Logility Collaborative Planning Solutions Offer Sound Proposition

Product Background

Atlanta-based Logility describes itself as the leader in B2B collaborative commerce solutions via the Internet. Though all vendors take great pains to position themselves as leaders in something, Logility's claim goes beyond a skillfully crafted marketing blurb. Logility traces its lineage as a provider of collaborative software to its work with Heineken, which purchased supply chain planning software from Logility (then wholly-owned by American Software) in 1996. Heineken received the VICS 1999 "Best in Logistics" award based in part on its Heineken Operational Planning System (HOPS), developed by Logility. HOPS helped Heineken improve communication with customers, correct irregular inventory management, and reduce lead-time from 12 to four weeks. The system is used by all of Heineken's 450 distributors.

Logility began its operation with a selection of software applications that collectively supported the major planning tasks characteristic of manufacturing and distribution enterprises. Today, although these planning applications (see Table 1 for a summary) account for the bulk of Logility's revenue, they have a revised role in the company's overall collaborative product strategy.

At the center of Logility's product suite lie its collaborative planning engines, Voyager XPS for CPFR (Collaborative Planning Forecasting and Replenishment) and Voyager XES for Collaborative Transportation Management (CTM), a set of logistics execution processes codified by the Voluntary Interindustry Commerce Standards organization (VICS) and defined in large part by Logility. The individual modules for inventory planning, demand planning, replenishment planning, etc., are brought together in the collaborative context created by XPS and XES, much like petals of a flower are joined in the center receptacle.

Product Strategy and Trajectory

In keeping with its heritage, Logility still targets the process manufacturing and distribution industry verticals, especially consumer packaged goods, food & beverage, chemicals, and textiles. In addition it enjoys a growing base of clients in retail, both brick-and-mortar and Internet, a phenomenon due primarily to its collaborative planning products that are well-suited to managing the processes by which retailers communicate and collaborate with suppliers. Logility feels its early entry into collaborative planning (Heineken) and resulting expertise is a major source of competitive advantage. We expect Logility to continue emphasizing its B2B collaborative commerce solutions over the next 3-5 years as this sector is still at the beginning of its lifecycle.

Integration with disparate systems is accomplished with the aid of Voyager Commerce Corridor, a selection of partner Enterprise Application Integration (EAI) vendors that works with Logility and the client on a per-implementation basis to provide a true data link between XPS and third-party demand planning packages, such as i2 RHYTHM Demand Planner or SAP APO Demand Planning. Among these EAI companies is Mercator (formerly TSI Software, Inc.), which has a long history with Logility and provided the cement for the standard interface between Logility and SAP R/3 that was developed in 1997.

Although Logility Voyager Solutions are offered on both NT and Unix, the company now finds its Windows NT platform to be far more popular and sales of Unix systems are rare. American Software established Logility as a separate business unit in January 1997 focused solely on the Supply Chain market and moved every component of the suite to the Windows NT and Windows 2000 (as of February 2000) platform including WarehousePRO (originally OS/2 based) and Transportation Planning and Management (originally AS/400 based). To capitalize on what it describes as "a very under-serviced platform for supply chain management," Logility has partnered with IBM to develop its Voyager suite natively for the AS/400e and DB2.

Contrary to its expectations, Logility has found small to mid sized companies reluctant to sign up for application hosting, a result indicative of the marketplace as a whole. i-Connection, one part of the company's applications hosting services provided by partners AmQUEST (owned by American Software) and ebaseOne, has been slow to produce expected subscription revenue. Consequently, Logility has adopted a "wait-and-see" strategy for further development of its ASP alliance network and relies almost entirely on its traditional license business. i-Community, the other part of its Web-deployed solutions business, allows users to collaborate with trading partners using Voyager XPS and Voyager XES through a hosted service, which also provides access to Logility's core planning "engines." Unlike i-Connection, Logility is actively seeking alliance partners, such as portals and other exchanges, with which to extend i-Community collaborative planning products.

Most recently, Logility announced an OEM agreement with ERP vendor Great Plains Software in which its warehousing and transportation execution products would be branded and sold as the Great Plains Supply Chain Series powered by Logility. Great Plains plans to incorporate more of Logility's products in the future, including its collaborative planning products.

