JDA Portfolio: For the Retail Industry Part Four: More JDA Portfolio 2004.1 and Microsoft Alliance

JDA Portfolio 2004.1 Components (continued)

JDA Software Group Inc. (NASDAQ: JDAS), a prominent global provider of integrated software and professional services for the retail demand chain and over 4,600 customers, plans to build upon the collective JDA Portfolio to enable its customers to achieve a new level of operational excellence. The vendor plans to establish this capability as a defining and differentiating characteristic of its next generation PortfolioEnabled solutions over the coming months and years. JDA Portfolio 2004.1 software and service offerings will include the following:

1. Portfolio Merchandise Management (see Part Two)
2. Portfolio Allocation and Replenishment (see Part Two)
3. Portfolio Planning and Forecasting (see Part Two)
4. Portfolio Store Systems (see Part Three)
5. Portfolio Customer Management (see Part Three)
6. Portfolio Revenue Management (see Part Three)
7. Portfolio Advanced Optimization (see Part Three)
8. Portfolio Business Intelligence (BI) (see Part Three)
9. Portfolio Infrastructure (see Part Three)
10. Portfolio Collaborative Solution (see Part Three)

This is Part Four of a six-part note.

Part One presented the event summary.

Parts Two through Four detailed the components of JDA Portfolio 2004.1.

Part Five will analyze the market impact.

Part Six will look at ERP vendors and the retail market and make user recommendations.

Part Six will be scheduled after the holidays, on January 3.

9. Portfolio Infrastructure

Portfolio Infrastructure would consist of Portfolio Framework, which is an XML-based, real-time messaging architecture designed to facilitate the integration among the somewhat overwhelming multiplicity of solutions. Also, Portfolio Knowledge Base (PKB) offers near real time configurable access to historical, enterprise data such as sales and inventory movement, by providing mechanisms to load, unload, structure, maintain and administer analytical data cubes, relational summary tables, and a meta data environment. Finally, Portfolio Registry, as designed, will provide a single graphical user interface (GUI), and a single set of input programs and screens for use by all JDA Portfolio applications. It will be the source for all of a company's descriptive data as well as provide a gateway to synchronize with third party sources and catalogs (i.e., UCCnet, EAN, etc.).

10. Portfolio Collaborative Solutions

Portfolio Collaborative Solutions starts with JDAMarketplace.com, which is a portal that enables trading partners to navigate to collaborative solutions and partners via the Internet relatively easily. In addition, JDAMarketplace.com provides educational insights and recent news for those interested in collaborative space. Marketplace Replenish is a solution designed to deliver collaborative planning, forecasting and replenishment (CPFR) between retailers and their suppliers by providing web-based portal access to the Advanced Warehouse Replenishment by E3 and Advanced Store Replenishment by E3 applications and thereby enabling the creation of a single, shared demand forecast that retailers and their suppliers can use to lower distribution and freight costs, increase annual sales, improve forecast accuracy, lower inventory requirements, and increase human productivity.

Further, Electronic Dynamic Agreement (eDA) is a web-based solution designed to support extended vendor management of the replenishment process by transferring control of the buying decision to the vendor. JDA claims that it is the first software proven to dynamically generate a retailer's order forecast for a supplier beyond the standard single order lead-time using actual order creation logic. Namely, while trading partners can share POS information and sales forecasts, it does not necessarily translate to what customers are going to buy and when they will buy it from their respective suppliers. One hardware retailer has recently completed successful benchmarks of product orders for thirty, sixty, and ninety days into the future, and these benchmarks reportedly validate that eDA will provide a reliable order signal beyond a standard lead time and enable its suppliers to more economically manufacture, deploy and pick goods.

Last but not least, VistaRetail is a web-based software application, which will provide data synchronization using UCCnet as a data pool. Since acquiring the intellectual property assets of Vista Software Solutions in 2003, JDA has developed several enhancements to its data synchronization application. New functionality will allow JDA clients to improve decision-making and data synchronization with more information about each product transmitted through the global synchronization network (GSN) and UCCnet. Additionally, VistaRetail is now one of the first applications to provide retailers with kiosk portal capabilities that allow small suppliers the ability to efficiently and accurately provide price and promotional information electronically to their retail partners.

For more efficient supply chain collaboration, trading pairs must ensure consistent, accurate shared data, and the VistaRetail software is designed to execute and manage all processes required for data synchronization and advanced order forecasting between trading partners. Based on global standards developed and required by such key organizations as European Article Numbering (EAN)/Universal Code Council (UCC), Global Commerce Initiative (GCI), and VICS, VistaRetail enables retailers and suppliers to electronically link over the Internet to exchange information and process business transactions for greater data accuracy, operational efficiency, and profits. VistaRetail was also enhanced with a collaborative cache framework that enables companies to store and transmit standard, emerging and proprietary XML business messages such as new item, item change, pricing, promotions, and deals. Closely linked to this capability, is JDA's first release of Trade Event Management for Retail which is in production at one of the nation's largest independently owned food retailers. Built on the Microsoft .NET framework, Trade Event Management allows trading partners to remove the costs associated with manual deal entry and the corresponding costs of mis-keys, re-keys and deal deductions.

