Vendor
Summary
MAPICS,
Inc., headquartered in Atlanta, GA, is a leading global provider of enterprise
business software for mid-size discrete and batch-process manufacturing enterprises
and large corporate divisions. MAPICS revenues in fiscal 1998 were $130 million.
IBM launched MAPICS II (Manufacturing Accounting and Production Information
Control System) software in 1978. It was the first MRP system commercially available
for manufacturing enterprises and held the lion's share of the marketplace for
many years, until the advent of client-server computing and emergence of the
new generation of MRP systems, namely ERP. MAPICS II evolved from its start
on the earliest midrange computers to take advantage of IBM's AS/400 in 1988
(MAPICS/DB). In 1993, IBM formed an alliance with Marcam Corp., which took over
the MAPICS product and announced MAPICS XA (eXtended Advantage). In 1997, MAPICS
Inc. separated from Marcam and became an independent public company, registered
on the NASDAQ national market. The Company's current MAPICS XA product line,
installed in over 2,400 sites, consists of more than 50 integrated application
modules in the following six areas: Engineering Management; Demand Management;
Operations Management; Resource Planning; Financial Management; and Business
Management. Recent product enhancements include technologies such as Wisdom,
an advanced planning and scheduling system developed in alliance with Symix
Systems; FrontOffice, a CRM solution, developed in alliance with Trilogy Software;
COM_Net, for Internet enabled order management; and MAPICS Workflow, a solution
that enhances data sharing throughout the corporate enterprise. MAPICS sells
its product primarily through a network of 85 affiliates that sell, install,
service and support the product line in more than 70 countries (approx. 25%
of the total MAPICS' revenue comes from the international market). By fiscal
year end 1998, the Company had approx. 5,700 MAPICS II and MAPICS/DB customer
sites.
Fig. 1
Vendor
Strengths
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Well-established, leading global position in discrete and
batch manufacturing Small-to-Medium Enterprises (SME) segment of ERP market,
with a comprehensive product line, large satisfied customer base, and dedicated
affiliate channel. Established track record of delivering consistent profitable
results (See Fig. 1 - MAPICS, Inc. Annual Results Chart).
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MAPICS has consistently scored above average in following
key industry customer-service & support benchmarks: reliability, quality
of support, vendor stability, overall relationship, ease of doing business,
affiliate product and industry knowledge.
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Continuous focus on high customer satisfaction and heavy
investment in R&D (See Fig. 4 ERP Vendors R&D Employees as % of Total
Employees). Low staff turnover provides for a very stable organization,
while a long presence on the same platform ensured that R&D money had been
spent on enhancing product functionality, rather than on keeping up with
the latest technology fads.
Fig. 2
Vendor
Challenges
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Increasingly competitive market and declining market growth
caused the Company to post modest results in the first 3 quarters of fiscal
1999. Recent MAPICS revenue growth has been driven primarily by the existing
customer base (approx. 80% of total revenue), with significant deceleration
in license revenue (down 16%), flat total revenue, and steep profit decrease
(down 37%) compared to the third quarter of the last year (see Fig. 2 -
MAPICS Inc. Quarterly Results Chart).
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Late move into Windows NT platform development in 1998
makes the Company's mid-term success directly dependent on IBM's ability
to successfully market the AS/400.
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MAPICS is confined to discrete and batch manufacturing
markets and does not support process manufacturing with complex product
formulas. This does not provide MAPICS much maneuverability within an ERP
market with a declining growth rate. Moreover some modules offer only basic
functionality within its "native" discrete manufacturing area (e.g. quality
management, transportation, human resources).
Fig. 3
Vendor
Predictions
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Fiscal 1999 will prove to be challenging for MAPICS. We
predict significantly reduced annual revenue growth (10%-20%), and reduced
profit (down 40%) compared to the last fiscal year (75% probability).
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No major acquisitions are expected in the foreseeable future
(80% probability). Instead, the focus will be on interfacing with Trilogy's
applications, as well as on expanding its own product functionality and
offering new vertical industry solutions (see Vendor Challenges).
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AS/400 products will contribute more than 50% of total
license revenue within the next 5 fiscal years (70% probability). For the
next 18 months, approx. 80% of license revenue will come from MAPICS existing
customer base, who will want to either replace an old MAPICS product or
add new modules to an existing MAPICS XA installation (75% probability).
Fig. 4
Vendor
Recommendations
Expanding
into process manufacturing might appear as a logical surface recommendation.
However, since its inception, MAPICS has focused on discrete manufacturing,
and has not developed any internal process manufacturing expertise. Existing
MAPICS resources and corporate culture do not make diversification a viable
option at this stage. Therefore, we recommend the following:
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MAPICS should further entrench its leading position in
the Small-to-Medium Enterprises (SME) market segment in the following ways:
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Expand business in its existing customer base, by upgrading
older versions of software and by offering both new ERP modules and
enterprise applications beyond its core ERP solutions (Front-Office,
Supply Chain, E-Commerce).
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Expand further into the SME market, particularly into
the lower-end that is still out of reach of the bigger ERP vendors by
further leveraging its very strong affiliate channel network. Delivery
of more new, focused and pre-configured vertical solutions, and offering
application of outsourcing would make MAPICS additionally attractive
to resource constrained smaller enterprises.
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Expedite the completion of Windows NT and Java related
development work before the end of 1999.
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Remain committed to new product features/enhancements introduction
(e.g. multi-site capabilities and transportation) and to enhancing Business
Intelligence offerings.
User
Recommendations
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We generally recommend including MAPICS on a long list
of an enterprise application selection for mid-market companies (with $50M-$500M
in revenue) and to divisions of Tier1 global companies, based on its broad
product portfolio and excellent global service and support.
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MAPICS should be included on the short list of any selection
within the SME market where discrete and batch manufacturing and logistics
modules are the main pillars of an enterprise application. The industries
that would most likely benefit from using MAPICS products are automotive,
electronics, industrial machinery and equipment, consumer products, and
pharmaceutical.
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While MAPICS service and support is strong overall, affiliate
capabilities and industry focus can vary. Therefore, potential clients should
conduct a preliminary research on industry expertise and reference sites
of a regional MAPICS affiliate service provider when MAPICS is included
in the selection process.
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If MAPICS XA is selected, future clients should negotiate
possible future server uplift charges, in anticipation of either incorporation
of new product components or expansion to other sites.