Product Strengths

• The B2B Collaborative Commerce Solutions for e-business Voyager XPS and XES have as perhaps their strongest feature the potential to integrate and collaborate with other planning engines. This allows suppliers to participate actively in planning inventory replenishments for a retailer, distributor, or manufacturer through merely a Web browser without needing other Logility applications. The retailer (or trading partner closest to the consumer demand) controls how the supplier and others access the planning environment. Though a strength for Logility, this paradigm is not unknown in the SCM software marketplace. J. D. Edwards' has put together a similar Web-based product incorporating elements of Numetrix xtr@ and others are sure to follow.
  
  
• Attractive user interface with consistent look and feel: Logility Voyager Solutions are soft on the eyes and place functions and graphics in intuitive locations within the GUI. Charts and graphs are accessible from many locations and allow interactive updates to inventories and schedules by "point-and-click." Exceptions are conveniently summarized within a single window and users are directed to them via multiple means, such as e-mail, page, and fax.
  
  
• Price is right: While it doesn't offer the cheapest licenses among best-of-breed SCM vendors, Logility on balance represents a lower total cost than i2 Technologies or Manugistics (for installations of comparable scope). Also, many users will find that Logility's highly configurable solutions can lessen implementation expenses provided they are willing to adopt standard business processes. Logility's hosted applications available via i-Connection or Internet-based exchanges via i-Community also offer a lower entry cost than traditional licenses.

Product Challenges

Competing effectively with larger players. The fact that Logility is a pioneer in collaborative planning has not stopped other vendors from blazing their own trails into this lucrative market territory. Many of these companies have massive resources to bring to bear on promoting competitive offerings. A good example is SAP, whose inferior capabilities for CPFR may nonetheless win out over Logility if SAP can regroup and focus its development resources effectively.

Application hosting represents another opportunity for Logility, but other vendors are better positioned for Internet deployment. i2's TradeMatrix platform has the capabilities for delivering hosted applications and enjoys much wider recognition than Logility Voyager Solutions offered through i-Connection. Logility's conservative "wait-and-see" ASP strategy for i-Connection may allow it to preserve capital, but may allow other vendors to establish a stronger presence in what will ultimately be a thriving market.

Integration of collaborative planning products lags behind rest of functionality. Logility should increase current investment in development to improve integration templates and seek partnerships with more EAI vendors to offer clients maximum flexibility and further mitigate implementation integration issues. In addition, Logility should look to partner consulting and systems integration firms for help in defining collaborative business processes for clients who wish to install Voyager XPS and Voyager XES. Logility currently partners with EDS, IBM Global Services, WaveBend (formerly BDO Seidman), and Technology Solutions Company (TSC) for CPFR-specific as well as general supply chain consulting.

Voyager XES places Logility in the running for supply chain execution, but lacks the maturity of some other packages. Though it may be the only software to adhere directly to the VICS-sponsored Collaborative Transportation Management procedures, there are other products that support collaborative transportation and logistics processes without the VICS standards that have been around longer, such as Descartes' DeliveryNet.LOG. Logility needs to complete functionality for the next release of XES quickly in order to prevent competitors from advancing.

BOTTOM LINE

Vendor Recommendations

Collaborative planning for businesses carries great potential for reducing the hidden costs that inevitably result from poor planning and limited visibility among supply chain business partners. Logility has made a good move in targeting this growing area and organizing its applications around the collaborative aspects. We believe Logility should continue to emphasize its Internet-based Voyager XPS and Voyager XES applications, but should enhance their capabilities by incorporating additional features from its core Voyager Solution suite.

Logility also needs to seek commitment from consulting partners to support CPFR initiatives and demonstrate their support by allocating resources and providing training. CPFR and collaborative planning in general require a different mindset than most corporate users and IT personnel possess, one that involves judicious levels of trust and cooperation with external suppliers and customers.

User Recommendations

Retailers, manufacturers, and distributors that are looking for software technology to help them maintain individualized, strategic relationships with multiple suppliers should place Logility Voyager Solutions, and specifically XPS, high on their shortlists. Logility's experience in collaborative planning is unmatched by its competitors, although the gap is narrowing.

Voyager XES, which adds logistics visibility and execution for customer and supplier networks is the most recent of Logility's Internet-based Collaborative Commerce Solutions and is thus the least developed in terms of functionality. Still, Logility's commitment to the XES product as evidenced by its support of VICS initiatives (CTM) and user forums is a factor that bodes well for future enhancements and we predict Logility to release a more full-featured version by 2001.