Adonix Grows Roots Against The Odds Part 1

Adonix Grows Roots Against The Odds
P.J. Jakovljevic - August 20, 2002

Event Summary

Amid the doom, gloom and despondency news coming from almost all corners of the world economy and particularly from the tech sector, it may be refreshing to hear upbeat and enthusiastic plans for the future coming from a relatively less known smaller vendor.

Adonix (www.adonix.com), a privately held French enterprise applications provider for mid-sized mixed-mode manufacturing and distribution companies, has recently unveiled its latest product release, Adonix X3 Version 1.34, an enterprise resource planning (ERP) suite featuring true Internet architecture. The product is touted as possibly the first web-native ERP solution developed to meet the demands of the mid-market for inexpensive and universal access to enterprise applications by remote and mobile users.

The new version additionally enables companies to extend Adonix X3 business transaction and inquiry functions to their Web storefronts, making it also feasible to connect to customers, trading exchanges, and key business partners. To that end, Adonix Xtend is a toolset that uses industry standard middleware, eXtended Markup Language (XML) technologies, and Adonix APIs (application programming interfaces) to create the connection of Adonix X3 with customers' storefronts. Adonix Xtend enhances the flow of business transactions information, giving Web users real-time access to product catalogs, pricing, stock availability, order placements and order status information.

Additionally, Adonix has recently rolled out a new data collection module intended to help warehouse and shop floor operations by communicating with manufacturing, distribution and accounting functions. Adonix Data Collection gathers data directly from automated input devices across operational areas, verifies its accuracy, and passes data to Adonix X3 for immediate update. It also controls all prompts on collection devices, manages the entire network of devices, and ensures that data is saved during system downtime.

Also, on August 2, Adonix and the family-owned group Guillemot signed an agreement on the purchase by Adonix of the controlling stake in French financial computer services provider Groupe Abel owned by Guillemot. The transaction has been carried out at a price of 6.0 euro ($5.9) per share, and following the acquisition Adonix should own ~55.4% of Abel's capital and majority (51.3%) of the existing voting rights in the company. Groupe Abel is listed on the Nouveau Marche segment of Euronext Paris.

Adonix reportedly plans to respond to future market changes by continuing to improve its X3 application, as it did when it had rolled out the earlier Version 1.3 that allows Internet access to the software system, and features broadened scope of its traditional back-office enterprise applications manufacturing, distribution and accounting by integrating front-office applications, including CRM, customer service, and product configuration into Adonix X3.

Moreover, in addition to providing traditional extended-ERP functionality within the X3 software, integrated data collection, barcode label management, and full implementation services, Adonix also provides data collection equipment manufactured by leading hardware vendors including Intermec. Consequently, Adonix believes that its product offering exhibits superior features and capabilities than most of its peer mid-market competitors' products, particularly in terms of scalability, flexibility/configuration, multi-national capabilities, multi-site capabilities, and the support for many platforms (UNIX and Windows NT/2000/XP, using Microsoft SQL Server, IBM DB2, and Oracle databases, both through the Windows- and browser-based client). Further Adonix uses industry-standard tools such as XML and Java, together with Adonix API's, that open the system to communicating easily with business partners, trading exchanges and other applications and languages.

Adonix X3 can either be implemented as a company-wide business management system or incrementally to support specific business processes or time-phased implementations. While the system provides a variety of parameters that can be set to adapt implementations to the needs of the business without programming changes, best-practice templates are also available to promote rapid, timely implementations.

To add to good news, another benchmark was achieved in June when Adonix X3 signed up its 500th customer worldwide Texas Feathers, a leading manufacturer of ostrich feather cleaning products. Adonix X3 had been sold to 450 clients by the end 2001, including over a dozen clients in the US. However, since its founding in 1979, the company has grown to support the combined Adonix legacy applications of over 4,000 instances, with approximately 100 in the US, including at familiar corporations like Apple Computer, L'Oreal and Yoplait.

