Intentia Braces For Its Ongoing Roller-Coaster Ride Part 2: Challenges and User Recommendations

Intentia Braces For Its Ongoing Roller-Coaster Ride

Part 2: Challenges and User Recommendations
P.J. Jakovljevic - Juky 16, 2002

Market Impact Continued

Intentia can also boast deep and wide ranging vertical industry knowledge and breadth, attained through its own implementation and software support delivery, as it has a staff consultancy and service organization of over 2,700. The company employs industry-savvy individuals who not only provide strong customer support, but are also able to blend industry-specific functionality into the Movex suite. With its own substantial service organization Intentia might be in a position to continue to build out its technology to better serve its vertical markets. Moreover, the Movex applications suite is built on several integrated software components to facilitate implementation, such as the Component Repository, which contains generic and industry-specific business components for customizing the applications to unique business environments and industries. The Enterprise Process Manager is an integrated business process-mapping tool facilitating business process design and streamlining configuration. Intentia complements these two software components with its Implex implementation methodology that stipulates how an implementation project should be organized, planned, and carried through to completion.

This is Part Two of a two-part Event Note on Intentia. Part One covered recent developments and began a discussion of the Market Impact.

Challenges

Nevertheless, the company strength has been tested for the last few years by its transition from a solely iSeries based product to additional platforms, which resulted in its current financial discomfort. The company still has to battle fights on several fronts as it goes forward. It has to continue with strong license revenue and with justifiable investment in direct and indirect channel worldwide, while its R&D strategy has to produce notable returns.

One fails to understand why the company with such a product and technology in hand is not doing a much better job in marketing it with more vigor, given its US counterparts start hyping (and often selling) the product while it is only in the vaporware stage.

Culture may be one reason for the company's inactive marketing in a small, close-knit but highly contested domestic Scandinavian ERP market, Intentia's name is well known. The company is regarded as a leading ERP vendor (on par with the likes of SAP) and almost no ERP selection in Europe goes without Intentia's participation. Therefore, the delivery of an immaculately functioning product has long been the company's priority, for the product was sold more through a word of mouth than through an active marketing.

The same mindset cannot be applied in other markets worldwide, where any CIO is overwhelmed with the hype from several dozen vendors and will only be aware of Intentia through some meaningful channel. The similar initial situation existed, until recently, for another Swedish vendor, IFS. However, IFS recently launched an aggressive marketing campaign and struck well thought out product and/or system integration alliances that are attuned with the local markets, which, when bundled with a slick product seems to have turned the tide and the US market now contributes a respectable 33% to IFS top line. Contrary to this model, until 2000, by and large, Intentia has had the US operation in place to facilitate implementation of spin-off deals from Europe. Lately, however, its US customer base has grown to more than 230 customers in its industries of focus.

What might have additionally hurt Intentia in its worldwide expansion would be its traditional confinement to the IBM iSeries platform, where it has faced strong competition from incumbent players like J.D. Edwards, SSA GT, IBS and MAPICS, many of these with stronger geographic coverage and channel throughout the 90s. Although Intentia has theoretically been platform independent since 1999, it still has one more myth to debunk on top of its otherwise low brand recognition outside Europe.

Intentia's strategy in developing its international operations has been to establish strong local offices, typically by signing up joint ventures with distribution partners, which would serve the delivery of Movex implementations projects. Although the model has resulted in a great customer satisfaction and a considerable growth from 1993 to 1999 with over CAGR 40%, it would typically not scale up as rapidly as the fastest growing competitors. In cases of really unsatisfactory results, Intentia has fallen back on a direct marketing and sales model, which again has never really gained any ground despite the benefit of a single accountability place for the customer. To continue to expand beyond its European roots and succeed in other markets, Intentia must continue to focus on marketing and sales, both direct and indirect, engaging a number of resellers and executing an aggressive, enticing marketing program, although not at the expense of profit margins.

More Competition

Furthermore, a broader offering inevitably creates more intensive competition. Although Intentia might often face off against SAP, Oracle, J.D. Edwards and PeopleSoft, its more likely nemeses in the ERP space are the likes of Baan, IFS, IBS, SSA GT, and Geac (formerly JBA). However, its emphasis on web-based supply chain and CRM applications, as well as private web trading exchange technology has indeed changed its footprint, therefore, the company may additionally compete with the likes of i2 Technologies and Manugistics in the SCM space, with Siebel Systems for CRM and CommerceOne and Ariba for web auctions, trading exchange technology, and other B2B eBusiness components.

