Event
Summary
Manugistics Group, Inc. recently announced its fourth quarter and fiscal
year-end results. License revenues grew 51% over the third quarter to
$22.0 million, while services and maintenance revenues remained largely
flat at $21.7 million, a 2% rise over the third quarter. The company signed
a substantial number of new clients, an effort that resulted in a 17%
increase in sales and marketing expenditures over the last quarter for
building its global sales organization. At $1.1 million, net loss for
the quarter was smaller than expectations, fueling a 9-point surge in
Manugistics' stock, which closed at 65 on Friday, March 24.
Market
Impact
A pioneer in supply chain management, Manugistics has for many years possessed
the expertise to "enable e-business" but lacked the strategy and infrastructure
necessary to effectively apply this knowledge. Over the past year and
a half, it has taken important steps toward rectifying this, including:
- Restructuring its business in early 1999, including a significant
headcount reduction
- Assembling a new management team comprised of former industry participants
in mid 1999
- Launching Internet products designed for e-commerce, bstreamz.com
and bnetworks.com in January 2000
- Allying itself to complementary software providers, including Siebel
for CRM in January 2000
In
spite of its fourth quarter success, Manugistics remains a long way from
recovering its former dominance in the supply chain management market
and has certainly has fallen short of its own growth projections. In April
1997, then CEO William Gibson mused that if his company could maintain
its market share, Manugistics had the potential to grow to ''close to
three quarters of a billion dollars'' in revenue by 2000. Unfortunately
for Manugistics, it lost much of its market share to more aggressive players
in the intervening years. The "close to three quarters of a billion dollar"
vendor is now i2 Technologies (with the recent acquisition of Aspect Development
Corporation).
User
Recommendations
Users evaluating supply chain management vendors should remember that
the core competencies of Manugistics' NetWORKS suite remain in process
manufacturing for consumer goods, but it has captured significant wins
in other verticals like high tech electronics (Compaq Computer) and chemicals
(DuPont). Since some segments of these other industries involve the same
processes as in CPG (Consumer Packaged Goods), users in Manugistics' non-core
verticals should find out what part of these clients' businesses employ
NetWORKS. For example, distribution operations for a PC manufacturer can
be modeled similarly to those of a soft drink manufacturer, although the
manufacturing processes are completely different.