As a result of the expansion, the company has recently enhanced its executive ranks in the US, and is also pondering expanding its US-based staff a topic not often heard about lately. Alex Attal, the CEO of Adonix North American operations, joined last December. In April 2002, the company hired Lucia Ahnemann as VP of marketing and channels. Ahnemann was formerly CIO of Scient, an e-business consulting and professional services concern in New York City. Like Attal, Ahnemann is also a former executive with IBM.

This is Part One of a two-part note on recent developments at Adonix. Part Two will discuss the challenges Adonix faces and make User Recommendations.

Market Impact

Adonix might prove that a well-espoused value proposition can bode well despite a bad economical situation and unfavorable recognition of a newcomer vendor in some markets. With its main HQ in Paris, France and its US headquarters in Pittsburgh, PA, Adonix is not a uniformly well-known mid-market global vendor. Adonix has been changing that situation by increasingly showing up on many mid-market application selection's radar screens. That has been particularly true for the North American market, which should remain an important revenue contributor in the future, since the market accounts for about 20% of the company's total revenues with $9 million of the $45 million in global revenues recorded in 2001.

While the enterprise applications market suffered miserably recently, Adonix too felt a pinch of less than desired revenue growth, but it was still ahead of most of its peers while the company remained profitable. While corporate revenues grew approximately 5% in 2001, license revenues grew 15%, and in the US market, sales of Adonix X3 product doubled, while X3 related revenue growth worldwide was more than 150%. This was a notable feat, especially when the assimilation of multiple acquisitions and an ambitious product development strategy combine with the difficult sales situation. Consequently, the company continues to pour more than a hefty 20% of its revenue into product development. After committing a substantial investment in fortifying its flagship Adonix X3 ERP offering with new CRM and data collection capability and to make it both Web native and a Web Services amenable solution (i.e., XML and Java compliant), Adonix deserves to be weathering the present down market as well.

Adonix Strategy

In its early days, Adonix has made a conscious decision not to target a direct presence in most foreign markets, and to go for product distribution mainly through partners/value added resellers (VARs). Adonix X3 is currently sold in 18 countries. A direct subsidiary handles sales in the US as well as in France, Italy, Portugal, and Spain , while resellers and distributors sell Adonix elsewhere. This has traditionally proven to be advantageous to mid-market customers by allowing Adonix to keep their costs down. Further, selling through partners requires a higher quality of product support, and accompanying documentation.

By deliberately steering clear of the too ambitious expansionist policies that have hindered and/or badly hurt so many smaller software companies in the past, and by focusing on a handful of core markets, Adonix has managed to keep itself on a healthy track. Also, direct and indirect channels that have already been built in targeted countries have helped the company with product translation and localization issues, which have in turn resulted with solid multi-national and/or localization capabilities of the product.

Adonix has recently combined its established finance and accounting package with a solid manufacturing system, distribution system, and warehousing management system (WMS). Its offering would be in the same league with Lilly Software, IBS, Syspro, and Frontstep, with a possible edge in broader platform/middleware standards support, stronger multi-national capabilities and/or wider geographic coverage, often therefore making it competitive with the likes of Intentia, J.D. Edwards and SAP. This breadth and depth of functionality provides an attractive solution for resellers to offer their clients and for those wishing to adapt the software to their own vertical markets.

Adonix additionally provides its resellers with other opportunities designed to maximize revenues and profit margins, such as:

• Retain the entire revenue from services generated from customer implementations
  
  
• Retain a significant percentage of end-user license fees and annual maintenance fees
  
  
• A license fee program that is affordable for customers, and easy to understand and sell
  
  
• Aggressive quantity discount schedules by user range

Another Adonix' order winner is its per-seat pricing structure that suits small cost-conscious, risk-intolerant manufacturers and distributors, which often want to pay a fixed price for a solution, whatever the functional scope and implementation timeframe of their projects may be. As the company also prides itself on fast implementations (3 6 months) and on implementation costs being within 100% - 200% of software license costs (120% on average), the price tag appears to be attractive even in the current era of reduced IT budgets.

This concludes Part One of a two-part note on Adonix. Part Two will continue to examine the Market Impact, look at the Challenges Adonix faces, and make User Recommendations.