Reconnecting with a Tried-and-True Manufacturing ERP Vendor

At Progress Software’s recent Progress Revolution 2011 user and partner conference (see TEC’s related article), TEC reconnected with QAD Inc. and met with Epicor Software (see TEC’s related article). For those not familiar with the vendor, QAD is a leading provider of enterprise applications for global manufacturing companies specializing in automotive, consumer products, electronics, food and beverage (F&B), industrial, and life science products. QAD applications provide critical functionality for managing manufacturing resources and operations within and beyond the four walls of an enterprise, enabling global manufacturers to collaborate with their customers, suppliers, and partners to make and deliver the right product, at the right cost, and at the right time.

QAD was founded in 1979 by Pamela Lopker, who remains QAD's President and Chairman to this day. QAD initially developed proprietary software applications for manufacturing companies in Southern California. One of those early customers was the shoe manufacturing company ran by Karl Lopker, QAD’s chief executive officer (CEO) and Pamela’s husband (the couple owns 60 percent of QAD).

The rest is history: in 1984, QAD launched its flagship enterprise resource planning (ERP) product MFG/PRO, which was built using Progress Software's Fourth Generation Language (4GL) and relational database (known today as the Progress OpenEdge platform). Then operating in the newly emerging open systems arena, MFG/PRO was one of the first software applications built for manufacturers following the well-known principles of APICS (e.g., closed loop Manufacturing Resource Planning [MRP II]) and the ISO 9001 standards.

Nowadays, QAD software is used at over 5,500 manufacturing sites in more than 90 countries. QAD's main product suite is now called QAD Enterprise Applications (prior to 2007 its name was MFG/PRO), with year designations to denote versions. For example, QAD EA 2011.0 is for the first version of 2011 and QAD EA 2011.1 for the second. For the fiscal year ended January 31, 2011, QAD had a total revenue of $220.0 million (USD) and 1,350 employees.


QAD’s Expertise and Partnerships
QAD has consistently maintained a strong competitive position in the manufacturing ERP market by delivering astute products that meet the needs of its global customers in very specific vertical markets, and by providing exemplary customer service.

QAD’s solution also meets its customers’ sophisticated manufacturing and supply chain management (SCM) requirements, while efficiently aligning with their business processes. The vendor’s offering is highly scalable, effectively addressing the needs of both country-focused and global multinationals. QAD operates in more than 90 countries and supports more than 30 languages to address its customers’ global regulatory, financial, and other compliance requirements. The company focuses on repetitive, lean, and configure-to-order (CTO) discrete manufacturing, instead of continuous flow, or fixed project engineer-to-order (ETO) manufacturing. In fact, QAD customers have manufactured most of the parts of the world’s passenger vehicles.

The company’s global ecosystem comprises strategic channel, solutions, consulting, and technology partnerships. QAD has approximately 1,000 partners of varying size and complexity, from major territories to remote geographies, across the globe, providing sales, support, solutions, and services. QAD leverages its global, regional, and local partnerships to extend its core solutions and works with QAD channel and consulting partners to supplement its own sales and services. Workday, Preactor, and PTC are examples of independent software vendor (ISV) partners covering the human resource (HR)/payroll, advanced planning & scheduling (APS), and product lifecycle management (PLM) white spaces, respectively, within QAD’s portfolio. For an extensive look at QAD’s partner ecosystem, visit:


The Quintessential Progress Partnership
Though not the largest Progress partner (compared with the size of Epicor and Infor), QAD is a loyal developer of the OpenEdge platform, as are some of its acquired companies, such as Precision Software. QAD has embraced Progress OpenEdge’s recent business process management (BPM) and software as a service (SaaS) capabilities, and in 2006 it launched its next generation UI called .NET UI, based on Microsoft’s client technologies, as OpenEdge did not have strong native user interface (UI) and business intelligence (BI) capabilities.

