In common with other enterprise resource planning (ERP) vendors, JD Edwards is seeking to find a way to position itself outside the traditional ERP mould so that it appears as a modern, stable application vendor.
Its product and strategy announcements at IDC's European Ecommerce Forum go some way towards achieving that objective, but the company knows it has to do more. (see Newswire 16 September)
During the last year, JD Edwards has transformed itself from being perceived as an AS/400 vendor to one where its OneWorld component architecture, combined with its Idea to Action marketing, is gaining acceptance and understanding. Important wins are characterised by companies that are looking forward technically and taking risks, but not everyone is being carried.
For example, The States of Jersey is a new OneWorld customer where it will undertake collaborative development for the public sector, a new market for JD Edwards, and its flagship BskyB site was a collaborative development venture.
Elsewhere, JD Edwards is believed to be undertaking significant development in conjunction with Andersen Consulting for CPG-related ERP as a complement to supply chain systems.
A senior JD Edwards spokesperson commented, "They approached us, we both see important opportunity." But last year, Johnson and Johnson's European systems manager, Dave Taylor, said his organisation was sticking with the AS/400 green screen World software products.
Today, JD Edwards is setting out a vision based on application agility and underlying framework resilience as the cornerstone for a long-term product strategy that recognises applications will change more rapidly as time progresses.
CEO Doug Massingill said that integration remains a key issue, and in this sense JD Edwards is up there with competitors like SAP and Oracle. But the JD Edwards approach is different.
Oracle and SAP are developing applications internally, while PeopleSoft is on hold. JD Edwards is partnering and acquiring while continuing to develop in the background.
Its Numetrix supply chain planner is said to be at 'phase one' integration where major touchpoints to the backbone transaction system are complete. Tellingly, Massingill said, "When we get to phase three, we are then looking at major re-architecting."
This implies that while there may be some synergies in the design of Numetrix and OneWorld, the reality is that to achieve true process integration, JD Edwards will need to devote more development resource than is committed today.
Its Siebel partnership for sales force automation (SFA) is a co-marketing deal with development rights. But as Massingill admits, "This is not an exclusive contract." So, while Massingill hinted that the company is close to announcing some important joint contract wins, it’s not a long-term solution.
JD Edwards is trying to address the need to get to market quickly as part of a strategy to deflect attention away from perceived product deficiency. "If I develop SFA, I get to version 1.0 while Siebel is at version 5. There's no point in that," he said.
The justification for partnering in SFA and other front-office style applications like eprocurement rather than acquisition is that there are fewer software touchpoints that are easier to manage and control. "We only need to go one way to get data in, we can report back out without too much trouble," he said.
But the situation becomes confused because JD Edwards is not enamoured by the idea of using enterprise application integration software as a fast track integration strategy, despite having an investment in troubled CrossWorlds.
Massingill rejects the notion of hub and spoke systems of the type offered by NEON. "These are really for big mainframe, MVS applications. We're not sure they're valuable to us," he said.
JD Edwards is following a mixture of strategies at a time when no-one is entirely clear which way the enterprise applications market will shape up. Even SAP is sending out conflicting messages.
For example, immediately prior to SAPPHIRE Americas being held this week, SAP seemed to be endorsing Application Service Providers (ASP's) with its joint Sun announcement. But then in a subsequent interview, SAP co-chairman Hasso Plattner said that ASP's were relatively unimportant and would only account for about 15 to 20 per cent of a full application suite.
Nevertheless, JD Edwards may be able to reap benefit where others wobble due to its levels of customer satisfaction and industry profile. Research consistently shows that its customers are among the ERP industry's most satisfied, and a forthcoming report from UK-based analysts TBC Research is expected to confirm this for the second year running.
This is critical, because Oracle has found it can pick off competitors' customers where there is a lack of delivery or relative dissatisfaction.
JD Edwards has a short-term breathing space during which it can roll out new supply chain applications. This is because its main customer base is in discrete manufacturing, construction and heavy engineering.
Until recently, these were industries where the Internet was expected to make a slower impact because their business models are not as volatile as service industries or high technology.
But this may be a false assumption. Manugistics, which occupies the number one slot for supply chain across CPG in Europe,continues to add value. A recent AMR Research report noted that i2 Technologies' success in automotive may serve as an indicator about how so-called bricks-and-mortar businesses are finding that new technologies in supply chain can add real value.
JD Edwards responds with its Numetrix and Synquest products. i2's vision about managing supply chains will percolate into JD Edwards’ mid-range turf as large enterprises see the value of working with one supplier rather than worrying about integrating with any number of supply chain systems.
Massingill accepts that i2's shared value model for deriving revenues has proved compelling. "Sharing in success is good for both parties. The risk is lowered, and as i2 gets more downstream, it’s a potential threat," he said.
In distribution and warehousing, JD Edwards sees other pressures. Today, it is making a big noise about ecommerce and the adoption of XML standards. But as Massingill notes, some customers are tied to very powerful businesses like Wal-Mart that have hinted strongly that their suppliers must not adopt an internet strategy or risk exclusion as preferred suppliers.
"Do you take the risk of implementing an Internet strategy when 80 per cent of your business is going to Wal-Mart or Home Depot?" he asked.
The challenge ahead
JD Edwards does not have the same level of customer pull that SAP enjoys. With over 20,000 customers, SAP is gambling that it can leave them waiting for integrated portal applications because those same customers are wedded to SAP processes. JD Edwards does not have that luxury, yet is keenly aware that in the mid-market, there will be contraction as vendors whither or are picked off.
But it’s in marketing that JD Edwards faces its greatest challenge. Massingill agrees that Oracle, with its relentless marketing offensive, has become a tough competitor and acknowledges that finding a way forward is a hard path to tread.
"I want to change it but I have to carry our assets, our people, along. I could easily throw $100 million at the problem for zero result," he admitted. Elsewhere, the me-too naming of the JD Edwards OneWorld process and component workbench as a portal, was weak.
Is JD Edwards fatally exposed? It’s too early to tell, and the reinforcement of delivering on product promise which was pre-announced in advance of a formal announcement on 21 September helps.
What's more, Massingill appears more confident than he was three months ago. "Sure, we were having a hell of a time, but things change quickly and I’m satisfied we have the product execution strategy in place that really matters in technical evaluations," he concludes.
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