QAD Explores E-Business While Not Abandoning ERP
QAD, a leading ERP vendor, announced a number of product and alliance
initiatives prior to and during Explore 2000, its annual user conference
that took place in Nashville, TN from May 15 to May 17. Following are
the excerpts from some pertinent company's press releases.
May 16, Commerce One and QAD announced their intention to form an alliance
to deliver access and integration to mid-market and multinational manufacturers
in QAD's target vertical markets through the Commerce One BuySite e-procurement
application and Commerce One MarketSite Global Trading Portal. Commerce
One and QAD expect to finalize the terms of this alliance and execute
definitive agreements by the end of May 2000. As a result, it is expected
that QAD customers can lower their indirect procurement costs by leveraging
BuySite's e-procurement capabilities and streamline e-business sales channels
by automating the entry of sales orders from MarketSite Global Trading
Portal. Both applications are to be fully integrated with QAD MFG/PRO
and QAD eQ products this year
gaining entry to Commerce One's extensive network of suppliers, QAD customers
will be well positioned to take advantage of trading communities," said
Pam Lopker, president of QAD. "We foresee that companies who select QAD
eQ B2B applications will also be adding the capability to receive orders
from Commerce One MarketSite and will be able to intelligently distribute
those orders to multiple plants and distribution centers."
on May 15, QAD announced the availability of reverse auctions with the
QAD eQ Business-to-Business (B2B) suite of applications. QAD reverse auctions
should enable manufacturers to drive down material costs by leveraging
QAD eQ's demand aggregation capability and then automating the reverse
auction and vendor selection processes. QAD eQ allegedly qualifies vendors
based on multiple critical factors, including price, the ability to meet
schedules, and shipment methods. To build intelligence into the solution,
QAD eQ uses the vertical expertise of QAD service consultants to help
companies address their industry-specific needs. The QAD eQ Relationship
Management Framework supposedly then can apply built-in rules to each
situation based on what vendor is participating.
finding that many of our customers prefer to keep control of their transactions
and not place their private information on a public exchange," said Pam
Lopker, President of QAD. "With QAD eQ reverse auction functionality,
our customers have greater control over who participates in their exchange
- as many or as few vendors as they deem appropriate. The solution also
offers the potential to reach out to multiple industry trading exchanges
to satisfy special procurement needs."
Also on May 15, QAD and MDI Source.com announced a strategic alliance
for a trading exchange focused on medical device manufacturers and their
suppliers. Under a multi-year agreement, MDI Source.com will use QAD eQ
B2B applications and the two companies will co-market the MDI Source.com
integrated purchasing solution to approximately 3500 buyers and 10,000
suppliers in the medical device industry. QAD and MDI Source.com will
jointly develop and market a set of applications that will integrate MDI
Source.com's processes into existing enterprise systems, including the
many medical companies utilizing QAD MFG/PRO. In addition, the two companies
will aim to develop an application based on the QAD eQ architecture that
may create information transparency between the user's systems and those
of their suppliers.
Earlier on April 24 QAD announced an agreement with IBM to combine QAD
eQ B2B applications with the IBM WebSphere Commerce Suite. The total e-business
solution will possibly offer manufacturers and distributors a complete
business-to-business (B2B) solution accessed through a user-friendly business
storefront interface over the Internet.
"First generation storefronts cannot answer the needs of B2B trading partner
relationships," said Pam Lopker, president of QAD. "QAD will provide an
elegant solution to this situation that combines the sophistication of
a full-featured B2B solution with IBM's e-commerce solution. This will
offer manufacturers an effective way to improve operational efficiency
and increase customer satisfaction."
but not least, at the opening presentation of its user conference, QAD
also unveiled the plans regarding the new release of its core ERP product,
MFG/PRO. The new product, branded as MFG/PRO eB, is due in July/August
2000, and will allegedly exhibit significant functional, interconnectivity
and e-business enhancements. QAD also intends to extend this product into
more vertical markets and to support more localization and regulatory
We believe that QAD has seen the worst in 1999. The Company seems to have
successfully curbed R&D expenses (which amounted $100M during the last
3 years) while expediting the delivery of its eQ product. The prolonged
and exorbitantly expensive development of eQ has seriously affected the
Company's recent financial performance. In 1999, QAD also introduced the
fully Internet enabled release of MFG/PRO v. 9.0 and strengthened its
global service organization.
QAD will continue to nurture its large loyal customer base, which accounts
for approximately 80% of its revenue. Note that 65% of them are true global,
multi-national organizations. The aim of this conference was to assure
its customers of QAD's intentions to help transition them successfully
into the new Internet economy, just as it helped them resolve issues in
the past (e.g., Y2K & Euro compliance). QAD has been making every effort
to enable a smooth transition into uncharted territory and to ease the
apparent anxiety among dazed customers.
are a number of reasons to expect a brighter future for QAD.
first is the Company's well-established leading global position in Small-to-Medium
Enterprises (SME) and divisions of large global companies, where QAD has
a large loyal customer base and a dispersed global network of offices
and indirect channel.
