Event
Summary
On January 25, Made2Manage Systems Inc. (NASDAQ: MTMS), a provider
of enterprise business systems for small and midsize manufacturers, reported
fourth quarter and full year 2000 results. For the quarter ended December
31, 2000, total revenues were $9.6 million, a 34% increase from fourth
quarter 1999 revenues of $7.2 million. Software license revenue was $4.8
million compared to $3.0 million in 1999, which represents an impressive
58% increase. Services revenue was up 15% to $4.5 million from $3.9 million
1999. Net income for the Q4 2000 was $123,000 compared to a loss of $735,000
for the Q4 1999 (See Figure 1).
Figure
1.
Total
annual revenues for 2000 were $32.9 million, a 6% increase compared to
$31.1 million in 1999. Software license revenue grew 9% to $14.9 million
in 2000 from $13.7 million in 1999. The net loss for 2000, including all
the write-down and other charges, was $2.5 million, compared to a net
loss of $1.5 million in 1999 (See Figure 2).
Figure
2.
"We
are very pleased with the revenue growth and profitability in the quarter.
Our focus on growing the top line coupled with appropriate expense management
is paying off," said David B. Wortman, chairman and CEO. "We are optimistic
about our revenue growth for 2001 and anticipate that historical trends
of higher revenues in the second half of the year will continue. However,
we remain cautious as we monitor the effects of the economy on manufacturers
in our market space. We continue to enhance and expand our product offering
to ensure we remain a leader in providing comprehensive business management
solutions to small and midsize manufacturers. This product expansion into
areas of rapid growth such as customer relationship management, supply
chain management and e-business applications is critical to our continued
success."
Market
Impact
While
not yet out of the woods, as voiced in its CEO's cautionary message, Made2Manage
seems to be on the mend. This has been a crunching time for smaller applications
vendors and Made2Manage has had its fair share of hardships. During 1999
it boldly embarked on a strategy to provide e-commerce solutions for its
target market - small-to-medium manufacturing enterprises (SMEs).
Throughout
2000, Made2Manage continued to complete its evolution from a vendor of
traditional MRP software to a provider of 'one-stop-shop' business applications,
including integrated front office, back office, business intelligence
and e-business capabilities for its target niche. The company has long
demonstrated a deep understanding of this market's dynamics and its requirements
of inexpensive products, fast and simple implementations, and good service
and support.
Further,
the company's readiness to provide smaller discrete manufacturers with
a number of portals that offer a broad range of collaborative, interactive,
and communications applications, makes it even more attractive. These
applications include collaborative engineering design, tools, trading
exchanges, and access to information resources. Made2Manage has also been
proactive in service and support cost reduction by harnessing the latest
technology, like CBT (Computer Based Training), to deliver inexpensive
users' training.
Its
proactive grasp of the ASP opportunity is also praiseworthy, particularly
in light of its peers' tardiness in that regard (for more information,
see Small
ERP Vendors Missing The ASP Boat. While manufacturers usually prefer
to keep their ERP systems in-house, many may opt to use Made2Manage hosted
applications for collaborative commerce, which is available through www.m2meport.com
portal. Furthermore, its embrace of Microsoft's .NET technology
and SOAP enterprise platform, which might possibly become the standard
for future Internet applications in the SME market, is certainly commendable.
Also, the company has been developing an indirect channel to supplement
its direct sales force and to address its low international presence.
Customers and resellers should benefit from the new "TEAM ONE" VAR program
because it allows both internal and external sales groups to share consulting
services, education and product configuration/customization services.
All the above-mentioned initiatives have, to our mind, contributed to
creating increased customer demand and acceptance of Made2Manage's offering.
However,
the above moves should be backed up with substantial progress in extending
multi-site and supply-chain management (SCM) functionality footprint,
and in a delivery of tailored vertical solutions, in order to spar with
the onslaught of its bigger competitors. Some of these current weaknesses
may be mitigated by the next product release, Made2Manage 4.0, which will
supposedly feature Explorer Link, Field Service and Multi-Warehouse capabilities.
This release, scheduled for early 2001, will also support Microsoft's
newest server software, SQL Server 2000.
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 making moves that should help it weather the storm.
The company has demonstrated a deep understanding of the low-end of the
ERP market dynamics and its requirements of inexpensive products, fast
and easy implementations and good service. The innovativeness of its offerings
to the SME market is attractive and should be taken into initial consideration.
More
comprehensive recommendations for both current and potential Made2Manage
users can be found in Made2Manage
Systems, Inc.: M2M From A2Z For SMEs?