It's business according to plan

ArchestrA looms even larger sans Baan

Invensys isn't nearly the size it was a year ago, but that's in line with the company's divestment plan, says Leo Quinn, chief operating officer of the company's Production Management division, which offers industrial automation and plant management software. In fact, says Quinn, the plan leaves his division as the main business for Invensys.

The company's divestments were necessitated in part by a need to reduce its debt, but according to Quinn, it also allows the company to focus on Production Management. The division itself is paring down by selling enterprise software vendor Baan. Just prior to press time, it was announced Baan was being sold to the same investment group that also owns SSA Global Technologies (number 18 on Top 100), though the actual transaction was expected to take another six weeks.

Without Baan, says Quinn, his division is a roughly $2-million concern that yielded a profit margin of just under 5 percent for its last fiscal year. Production Management includes Wonderware, Foxboro, and an organization called Process Systems, which offers the Protean enterprise and Avantis asset management systems. Besides Production Management, Invensys is keeping its Rail Systems division, a roughly $500-million business.

The common focus across his division, says Quinn, is resource productivity. "Resource productivity is about helping manufacturers produce more from existing assets, lowering the cost of migration from legacy systems to emerging standards, and enabling the movement of real-time data and information."

ArchestrA, an integration and industrial automation software platform that Invensys has spent about $50 million on, provides the foundation for these goals. "In a nutshell," says Quinn, "ArchestrA is an open architecture that gets all the systems in a plant working in concert. It's being used not only in our products, but also by OEMs and systems integrators."

Early adopters of ArchestrA such as BP, the oil & gas giant, praise the platform's ability to speed up automation projects via common services like alarming, and the object-oriented reuse of functional entities. Says Quinn of the framework, "It affords both connectivity and reuse."

Still standing, waiting, and hoping

A wretched year has i2 Technologies had. Five straight quarterly losses; an announcement that the company was re-auditing its results for as far back as 1999; and a Securities and Exchange Commission investigation of its accounting practices—all topped off by an announcement on May 9th that NASDAQ was delisting its once high-flying stock. For a company once tipped by Fortune magazine as one of the best investment bets of the coming decade, it's undoubtedly been—as England's Queen Elizabeth memorably put it after Diana Spencer's death—an annus horribilis.

In response, i2 has been made to slash its cost base, lay off staff, and look to hammer together a disparate bunch of software applications acquired in its late 1990s spending spree—companies including strategic procurement vendor Aspect Development.

So it's no wonder nervous customers and potential customers alike are watching the company carefully.

But amidst the gloom, i2 executives insist that the company is on firmer footing than the outside world perceives. According to Chief Marketing Officer Janet Eden-Harris, who joined the company with the Aspect Development acquisition, appearances are deceptive. "Ironically, back when the company appeared very vibrant to the outside world, we weren't as strong as we are today, even though we're under the shadow of the re-audit," she says.

Customer satisfaction—a perennial weakness for i2—has been addressed by assigning a dedicated i2 consultant or salesperson to be responsible for each customer, she says. New quality control procedures have reduced code errors—another bugbear—by 90 percent. Improved implementation methodologies have reduced average time to implement by 20 percent over the last two years. And Airbus, the European aircraft consortium, recently selected i2 for a corporatewide deployment.

Will it be enough? Only time will tell, but the best indication will probably be based on acceptance of its new Web services-enabled products, announced in the spring. In the meantime, CEO Sanjiv Sidhu must be offering thanks that at a time of weakness, his competitors also are enfeebled.

Optimization for process manufacturers

Process manufacturing calls for an integrated solutions approach, says Rainer Gawlick, a senior vice president with Aspen Technology (AspenTech), which offers engineering, supply chain, and production management solutions for process verticals. "Our customers are asset-intensive," says Gawlick. "We help them design and build those assets, and then we help them to run their assets as efficiently as possible."

To meet these needs, says Gawlick, the vendor approaches supply chain management and manufacturing (i.e., production management and engineering) solutions holistically. "We are the only vendor in the process industries offering the integration of these two activities," he contends.

For example, choosing which crude oil to use in a refinery crosses boundaries. "The act of choosing the precise crude oil is really a supply-chain activity," Gawlick says. "There are hundreds of types of crude in the world, and making the right choice is an enormously complex problem. You have to run a lot of optimization analysis to truly understand how the crude will perform. Having made your choice, you then have to understand the detailed characteristics of your plant to optimize production of that crude. So it's very important to integrate these two decision-making activities."

