Event Summary
Agilisys,
Inc., the former Process Manufacturing and Distribution division
of SCT Corporation (see iProcess.sct
Enters Golden Gate Opportunity), has been showing us lately that it has
swiftly moved beyond expected spin-off tremors, by leveraging its legacy of
a prominent pure-process industries enterprise applications provider to 1) gain
new customers, and 2) release new products under its new brand name and as an
independent company.
A
series of recent announcements and a summary of the Agilisys' product offerings
are detailed in Part One and Part Two of this three-part note.
Challenges
Still, although it is indisputably better that Agilisys had not stayed any longer under a parent that did not quite fathom its direction, and had even imposed a heavy overhead burden on it to be part of that company, and hindered its growth, the company faces both new and many old challenges.
- Impending
Marketing Effort: The former Process Manufacturing & Distribution Solutions
division of SCT Corporation had always been challenged to establish itself
as a name brand in the process segment owing to its late market entry and
a small client base, which is still vastly North America based. Its marketing
efforts had been both limited by and over shadowed by traditionally conservative
parent company that manages a plethora of other businesses within diverse
industries with different marketing dynamics. Although Agilisys should now
have more resources available to grow unfettered by any parent's corporate
direction and overhead, and it can now focus exclusively on the process manufacturing
sector, its new name is nonetheless a liability since the market still largely
does not know what Agilisys is, what it stands for, or what it does. The company
must therefore launch an aggressive name recognition program in its target
market, media and analysts. Since as a division of SCT, it had never fully
addressed its marketing needs, it has yet to prove the past will not be an
indicator of the repeated (bland marketing) future. Agilisys' management also
needs to continue to meet with and communicate the vision to the customers,
prospects and employees.
- Low International
Presence: Although Agilisys' customer base features a strong selection
of both large and mid-market companies, including household names like Coca
Cola, Molson Brewing, Glaxo Smith-Kline, Safeway Inc.
and a selection of smaller companies like Horizon Organic, Spraylat
and Basic American Foods, its relatively small client base (well below
1,000) is also predominantly North American, resulting in insignificant brand
awareness and an undeveloped channel outside of the North American market.
This is further aggravated by the fact that its product exhibits at best only
adequate multi-national capabilities and supports only a few languages beside
English. A result may be a number of missed opportunities as companies are
increasingly seeking global providers for its supply chain management and
collaboration requirements. Since the process manufacturing market is highly
global, Agilisys must therefore expand its global coverage to address the
needs of its current and intended customers. Although its international customer
base includes such brand names as Bernard Matthews, Scottish Courage,
Godiva, Heineken, UCB, and Organon, all of which
are European based companies, the room for improvement largely remains.
- Product Offering
Rounding Work-in-Progress:
Despite its breadth, Agilisys Suite does not cover all the bases. International
financials, warehousing management, e-procurement, product lifecycle management
(PLM), laboratory information management systems (LIMS), and plant maintenance
are some of functionality that peers, like Ross Systems, Baan Process,
and Infinium may tout as superior, let alone the Tier 1 vendors. Furthermore,
its former incarnation had not moved in a timely fashion into the customer
relationship management (CRM) market and this lack of functionality had limited
its marketability in some situations. However, we expect the RNM solution
(that tackles CRM, Supply Chain Event Management (SCEM), Supply Chain Visibility
(SCV), Partner Relationship Management (PRM), PLM, and Enterprise Portal)
to address this weakness going forward.
Also, the
former SCT division had not adequately addressed the buy side of its e-business
applications, as it had not aggressively moved in the area of e-procurement.
While SCT had formed a partnership with ecFood.com, a leading food
ingredient exchange, as part of its buy side e-business efforts, it has not
yet added similar partnerships for the remaining segments (chemical, life
sciences, etc.) of its targeted process markets. The market should expect
Agilisys' remedial actions in that regard, as its investors may also be interested
in further acquisitions of two possible company profiles -- a technology-based
provider, or a peer process-manufacturing-focused vendor with a large international
customer base.
Agilisys'
strategy going forward may also be impeded by the seemingly disparate ERP
and SCM products amenability to different market segments (mid-market vs.
Tier 1). While the first product appears to be a better fit for mid-size enterprises
(although the apparent company's aloofness from Microsoft .NET platform
support may mean some strategy misalignments for the Microsoft-infatuated
segment), which often require resellers/VARs, the latter one is seemingly
able to satisfy even the needs of the largest multi-national corporations,
encroaching thereby at the Tier 1 territory. The technological foundation
disparity of the products (i.e., proprietary vs. Java and other contemporary
Web-based technologies) has also likely taken its toll by doubling the development
expenses and in delivering products integration, which will likely continue
due to existing customers' tardiness in upgrading to the latest product releases
on unified technology.
- Undeveloped
Indirect Channel and Third-Party Implementation Partners Network:
Agilisys still relies mainly on its direct sales and consulting force, which
we consider as a cost ineffective (and possibly insufficient) sales and service
and support approach within the lower mid-market segment. The company will
have to demonstrate substantial progress in developing an indirect channel
to supplement its strong direct sales and product implementation force. Without
it, we believe the company's growth and international expansion will be hampered.
