New
Management at Manhattan Associates
S. McVey - October
19th, 1999
Event
Summary
On October
18, Manhattan Associates, Inc. announced that Alan Dabbiere will abdicate his
position as President and CEO of the Atlanta-based warehouse management system
vendor. His replacement, Richard (Dick) M. Haddrill, joins Manhattan from Powerhouse
Technologies, a diversified gaming technology company, where he occupied the
chief executive position. Founder Dabbiere will continue in his role as Chairman,
remaining involved in strategic projects for the company. The announcement comes
shortly before the company's third quarter earnings release.
Market
Impact
Demonstrating
70% license revenue growth over the past four years, Manhattan Associates has
proven that best-of-breeds can still be competitive in a consolidating marketplace.
However, lackluster performance over the three quarters since its last fiscal
year-end, combined with management team changes, may indicate the company is
planning a change in direction (see figure). At $62 million in annual revenues
(1998), Manhattan occupies the fourth position among supply chain execution
vendors behind Industri-Matematik, privately held McHugh Software, and IBS.
In contrast to many of the other players, Manhattan touts a relatively narrow
product offering, concentrating on warehouse management systems (WMS) and transportation
management software. When a company relies so heavily on one set of applications,
delayed product releases, such as that occurring in June, can have a detrimental
impact on earnings. With analysts predicting further losses for the company,
Manhattan will need to reassess its current formula and bring in the skills
needed to implement changes needed for it to stay competitive.
Dabbiere is
the third top executive at Manhattan to leave his post this year. Executive
Vice President Gregory Cronin left in March for an opportunity at another software
firm. In May, Robert Bearden vacated his position as Senior Vice President of
Global Sales, and Manhattan has yet to find a permanent replacement. Usually,
changes in management bring new ideas and a new corporate direction for a company.
With a strong capital position and good liquidity, Manhattan may well be ready
to embark on a more aggressive path of acquisitions and third-party alliances
to expand its footprint and preserve its market position.
User
Recommendations
Too often,
the tendency in selections is to give strong emphasis on product functionality,
while neglecting the drivers that ultimately determine that functionality: corporate
strategy. In addition to understanding the stated corporate strategy, project
teams must consider how that strategy will influence its product development
efforts and whether the vendor will be able to support the long-term objectives
of the project. Sometimes, changes in strategy are announced with fanfare, as
in the case of Catalyst International abandoning plans for an NT WMS product
following the recent investment by SAP. More often, however, these changes are
less obvious to the public, including customers. The recent power shuffle at
Manhattan should give all current and prospective users a reason to stop and
take notice.