In April, the company teamed with consulting firm Accenture to develop a performance management solution for chemical companies and petroleum refiners. Indeed overall, AspenTech identifies strongly with performance management.

"Our long-term vision is to reap significant synergies from the combination of manufacturing, supply chain, and engineering software to offer our customers dramatic improvements in the performance of their operations," Gawlick says. "We call these combined offerings Enterprise Operations Management solutions, and we believe they will help our customers design and operate more efficient plants that yield higher and higher productivity."

Great expectations, high hopes, and market realities

Manugistics' rocky ride continued through 2002 and into 2003. The company was one of the first to use fancy mathematical algorithms to optimize the supply chain—only to find upstarts such as i2 Technologies steal a march on it. Despite red ink and layoffs coming out of the B2B bubble, however, the last year was to be a corner turned.

The reason? Manugistics' new Enterprise Profit Optimization (EPO) capability, which uses other fancy algorithms to optimize pricing decisions. Added to the supply chain part of the piece, the dynamic pricing capability came with the 2001 acquisition of Talus Inc., which brought with it the patented optimization algorithms it had developed over the course of seven years.

But the optimism was misplaced, and Manugistics has continued to bleed. "There's a back-to-basics mood in the marketplace, and messages like EPO don't get as much traction as they did a year ago," says Neil Hooper, group vice president of solutions consulting. "Companies are saying that yes, they do ultimately want EPO—but that right now, they just want a forecasting system."

A more prosaic fight for survival has therefore replaced great expectations. "It was a transition year," is how Hooper characterizes the last 12 months. "We've rationalized our operations to bring them in line with what the market is buying and expecting."

Even so, the gloom isn't universal. "We feel we had a better year than most of our competitors," Hooper notes.

The big hope now is Manugistics 7.1, a wholly Web-architected version of the software, deployed around Web services. "When the market turns, people are going to want Web-architected software, and only Web-architected software," says Hooper. "When that happens, we'll be ready."

Deep into supply chain analytics

SAS Institute, says company president and CEO Dr. James Goodnight, is known as a business intelligence (BI) software leader, but he adds, "we intend to play very largely in the supply chain space" via deep trend analysis in areas including supplier, demand, and quality management.

An enhanced demand management module, High Performance Forecasting, is part of SAS's latest product lineup. Goodnight says it's aimed at consumer goods manufacturers, and allows users to crunch, "literally millions of predictions over hundreds of different stores, or locations, or products in a matter of minutes."

This is possible through new SAS algorithms that reduce the amount of time and the number of iterations needed to turn data into useful demand analysis, Goodnight says. "The idea is that if you're going to be successful with the supply chain, you've got to start with good product forecasting," says Goodnight, who reports similar advances in analytical speed applied to areas such as quality and manufacturing yields.

A new departure for SAS is more attention to low-end analytics through a query-and-reporting Web-based tool. "SAS has dominated high-end scientific and analytical areas," says Goodnight. "Now we plan to give [lower-end BI vendors] some competition in more simplified Web-based reporting."

SAS also continues to emphasize decision support tools for supplier relationship management and 'value chain cost analytics.' A solutions lineup called SAS Supply Chain Intelligence contains many of the applications geared toward manufacturers.

Eyes back on the end user

For much of its 16-year history, ILOG has lived quietly but ubiquitously inside other companies' software. More than 350 supply chain vendors use ILOG optimization technology products. Lately, however, the company has been eyeing the end user.

ILOG has a motto. It doesn't want to sell you a new set of applications. Instead, the company wants to help manufacturers make their existing collections of applications run better, with clearly defined business process management rules.

"Our strength has been optimization, but we're now focusing on rules," says Mike Morel, ILOG's industry director for manufacturing. Specifically, ILOG's Business Rule Management System (ILOG BRMS) solutions aim to make a manufacturer's enterprise systems and best-of-breed applications function together under a coherent set of business rules. As Morel puts it, "We take i2 and SAP [applications] and make them better by focusing on operational efficiencies."

As for the company's optimization products, Morel notes that ILOG is "looking at how to leverage optimization technology into real-time optimization." The goal, he says, is to help companies utilize their existing applications to respond more quickly to orders, increase accuracy, and reduce inventory.

