Will Adonix Provide A Warmer Home To CIMPRO? Part Two: Market Impact




Event Summary

In the year marked by depressing news coming from almost all corners of the world economy and particularly from the tech sector, which has also resulted in a recent flurry of acquisitions (often for ridiculously low prices), it may be refreshing to hear an upbeat strategy, including the Xmas-shopping-like acquisition, coming from still a relatively less known, but certainly up-and-coming vendor.

On December 19, Adonix (www.adonix.com), a privately held French enterprise applications provider for mid-sized mixed-mode manufacturing and distribution companies, announced that it has acquired CIMPRO, a Tarrytown, NY subsidiary of MAI Systems Corporation (NASDAQ: NOW), a provider of business solutions primarily to the hospitality industry. Adonix will reportedly assume all CIMPRO employees, net assets, technology (including flagship CIMPRO V process ERP product), and contractual rights to all 250 customers and business partners. The vendor believes the combination of its X3 flagship ERP solution (primarily for discrete manufacturers) and CIMPRO V will bring to the legacy replacement market a powerful offering tailored for specific process industries such as the chemical, pharmaceutical and food & beverage sectors. CIMPRO, standing for Computer Integrated Manufacturing for Process, is specifically designed to address the needs of these process industries.

This is Part Two of a three-part article.

Part One detailed recent events.

Part Three will discuss the Challenges and make User Recommendations.

Market Impact

While not necessarily a dream team' combination, this is still a matrimony that both partners enter with fervent expectations. Also, while neither party is blatantly taking advantage of the other one, CIMPRO might have had much more motives for a marriage of convenience. Although being one of the first original products written to satisfy the exacting requirements of process manufacturing, CIMPRO has had an unfortunate childhood, due to being frequently disowned by its parents and/or siblings. Namely, the second last ex-owner, former Datalogix spent its last few independent years during the mid 1990s (prior to its acquisition by Oracle) focused almost exclusively on its erstwhile high-end Global Enterprise Manufacturing Management System (GEMMS), an ERP system for Fortune 1000 process manufacturers, which has so far been rolled into current Oracle E-Enterprise 11i suite, and represents the foundation for Oracle's process manufacturing product.

Datalogix had meanwhile treated the older and then less attractive mid-market (ironically, little did everyone know then about today's mid-market opportunity) CIMPRO system as the proverbial ugly step-child, whose poor image was further compounded during Oracle's subsequent attempts to sell it expeditiously to potential buyers, while nobody felt duty bound to meanwhile communicate the development plans to CIMPRO users or the market overall. Due to constraints imposed during Datalogix' pre-Oracle financial struggles, CIMPRO users had generally suffered from inadequate service and support. While CIMPRO's straightforwardness might have allowed some users to become self-sufficient except for upgrade delivery and periodic phone support, under Datalogix and Oracle ownership, even these two areas had become problematic.

With MAI Systems' acquisition in 1997, many of these missteps and poor marketing problems have had the opportunity to be resolved. However, CIMPRO's predicament under MAI Systems had not changed much either, given MAI's main focus on the quite unrelated gaming & hospitality industry and the presence of a competitive, also antiquated process ERP sibling, MANBASE, within MAI's fold.

As a result, with only a dozen employees and only a few developers during the last few years, CIMPRO has remained based on very old and/or proprietary technologies (some of which could be traced back to the vintage 1980's like the IDOL Business Basic development tool to run on the IDOL database), with quite bland and fat client' graphical user interface (GUI), whose some parts still resemble the glorified green screen' metaphor, and it has remained confined to the US market.

Professional services personnel appear to be quite capable and generally appreciated by customers though, but their numbers have been skeletal and they are often unavailable straight away. The partnerships with some accounting systems providers, such as Microsoft Business Solutions, to bolster the process manufacturing capabilities of their products (i.e., Great Plains) has not helped CIMPRO much either in its quest to break away from painful anonymity abyss.

