Geller and P.J. Jakovljevic
Elcom.com, a wholly owned subsidiary of Elcom International Inc., and
Infinium have each determined that the ASP model is coming with the force
of a hurricane, and each is redefining itself in hopes of riding the winds
to new markets. Infinium made a strong statement to this effect at its
recent customer conference (see Infinium
Putting Its Cards on the Table ) Elcom's directional shift began in
May, 1999 with the announcement of Pecos Internet Procurement Manager
(Pecos.ipm), the hosted, browser based instance of its Pecos Procurement
Manager. The product reached general availability status in March 2000.
In August 1999 Elcom engaged its first advertising agency for a multi-million
dollar media campaign to promote its hosted procurement and digital marketplace
solutions, In January, 2000 Elcom filed a registration statement for a
secondary offering to support a financing arrangement with Cripple Creek
Securities, LLC that may net Elcom up to $50 million in investments over
an 18 month period. The funds are largely targeted toward the hosted e-purchasing
and digital marketplace products.
agreement with Infinium is the first in which Elcom's hosted solutions
will be made available by a third party. The actual hosting services will
remain under Elcom's control in the short term, with Infinium doing the
heavy lifting of sales and creating marketplace solutions for its customers
and their supply chains. However we expect that hosting for Infinium's
customers will move to Infinium's control in the next few months.
While we believe it will take time for the ASP market to settle, let alone
for companies to become winners (or losers), we certainly think that both
companies have chosen sensible directions. However, that either company,
or the two in tandem, can affect the e-procurement marketplace is not
at all obvious. In fact, we find some of the strategic aspects of this
partnership a bit foggy.
is aiming at middle-sized companies that do not have (or need) ERP systems.
According to CEO Robert Crowell this was an explicit design decision for
Pecos.ipm. Crowell also believes that by hosting the software themselves
they have a competitive advantage because they are "a single point of
contact and responsibility for our clients."
traditionally delivers financial, human resources, materials management,
and process manufacturing software applications, predominantly for users
of the IBM AS/400 platform. It targets mid-sized companies and divisions
of larger organizations within about a half-dozen well-defined verticals.
It is indisputably the leader within the hospitality & gaming industry.
Having experienced a downturn in revenues in 1999 Infinium is pushing
hard to reinvent itself. Transforming itself from an ERP vendor to a full-service
ASP with system integration capabilities will involve a total change in
outlook and culture - not an easy task, although certainly not beyond
the capabilities of the company.
is obvious why Infinium wants to build up a strong eBusiness division:
Not only is the "e-" prefix a requirement for any company that wants to
appear new and interesting, but it makes sense for Infinium to leverage
its existing customer base. It must be particularly concerned about the
hospitality and gaming industry, given the strong competition for that
sector's e-procurement dollars from GoCo-op (see TEC's
discussion of GoCo-op) and PurchasePro. However, given the utility
of leveraging their existing ERP customer base it is less clear why they
would choose Elcom, with its announced strength in serving customers without
be fair, Elcom recently signed a license with OnDisplay® Inc., for
use of its CenterStage® suite of products, which will include support
for data interchange with ERP systems. Elcom hopes to use these products
to make it cheaper and easier for customers to integrate with ERP products.
However ERP integration has never been an easy task, and in Elcom's target
space there are quite a few vendors to deal with, even ignoring custom
modifications that may have been made by each user company. (There are
other data exchange technologies in the license agreement in addition
to CenterStage.) Whether OnDisplay's products will be used to integrate
Pecos.ipm with Infinium's software has not been revealed.
short, we believe that both companies are actively trying to determine
the detailed implications of their new corporate directions. If the end
result is a much stronger partnership - essentially a single integrated
product offering - the result will be a potential challenger to such companies
as Concur and Remedy. If this is merely a simple cross licensing agreement
with no greater strategic implications, we don't expect it to effect a
radical change on the competitive landscape.
The users who stand to benefit the most from this announcement are existing
Infinium ERP customers who plan to implement e-procurement systems before
the end of the year. They should add Elcom to their list of potential
vendors, whether or not they intend to implement an ASP solution, because
any integration efforts are likely to benefit them. However we don't recommend
that they make a decision for Pecos without carefully investigating its
features, and we caution them not to assume that the integration efforts
between Infinium and Elcom will be successful until there are successful
beta customers who can serve as references.
in Infinium's target verticals will also be interested, given the potential
that Infinium can carry over its expertise to helping them implement specific
solutions. However, this is also an area where a wait and see attitude
is appropriate, to give Infinium a chance to learn how to best apply the
Pecos product to your vertical. Infinium also needs to develop both technical
and business experience in building marketplaces that support full integration
of a customer's supply chain partners. Until then, make your purchase
decisions solely on the basis of what can be delivered when you need it.