Unlike many vendors, ILOG has a stable though somewhat modest track record of growth and profitability. Moving from vendor-as-customer to end-user-as-customer may alter this stability, but with companies overdue for a new round of tech spending, ILOG's timing may be right.

Analytics for the supply chain

Launched in 1975, Information Builders is an old-timer in the business intelligence field. The company's intelligence tools are supported by FOCUS, its analytical data management foundation. The software gathers information from disparate systems and locations for integration, decision support, and application development.

In recent years, Information Builders has extended these tools outside the end-user organization via the Internet. Called WebFOCUS, this suite of analytical tools makes it possible to share reports and business intelligence with suppliers, customers, and other business partners via Internet-based portals.

Though Information Builders is strong in multiple industries, the company has an extensive set of manufacturing customers, including Ford, Sony, and Texas Instruments. "We allow manufacturers to work better with their dealers and suppliers online," says Michael Corcoran, an Information Builders vice president. Ford and its network of dealers, warranty specialists, and warranty consultants use Web-based reports generated by WebFOCUS to identify and resolve problems with warranty repair and claim trends.

Indeed, the whole service side of manufacturing is an area ripe for analytics, explains Corcoran. "Web technology supports the communication necessary for manufacturers to better manage performance in service," he says.

In 2001, Information Builders launched an integration software company called iWay Software. Some manufacturers—including Gates Rubber Co.—have used a combination of WebFOCUS and iWay's technology to create analytical solutions that draw on data from multiple sources.

Acquisitions aid fast-track growth

That blur you just saw was Finmatica, the Italian vendor with big plans and a track record to back them up. "Last year, our division grew from $20 million in sales to $34.2 million—an increase of approximately 85 percent," says René Desvignes, executive vice president, Finmatica B2B/SCM division. "We put a strategy in place that's generating significant growth both through acquisition and through organic growth."

Phase one of that strategy called for Finmatica to become a player in all key global markets, including North America. Toward that end, the company established a beachhead here in 2001 by acquiring Ortems, a European planning and scheduling specialist already resident in the U.S.

But the real action took place last year when Finmatica acquired Mercia, the demand planning vendor, in July 2002. Then, in December 2002, Finmatica acquired ObbiSoft, a transportation management systems provider.

"We will continue to move forward with acquisitions," Desvignes says. "Right now, we are investigating several companies that complement our existing product portfolio and will expand our market coverage."

Phase two of the strategy consolidates these best-of-breed applications into a supply chain management suite. FINeCHAIN is its name, and it was announced earlier this year. It includes everything from planning, scheduling, and sourcing through supply chain event management, supplier relationship management, and analytics.

"This suite supports traditional internal business processes, but also extends those capabilities to customers and suppliers," Desvignes says. "With our Java-based platform, we can integrate easily with the major enterprise backbones and move forward into the world of Web services."

Desvignes continues, "While we certainly embrace advanced technologies in our solutions, we don't sell technology for the sake of technology. For example, Web-based solutions are important only because they enhance a manufacturer's agility and provide real-time visibility across the supply chain."

Next up, look for more specialized functionality for process manufacturers, as well as the service-parts segment.

Hosted visibility—a sight for sore eyes

If someone asks you where an item is in your supply chain, what would your answer be? Can you even provide an answer?

Transentric, a subsidiary of Union Pacific, has been answering questions like this one for 16 years. Originally focused on visibility solutions for rail customers, the supply chain event management vendor has expanded to include amongst its clients anyone who needs to track goods in-transit.

Transentric products include those for shipment, equipment, and inventory visibility; and business systems integration.

"Our core competencies are in that space between companies and systems, where it's really hard," says Jim Damman, president and COO. "There isn't that much available that focuses on EDI for the inter-enterprise space."

The toolset—including its centerpiece, called "Item vision"—exploits electronic connectivity and is delivered through a hosted model. But Damman says it's much more than just electronic data interchange.

"We take information from any system and translate it into any format required. For example, spreadsheets translated into an electronic format, or old EDI converted into XML [eXtensible markup language]."

When he joined the company about a year ago, Damman found Transentric supported fully 30 products and focused on verticals that he says just didn't make sense.

