Event Summary
On January 14, Made2Manage Systems Inc. (NASDAQ: MTMS), a provider of broad enterprise business systems for small and mid-market manufacturers, announced the release of the latest version of its Enterprise Business System suite running on the Microsoft SQL Server. The release tagged M2M ERP 5.0 SQL extends the capabilities of the company's flagship ERP product primarily through key new features that include support for multi-site manufacturing and enhanced financial capabilities.
This Part Two of a two-part event note discusses the Market Impact and makes User Recommendations. Part One released the latest announcements.
Market Impact
Made2Manage might be proving that size does not always necessarily matter when it comes to attractiveness. Although not completely out of the woods, partly due to being smaller and having less resources than most of its competitors, Made2Manage' future seems to be much brighter than most of its peer vendors that have either been heavily bruised or eliminated during the recent crunching period. Its recent renewed revenue growth and marginal profitability could be attributed to several reasons.
First of all, since its inception in 1986, the company has put all of its efforts solely into serving small-to-medium manufacturing enterprises (SMEs) in need of enterprise application solutions that are intuitive and, consequently, easy to use and implement. The company has long demonstrated a deep understanding of this market dynamic and its requirements of competitively priced, strong functionality products, well-designed implementations, and immaculate service and support. End users of smaller enterprises have indeed long been impressed with its intuitive user interface, which provides ease of system navigation (the "Navigator" feature) and of information retrieval (the "Locator" feature), and with underlying workflow & messaging system capabilities (the "Notifier" feature).
During the late 1990s, however, Made2Manage, somewhat painfully like many others, realized that its target market needed more than an inexpensive and easy-to-use back office system. To that end, during last two years, Made2Manage had mobilized its resources to evolve from a vendor of traditional ERP software to a provider of one-stop-shop' enterprise business applications. The company has, gradually, either developed in-house, acquired or incorporated through partnerships a line of integrated collaborative e-business, customer relationship management (CRM), business intelligence (BI), and advanced planning and scheduling (APS) components within its core ERP solutions. In other words, the Made2Manage Enterprise Business System now offers a broadly integrated application solution for automating business processes from selling and design, finance and human resources (HR), customer service and support, through scheduling and distribution.
Further, in addition to choosing the right focus and the appropriate accompanying functionality footprint, the company has concurrently been trailblazing the majority of its peers with regard to the technological aspect of its product. Made2Manage has long embraced concepts of component technology in designing its product. The object-oriented product architecture has been devised entirely from scratch in-house within the Microsoft context, which provides for flexibility and ongoing agility. With the release of Made2Manage for Windows in late 1995, Made2Manage became an early adopter of Windows NT and was reportedly the first manufacturing software application to receive the "Designed for Windows 95" endorsement.
Today Made2Manage uses Microsoft's technology virtually for all aspects of its product development:
- Microsoft Visual Studio for product development
- Microsoft Visual Basic for Applications (VBA) within M2M applications
- Microsoft Sequel Server (SQL) as its database platform
- Microsoft Windows Server as its preferred server platform
- Microsoft Project as its scheduling tool
- Microsoft Exchange Server as its messaging/workflow engine
- Microsoft Office for office management
- Microsoft .NET as its Internet platform
The company's strategic relationship with Microsoft has proven to be of the utmost importance given its market segment's infatuation with the technology, whose performance, reliability and scalability has long been improving as well. By leveraging the capabilities of the Microsoft platform only, Made2Manage might be in a better position to be responsive to delivering new functional features that its customers may demand.
In contrast, a smaller vendor that covers multiple platforms often spends more than a half of its R&D budget on porting issues; thus making a cross-platform solution the prerogative of only bigger vendors. Furthermore, the early adoption of the .NET platform has helped Made2Manage transition from a traditional two-tier client/server architecture (where the entire business logic resides at the client front end) to the one where the business logic resides in a set of business logic components that can be used by the user interface (UI), alternate UIs, or it can be integrated with other systems through Microsoft BizTalk, which bolsters the systems interconnectivity and flexibility.
Other Technology Advantages
More on the technology front, in addition to being entirely Microsoft-centric, the software is available in a multiplicity of ways from traditional license purchase, to rental and leasing options, with both client/server and web-based delivery. Web-enabled M2M Express is the Internet hosted version of the software. The company's proactive grasp of the hosting/application service providers (ASP) opportunity is commendable, particularly in light of its peers' tardiness and/or non-compelling value proposition in that regard.
While manufacturers usually prefer to keep their critical information in-house, many may still opt to use Made2Manage hosted applications for collaborative commerce with the above-mentioned best of both worlds' hosting principle, which is available through M2M VIP portal. The company not only hosts its own offerings, but it also hosts e-business applications such as web sites and e-mail and collaborative tools.
Possibly thought leading is the company's readiness to provide mid-sized discrete manufacturers with a number of portals that offer a broad range of collaborative, interactive applications including collaborative engineering design tools (e.g., AutoCAD and ProEngineer), on-line trading exchanges, with streamlined inter-business processes and workflow, and access to information resources via M2M VIP that offers trade partner-facing portal functions and thereby solidifies relationships with distributors, suppliers, employees, and customers (in other words, within the entire channel).