With the launch of QAD Enterprise Applications 2007, QAD pioneered hybrid deployment, enabling customers to deploy its applications either on premise, on appliance (for remote departments in regions with no Internet access), or on demand (SaaS). In 2008, QAD launched a significant enhancement to its core suite with the release of the Enterprise Edition of QAD Enterprise Applications. The 2008 release introduced global financial management capabilities (for more info, see TEC’s blog post).

In 2010, QAD launched QAD Enterprise Applications 2010.1 (QAD 2010.1), a suite designed to meet the unique needs of global manufacturing companies. Based on domain-based architecture (to be explained shortly), this software release helps companies operate at peak efficiency for accelerated business recovery and growth.


Discussing the 2011 State of Affairs
What follows now is our candid discussion with QAD’s product marketing team. Our questions and QAD’s answers are as follows:

TEC: What were the major highlights and messages from your recent QAD Explore 2011 user conference?
QAD: We shared important product developments and directions for the company with its customers. In particular, QAD reminded customers of its commitment to customer engagement and its vision for an Effective Enterprise, a customer organization with business processes working at peak efficiency and in perfect alignment with its strategic goals. QAD reinforced its focus on QAD On Demand, the company’s full-strength ERP offering that can be deployed on premise, on demand, or as a hybrid model, and highlighted why QAD customers are increasingly choosing this solution.

In addition, QAD unveiled its mobile BI solution, and previewed its mobile computing strategy and direction for its BPM application. Last but not least, we launched QAD Enterprise Applications 2011 Enterprise Edition (QAD 2011 EE), which includes several enhancements for manufacturing, distribution, and financials.

TEC: Has your market and competitive landscape changed as of late, and how? What trends have you noticed in the market?
QAD: The industry has witnessed continuing consolidation across the ERP landscape, most recently with Infor’s acquisition of Lawson Software and the merger between Epicor and Activant. QAD is also seeing new players venturing into the market, with a focus on SaaS or on-demand deployment of ERP applications. QAD believes its strong leadership in on-demand computing positions is to capitalize on this market shift.

Additionally, QAD sees several emerging trends in ERP, which all relate to pressures that manufacturers face in their business, including:

  • Business Process Effectiveness—Today, most companies compete based on how effective they are in globally deploying their business model. BPM is essential in helping companies to visualize and configure their applications more effectively. QAD understands this trend, and underscores its importance by embedding BPM into its core ERP solution. Additionally, QAD is dedicated to advancing manufacturing effectiveness through its vision of the Effective Enterprise.
  • Real-time Data Visibility—As companies recover from the still tenuous global financial crisis, they are paying more attention to access and visibility of real-time data, as they want ensure they’re correctly reading their customers’ demand. They’re requiring visibility into real-time data to identify issues and make accurate, fact-based decisions immediately. QAD has responded to this trend by delivering a new, re-architected ERP solution with its enhanced BI module. QAD BI v.3.5 automates the data warehouse capability and enables users to configure views, rather than relying on a specialized information technology (IT) staff. This capability mitigates the classic ERP conundrum, wherein companies invest in BI tools but can’t use them because they can’t afford the skills or the people to maintain them.
  • Usability—With expectations for higher value from their ERP solutions, companies are also placing greater focus on usability. Companies and their users have high expectation for their software to be intuitive, simple to use, and rapid and easy to deploy. As a vendor, QAD is putting a lot of focus on addressing these challenges, particularly with its latest release: QAD Enterprise Applications 2011.1.

TEC: What is the current state of affairs of QAD Enterprise Applications 2011.1 and QAD On Demand in terms of customers, new enhancements, etc.?
QAD: Currently, QAD On Demand is used at about 100 sites globally. The product’s penetration is growing, and QAD projects are becoming widely adopted. In September 2011, QAD officially announced the general availability of QAD Enterprise Applications 2011.1 Enterprise Edition (QAD 2011.1 EE), the latest release of its ERP suite (which can be delivered on premise, on demand, and as a hybrid model).