CIMPRO Strengths

On the positive side, CIMPRO still exhibits solid functionality for batch process manufacturing, as it is extremely strong in the paints & coatings vertical segment, and it has a very good functionality in formula management (originally designed by the founders of Formation Systems, nowadays a PLM vendor for the process market) and in built-in quality management systems (QMS), material safety data sheets (MSDS), and laboratory inspection management system (LIMS) functions. The product also supports a wide range of database and operating systems (OS) platforms, as the IDOL environment does provide gateways to other databases such as Oracle for those users who prefer a more mainstream relational database management system (RDBMS), but the performance is typically impaired in such configurations.

The company recently delivered the product on the mid-market-amenable Microsoft Windows NT and SQL Server technologies, whereby the product was written with the Passport tool, thereby enabling it to support Unix OS as well and multiple databases. Moreover, CIMPRO V, an upgrade to the legacy CIMPRO Classic system, was released in 2002 as a new technical version of the application. The main changes were in the programming language (i.e., Visual Basic, which is the meaning behind the brand name CIMPRO V) and a graphical user interface (GUI) look and feel to replace the green screen. Even under these adverse conditions, CIMPRO recently released modest but appropriate enhancements such as CIMPRO Exec, an Executive Information System (EIS) with predefined or interactively created sales and production pertinent graphs, alerts and a scratchpad notes facility. Consequently, CIMPRO has occasionally been a competitor to the likes of Ross Systems, Agilisys, BatchMaster, ProcessProMFG, and Infinium in the lower end of the US mid-market.

To that end, the acquisition should provide Adonix with an industry-specific solution for the large number of mid-sized process manufacturers in North America initially, to widen the general mid-sized markets it already covers with Adonix X3 (i.e., discrete and mixed-mode manufacturers in make-to-order (MTO), assemble-to-order (ATO), configure-to-order (CTO) and make-to-stock (MTS) environments). The acquisition also adds 250 CIMPRO customers to the Adonix' still fledgling North American installed base, which should now amount to few hundreds almost overnight (rather than to a few dozens only).

In addition, Adonix should gain vertical market expertise in the process manufacturing segment (i.e. chemicals, pharmaceuticals, laboratories, and food & beverage) that should help significantly enhance the functional capabilities of future Adonix software offerings. The company will reportedly also be combining its North American marketing, sales, and development efforts into building an advanced solution that will incorporate process-specific functionality into the Adonix X3 framework, while it pledges to continue to support the entire CIMPRO customer base that is under maintenance contracts.

Adonix Strengths

Adonix might have already proven that a well-espoused value proposition can bode well despite a bad economical situation and unfavorable recognition of a newcomer vendor in some markets. With its main HQ in Paris, France and its US headquarters in Pittsburgh, PA, Adonix is still not a uniformly well-known mid-market global vendor. Adonix has lately been changing that situation though, by seemingly increasingly showing up on many mid-market application selection's radar screens. That has been particularly true for the North American market, which should remain an important revenue contributor in the future, given that in the US market, sales of Adonix X3 product doubled in 2001, with continued upbeat posture in 2002.This has been a notable feat, especially when the assimilation of multiple acquisitions and an ambitious product development strategy combine with the difficult sales situation.

Still, although the international revenue has grown much faster than the domestic French market revenue lately, the most-active region has been Southern Europe (i.e., Spain and Portugal), with increasing success in the US market, albeit which had initially been slower to warm up to Adonix's solution, largely due to the number of incumbent peer solutions that are already present. Nevertheless, for US companies with mid-sized domestic and international operations, Adonix can prove to be of interest, as it is already available in seven languages (English, French, Italian, Portuguese, Polish, Chinese and Spanish), and the sales and financial product modules have localized features.

Consequently, the company continues to dedicate more than a hefty 20% of its revenue into product development, which should be music to CIMPRO users' ears. After committing a substantial investment in fortifying its flagship Adonix X3 ERP offering with new CRM, WMS and data collection capability and to make it both Web native and a Web Services amenable solution (i.e., XML and Java compliant), Adonix should be poised to weather the present down market as well.

