WAM Systems develops and markets Internet-enabled Supply
Chain Planning (SCP) solutions exclusively to the worldwide chemical industry.
CEO Jack Weiss founded the company in 1987 as a developer of custom solutions
to support complex planning and scheduling requirements of polymer manufacturers.
Weiss and others observed that SCP applications prevalent at the time
were designed for discrete manufacturing operations common in electronics,
automotive and consumer packaged goods industries.
was conceived to help companies address supply chain problems specific
to areas of chemical processing such as reaction operations, liquid and
gas transfer, evaporation, mixing, and extrusion. Since the company's
inception revenue composition has steadily shifted toward licenses while
revenues from custom services have waned. Today, WAM's livelihood relies
predominantly on sales of its packaged solution suite, PICASO
Advanced Planning System and implementation support
PICASO suite for supply chain planning consists of a central supply chain
simulator supported by modules for collaborative sales forecasting, production
planning and scheduling, inventory targeting, cycle optimization, distribution
planning, and raw material planning. Planning to partner with EAI vendors
including webMethods and Extricity, WAM will offer a B2B
messaging layer to PICASO that helps users engage in collaboration with
Trajectory and Strategy
WAM Systems remains dedicated to solving the supply chain problems characterizing
the chemical industries. Though its core market is polymers, WAM has identified
new areas of growth in peripheral verticals. It plans to target primary
expansion markets in paints, adhesives, and lubricants and then move on
to organics (carbon-based chemicals), inorganics, gaseous products, and
agricultural products. WAM sees huge potential in these markets and estimates
that only four percent of chemical plants worldwide currently use SCP
software. The company expects this percentage to grow to 48% by 2004 with
total revenues from chemical plant SCP installations reaching $950 million
the same year. These projections are based in part on a survey conducted
by WAM of 638 chemical industry executives in which 70% reported planned
SCP or e-business initiatives in year 2001.
plans to nearly double its workforce within the next year to keep pace
with its growth projections. Many of the new recruits will assume roles
in sales and marketing as most of WAM's forty employees are engaged in
consulting services and product development. Overall, penetration into
international markets still remains low given WAM's small size and untapped
domestic opportunities. However, WAM just signed a multi-million dollar
deal with Pecom Engergia in Argentina for a complete eSCM
solution. Additionally, many of WAM's customers are large multinationals
that can provide access to international sites if properly leveraged.
have played a major role in shaping the current PICASO suite through the
years. WAM solutions have found homes within the technology infrastructures
of many well-known leaders in the chemical industry, including BPAmoco,
Chevron Phillips, Cyro, Equistar, ExxonMobil,
Montell Polyolefins, SABIC, and Solvay. Some
of these companies have been using PICASO since WAM was founded, a testament
to its commitment to customer service.
PICASO is a broad, feature-rich, pre-configured product suite designed
from custom applications developed in conjunction with leading chemical
manufacturing companies over many years. This evolution gives it an
edge over applications whose designs were based only on feedback from
market researchers and focus groups. Usability is a key strength - especially
in regard to tracking inventory availability, which PICASO enables through
an intuitive graphical user interface.
Since chemical manufacturing presents unique challenges, most vendors
have not bothered to package functionality as WAM has done, but design
custom solutions one client at a time. Some, like Aspen Technology,
offer software "toolsets" that are intended for large companies that
still staff engineering departments capable of assuming the tasks of
modeling and configuring software as needed. Downsizing has made fully
complemented engineering divisions more the exception than the rule,
however, and WAM is one of the few vendors that can offer a product
with readymade functionality that does not require vast resources to
construct and maintain.
tier customers in the chemical process industries (CPI):
WAM counts among its customers three of the top ten petroleum refiners,
including number one ExxonMobil, plus many other well-known companies
like Solvay and Equistar. Large, multinational companies provide WAM
many opportunities for repeat business as they expand SCP to other sites
and functional areas.
By far the greatest challenge for WAM lies in creating brand awareness.
Without recognition in the corporate buying community, WAM has a substantial
disadvantage among other SCP vendors in being asked to participate in
software selections. WAM has clearly acknowledged its shortcoming and
has recruited top industry professionals like John Kaiser, Executive
Vice President Sales and Marketing, to spearhead efforts to make its
on niche market:
WAM Systems has been well served by its commitment to the polymer manufacturing
industry since its founding. However, unless its efforts to expand into
peripheral chemical industry segments are successful, the company risks
being permanently relegated to a limited niche.
funding levels required for growth: As a privately held company,
WAM Systems sustains its operations solely with funding from revenues
and venture capital. To date, these sources have proven sufficient for
its needs; however, the downturn in the technology sector may complicate
future efforts to obtain private placement and it is unlikely that current
revenues can support WAM's plans for growth over the next several years.
Expansion: WAM believes expansion into new chemical industry
verticals is a critical step in establishing new areas of growth. While
revenue from its primary market, polymers, will continue to grow at
a moderate rate; its sales and marketing efforts directed toward expansion
verticals (adhesives, paints, and lubricants) should result in these
areas contributing 10% to overall revenue composition by the end of
2001. (60% probability)
Public: Given the strong investor skepticism toward the IPO market,
it is doubtful that WAM Systems will attempt a public offering until
late 2001. Although WAM has many attributes that would appeal to investors,
such as a history of venture funding support and a list of top tier
clients, its narrow market niche and brand obscurity make a near-term
IPO unadvisable. (70% probability)
The PICASO B2B messaging capabilities represent an important advance
for WAM and strong selling point for customers eager to join the e-business
revolution. However, more capabilities could be added to further enhance
its ability to support one-to-many and many-to-many collaboration and
integration to net marketplaces for buying and selling chemicals. We
expect WAM to partner with an e-commerce platform provider to extend
its functionality within the next twelve months. (70% probability)
- The ability
of PICASO to represent and track vast numbers of product SKUs (stock
keeping units) makes it an ideal solution for polymer and specialty
chemicals companies. It would be even more useful if packaged with a
laboratory information system (LIS). LIS applications and PICASO use
much of the same data, such as product specifications, product and raw
material assays, and customer order information. Combining PICASO with
an LIS would be a strong selling point for customers who want both supply
chain management and laboratory data management and would otherwise
need to go to two vendors.
- WAM Systems
should continue its plans to build its market presence, crafting its
message for executive levels (CIO, CEO, COO) of mid to top tier chemical
manufacturers. An emphasis on the B2B fulfillment aspects is paramount
for getting a foot in the door so that a case may be made for the rest
of the PICASO suite.
- WAM Systems
may want to consider building APIs to facilitate the integration of
PICASO to DCS (Distributed Control Systems) and SCADA (Supervisory Control
and Data Acquisition) systems. This strategy may give it leverage against
the 900-lb gorilla of the chemicals SCP software space, Aspen Technology,
for which integration to these plant-level systems is a strong selling
- For polymer
manufacturers of any size, PICASO is virtually the only solution on
the market that, although not quite "shrink-wrapped," contains a rich
set of built-in features that can be implemented with no customization.
and mid market companies in the broader chemical manufacturing industries
such as specialty chemicals and petrochemicals that do not support a
staff of operations research engineers should give WAM a prominent position
on its list of vendors.
multinational petroleum refiners and chemical manufacturers that want
maximum control and flexibility over their solutions should probably
look beyond WAM to more toolset-oriented applications, most notably
Aspen Technology's eSupply Chain Suite.
that may be put off by WAM's relatively small size and undisclosed financial
condition should be reassured by its successful, established customers
and thirteen-year operating history.