Symix Sytems: Shifting SME's Focus to Their Customers

Vendor Summary

Symix 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).

Fig. 1

Vendor Strengths

  • 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.

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Vendor Challenges

  • 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 is 37%.

  • 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).

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Vendor Predictions

  • 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 International).

  • SyteLine and SyteCentre will converge into one product and Symix will assume an integrated marketing strategy within the next 24 months (75% probability).

Vendor Recommendations

Since 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 smaller enterprises.

  • 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 competitors.

User Recommendations

  • 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.

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