Mid-Market Strategy: International Enterprise Solutions

Adonix Strategy

Careful acquisitions and internal development is giving Adonix (http://www.adonix.com), a privately-held, French enterprise applications provider for medium manufacturing and distribution companies, greater leverage in the international market. Its overall strategy is marked with two catchwords: "growth" and "independence". Growth entails organic growth to broaden Adonix X3 suite's functional scope, licenses, and services; and external growth through acquisitions.

The vendor plans to expand its international coverage into more countries, primarily in Asia, Northern Europe, and Latin America. From its early days, Adonix made a conscious decision not to target a direct presence in most foreign markets, and to go for product distribution mainly through partners and value added resellers (VARs). This has often proven to be advantageous to mid-market customers looking to keep costs down, because selling through partners requires a higher quality of product support, and accompanying documentation.

Part Two of the Adonix' Mid-Market FORMULA—Adopting Best of Both "Organic Growers" and "Aggressive Consolidators" Worlds series.

By deliberately steering clear of too ambitious expansionist policies, which have hindered so many smaller software companies in the past, and by focusing on a handful of core markets, Adonix has managed to keep itself on healthy track. Also, direct and indirect channels that have already been built in targeted countries (around 150 partners worldwide) has helped the company with product translation and localization issues, which has resulted in the product's solid multinational and localization capabilities. The vendor tries to engage partners that the mid-market trusts, and VARs, system integrators (SI), and consultants are carefully chosen and trained. They are selected for their integration and industry skills, and local presence, and are in charge of implementation, customer coverage, and industry specific enhancements.

Adonix also emphasizes its capacity to provide its customers with a wide choice of functionalities and underlying technologies. Vendor tend to appreciate open technologies and leading industry platforms, and Adonix 4GL, a data dictionary and event-driven, fourth generation language (4GL) platform is a consistent, underlying development platform. To provide different options for open standards, such as UNIX, Microsoft Windows, Linux, Oracle, Microsoft SQL Server, Microsoft Business Framework (MBF) etc., Adonix partners with leading technology firms, such as IBM, Oracle, and Microsoft.

These high-profile partnerships should bode well for the guaranteed evolution for existing customers, as functional offerings are refined on an on-going basis in pace with the needs of the market, and are tested in independent software labs and at pilot customer sites for performance. For example, during the last few years, Adonix has broadened the scope of its traditional back-office enterprise applications (manufacturing, distribution, and accounting) by integrating front-office applications, including customer resource management (CRM), customer service, and product configuration into Adonix X3.

Recently introduced CRM functions help customers manage sales opportunities, sales contacts, and marketing campaigns, whereas new customer service features are the ability to track repair parts, manage service calls, and maintain a knowledge repository to assist help desk personnel with resolving customer issues. The Product Configuration module features a rules-based engine that allows building customized products to match customer's exacting requirements. These have allowed Adonix to stand apart from most mid-market peer solutions, which are typically a collection of acquired packages bolted together to form a suite. Conversely, Adonix has deliberately taken the time and made the investment to build a solution on a single architecture that is portable to multiple platforms, via a single, central repository with n-tier client/server architecture on standard database platforms (Microsoft SQL Server and Oracle).

As for its mantra of financial independence, Adonix's growth has long been self-financed. It is a family-owned, private company with sustained profitability, despite its acquisitions of Gruppo FORMULA, CIMPRO, ABEL and Meta4 in only last few years. Adonix prefers to buy software companies that have assets that it values, either in geographic coverage and leadership, markets, technologies, functional areas, etc. Some may be behind the curve technically or financially, but will still have something that will work within the Adonix Group.

Sometimes the vendor maintains the acquired entity's organization, products, etc., which then continues to run separately from the X3-related business (which is the case currently with Meta4 HR/Payroll). For others (particularly for specific vertical markets or functional domains like the CIMPRO and ABEL acquisitions for process industries and fixed assets respectively), Adonix takes the functionality and builds it into the X3 development environment, so that mid-market companies can take advantage of as much functionality in one integrated software package as possible.

Thus, while Adonix X3 has been available in the US since 2000, the ABEL Enterprise's fixed asset management capability will be available in the next X3 1.4 release. As will be explained later in this series, the former Cle128 warehousing management system (WMS) was released recently under the Geode GX name. Meta4 PeopleNet's personnel management, payroll administration, workforce collaboration, and BI capabilities might also come to the US some time in the future, while the Loan Solutions, for the public sector and local authorities, and Logan Informatique software, for real estate management, will remain permanently in local European markets.

