Geac Trying Its Luck in Partnering:Market Impact

After a slew of acquisitions in the past, which have resulted in varied outcomes, Geac seems to be trying another tack to expand its product offering and to convince the market about its commitment to further develop certain attractive product lines.

We maintain our position that Geac will not establish itself as an enterprise applications leader as long as it remains perceived as a company that acquires, botches up, and possibly divests other under performing software vendors and/or products. The company will have to become a true software-developing vendor, not simply a software collector and/or dealer within some esoteric market segments. It will need to add much more value to its products and services to attract and retain customers instead of simply increasing the investment in the existing, possibly outdated, core products and support services. For these reasons, we endorse Geac's recent partnering initiatives in case as well as its alliance with IBM from the beginning of this year, which features Geac's System 21 on IBM hardware, with IBM consulting services and e-Business solutions.

Its applications must be able to support future business requirements, which are nowadays directly related to customers' e-business strategies. While the company is currently not in a position to offer a comprehensive e-business and CRM solution on its own, it should, nevertheless, be able to at least provide a back-office hub and bridges to e-business components in the fashion similar to J.D. Edwards' EAI strategy. To that end, Geac must develop standard, common components that will be readily available within its product portfolio.

Geac acquired System 21 through its acquisition of JBA International. In spite of the fact that Geac, which is a large software company with a track record for profitability and growth, has significantly enhanced System 21 by embedding acquired CRM and SCE products for the apparel industry, Geac has been unable to be successful in marketing its System 21 business. The revenue from the product in the last year was embarrassingly low ($67 million) compared to the level attained in 1998, when JBA reported $487 million in sales. Therefore, its recent partnering initiatives are only an initial necessary step in creating its market recognition as a strong global business applications vendor to be reckoned with.

Geac Trying Its Luck in Partnering

According to a press release from August 21, Applix, Inc., a global e-business solutions company, and Geac Enterprise Solutions, a division of Geac Computer Corporation Limited, a Canadian supplier of enterprise management software, have partnered to deliver a global, Web-based iCRM solution to customers. Geac will distribute Applix's iCRM solution on a worldwide basis as both a component of its own solution offering and as a standalone application in select markets. As proof of its commitment, Geac will implement Applix's iEnterprise iCRM solution for its own internal use.

Geac will use Applix iEnterprise software to interface the customer-facing front office business processes to its back office applications. Subsequently, it will use Applix's iTM1 business intelligence solution to analyze customer data to help users improve business efficiency and provide customers with the information and services they need. By accessing enterprise-wide data, businesses will be able to accurately measure levels and patterns of customer demand in real time. Also, when the highly flexible iEnterprise is configured to Geac's solutions (SmartStream, System21, E Series, M Series, SQL Financials, TotalHR), the browser access will enable customer data to be viewed and analyzed remotely, regardless of where the transactions are made. The extensive information available relating to customer sales, previous orders, service levels and prior performance will give organizations the necessary data to fully understand the cost of transactions and streamline the entire process of customer interaction, such as matching the most suitable process with the right customer.

"In the New Economy, maintaining both new and established customer relationships is not an option - it is a necessity," explains Harry Debes, President, Geac Enterprise Solutions. "By partnering with Applix, Geac Enterprise Solutions can now show businesses how to use the data that our applications maintain to improve and streamline the way their e-business interacts with the customer. It is yet another example of Geac Enterprise Solutions' commitment to supply mid-market companies with unrivalled and specialized end-to-end solutions to help them prosper in the new digital age. This represents a significant step in Geac's strategy of enhancing its customers' existing investments to participate wholeheartedly in the New Economy."

Earlier, on August 7, FRx Software Corporation, a Denver-based company specializing in the development of advanced financial reporting and analytical application software, announced a strategic partnership with Geac Enterprise Solutions. As part of the agreement, Geac will make FRx available to its SmartStream customer base and will extend its pre-existing interface with FRx for SQL Financials customers. Geac will also include FRx with all new license agreements into its SmartStream, SQL Financials and E Series and M Series product suites. In addition to bundling FRx into future solution packages, Geac will market and sell the product to its existing customer base, which includes businesses in the hospitality, property, banking and publishing industries. This combination will allow Geac customers rapid access to critical financial information and reports needed to make more informed business decisions.

"We chose to partner with FRx Software based on its reputation, quality of product and commitment to its customers," said Peter Quinn, vice president of Product Marketing, Geac Enterprise Solutions. "Through this partnership we can offer our clients the ability to provide their customers with industry-leading financial reporting capabilities that maximize Geac's ERP solutions."