QAD 2011.1 EE delivers enhancements across the entire QAD Enterprise Applications suite, spanning updates from foundation-level architectural framework to new product modules, including QAD Enterprise Asset Management (EAM) 12.4. Collectively, these key upgrades focus on analytics, enhanced data integration, monitoring, reporting, and/or delivery. The details are as follows:

  • QAD BI 3.5 provides companies with access to their data in an intuitive, browser-based interface. In addition, using the Apple iPad application enables customers to access key performance indicators (KPIs) anywhere, anytime.
  • QAD Monitoring Framework enables companies to monitor and report on the availability of their entire system, including non-QAD software, hardware, and infrastructure. Companies can review performance usage and patterns, trends, system bottlenecks, and other activity, and create alerts, graphs, and reports.
  • Additionally, QAD’s interoperability application, QXtend 1.7.2, and its optional integration tool QXtend Excelerator provide companies with enhanced data integration and manageability.
  • To enable transparency across the supply chain, QAD has developed a new application add-on for its transportation management system (TMS) suite called Package Exception Management (PEM) 1.0. This solution gives customers a portal to track and manage multiple carriers, and provides visibility of shipments through delivery and a proactive communications tool to improve customer service and reduce costs.

TEC: Would you please explain your domain-based architecture and its advantages?
QAD: Our domain-based architecture provides the foundation for QAD Enterprise Applications. It enables QAD customers to deploy their systems across a global enterprise more rapidly than on other system architectures. This architecture gives global customers greater flexibility with their system deployment option.

QAD’s domain-based architecture enables companies to separate their computer infrastructure from their business organizational and legal structures. Today, many global companies operate within multiple legal entities, operating sites, and operating groups simultaneously, and they need the freedom to separate these to account for differing legal requirements, accounting practices, etc.

Customers can select centralized, decentralized, or hybrid computing architectures—with their enterprise running from both central resources and local resources. QAD customers can also configure their systems to support dynamic business models, and easily reconfigure their systems to reflect business structure modifications, such as divestments or acquisitions.

TEC: What mobile and BI (WhereScape Red–based) applications are generally available now (under which exact name) and what is coming out soon?
QAD: We just announced the general availability of the re-architected and re-developed next-generation collaborative BI application: QAD BI 3.5. QAD BI 3.5 provides companies with access to their data through a browser on its Web-based QAD BI Collaborative Portal, or using QAD’s new Apple iPad application. Available through Apple’s App Store, the QAD BI 3.5 iPad application provides the same functional access as the QAD BI Collaborative Portal, including visualization of data and access to collaborative features.

Unlike other conventional BI tools, which require significant IT investment to execute basic data analysis, QAD BI 3.5 allows users to conduct sophisticated, complex analysis anywhere, anytime, using simple, user-friendly functionality. QAD BI 3.5 features its own data repository called the QAD Data Warehouse. Data is populated using QAD’s extract, transform, and load (ETL) tool, developed to streamline data collection and automate the timely maintenance of the QAD Data Warehouse.

QAD has also streamlined the process of data analysis and helps mitigate the guesswork on what companies should view and measure. QAD BI 3.5 provides pre-packaged and pre-formatted modules that cover KPIs for most functional areas of an ERP system. This convenience, combined with QAD’s simple to access, browser-based interface, deployable across many platforms, gives companies the fast, flexible access to BI data they need to stay competitive.

TEC: Is there a reason why “social” was not mentioned during our recent briefing. Perhaps social tools are not that important on the shop floor?
QAD: From a social networking perspective, QAD has enabled collaboration for some time around various aspects of its ERP suite. For example, QAD’s BI application allows customers to collaborate, annotate, and share data across the enterprise and through supported mobile platforms. QAD also supports social collaboration around its workflow and processes in the application for transactions such as routing a purchase approval, for example.

With regard to broader use of social networking, QAD has observed collaboration tools such as Facebook within the customer relationship management (CRM) space. However, QAD has not yet identified a sensible business application with which to develop tools and is waiting to see how these needs emerge.

