Company
Makes Good On B2B Collaboration
S. McVey - March 8th, 2000
Event
Summary
Business-to-business collaborative planning software company, Logility recently
announced financial results for the third quarter ended January 31, 2000. Corporate
revenue growth achieved its highest level since a decline that began in the
first quarter of fiscal 1999 (Figure 1). Although software license fees at $3.9
million dropped 3% from those reported in the second quarter, they represented
a 59% improvement over the same period last year. Services and maintenance revenues
were $8.5 million, a 16% improvement over the comparable period last year. Most
notably, Logility generated a net profit of $1.2 million for the quarter, its
fifth consecutive positive earnings.
J.
Michael Edenfield, President and CEO of Logility, attributes the strong performance
to demand for his company's B2B collaborative commerce solutions which enable
customers to collaborate with trading partners on forecast and replenishment
orders via the Internet. Voyager XPS is an HTML thin client application that
provides the framework for conducting Collaborative Planning, Forecasting, and
Replenishment (CPFR). XPS is vendor neutral and can use sales and order forecasts
from third-party applications like other supply chain forecasting modules and
ERP systems.
Other
events of note are a strategic alliance with integrator Tompkins & Associates,
several new customers, and an appearance in Computerworld magazine's list of
"100 Emerging Companies to Watch in 2000".
Market
Impact
Unlike many other enterprise application vendors, Logility seems to have moved
largely unscathed through the recent Y2K market turmoil. Although revenues and
earnings show a marked decline amid rising expenses four quarters ago (Figure
1), Logility has rebounded to near record revenue levels, outpacing the storm
that wreaked havoc on Manugistics and ERP poster child, Baan. The strong quarter
performance indicates growing market acceptance for Logility's collaborative
forecasting and replenishment planning applications available for in-house deployment
or hosted through i-Community.
Though
Logility has capitalized on its early lead in CPFR (Heineken, 1996), its transition
to a B2B software provider has opened it to a vast new competitive landscape
that will require further investment in product development, marketing, and
sales.
Logility
needs to concentrate on marketing its lineage as a supply chain management vendor
and emphasize its expertise in CPFR to distinguish it from the host of similar
players, many of which are newcomers to the supply chain management arena with
limited operating history and unproven applications.
Logility
also needs to strongly champion the adoption of CPFR for manufacturers and clarify
for prospects the distinction between its XPS application and those for vendor
managed inventory (VMI) and related practices. Logility must also convince the
B2B market that CPFR is superior to online trading networks, a difficult task
in lieu of all the hype surrounding these exchanges.
User
Recommendations
Users with relatively uncomplicated business processes in the process manufacturing
industries, such as food & beverage, chemicals, and other consumer goods should
place Logility on their shortlists. Also, third-party logistics companies should
find benefits in Logility's transportation and warehousing products, especially
when coupled with expertise of new partner, Tompkins & Associates.
Users
with very particular business requirements that defy simple implementation should
still involve Logility in the selection, at least through the scripted scenario
demonstrations, but should ask for quotes that detail additional costs involved
in customization. Other products like Rhythm (for high tech, semiconductor)
or MIMI (for chemicals, metal industry, food & beverage) may prove better when
extensive modeling is in order.
Small
to mid market companies evaluating application service providers for collaborative
planning will want to seek references from Logility and its ASP partners AmQUEST
and ebaseOne.