Systems, Inc., headquartered in Columbus, OH, is a leading global provider of
enterprise business software for mid-sized discrete manufacturing enterprises
with fiscal 1999 revenues of $129.1 million. Founded in 1979, Symix was the
first company to develop Materials Requirement Planning (MRP) software solutions
for PCs, called MCS-2, and followed with UNIX-based Manufacturing Resource Planning
(MRP II) software in 1986. Symix went public in 1991, and in the early 1990s,
the Company dropped hardware sales to focus solely on software and support services.
A client-server-based ERP product called SYMIX V4 was introduced in 1992. In
1994, the Company entered into a joint venture with Belgian software developer
Soft Cell to tailor Symix products to European companies. In 1996, Symix introduced
SyteLine, a next-generation graphical ERP product, followed by SyteLine's CSRP
(Customer Synchronized Resource Planning) extension products. In 1997, Symix
bought field service specialist Visual Applications Software, and Pritsker Corp.,
a maker of planning and scheduling software. As a result, Symix became in 1998
one of the first ERP vendors to add Advanced Planning and Scheduling to its
product portfolio. Symix is one of the few middle market ERP vendors with a
set of holistic planning/ERP/customer management solutions, including its core
SyteLine ERP product, and the following complementary software: SyteAPS (advanced
planning and scheduling system), SyteSelect (product configuration software),
SytePower (data analysis), SyteGuide (business process modeling software), SyteEDI
and SyteWeb (e-Commerce), and SyteService (customer service management software).
In 1999, Symix acquired Distribution Architects International, a developer of
supply chain management applications for mid-sized manufacturers, and in the
same year, Symix launched SyteCentre, an ERP application targeted for the consumer
goods, computer, and electronics industry, and SyteDistribution, a supply chain
management suite for mid-tier distributors. The Company has more than 3,600
customer sites, which it supports through a worldwide network of over 75 direct
sales offices and distributors in over 32 countries (approx. 21% of revenue
comes from the international market outside of North America).
Symix holds a strong global position in the Small-to-Medium
Enterprises (SME) market within the discrete manufacturing segment of the
ERP market, with a broad product line, a strong direct sales force (26%
of the total workforce) and an expanding indirect channel. A solid industry
focus and effective management have produced strong sustained growth in
recent years (See Fig. 1 - Symix Systems, Inc. Annual Results Chart).
Symix is regarded as the originator of the extended ERP
concept (CSRP), which has proven to be so attractive to mid-market enterprises
that two other leading mid-market vendors (MAPICS and JBA International)
entered into specific R&D and licensing agreements with Symix to gain access
to its SyteAPS product.
Continuous heavy investment in R&D (approx. 34% of total
workforce, one of the highest in the industry, slightly less than MAPICS)
backed with wise acquisitions (See Vendor Summary) and strategic product
alliances (Trilogy Software, Keyfile Corp., MCI WorldCom) have led to a
very broad product portfolio for Symix.
Symix's low market capitalization of approx. $80 million
makes the Company a very attractive acquisition target, while its low available
cash resources ($5 million) do not provide for any real expansion and/or
defensive corporate initiatives.
Symix's two-pronged product strategy (SyteLine and SyteCentre),
although creating more opportunities in a short-term, inevitably creates
some duplication of resources. Sales & Marketing and General & Administrative
costs as a percentage of net sales are 46%, whereas the industry average
Symix products can be deployed to a very narrow set of
servers and databases. SyteLine can run on Windows NT or UNIX servers and
on PROGRESS database, whereas SyteCentre can only run on Windows NT server
and SQL Server.
Symix is confined to discrete manufacturing, and does not
support process manufacturing. This does not provide Symix much maneuverability
within an ERP market with a declining growth rate. Moreover, some modules
offer only basic functionality within its "native" discrete manufacturing
area (e.g. mass customization and repetitive manufacturing, quality management,
plant maintenance, and human resources).
Despite a highly competitive environment, we predict that
Symix Systems will reach $250 million in revenues within the next 3 years
(70% probability), based on attractiveness of its product for discrete manufacturing
and distribution within Small-to-Medium Enterprises (SME).
We believe there is a possibility that Symix will be acquired
by a market predator, rather than a direct ERP competitor, Potential acquirers
could include Computer Associates (for which it would provide an established
service revenue stream) or Siebel Systems (for which it would provide back-end
ERP capability), within the next 18 months (30% probability); The more likely
scenario (40% probability) is that Symix will seek more strategic alliances
or mergers with competitors who have a similar focus but offer complimentary
products, vertical advantages and new platforms (e.g. MAPICS or Intentia
SyteLine and SyteCentre will converge into one product
and Symix will assume an integrated marketing strategy within the next 24
months (75% probability).
its inception, Symix Systems has focused on discrete manufacturing, and has
not developed any internal process manufacturing expertise. Current Symix resources
and corporate culture do not make diversification a viable option at this stage.
Therefore, we recommend the following:
Symix should further penetrate the Small-to-Medium Enterprises
(SME) market segment in the following ways:
Expand business in its existing customer base, by upgrading
older versions of software and by offering new extended ERP modules
and enterprise applications.
Expand into the SME market by leveraging and enforcing
both its direct sales and its indirect channel network. Deliver more
new, focused and pre-configured vertical solutions, and offer application
outsourcing to make Symix attractive to smaller, resource constrained
Explore other investment opportunities in order to both
financially strengthen the Company and expand its distribution channel.
A good example is the arrangement Symix has made with Mitsui & Co., who
currently holds a 13% stake in Symix' Asian distribution operation.
Remain committed to new product features and the introduction
of additional enhancements (See Vendor Challenges) and to enhancing Business
Intelligence offerings, possibly through strategic product alliances with
We generally recommend including Symix Systems in a long
list of an enterprise application selection for mid-market companies (with
$30M-$500M in revenue), based on its broad product portfolio and understanding
of its target markets' needs.
Symix should be included on a short list in any selection
within the SME market where discrete manufacturing, assembly, and distribution
modules are the main pillars of an enterprise application. The industries
that would most likely benefit from using Symix products are electronics,
industrial equipment, consumer products, fabricated metals, and furniture.
If Symix is selected, future clients are advised to request
Symix's written commitment to promised functionality, length of implementation,
and seamless future upgrades, particularly for recently released products.