Microsoft Alliance Part of JDA Strategy

It is only logical that the above, somewhat overwhelming JDA Portfolio product's strategy would be to offer a suite of applications that can be deployed independently in order to provide a quicker return on investment (ROI). These products have been developed or acquired by JDA in order to present customers with an enterprise offering that might be the broadest, most functional set of industry leading retail demand chain software solutions available to retailers and their suppliers. In addition, JDA has developed and provided the industry with a guaranteed series of integrations between the above JDA Portfolio applications, which allow its customers to deploy large portions of the JDA Portfolio functionality with reasonable integration costs. Still, the vendor believes there are significant opportunities and advantages to be gained by integrating its solutions into a common technical framework that would be based upon open Web services standards, and largely focused around the Microsoft .NET platform.

Thus, in April, Microsoft and JDA signed a multiyear alliance that will supposedly expand their existing relationship and accelerate the development, marketing and sales of the JDA Portfolio suite based on the Microsoft platform and Microsoft .NET technologies. Through the alliance, Microsoft and JDA will jointly promote JDA's .NET-based enterprise solutions as a strategic solution for the retail industry. This solution will not only take full advantage of the Microsoft .NET Framework, but will also drive sales of JDA products on the Microsoft SQL Server database platform. JDA and Microsoft will also be closely evaluating the use of the Microsoft BizTalk Server 2004 within the JDA Portfolio suite of NET-based applications, which, as the newest member of Microsoft Windows Server System, promises to enable retailers to integrate systems, employees, and trading partners through more efficient automation and orchestration of key business processes.

Both Microsoft and JDA believe the alliance uniquely addresses a void in the market for demand chain applications that is to deliver industry-leading functionality in an integrated and real-time shared framework based on open technology standards. By taking their relationship to the next level, the two vendors pledge to enable retailers, manufacturers, and wholesalers to also benefit from JDA's next generation of enterprise solutions, PortfolioEnabled, to be more agile in running their mission-critical operations at a lower TCO ahead of the current release schedule.

Featuring best-of-breed strategic merchandise management capabilities for advanced enterprise planning and replenishment, the first PortfolioEnabled applications scheduled for delivery will work together in a real-time integrated framework to help ensure a company's marketing, production, distribution, merchandising, and store operations will all be on the same page working with shared processes and information. These JDA products will leverage Microsoft's next-generation SQL Server, code-named Yukon, designed to provide increased scalability, availability, and security for enterprise data and analytical applications.

Although the original Microsoft-JDA relationship confirmed JDA's adoption of the Microsoft .NET Framework and Microsoft's commitment to JDA as a leading go-to-market partner in the retail demand-chain space, the deepening of this strategic relationship will also result in Microsoft providing additional technical and product support. In addition, JDA and Microsoft are committing to a structured go-to-market program including cross training of sales teams and global co-marketing and lead management programs to ensure the market success of the PortfolioEnabled applications. JDA and Microsoft claim to share a common technology vision that centers on the development of software based on industry standards such as XML and Web services.

These new PortfolioEnabled solutions are also based on Microsoft's Smarter Retailing Initiative (SRI), announced in January 2004, which provides an approach for enabling retailers to take full advantage of their legacy investments to connect retail enterprise to the store, to suppliers, and to the consumer. SRI focuses on three key areas: Smarter Shopping, Smarter Selling and Smarter Operations, which are all designed to close the loop between the retailer's strategy, the in-store execution, and familiar technologies already in consumer's hands. This alliance addresses smarter operations, real-time collaboration, and workflow management needs with the first four deployable modules of the PortfolioEnabled product, which will, over time, consolidate JDA's entire suite of products into six business domains to cover almost every aspect of best practices for retail demand chain processes and provide, in their entirety, possibly the broadest and deepest retail solution suite available.

Ultimately, JDA hopes to be able to reduce the number of applications and technologies it would maintain while at the same time increase the overall depth and breadth of its solution offering. This change should reduce its research and development (R&D) investment requirements in the long-term and allow JDA to accelerate the delivery of new functionality. The .NET Platform should also enhance its ability to integrate acquisitions of technology that are also based upon open Web services technology. However, the vendor acknowledge that it has incurred and will continue to incur, higher than usual R&D expenses as a percentage of product revenues, as it completes this transition, one product at a time, and keeps its current product offerings competitive.

The goal is to begin delivering applications on the .NET Platform in third quarter of 2004, starting with Portfolio Replenishment by E3, followed by Portfolio Planning by Arthur, and certain of Intellect applications, whereby the complete transition to the .NET Platform is slated for the next two to three years period. This is a significant investment by the company to build its next generation of products, while at the same time, it continues development efforts on its existing products and completes the integration of acquired products. In addition, the In-Store Systems development initiative remains based on the also emerging Java technology.

According to JDA, with advancements in radio frequency identification (RFID) and other collaborative initiatives, the industry is heeding the call for increased efficiency and accuracy in the exchange and update of item and supply chain information. JDA sees a huge growth opportunity in other world regions and market segments, in particular food and consumer packaged goods (CPG), and to become the preferred solutions provider for these untapped markets that will soon require interoperability and compliance with shared global standards.

This concludes Part Four of a six-part note.

Part One presented the event summary.

Parts Two through Four detailed the components of JDA Portfolio 2004.1.

Part Five will analyze the market impact.

Part Six will look at ERP Vendors and the retail market and make user recommendations.

In lieu of the holidays, Part Six will be scheduled on January 3.