Symix
Expands Its Product Offering While Remaining Profitable
P.J.
Jakovljevic - February 28th, 2000
Event
Summary
On February 10, Symix Systems, Inc. announced that it had completed the acquisition
of Profit Solutions, Inc. ("PSI"), a provider of Web-based customer relationship
management (CRM) software. PSI will merge with Front Step Inc., Symix's eBusiness
subsidiary. The acquisition was first publicly announced January 20, 2000.
PSI's
eCRM Front Office(TM) is one of the industry's first completely Web- based CRM
solutions, delivering marketing automation, sales management, service management,
and business intelligence. The eCRM Front Office applications will be integrated
with Front Step's eBusiness software suite to provide a complete, Internet-based
customer service, customer intelligence, and customer relationship and response
solution. As an eCRM business unit within Front Step, PSI independently markets
to midsize companies in the manufacturing, hospitality/service, financial service
and healthcare industries. The new Front Step eCRM business unit, led by PSI
President Susan Woelfel, will maintain its headquarters in Minneapolis, Minn.
On
January 31, Symix Systems, Inc. announced that it had partnered with Software
Plus, a leading provider of human resource and payroll solutions, to deliver
Web-based HR/Payroll systems to its midsize manufacturing customers. Software
Plus' Geneva, Geneva Xpress and Geneva Web applications complement Symix's eBusiness
and SyteLine ERP suites, allowing SyteLine customers to better manage administrative
personnel processes, and rapidly disseminate this personnel-related information
internally via a corporate intranet.
Software
Plus' Geneva, Geneva Xpress and Geneva Web applications are available today
integrated with SyteLine ERP, Symix's enterprise resource planning application
for midsize manufacturers of industrial products. Geneva enables SyteLine customers
to expand their financial management capabilities to meet payroll, regulatory
and management HRIS challenges. Geneva Web facilitates the transition of the
traditional HR/payroll management function to a dynamic online employee information
source.
On
January 20, Symix Systems, Inc. announced financial results for the second quarter
and six months ended December 31, 1999. Total revenue for the quarter increased
4 percent to $34.4 million from $33.1 million in last year's comparable quarter.
For the six-month period ended December 31, 1999, total revenue increased 11
percent to $66.5 million from $60.0 million last year.
Net
income for the second quarter of fiscal 2000 decreased to $288,000, or $0.04
per share (diluted), from $2.3 million, or $0.32 per share (diluted), in the
second quarter of fiscal 1999. Net income for the six-month period was $1.2
million, or $0.15 per share (diluted), versus $3.2 million, or $0.44 per share
(diluted), in the comparable period last year. License fee revenue for the second
quarter was $15.5 million reflecting a 16 percent sequential increase from the
first quarter and an 18 percent decline from last year's comparable quarter.
"With the passing of Y2K, I am pleased to report that Symix maintained consistent
profitability throughout altered market conditions while actively positioning
the company for the digital economy," said Stephen A. Sasser, Symix President
and Chief Executive Officer. "Now that Y2K concerns have been widely put to
rest, we anticipate that our traditional Customer Synchronized Resource Planning
business will begin to rebound during the coming year, and will be driven primarily
by the requirement for integrated eBusiness systems. Symix is prepared to deliver
on these market requirements. We are growing and advancing the business through
several new strategic initiatives, including the establishment of an eBusiness
applications and services subsidiary, Front Step, Inc., and the pending acquisition
of eCRM vendor Profit Solutions, Inc."
Market
Impact
Although much less visible and publicized than its larger brethren, Symix Systems
continues to be a profitable vendor (See Figure 1). While there may be a reason
for concern due to declining license revenue, the fact remains that profit has
been posted despite increasing R&D expenses.
The
company is taking full advantage of its soaring market capitalization to extend
both its foothold in the coveted small-to-medium (SME) ERP market segment and
fill the current gaps within its product portfolio. We believe that the company
is striking a good balance in extending its offering by both acquisition and
partnering with best-of-breed vendors. We also believe that these moves are
in tune with the current ERP market trends. However, the company will be faced
with two challenges.
First,
it will have to undertake full integration of the acquired applications if it
wishes to mine its large customer base.
Second,
the new product will further complicate the manageability of Symix' portfolio
of disparate product lines that run on disparate platforms.
User
Recommendations
Symix should be included on a short list in any selection within the SME market
(companies with $30M-$500M in revenue) where discrete manufacturing, assembly,
and distribution modules are the main pillars of an enterprise application.
However, any organization evaluating Symix Systems should only consider existing
functionality, and, in case of final selection, should negotiate the incorporation
of new application components now. Future clients are also advised to request
the Company's written commitment to promised functionality, length of implementation,
and seamless future upgrades and/or integration, particularly for the products
in question.