In the case of Gruppo FORMULA, the software seems as a good fit in markets other than Adonix' traditional markets of manufacturing and wholesale distribution. Namely, the solutions are also targeted at the retail, healthcare, utilities, and services sectors, all which are not currently covered by Adonix X3. Thus, from this standpoint, its certainly fit the mold of Adonix' typical acquisition target, particularly with its mid-market ERP leadership position in Italy and the markets it serve. However, it remains to be seen whether Gruppo Formula will follow the CIMPRO and ABEL route and be incorporated within X3, or if it will remain independent like Meta4.

This is Part Two of a four-part note.

Part One detailed the company and its products.

Part Three will discuss Adonix' WMS Response.

Part Four will cover technology, challenges and make user recommendations.

Supporting Product Development

In additional to acquisitions, The Adonix Group, based in Paris, France is also focused on internal development and continues to pour more than 20 percent of its revenue into product development. After "biting the bullet" a few years ago and committing a substantial investment to basically rewrite its flagship offering, Adonix X3 ERP, to make it both Web native and a Web services amenable solution (extensible markup language [XML] and Java compliant), Adonix seems to be thriving in the ongoing timid economy. Also unlike most of its peer vendors, which started their ERP applications in the manufacturing space, Adonix first established a strong presence and functionality in the distribution and logistics field. Having mastered the idiosyncrasies of French business requirements in distribution, administrative, and accounting procedures, the company has remained the local market leader, despite strong competition and onslaught from international ERP vendors.

Going even further in the past, to complement its initial solution, which had initially focused on finance and accounting, and distribution for the lower-end of the mid-market, Adonix acquired a number of companies during the last several years. The most prominent of these were Prodstar, a French manufacturing resource planning II (MRP II) solution for mid-market manufacturers and their international subsidiaries, GSI Transcomm, a US provider of distribution and financial applications called TOLAS, and the Geode product from Geodis Logistics, a European WMS solution. Consequently, Adonix started rewriting its solution in 1997 after the Prodstar's acquisition and released the first version of Adonix X3 in 1999. However, the combined Adonix legacy applications are installed in over 4,000 sites, with approximately 200 in the US. Although one may expect a substantial recurring revenue stream or a new license opportunity from this large installed base from, for example, the former Prodstar product and older versions of Adonix, the challenge of incremental migration and concurrent support remains.

Since mid-2002 when version 1.34 emerged, Adonix X3 has been a Web-native ERP solution designed for mid-sized companies. Its functionality includes fully integrated manufacturing, such as routing, bills of material (BOM), product configurator, master planning schedule (MPS) and MRP; costing; quality control; shop floor control (SFC), and capacity planning; distribution, including purchasing, sales, inventory management, and replenishment; and warehouse management, including receiving, put-away, location control, cycle counting, picking, packaging, shipping, optimization, and automation control. It also encompasses, customer resource management (CRM) functionality, including contact management, marketing campaigns and after-sale service; and finance, which includes budgeting, allocations, analytical accounting, accounts receivable AR, accounts payable (AP) and general ledger (GL). All of these are on a single common architecture.

Incidentally, the Internet-based product architecture for the extended enterprise, (without any code on the client side) runs using a standard Web browser, enables remote offices and traveling users, and secure real-time access for partners, suppliers, sub-contractors, and so on. The product also enables companies to extend Adonix X3 business transaction and inquiry functions to their Web sites, making it relatively easy to connect to customers, trading exchanges, and key business partners. Namely, the Adonix Xtend module uses industry standard middleware, XML technologies, and Adonix application programming interfaces (API) to create the connection. The product extends relatively easily to the Web via the publication of X3 business rule APIs in Java/XML format to interface Web applications, so that the same X3 central application is accessible from a browser. The product is therefore Web services-compliant, since it supports all the common Internet standards including XML, Universal Description, Discovery and Integration [UDDI], Web services description language [WSDL], and simple object access protocol SOAP) as part of its development toolset.

Adonix X3's evolution strategy is based on a technical development toolset that is the foundation for translating specific functional designs into components of a single integrated software solution. Consequently, Prodstar was leveraged for the Adonix X3 Discrete suite, TOLAS for Adonix X3 Distribution, ABEL Entreprise for Adonix X3 Finance, Geode for Adonix Geode GX, and CIMPRO for Adonix X3 Process.