TEC: Could you please elaborate on the current and future content of QAD Store apps?
QAD: QAD Store is the company’s vision for simplifying delivery of all of the components customers may require in attaining the most value from QAD Enterprise Applications and its customer and partner ecosystem. This marketplace, fashioned after the ubiquitous adoption of similar consumer marketplaces, like Apple iTunes and Amazon, will provide the entire QAD community/ecosystem with a one-stop shop for downloading and/or sharing valued assets.

For example, customers will be able to purchase QAD and partner licenses, updates, documentation, support, and other things. They can also share operational metrics, browses, reports, and processes with one another, strengthening the value of their investment and relationships. Presently, the QAD store is operational for internal use only. However, QAD expects to launch the site publicly in early 2012.

TEC: Which products, regions, and verticals have been most active as of late? What do you foresee in the 12 to 18 months—more of the same or not?
QAD: Like all manufacturing companies, QAD has just witnessed a significant global economic crisis, which has affected industries and geographies very differently. QAD’s life sciences industry was relatively unscathed by the recession and the slow recovery.

The automotive industry is near pre-recession levels, but the outcome of the recession is a different distribution model. China is now out-producing the United States in passenger vehicles. QAD customers have adjusted their businesses to meet this changing demand.

Geographically, QAD has witnessed faster demand for its products in China. In Europe, QAD is seeing varying levels of demand on a country-by-country basis, dictated by stability and growth. As a whole, QAD’s business in North America, and its emerging markets, particularly Brazil, are picking up.

TEC: Can you describe how the Savvion BPM suite fits in with your process maps? Also, what is generally available versus what’s coming soon?
QAD: Our BPM tools use the Progress OpenEdge BPM platform (formerly Savvion). QAD plans to deliver its initial wave of BPM functionality in early 2012. The BPM tool will allow configuration of all QAD business processes dynamically and create a workflow around them. QAD Process Maps visualize the workflow and allow navigation. As QAD brings these two technologies to market, the two will merge into an integrated environment.

TEC: What is the current state of affairs and differentiation traits of Precision Software? What enhancements are slated for future releases?
QAD: We continue to enhance our subsidiary, Precision Software, which deals with transportation management, into a robust offering, particularly with its new live tracking of multiple carriers, and global trade compliance capabilities. Additionally, Precision is continuing to develop more of its suite of products in the cloud, supporting QAD On Demand.

TEC: What is the current state of affairs and differentiation traits of the former Fulltilt suite? What enhancements are slated for future releases (within QAD MDM)?
QAD: We acquired Fulltilt in the product information management (PIM) space as a new technology to support our master data management (MDM) strategy. QAD has since infused this into its core product, and offers MDM capabilities as part of QAD Enterprise Applications. These capabilities have come in handy to our consumer goods and life sciences customers, and we are exploring their potential in other industries.

TEC: Is there anything that you are at liberty to divulge on the company's future moves, i.e., new functional scope, verticals, intra-company product integrations (cross-selling), etc.?
QAD: Our core focus for the future is enabling our customers to achieve the vision we call the Effective Enterprise, wherein all of our customers’ business processes are operating at peak efficiency and are perfectly aligned with their strategic goals. To that end, QAD will continue focusing on BPM and changing the organization’s skills and competencies to better address this area; and fostering and facilitating its ecosystem to do the same.

TEC: What is your long-term growth strategy (avenues to pursue), if it’s not becoming a part of a broader ecosystem/platform (i.e., your majority shareholders are adamant about not selling the company)?
QAD: We are a closely held company, which enables us to preserve our long-range business direction and vision. QAD sees its growth as arising from organic customer expansion in its key industry verticals and via delivering incremental enhancements and new capabilities that enhance customers’ business, whether created through acquisition or internal development. Additionally, QAD expects significant revenue growth through the continued adoption of QAD On Demand by its existing and new customers. 


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