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New Management at Manhattan Associates

Written By: Steve McVey
Published On: October 19 1999

New Management at Manhattan Associates
S. McVey - October 19th, 1999

Event Summary

On October 18, Manhattan Associates, Inc. announced that Alan Dabbiere will abdicate his position as President and CEO of the Atlanta-based warehouse management system vendor. His replacement, Richard (Dick) M. Haddrill, joins Manhattan from Powerhouse Technologies, a diversified gaming technology company, where he occupied the chief executive position. Founder Dabbiere will continue in his role as Chairman, remaining involved in strategic projects for the company. The announcement comes shortly before the company's third quarter earnings release.

Market Impact

Demonstrating 70% license revenue growth over the past four years, Manhattan Associates has proven that best-of-breeds can still be competitive in a consolidating marketplace. However, lackluster performance over the three quarters since its last fiscal year-end, combined with management team changes, may indicate the company is planning a change in direction (see figure). At $62 million in annual revenues (1998), Manhattan occupies the fourth position among supply chain execution vendors behind Industri-Matematik, privately held McHugh Software, and IBS. In contrast to many of the other players, Manhattan touts a relatively narrow product offering, concentrating on warehouse management systems (WMS) and transportation management software. When a company relies so heavily on one set of applications, delayed product releases, such as that occurring in June, can have a detrimental impact on earnings. With analysts predicting further losses for the company, Manhattan will need to reassess its current formula and bring in the skills needed to implement changes needed for it to stay competitive.

Dabbiere is the third top executive at Manhattan to leave his post this year. Executive Vice President Gregory Cronin left in March for an opportunity at another software firm. In May, Robert Bearden vacated his position as Senior Vice President of Global Sales, and Manhattan has yet to find a permanent replacement. Usually, changes in management bring new ideas and a new corporate direction for a company. With a strong capital position and good liquidity, Manhattan may well be ready to embark on a more aggressive path of acquisitions and third-party alliances to expand its footprint and preserve its market position.

User Recommendations

Too often, the tendency in selections is to give strong emphasis on product functionality, while neglecting the drivers that ultimately determine that functionality: corporate strategy. In addition to understanding the stated corporate strategy, project teams must consider how that strategy will influence its product development efforts and whether the vendor will be able to support the long-term objectives of the project. Sometimes, changes in strategy are announced with fanfare, as in the case of Catalyst International abandoning plans for an NT WMS product following the recent investment by SAP. More often, however, these changes are less obvious to the public, including customers. The recent power shuffle at Manhattan should give all current and prospective users a reason to stop and take notice.

 
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