Currently, 1,200 Adonix X3 customers represent over 35,000 users within manufacturing, distribution and financial mid-sized companies and subsidiaries of large organizations in process, mixed-mode, discrete and distribution-intensive industries worldwide. These customers might benefit from faster time-to-market for new Adonix X3 releases, reduced total cost of ownership (TCO) through a homogeneous platform (without costly "bolt-on" solutions), and will more likely see a return on investment (ROI) for ongoing maintenance over the life of the system. They are entitled to a regular release schedule of new, value-added components, including CRM, automated data collection (ADC), finite scheduling, etc., and a toolset is integrated into Adonix X3 for handling customer-specific personalizations that are preserved over the life of the system.

Adonix X3 is also an ERP product designed for mid-sized companies with a view towards an easy installation (via a phased approach and parameterization tools), use, maintenance, and customization/personalization. It adapts to customers' business environments and changes, given that personalization and customization capabilities make upgrades and maintenance easier. The product maintains its flexibility via powerful parameterization capabilities, whereby the parameters are user-definable, and can be linked to applications or workflows, and can be set at different organizational levels.

One of the biggest Adonix' trumps is its per-seat pricing structure that suits small cost-conscious, risk-intolerant manufacturers and distributors, which often want to pay a fixed price for a solution, whatever the functional scope and implementation timeframe of their projects may be. To that end, Adonix prices its software (including all modules with only three add-on exceptions: finite capacity scheduling, product configurator, and assets management) $3,500 (USD) per seat in the US, with an optional 18 percent annual fee for maintenance and unlimited upgrades. The number of users per client varies significantly (from eight seats to more than 200 seats), leading to an average deal size of 35 users.

As the company prides itself on fast implementations (36 months) and on implementation costs being within one to two times the software license costs (120 percent on average), it does not take a rocket scientist to calculate that most of projects cost in the range of $50,000$500,000 (USD). The price tag might be attractive even in the current era of reduced information technology (IT) budgets. The product's design typically prevents additional "hidden" costs, since maximum functionality is included in standard version, whereas easy customization capabilities are allowed with the Adonix X3 toolset, and object-oriented technology allows reasonable integration and easy upgrades.

Implementations are so rapid and costs are low because the product is relatively easy to use and agile through parameterization, and it can be relatively easily interfaced with likely legacy applications in place. Adonix' deep in-house experience, with over 1,000 employees worldwide who have on average 14 years of experience in application software and on average 10 years of tenure at Adonix, bode well for the deep understanding of the mid-market business.

Catering to Various Environments

The product has an impressive depth and breadth of distribution and order management functionality. Particularly powerful is its advanced pricing functionality that allows companies to create a complex customized pricing formula based on a multiplicity of categories, such as customer, region, territory, etc. It is also a workflow/event-based solution that enables enterprises to model business planning issues through, e.g., a network of tasks, resources, and inventory buffers on which strategies can be applied to optimize interrelationships.

Workflow management covers all financial and distribution processes and, more recently discrete and process manufacturing. In other words, when information comes in from ancillary sources, such as electronic data interchange (EDI), the Internet, or sales force automation (SFA) systems, it can be imported into a system and can trigger exception events, that can be defined based on a user's information needs. The vendor plans to continue to improve and broaden the algorithms to address more industry-specific problems. Another attractive feature that the product offers is its native reporting and business intelligence (BI) capability, as it has built-in support for data marts for financial and logistics analysis by executive information system (EIS) systems. As will be explained later, the typical optional add-on modules are WMS options, shipping system options (custom or packaged solutions), product configuration, and finite capacity planning (with or without optimization).

Consequently, Adonix X3 comes configured in three slightly different offerings in North America. First, Adonix X3 Distribution provides an integrated set of application modules devised to help streamline business operations of wholesalers and distributors. The following modules can be installed completely to form either a full enterprise solution, or in modular fashion: CRM, sales management, inventory management, purchasing management, advanced warehousing and data collection (or Adonix Geode GX for more complex warehouse practices), financial management, demand forecasting, edi, shipping and manifesting, and Adonix Xtend (for integrating Adonix X3 to Web storefronts). With this suite of applications, distributors should be able to take advantage of features such as

  • advanced order fulfillment for meeting critical customer delivery dates,

  • comprehensive pricing and promotion capabilities,

  • product configuration for locating and defining products according to customer definition,

  • after-sales service with warranty tracking, service scheduling, and a knowledge base of product problems and resolutions,

  • near real time BI for critical management reporting, including exception handling and performance measurements; and

  • workflow management for ease in communicating exceptional events and transactions both inside and outside the enterprise.