- Intensifying
Competition: The enterprise applications market in general has not been
very strong since the late 1990s. Although the process manufacturing and consumer
packaged goods (CPG) target markets, comprised of more than 8,000 manufacturers,
have long been under-served by traditional ERP vendors who primarily designed
their products for discrete manufacturing, the situation has been rapidly
changing recently, with the process ERP market becoming quite cramped with
competitors. The recent revival of its direct competitors such as Geac,
Baan Process and especially Ross Systems, while hinting a strong
opportunity, also reveals the challenges all the players might face (see Geac
Hopes To See System21 Shine Again Like 'Aurora' and Ross
Systems A Bright Spot On A Difficult Enterprise Application Landscape).
Therefore,
a pure process enterprise applications player like Agilisys does need to be
able to differentiate itself from increasing competition both from the larger
players, particularly SAP, Oracle, J.D. Edwards, Intentia,
IFS, Ramco Systems, Geac, SSA GT and QAD,
which have recently made significant in-roads in the relevant sectors (e.g.,
CPG and chemical verticals) and from a growing number of process enterprise
applications incumbents like Ross Systems, Baan Process/Invensys,
ProcessProMFG, Infinium, MAI Systems (with its CIMPRO
product), and Best Software (with its BatchMaster product).
In addition to many of these ERP players that offer supply chain applications,
the pure SCM competition will include AspenTech, i2 Technologies,
Manugistics, Logility, WAM Systems, SynQuest and
Prescient Systems, which has recently even struck an alliance with
Agilisys' archrival Ross, and thereby possibly closed the SCM advantage Agilisys
has long had over Ross (see Two
Highly Focused Vendors Team For Their Markets' Good).
Still,
the Agilisys management seems to have grasped the exacting requirements (e.g.,
regulatory compliance and handling of unanticipated issues supply chain-wide)
of these verticals, as it has been proven that a deep domain knowledge should
go a long way in creating opportunities (see Ross
Systems' Focus Yields More Value For Process Manufacturers). Most of these
markets live with the reality of very slim margins, and to compete, they must
continue to reduce costs while increasing the level of service to their customers.
These companies, whose time-to-market is often constrained by the idiosyncrasy
of handling natural resources (e.g. seasonality and perishability), the speed
of communications promised by Internet has evolved into a new era of competitiveness
that is not that typical within the discrete manufacturing sector. Agilisys
proves to understand these and continues to produce a compelling value proposition.
User Recommendations
While existing customers should be encouraged given the spin-off has been bearing fruits, some growing pains and transitional issues are always to be expected. Consequently, users evaluating the above individual Agilisys products should exercise slight caution, keep themselves informed, and consider generally available (GA) functionality only. Existing customers contemplating future investments in Agilisys' solutions need to meet with company executives and understand the management team, the company's financial picture and how Agilisys plans fits with their future. They should clarify and enforce their support status and the long-term product alliances, product development and migration strategy with the new management. Users will also benefit from approaching Agilisys and informing themselves about what the company plans for future service & support of its older product releases (still based on OpenRoad) are and what would the ramifications of migrating (or not) to its new product offering be.
Process manufacturing enterprises from the food, beverage, pharmaceuticals, chemicals, biotechnology, and CPG industries in the $50 million - $2 billion-a-year revenue range that are looking for a full enterprise solution or just e-commerce or other SCM components should place Agilisys on their initial list of prospective vendors. Potential and existing users should be aware of the fact that it is a long journey from vision to execution though. Therefore, prod new company executives about firmer product availability dates and bear in mind typical issues associated with immature product releases. Become a part or enquire about the state of affairs of Special Interest Groups by company type (e.g., food, chemical, etc.) and functional area (supply chain, etc.), which had in the past allowed customers and former SCT field and product management to share experiences. The tone of these sessions revealed that the user community is attacking in-depth business issues and getting results, as the users would also identify additional requirements that remain to be addressed.
For process manufacturing companies, Agilisys should be placed on the short list for most functional areas of the business. Mid-sized companies should view is as a single source vendor for all ERP, SCM and significant portions of their e-commerce and CRM needs. Large companies should consider Agilisys as a single source vendor for divisional level systems and as a SCM and plant level provider to corporate level systems.
Since requirements differ significantly among different types of process manufacturing companies, users should focus on those functions that make their kind of process industry unique. From Agilisys and any other vendor in the contest, get in-depth demonstrations of those functional areas. Each e-business component should be put through its paces using a well-documented set of requirements, scripted scenario demonstrations that mimic the real-life business processes, and rigorous reference checking. Though time consuming, the preparation demanded by a diligent selection will invariably produce better results - and less headaches.
Very
detailed information about Agilisys ERP is contained in the ERP
Evaluation Center at http://www.erpevaluation.com.