Event
Summary
As announced in the press release from May 17, Ross Systems' Chairman
and CEO, Dennis Vohs will retire as CEO at the end of the company's fiscal
year on June 30, 2000. J. Patrick (Pat) Tinley, has been selected as the
new President and CEO. Mr. Tinley has over 22 years of experience in the
software industry. During the last twelve months, he has successfully
orchestrated the transition of the company to an e-Commerce solution provider.
"Pat
has restructured the entire management organization to prepare for the
drive into the B2B e-Commerce marketplace," said Dennis Vohs. "Pat has
lead this process, built an excellent team and is the perfect executive
to direct the company's efforts into this fast growing market. The new
management team appointments include proven senior executives in sales,
marketing, consulting and development, as well as in our European and
worldwide distribution operations."
"Dennis
has been instrumental in the growth of Ross from a $17 million dollar
company in 1989 to $102 million last fiscal year and positioned the company
as a premier supplier of e-business solutions to our process manufacturing
customers worldwide, in fourteen languages and delivered in over fifty
countries." said Pat Tinley. "Dennis will continue to serve the company
as Chairman and is looking forward to a well deserved change in the scope
of his business activities."
Earlier,
on April 27, Ross Systems, Inc., a supplier of enterprise systems, announced
financial results for its third quarter of fiscal 2000, ended March 31,
2000. Revenues for the quarter declined to $18.5 million from $24.4 million
in the same period of the prior year. Operating expenses for the quarter
declined to $22.0 from $26.5 million in the prior year. The net loss for
the quarter was $3.9 million or $0.16 per share, including a $1.1 million
non-recurring charge, compared to $2.4 million or $0.11 per share in the
prior year.
"To
take advantage of the significant market opportunity projected in the
B2B e-commerce marketplace, the company has made investments in Fiscal
2000 to develop its e-commerce offerings and establish a branding and
distribution channel for these products and services," said Dennis Vohs,
Ross' Chairman and CEO. "The company also incurred costs in restructuring
its worldwide sales and marketing organization in order to improve efficiencies
and lower costs to accommodate these investments. I am extremely pleased
with the management team that we have assembled to lead Ross' charge in
the B2B market. We have made changes to improve every aspect of our senior
management team in sales, marketing, and product development both domestically
and internationally. Simultaneously, sales of enterprise systems, as has
been reported by other companies within the industry, have been slow to
return to levels experienced prior to the Y2K slowdown. As a result, the
company has reported losses in two of the first three quarters of Fiscal
2000."
Market
Impact
Behind managements' typical PR rhetoric lays the company's harsh reality
of steadily declining revenues (See Figure 1) and a fair amount of R&D
work in progress. The company introduced its iRenaissance ERP solution
in December 1999, as well as its internet connection and navigation architecture,
iRenaissance.Portal. However, the company's wholly owned subsidiary, Resynt
is currently only in beta testing with its initial sell-side website application,
PriceLink. Furthermore, the company only plans to announce to its customer
base and to industry analysts its more complete e-commerce strategy, ranging
from e-procurement to sell-side solutions, including trading exchanges
and supply chain collaboration. Executing these initiatives with its ever-thinning
resources will be a tremendous challenge.
Figure
1.
Ross
offers possibly the best and broadest functionality for the process manufacturing
mid-market segment, with a sharp vertical focus and good multi-national
capabilities. It also offers financial and HR products for the healthcare
and public sector market segments. These have proven to be significantly
less profitable than its process manufacturing product line, and has in
the past resulted in diluting the company's resources and focus. We believe
the company will have to conduct a serious 'soul searching' and scrutinize
its target markets. Giving each product line profit and loss responsibility
may possibly help Ross close its ranks and weather the impending stormy
period.
User
Recommendations
We generally recommend including Ross Systems in a list of an enterprise
application selection for mid-market companies (with $50M-$500M in revenue)
within the following industries: chemicals, food & beverage, pharmaceuticals,
forest products, and metals. Users from the healthcare and public sectors
may also benefit from evaluating Ross' relevant product lines. This as
well as obtaining the company's implementation guarantee could be leveraged
against other vendors in the selection.
Any
organization evaluating Ross Systems should consider existing functionality
only, and, in the case of final selection, should inquire and negotiate
incorporation of new applications components now at negotiated license
fees, given its recent new product introductions. Moderate caution should
be exercised now and a watchful eye should be kept at the company's future
financial performance.