Its product offering might exhibit superior features and capabilities than most of its peer mid-market competitors' products, particularly in terms of scalability, flexibility/configuration, multi-national capabilities, multi-site capabilities, and the support for many platforms (UNIX and Windows NT/2000/XP, using Microsoft SQL Server, IBM DB2, and Oracle databases, both through the Windows- and browser-based client). Further, Adonix uses industry-standard tools such as XML and Java, together with Adonix API's (application programming interfaces) that open the system to communicating reasonably easily with business partners, trading exchanges and other applications and languages. In addition to the platforms mentioned, the company is in the midst of porting Adonix X3 to IBM's Websphere Application Express, with the expected availability by the end of Q1 2003.

Adonix seemingly plans to respond to future market changes by continuing to improve its X3 application, as it did when it had rolled out the earlier versions (i.e., 1.3 and 1.34) that allow Internet access to the software system, and features the broadened scope of its traditional back-office enterprise applications within its unified enterprise offering. Adonix X3 is also an ERP product designed for mid-size companies, with a view towards easy installation, use, maintenance and customization/personalization. Its integrated manufacturing, distribution, CRM and accounting functionality may be a good fit for a wide range of manufacturers and distributors, as it fits multiple discrete and batch process manufacturing environments (which will particularly be bolstered with CIMPRO's assimilation in the future). It particularly has an impressive depth and breadth of distribution and order management functionality, such as its advanced pricing functionality that allows companies to create complex customized pricing formula based on a multiplicity of categories (e.g., customer, region, territory, etc.).

Adonix Advantage

Indeed, contrary to most peer vendors, which started their ERP applications in the manufacturing space, Adonix first established a strong presence and functionality in the distribution/logistics field by combining its established finance and accounting package with a solid manufacturing system, distribution system, and warehousing management system (WMS). Its timely focus on distribution/supply chain execution (SCE) has proven to be wise and useful particularly these days, since it remains a fertile enterprise applications area. Companies still have ample opportunity to redesign and optimize the practices of warehouse employees scurrying around with clipboards and pick lists, while their deployments are at the same time less time-consuming and more oriented towards return on investment (ROI).

Also, most current manufacturing-oriented ERP products in the market contrarily still do not innately support automated data collection, although the need to pass data to and from third-party systems has long been present in the market. Further, a vast majority of them do not have the ability to manage and fulfill an order that might involve increasingly required so-called postponed manufacturing' (e.g., moving, kitting, light assembly, customization, reverse logistics, compliance labeling, gift-wrapping, custom packaging etc. aspects of light manufacturing in the distribution center). To that end, Adonix' native integration would allow a distributor to make sure the product is in stock before committing it to a 20-line-item sales order for, e.g., a kitting set. Consequently, its offering would be in the same league with Lilly Software, IBS, Syspro, and Frontstep, with a possible edge in broader platform/middleware standards support, stronger multi-national capabilities and/or wider geographic coverage, often therefore making it competitive with the likes of Intentia, J.D. Edwards, SSA GT, Oracle, and SAP. This breadth and depth of functionality (possibly unmatched by its Tier 2 peers in the future, provided CIMPRO integration goes as hinted) should provide an attractive solution for resellers to offer their clients and for those wishing to adapt the software to their own vertical markets.

In its early days, Adonix has made a conscious decision not to target a direct presence in most foreign markets, and to go for product distribution mainly through partners/value added resellers (VARs). Adonix X3 is currently sold in 18 countries, since direct subsidiaries handle sales in the US as well as in France, Italy, Portugal, and Spain, while resellers and distributors sell Adonix elsewhere. This has traditionally proven to be advantageous to mid-market customers by allowing Adonix to keep their costs down. Also, direct and indirect channels that have already been built in targeted countries have helped the company with product translation and localization issues, which have in turn resulted with solid multi-national and/or localization capabilities of the product.

This concludes Part Two of a three-part article.

Part One detailed the events.

Part Three will cover Challenges and make User Recommendations.

 
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