor is now i2 Technologies (with the recent acquisition of Aspect Development Corporation).

User Recommendations

Users evaluating supply chain management vendors should remember that the core competencies of Manugistics' NetWORKS suite remain in process manufacturing for consumer goods, but it has captured significant wins in other verticals like high tech electronics (Compaq Computer) and chemicals (DuPont). Since some segments of these other industries involve the same processes as in CPG (Consumer Packaged Goods), users in Manugistics' non-core verticals should find out what part of these clients' businesses employ NetWORKS. For example, distribution operations for a PC manufacturer can be modeled similarly to those of a soft drink manufacturer, although the manufacturing processes are completely different.

 

 
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