On its hand, the Adonix X3 Discrete Suite is an enterprise-wide set of application modules that addresses the needs of mid-sized discrete manufacturers in a variety of manufacturing modes including make-to-order (MTO), configure-to-order (CTO), assemble-to-order (ATO), make-to-stock (MTS), and mixed-mode environments. The Adonix X3 Discrete Manufacturing module supports the planning, scheduling, and production control activities of a manufacturer within these different manufacturing modes, and it is fully integrated with the distribution, CRM, and accounting components.

Last but not least, Adonix X3 Process is a broad enterprise system that is specifically designed to support the dynamics of process manufacturing. Manufacturers try to achieve greater product and process consistency, while improving the ability to satisfy vacillating customer demand. To that end, Adonix X3 Process' advanced planning and control capabilities use near real time and historical information to help manage inventory levels and costs, optimize product mix, reduce waste, and shorten product development cycles. It combines the features of the company's flagship product, Adonix X3—a Web-native ERP suite that integrates manufacturing, distribution, WMS, CRM and finance functionality—with application features that address the unique and specialized needs of the process manufacturer, including formula management, lot traceability, shelf-life management, quality control, and regulatory compliance. The suite supports the specific needs of most formula-based process manufacturers including those in areas as diverse as dairies, bakeries, paints, lubricants, and cosmetics (for more germane information, see Process Manufacturing Software: A Primer ).

The process manufacturing module permits control over many planning and production control activities including formula management, routings, MRP, MPS, work in progress (WIP) accounting, and SFC, whereby the product supports both work order-based manufacturing and continuous batch environments. The distribution modules supports most required sales, purchasing, and inventory control functions including features to support quality control, lot control and tracking, expiration date management, and variable packaging units. Like in the case with the discrete manufacturing counterpart, the accounting modules are fully integrated with manufacturing and distribution, providing process manufacturers with complete AR, AP, GL and financial reporting capabilities.

However, Adonix X3 Process also provides complete quality assurance functionality, integration with material safety data sheets (MSDS), and helps US Food and Drug Agency-registered (FDA) manufacturers comply with regulatory requirements imposed by legislation such as the Bioterrorism Act and 21 CFR Part 11. It is ideally suited for companies producing coatings, adhesives, and sealants, as well as other batch-produced products. Since Adonix X3 also has solid discrete manufacturing capabilities to complement its process manufacturing orientation, it may also allow some mixed-mode manufacturing environments to freely adapt their systems to the style of manufacturing required.

For these reasons, the process-manufacturing suite has been a case of success at Adonix lately, with an enviable sample of customers in the industries, such as food and beverage, with Ganong Brothers and Simply Lite Foods (confections), Foxtail Foods (baked goods), East Coast Olive Oil, and Calico Cottage (fudge). Other industries of notice include the chemical industry, with Aceto Corporation (in chemicals distribution), Lubrication Engineers (lubricants), Garland Industries (tar-based products), Alloy Polymers (resins), and Golden Artist Colors (paints) representative customers; and the life sciences industry, with Fleming & Company (pharmaceuticals), UreSil (medical devices), Teikoku Pharma USA, and GS Cosmeceuticals (skin care). Some customers are notable multinational corporations, such as L'Oreal and L'Occitane (luxury goods), Sofradim (medical devices) and Stockmeier Urethanes .

However, as no one can be all things to all people, Adonix uses a number of value-adding partnerships, such as the incorporation of the MSDS capability in conjunction with The Wercs, financial reporting from FRx Corporation (part of Microsoft, see FRx Poised to Permeate Many More General Ledgers), report development and writing from Business Objects' Crystal Reports, data collection hardware from PSC and Intermec, forecasting from Smart Software, EDI from Sterling Commerce and Mercator, and credit card payments from Datawire.

This concludes Part Two of a four-part note.

Part One detailed the company and its products.

Part Three will discuss Adonix' warehouse management systems response.

Part Four will cover technology, challenges and make user recommendations.

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