M2M VIP functionality was enabled through the embracement of Microsoft's .NET technology, which is designed to support an interconnected network of web services that are invoked by web pages using open technologies like Simple Object Access Protocol (SOAP) and Extensible Markup Language (XML); these, in turn, might possibly become the standard for future Internet-based applications in the SME market.
Made2Manage also offers a Web-based training and support program for its customers called M2M University. This subscription-based education program along with additional service and support functionality is available through a customer-facing portal called M2M Expert. Another example of Made2Manage's alertness in service and support cost reduction by harnessing the latest technology, like live Web-based training, to deliver inexpensive users' training. As a summary, by leveraging the above advanced technologies, the company has been agile enough to spar with a constantly morphing business environment, and to meet the latest customers expectations of 24/7/365 access availability to place and track orders, or to obtain any urgent system support.
Given that M2M VIP does not necessarily require the hardware, software and maintenance investments that other solutions typically require, it may bode well for the new revenue stream despite the current difficult economic climate. The difficult economic conditions have, in fact, put additional pressures on manufacturers to streamline operations and increase efficiencies in the most pragmatic way. Made2Manage seems to have positioned itself well to capture their attention with its above offering.
Channel Development
Also, the company has been savvy in developing an indirect channel to supplement its direct sales force and to address the low international presence and recognition. Customers and VARs should benefit from the new "Team One" reseller program because it allows both internal and external sales groups to share consulting services, education and product configuration/customization services, as illustrated in the above Concord example cited in Part One.
Likely the most crucial developments that increase the market opportunity are the recent extension of multi-site and supply-chain management (SCM) functionality footprint, and the protracted availability of Microsoft SQL Server edition of the package. With the addition of Multi-Site functionality, the M2M ERP product has possibly grown to meet the needs of the mid-market. Given it is also the third major release of M2M ERP on the SQL platform in the past 12 months, some scalability issues that have long plagued Made2Manages success in the higher end of the market might thereby be mitigated.
Challenges
Although the above-mentioned initiatives have, to our mind, contributed to creating increased demand and acceptance of the offering in the mid-market, nevertheless, Made2Manage will have to address certain challenges in order to continue to thrive in this cutthroat competitive environment. The competition is flying from all directions: its peers, the Tier 1 vendors coming down the market, and even its quintessential technological partner, Microsoft's intrusion into the discrete manufacturing market via its Great Plains' applications division.
Made2Manage global market awareness and presence remain quite insignificant in spite of the recent expansion in the UK via a sole VAR agreement with MacroScope Ltd, where the company has localized the financial functionality for the market but still lacks the payroll functionality. This is further aggravated by the fact that the product continues to exhibit minimal multi-national capabilities and to support only the English language. This may result in missed opportunities as companies are increasingly seeking true global providers for its supply chain management and collaboration requirements.
Further, M2M's functionality across the board, although broad and well balanced, has not been recognized as a differentiator in the market as the company does not exhibit much of a vertical focus; It basically exhibits a generic engineer-to-order (ETO), make-to-order (MTO), assemble-to-order (MTO), make-to-stock (MTS) and mixed-mode discrete manufacturing chunks of functionality. Given the fact that some of its competitors offer a sharp vertical focus even to the precision of six-digit Standard Industrial Classification (SIC) codes within an industry (e.g., Navision), Made2Manage's above-mentioned strengths may soon be emulated and loose its differentiation value. The company should, therefore, try to interest its VARs into industry specialization and provision of vertical extensions.
User Recommendations
While it is unclear how many smaller vendors will survive the shrinking and more crowded market intact and avoid either bankruptcy or assimilation, Made2Manage has been taking strides that should help it weather the storm. The innovativeness of its offerings to the manufacturing SME market is attractive and should be taken into initial consideration.
Made2Manage's target market, single-site North America and UK-based discrete manufacturing companies and their divisions with up to $250 million-a-year revenue range and up to 100 concurrent users per site, should consider the company's value proposition, but avoid selecting it without looking at what the competitors have to offer.
TEC generally recommends including M2M in the long list of vendors considered for an enterprise application selection by the mid-market companies. These companies generally are agile, but have a limited IT budget/staff, a conservative IT strategy, and less intricate mixed-mode discrete manufacturing, CRM and B2B e-commerce collaboration requirements.
Fast expanding, multi-national and companies looking for a deeper vertical functionality may benefit from evaluating other products at this stage.
Organizations seeking a Web-based solution and out-of-box functionality with little or no re-engineering effort may want to inquire about the M2M's hosted offering though.
The industries that would most likely benefit from using its products are electronics, consumer products, industrial machinery, fabricated products, computer and office equipment, transportation equipment, and rubber and plastic products. Existing users of DOS-based products or earlier Windows product releases that run on Visual Foxpro database may benefit from querying the company's future two-pronged product strategy, product migration path, service & support, and/or scalability strategy.
More comprehensive recommendations for both current and potential Made2Manage users can be found in Made2Manage Systems, Inc.: M2M From A2Z For SMEs?