Second, QAD is very competitive in speed and ease of global multi-site
implementation due to its global service and support capabilities. Its
average multi-site implementation often takes less than 6 months while
the total cost of ownership is often a fraction of its larger competitors'.
QAD has a somewhat unique vertical and vertical sub-segment focus within
certain industries (e.g., with solutions for the after-market, OEMs, and
suppliers segments within the automotive industry).
QAD was one of the first mid-market ERP vendors to incorporate concepts
of e-commerce, Supply Chain Management, and interconnectivity with other
vendors' products, which provides QAD with an opportunity for sustained
future license and service and support revenue.
favorably regard the company's recent e-business moves, which are in sync
with the market trends. Moreover, QAD seems to have grasped underlying
e-business customer needs and business process intricacies while most
of its competitors have yet to figure those out and are mostly at the
stage of providing simple B2C Web storefronts. QAD's comprehensive e-business
offering, which includes the following modules speaks for it:
- sell-side B2C (the PowerSystem Storefront Catalogue, developed in
partnership with IBM)
- sell-side B2B eQ (integrated with MFG/PRO)
- buy-side B2B eQ for direct materials (through reverse auctions)
- buy-side B2B for indirect materials (aggregated supplier catalogues
for MRO modules developed in alliance with Commerce One and to be delivered
in the ASP mode)
Very notable is the central B2B Relationship Management Framework module,
envisioned to provide many-to-many relationship modeling functionality,
both within an enterprise (internal suppliers and customers) and beyond
enterprise borders (external business partners). Once defined, these relationships
would determine workflow and will allegedly be created and/or modified
by ordinary end-users on an ongoing basis. The only e-business component
still to be desired is product lifecycle management (PLM) collaboration,
which has been delivered by some of its competitors like MAPICS and Made2Manage.
also agree with QAD's plans of enhancing its core ERP product and continued
emphasis on integrating eQ components with back-office systems (not necessarily
MFG/PRO). Companies are increasingly realizing that the fancy 'click'
side of the business is a mere castle in the air without a proper 'brick'
business foundation. It still matters very much what and how a company
manufactures. Therefore, QAD recommends the following e-business roadmap
for its current users:
- Create a Web Storefront
- Integrate it with MFG/PRO
- Upgrade to MFG/PRO eB
- Connect with eQ
- Collaborate through reverse auctions for direct materials
- Participate in Internet Exchanges through eQ
- Rest (read maintain and/or improve business processes).
believe there is a genuine need for recommending these steps beside QAD's
intentions to generate more revenue from its install base.
Nevertheless, the company faces the challenge of delivering its very ambitious
undertakings as planned and creating greater market recognition (mind
share) for eQ outside of its current MFG/PRO customer base. The company
will have to give a serious thought to how to best utilize its current
sales & marketing resources to sell its two major product lines.
the idea of spinning off the eQ business may be tempting, it may not make
much sense at present, given the fact that QAD has been closing its ranks
as a part of the recovery strategy. Any hiccups and delays in its product
development execution, possibly bundled with bland sales execution and
cautious initial eQ acceptance within MFG/PRO customer base, may put significant
strain on its eroded cash resources. Any product development and/or integration
with 3rd-party products requires a painstaking effort, and significant
part of it is still in progress as mentioned above. Mitigating factors
in this regard, however, are platform and back-office independence of
eQ and the proven interconnectivity of QAD's products in the past.
Also, its partnership with IBM holds the prospect of a true synergy rather
than mere a marketing pitch, where QAD would provide its proven industry
expertise and IBM the underlying infrastructure.
QAD has not yet officially announced its plans regarding Customer Relationship
Management (CRM) as well as a more articulated ASP strategy. During our
attendance of QAD Explore we were made aware that some alliance negotiations
were in progress, and the market should expect related press releases
in the near future.
We generally recommend including QAD in a long list of an enterprise application
selection to mid-market and low-end Tier 1 manufacturing and distribution
companies (with $50M-$2B in revenue), based on its broad product portfolio
and outstanding global service and support. We recommend including QAD
in a short list in any selection within the following industries: Automotive,
Electronics, Food & Beverage, and Medical Devices.
from industries other than Medical Devices may want to inquire about QAD's
plans regarding Internet marketplaces in their respective industries,
similar to that with MDI Source.com.
companies outside of above-mentioned industries may benefit from evaluating
eQ on a stand-alone basis for their e-business needs and leverage that
information against other vendors in the selection.
any organization evaluating QAD products should still exercise moderate
caution and consider existing functionality only, until QAD regains a
consistently profitable financial performance.
for the new added functionality through partnerships, users are advised
to ask for firm assurances on the availability and timeframes of future
upgrades, and more detailed scope of combined product functionality. Also,
make sure that QAD offers a single contract and help desk for all disparate
components of its product offerings.