IFS Has A Magic Growth Formula:Market Impact

We have only praise for IFS' fast growth and international expansion. Its formula for success seems simple, although apparently not easily emulated by competitors:

* a flexible and technologically superior componentized product

* a comprehensive e-commerce strategy

* deep feature-rich vertical functionality

* a number of standard APIs or XML-based interfaces

* reputable customer service & support

* prudent acquisitions and/or partnering moves in the past

Particularly at the lower end of the market segment and in regions where IFS has a strong presence (e.g., Nordic Region), it represents a generally low-cost, but viable option.

While the North American business unit, with headquarters in Tucson, AZ achieved very impressive results - a 234% revenue increase over the same period of last year - IFS' track record of successful regional implementations is still being made. Currently it is at the level of a couple of hundred customers. These results are crucial for the following two reasons: 1) to build the company's mind share in the world's most prospective business applications market, and 2) to show that the heavy investments IFS has made in North America over the past several years have begun to pay dividends. Although a newcomer in the North American market, IFS shows promise with a component-based product that enables it to more feasibly integrate traditional ERP with e-business, CRM and other extended-ERP applications. The company will also likely pursue the opportunity of preying on the customer base of currently struggling or all but vanished vendors.

IFS announced the availability of its new release, IFS Applications 2001, in August 2000. This release included 500 major product enhancements and the addition of 10 new modules. IFS Applications 2001 includes web-based components, Internet storefronts, customer relationship management (CRM) applications, connectivity to other business applications, and collaboration with process control systems with a variety of e-commerce engines. IFS Applications offers over 50 functional business components for improving business processes in medium-to-large size companies. Some major enhancements were:

* Completely integrated CRM Solution with Sales & Marketing, Call Management, Sales Configurator and WEB Store.

* Portals implemented for the whole IFS Application product suite.

* Flow manufacturing with support for Kanban.

* Integrated Business Performance solution with Data Warehouse and Cube configurator capabilities.

Despite IFS' presence in 42 countries, the challenge of further international expansion and brand awareness remains. The perception of poor scalability and less-than-global presence within the higher-end of the market are the hurdles yet to be overcome. There is also room for improvement in its currently undeveloped indirect channel, which has been a major success factor for other companies in the mid-market. Moreover, one should closely watch IFS' future profitability track. The company has posted five losing quarters out of the last six (See Figure 1), and its shareholders' confidence may deteriorate until they see a more consistent profitable performance. The mitigating factor in this regard is IFS' solid current stockholders equity.

IFS Has A Magic Growth Formula; But What About Profitability

Bengt Nilsson, president and CEO of IFS, commented, "We are pleased with the significant increase in license sales in the third quarter. Results for the third quarter are always considerably affected by vacation periods throughout Europe. However, the market is recovering strongly, particularly in the US. The positive consulting margins in September are evidence of better utilization of our consultants. With our consulting organization intact, we are well equipped to meet growing demand for IFS products and services. While we still aim to report a positive net earnings result for 2000, the late recovery of the market will make it difficult to achieve this goal. Our continued investment in product development has enabled us to remain in the forefront in terms of technology. An increase in sales of over 106% in the third quarter speaks for itself. IFS Applications 2001, our new product release that includes a wide array of e-business components, has met with an enthusiastic reception."

IFS was particularly pleased to announce strong momentum in the North American market with the last quarter producing the best performance to date in number and value of contracts in the United States. From July through September, the company closed deals valued at more than $20 million in products and services with 20 customers, predominately in the mid-sized manufacturing market segment.

IFS North America President and Chief Executive Officer Terje Vangbo commented, "This strong performance is further evidence that our component-based solution is gaining ever increasing acceptance among enterprises that need to evolve their operations one step at a time into e-business. With the North American market rebounding from the industry-wide slowdown of 1999, IFS is seeing not only an increase in the number of deals, but in the size of the deals as well. I believe IFS will continue to emerge as a business solutions leader in North America, particularly with the recent release of IFS Applications 2001 software. With its proven component technology, we expect IFS Applications 2001 to set the pace in the U.S. for e-business/supply chain integration. It will be difficult to match our solution with its integration capabilities, unlimited scalability, and new off-the-shelf e-business components."

IFS' newest U.S. customers represent a diverse range of industries, including plastics, automotive, fiber optics, civil aviation, electronic components, steel, and wood products.