Futhermore, Intentia's intent to deliver everything an integrated all-round suite geared to larger mid-size enterprises even via its own implementation channel might simply be a tall order for its stature, since even SAP had to abandon that approach, while Oracle's conundrum continues. Intentia's scope and coverage, although tempting to its target market, may not likely be as profound or able to deal with the same levels of complexity as the best of breed concoctions or the leaders' offerings.

Some examples of functional inferiority would be a delayed release of computer-telephony integration (CTI) functions while no telemarketing or retail sales management functions are currently supported within its CRM offering. In SCM, a profitable-to-promise capability has not yet been completely integrated with the Global Capable-to-Promise (CTP) module. Customers can still analyze and design the supply chain based on profitability, but it is currently a manually intensive task, compared to majority of slick Movex' 12 features.

Although Intentia is marketing its revamped architecture as being 100% pure Java, the architecture was initially only converted to Java, as Intentia delivered an RPG to Java code conversion tool called R2J. To make changes to the core product, existing AS/400-based customers still have to make the changes in RPG and run that code through the R2J. Thus, a 100% Java-based architecture might be applicable mainly to brand new users of Movex 12. On the other hand, the AS/400 version is currently more stable, proven, and robust than its more recent Java-based version in terms of functionality, although this should change some time in the future.

Therefore, although the company's biggest challenge remains its still nascent toehold in North America (where its strategy is likely to create a market leadership in the fashion, food & beverage, and wholesale & distribution vertical niches, get profitable and after that look at a verity of expansion strategies including acquisitions) and less nascent in Asia/Pacific (over the past 18 months it has scored big wins in the region with prestigious accounts like BHP Steel and it is the only vendor besides SAP with a full presence in Japan), without which no vendor can have a strong global competitive position, another area of its weakness has been a dearth of its prominent product (both technology and functionality wise) and system implementation partners. The company has been tardy to partner with any non-IBM technology provider, and its partnerships in the past have been rather reactive to a sporadic opportunity or customer request than really strategically proactive.

Also, the corporate culture still seems to be conservatively centralized, with all major decisions coming from the HQ, which does not bode well for the agility in this highly competitive and fast market. Recent acquisition and alliances like the ones with Sun Microsystems, IBM, Manhattan Associates and MRO.COM marketplace, might indicate the shift in Intentia's mindset and might promote its visibility and give it a quantum leap. These, bundled with the recent restructuring of some worldwide operations could boost Intentia's penetration of the global applications market after a number of dismal earlier attempts. Intentia must market the Movex product aggressively with the flashy media blitz and audacity that is peculiar to its US-based counterparts. Without it, it will likely remain confined mainly to the esoteric customer base in some local markets, which it has captured opportunistically mostly owing to a good word of mouth, to a dearth of suitable products, and/or to a bad publicity of some competitor's failures. Reliance on these certainly does not grant coveted sustainable growth and expansion.

User Recommendations

Intentia's functionality footprint, technological innovativeness and expertise, and sharp vertical focus should be attractive to mid-size and large global enterprises within the following industries: automotive, aviation, apparel/fashion, food & beverage, industrial goods, electronics, furniture, MRO, paper, retail & distribution, service & rental, and steel. Although its sweet spot is the higher-end of the mid-market, manufacturers with revenues in the range over $50 million should evaluate Intentia, its overall suite is scalable way beyond this, and has been sold into companies with up to several billion in revenues.

European enterprises that run on the iSeries server are the best candidates to benefit from deploying Movex. However, many companies from different geographic regions running on other platforms and within the above industries may benefit from allowing Intentia to give the other vendors in the selection a run for their money. Still, customers in countries where Intentia is not well established or where it uses distributors might find the quality of local service and support uneven. Also, while the reported Movex 12 performance benchmarks on non-iSeries platforms are trustworthy, one should rely more on performance in a real-world environment. Therefore, question the company's ability to provide reference sites that closely fit your business description.

On top of Intentia's challenge to manage brand recognition and channel development, the company will have to carefully balance its new technology strategy with a more aggressive marketing effort to gain acceptance as a cross-platform provider of enterprise applications without impairing its strong functionality development and reputation. We believe its open platform approach, e-Business capabilities, vertical focus, and more proactive partnerships should bode well for the company's overall standing. More comprehensive recommendations for both current and potential Intentia users can be found in Intentia Possibly Seeing Daylight.