Vendor
Genesis
Provia Software began life as Haushahn Systems & Engineers, a subsidiary
of German elevator system manufacturer Haushahn GmbH. Haushahn's elevator
technology led it to develop material handling and automated storage and
retrieval systems (AS/RS). The need for and growing interest in software
to manage automation in North America led to the formation of Grand Rapids,
Michigan-based Haushahn Systems & Engineers in 1988. Under the leadership
of CEO Ken Lewis, HS&E established its business in software and material
handling and AS/RS for large warehouse distribution and logistics operations.
Though
AS/RS remained an important offering, HS&E began to evolve into a full-fledged
supply chain execution vendor, complementing its WMS with acquisitions
like Pinnacle Distribution's transportation management software in May
1999. In an effort to disencumber its diverging businesses, Haushahn GmbH
divided the AS/RS and supply chain execution software sides of HS&E into
separate entities, Viastore Systems and Provia Software, respectively.
Today, Provia offers capabilities for AS/RS the result of the company's
continued evolution as a global provider of supply chain execution software.
Warehouse
management system vendors typically derive a larger portion of revenue
from implementation services than other software companies due to the
complexity of the applications and integration involved in uniting the
WMS with hardware like conveyors, bucket elevators, and other material
handling equipment. Though Provia claims to have offered one of the first
packaged WMS applications, its revenue mix has reflected an emphasis on
services until the last few years. License revenues continue to increase
as a percentage of total revenue and are currently at about 27%, a little
over one quarter of total. Service and support revenues make up around
43% and hardware resale revenues constitute the remainder. Provia plans
to phase out hardware sales over the next two years as it fully transforms
into a software company. Overall, Provia's revenues grew by over 100%
during the two years prior to Y2K but flattened out in recent quarters
in response to delayed purchasing among its core customers.
The
VIAWARE suite of applications for fulfillment is Provia's response to
a clear trend among many warehouse management software vendors to round
out their product offerings by including adjacent functionality. Key components
of VIAWARE are Provia's flagship warehouse management system (WMS) and
yard management system (YMS), an order management system (OMS) acquired
in 1999 from Logistics Concepts, a transportation management system (TMS)
acquired earlier this year from Pinnacle Distribution Concepts, and its
new visibility tool ViaView, developed in-house, among other applications
(see table under "Product Info").
Vendor
Strategy and Trajectory
Like many other SCE vendors, Provia is retooling its strategy to attack
the lucrative business-to-business fulfillment software market. On a vertical
front, third party logistics and wholesale distribution continue to be
hot areas for Provia, though its solutions are finding increasing favor
among makers of consumer goods and to a lesser extent process manufacturers
and retailers. As a WMS vendor, Provia risked the same fate as other small,
best-of-breed vendors, that is, becoming dependent upon larger ERP and
SCM companies for survival.
The
suite that Provia has built through acquisition and internal development
over the past several months allows it to pursue larger, longer-term contracts,
an ability that will ensure its success as an independent company provided
it continues to execute well and leverage its highly referenceable client
base. Provia stands apart from its peers in the enterprise software industry
by claiming that behind every one of its installations is a satisfied
client. In August 2000, Provia celebrated the 500th implementation of
VIAWARE. Aiding Provia on the implementation front are several integration
partners, including general consulting houses like PricewaterhouseCoopers,
Andersen Consulting, and Internet services firms like E-Sync, Q4 Logistics,
and marchFIRST (formerly Whittman-Hart).
ANALYSIS
Vendor Strengths
Provia
is distinguished from other vendors by its unique approach to implementation
services. Its Knowledge Exchange Methodology allows clients to learn the
nuts and bolts of VIAWARE in a two-week course before the start of the
implementation. Use of internal resources can bring clients great cost
savings in addition to building expertise for ongoing maintenance. Client
ownership is facilitated by Provia's emphasis on the packaged aspects
of the VIAWARE suite and its stance against customizations that can quickly
ensnare project timelines. While a packaged approach is not for all clients,
those who have chosen the methodology have good things to say.
Another
important strength for Provia is its enviable foothold in the third party
logistics market, achieved during its twelve years as HS&E. VIAWARE can
be found in the IT infrastructures of blue-chip providers like: Fedex
Logistics, Menlo Logistics, Total Logistic Control, Emery Worldwide, and
Ryder. New products ViaView and 3pl2deliver.com show that Provia is adept
at leveraging this position to generate new forms of revenue.
Vendor
Challenges
Provia's primary challenge is overcoming its lack of market visibility.
During the twelve years that it operated as Haushahn Systems & Engineers,
the company established a reputation among a select group of 3rd party
logistics providers and distributors. But Provia will need to broaden
its appeal if it hopes to fend off competition from other WMS and SCE
vendors. Companies such as EXE Technologies, Manhattan Associates and
HK Systems are following similar strategies and benefit from higher market
profiles. In addition, Provia does not have a substantial number of alliances
with complementary software providers, such as ERP, CRM, and Enterprise
Application Integration vendors. Predictably, SAP is the only major enterprise
application vendor for which Provia has coded a certified interface. Provia
does integrate to other ERP products through a standard host interface,
VIAWARE Gateway.
BOTTOM
LINE
Vendor Predictions
Provia
has successfully transitioned from a material handling systems vendor
into a world class order fulfillment application vendor, a fact reinforced
by its proven ability to win and keep clients. Provided it completes the
integration of acquired products of its VIAWARE suite over the next six
months, we expect Provia to register a minimum 20-25% CAGR over the next
two years.
Vendor
Recommendations
Provia should follow up its new name and image with further marketing
initiatives to penetrate mid tier distributors and Internet retail companies.
Top tier clients can contribute to growth by replicating single site implementations
to other parts of the organization, but the mid market is growing faster
and offers great rewards for vendors that stake an early claim. In addition,
Internet retailers habitually underestimate the demands of managing a
fulfillment network, a failure that Provia can rectify with VIAWARE by
targeting its message appropriately. Functionally, Provia should consider
acquiring or allying with a software vendor that offers full support for
ocean, air, and rail transportation modes to broaden the scope of its
TMS.
User
Recommendations
Provia has a strong value proposition for companies in third party logistics,
consumer packaged goods, high tech electronics, industrial distribution,
and retail. VIAWARE components are supported on Unix-based application
servers, Windows NT clients, and Informix and Oracle database platforms.
Internet
front-ends for its products are being developed but users should expect
to wait another six months (first quarter 2001) before all of VIAWARE
can be accessed through a thin client. FreightLogic, the product acquired
from Pinnacle that ultimately became VIAWARE TMS was built originally
for the Web. Provia is replicating its technology to make the rest of
its suite Internet-compliant with plans to have VIAWARE OMS enabled next.
Prospective
clients should keep in mind the packaged nature of VIAWARE and understand
that customizations will cost more. Users who want to host their applications
internally or "rent" them from Provia via a partner ASP can sign up for
VIAWARE TMS and ViaView immediately. Provia offers extremely flexible
subscription terms including low startup fees (two month's rent in advance)
and 30-day cancellation.
Figure
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Figure
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