Defining ERP for Services

The main difference in functionality between best-of breed service applications and ERP for services is the back-office component. ERP for services applications provide complete functionality for both the transactional (or operational) components, and the project-oriented components of service organizations. However, best-of breed service applications typically refer only to industry-specific functionality. Some vendors may include a back-office piece, and others may only deliver vertical functionality that communicates with other ERP systems or financial packages. As a result, there are two categories of vendors for service organizations:

1. Best-of-breed service vendors: Vendor solutions such as Compuware's Changepoint and OpenAir PSA focus primarily on professional services organizations, and are typically marketed to the small to medium business (SMB) market. These offerings vary in breadth and depth, and the vendors tend to target a few key vertical markets. Depending on the vendor, their business models are diverse and can deliver software as a service (SaaS) and license models to their clients.

2.
ERP for services: These vendors are typically traditional ERP vendors that provide a fully integrated solution with complete back-office functionality. Since they provide their clients with complete operational and transactional functionality, their offerings tend to be broader in application. In addition to project-oriented functionality that vendors such as Epicor and Deltek deliver for professional services organizations, ERP for services vendors provide fully integrated, operational functionality for non-project organizations, such as Lawson in the health care sector, and Unit 4 Agresso for the public sector.

ERP for Services
Back Office	Service Industries
Human resources	Health care components
Procurement	Distribution components
Financials	Government components
Customer relationship management	Higher education components
Business intelligence	Financial services components
Knowledge management	Hospitality component
	Nonprofit components
	Professional services components

The Evolution of Enterprise Resource Planning Includes Service Industries

Since the late nineties, the enterprise resource planning (ERP) vendors that originally targeted the needs of manufacturing organizations have slowly extended their functionality to service the needs of non-manufacturing industries as well. By 2000, when many of the major ERP implementations for the manufacturing industry had tapered off, tier one ERP vendors such as SAP and Oracle had refocused efforts to market their integrated solutions in the greener pastures of service-oriented vertical markets, including health care, government, higher education, banking, insurance, and other service-based businesses.

Today, ERP vendors are aggressively marketing industry-specific and project-oriented functionality to service industries. Unlike best-of breed solutions, these systems provide a fully integrated, mature back-office system originally developed for manufacturing industries. Consequently, this raises the question: Is ERP for services a new category? Or is it "ERP less manufacturing?"

From a vendor's point of view, the answers to these questions vary according to which side of the ERP fence you stand on. On one hand, ERP vendors claim that ERP for services is a well-developed software category customized for the service industries they serve. On the other hand, best-of-breed vendors for service verticals (such as professional services, health care, government, and financial services) push their industry expertise and vertical solutions built from the ground up for those respective service industries. Consequently, organizations in service industries are faced with the challenge of determining which vendors best fit their functional requirements.

SCT and G-Log Form Alliance For Collaborative Logistics in the Process Industries

SCT (www.sct.com/manufacturing) and G-Log (www.g-log.com), both leaders in their respective fields have announced a partnership that brings together SCT's process industry manufacturing execution, planning, and optimization with G-Log's global logistics platform. The partnership is aimed at process manufacturers and distributors in the food, beverage, chemical, CPG, pharmaceutical, biotechnology, and related process industries worldwide. Both companies currently have impressive lists of customers in these industries using their solutions. G-Log's customers include Eastman Chemical, Dupont, and Kimball International. SCT's customers include Coca Cola, Kroger, Cargill, and Basic American Foods.

Typically, the process industries have robust logistics needs due to the nature of the materials transported. These materials tend to be bulky, heavy and often have special requirements like environmental demands, shelf life or regulatory issues. Many process companies are global in nature and ship using a variety of modes (truck, barge, ocean freight, etc.) further complicating their logistics management needs. This partnership addresses those needs by the expansion of SCT's iProcess.sct solution by improving distribution service and efficiency, while considering real-world transportation constraints.

The G-Log logistics platform supports the mission-critical process of managing all freight, all over the world, in a multi-client environment, by incorporating traditional domestic and international transportation components into a single system. It provides planning, optimization, visibility, control, and settlement of shipments and orders. SCT's iProcess.sct, is a process industry-specific solution that provides supply chain planning, Internet commerce, relationship network management, and supply chain execution/ERP capabilities. The SCT products provide collaborative supply chain distribution and network optimization capabilities. Together, these products will help process enterprises optimize manufacturing, distribution and transportation decisions based on accurate real-time information from their logistics networks.

Darcy MacClaren, senior vice president, business development, of G-Log states, "We believe the combined solution will enable companies to collaborate more effectively with their suppliers, improve customer service, and respond more quickly to market opportunities."

"With the addition of the G-Log solutions, SCT is able to bring a full suite of supply chain planning and execution solutions to the process industries, ranging from network planning and design and enterprise planning all the way down to plant scheduling and transportation execution" states Jim Brown, VP Solutions Strategy and Marketing.