"Since then we've streamlined our company and focused on core competencies. That has leveled off and we've started adding functionality again," says Damman.

New initiatives build on existing expertise. The company waded into the homeland security fray with Risk Alert—a joint project developed with Philadelphia-based Delaware River Maritime Enterprise Council.

Says Damman, "The system tracks inbound freight in all modes and provides government agencies with tools to track each container. Then they can manage by exception rather than trying to inspect all containers, of which less than 2 percent are typically inspected."

ROI drives growth for forecasting vendor

Being able to cite a strong return-on-investment (ROI) for its leading products has helped Demand Management "hang tough" through the recent market challenges. "In most cases, our customers are able to get an ROI in 120 to 180 days," says CEO Mike Campbell. "That has been a salvation for us during these tough times."

In addition to its flagship forecasting software, Campbell says the company has momentum in the apparel and the hard-goods sectors with its DS Stores, a store-level inventory management product. Says Campbell of DS Stores, "The paybacks are huge, on the order of 10-percent to 25-percent inventory reductions, with fulfillment rates approaching 100 percent."

Industry pundits have been saying that the only products selling in this market are point solutions that address immediate problems and offer quick payback. If that's the case, then Demand Management is well positioned. Says Campbell of the focused ROI approach, "We've been doing it for 15 years now, and we're good at it."

The recent rollout of DS Enterprise brings Demand Management's main-line product into a fully Web-based collaborative environment. Version 1 contains the infrastructure and basic framework, while new functionality is being added over time. "We're trying to match the product to the needs, rather than sitting in a lab and trying to guess what our customers might want," says Campbell. "DS Enterprise opens the supply chain planning process up to all interested parties, not just the planner sitting in his cubicle."

The newly released version 9 of the Demand Solutions Suite contains new key performance indicator (KPI) capability offering a raft of new measurements. Specific measures are being added "literally weekly," says Campbell, in response to customer requests.

Another new product, Demand Solutions Data Exchange, eliminates the need to develop custom interfaces to enterprise and customer management systems. The user can specify the data, source, and format they want and the exchange module makes it happen. Says Campbell, "This should reduce the implementation time-to-value from several months to one or two weeks."

Closing the "circle of planning"

Cyrus Hadavi is the first to admit that the past year has been "challenging" for Adexa. The economy has been particularly hard on supply chain planning suite vendors. But as Hadavi, the president and CEO, says, his company has the advantage of global diversity.

Adexa has a loyal following in the Far East, especially in high-tech and semiconductor. "Asia helped," says Hadavi, adding that about 50 percent of Adexa's revenues came from there.

And rather than limit itself to supply chain planning, Adexa now has a more comprehensive solution with a broader impact on the enterprise.

Adexa's Enterprise Global Planning System (eGPS) includes 11 integrated Web-based tools for an enterprise business planning solution encompassing supply chain planning, event management, enterprise performance management, and intelligent collaboration. Adexa eGPS delivers plant and enterprise views of supply and demand, resource constraints, and the means to harmonize their interaction.

"Most of our customers look for sales, inventory, and operations planning," says Hadavi, adding that so-called SIOP amounts to a combination of demand planning, inventory planning, and supply chain planning. "It's a whole circle of collaborative planning."

Adexa closed a record number of deals in the U.S. last year. However, the average sale price dropped by about 50 percent—from more than $1 million to about $500,000. This results from a shift in buying patterns as customers proceed with smaller implementations focused on clearly defined problems.

"They are telling us that they want to put something in, and if it works then they'll roll it out to other divisions. I think they are right to do that. The onus is with us to prove the value is where we say it is."

Collaborative SCM for distribution-intensive verticals

Logility continues on course. Maybe that's not a compelling headline in the fast-paced software industry, but President and CEO Mike Edenfield thinks it's the right direction.

"We don't try to be all things to all people," he explains. "We have a laser-beam focus on what we do best, and that's to provide collaborative supply chain management solutions for customers in distribution-intensive industries."

Don't mistake this no-nonsense approach with a lag in development, because the upcoming Logility Voyager Solutions 7.0 suite boasts plenty of new features and technology. Highlights include support for Microsoft .NET, and new or enhanced functionality in global sourcing management, load optimization, demand chain planning, transportation planning, global order and inventory visibility, and performance measurement.

"Logility will continue to focus on delivering industry-leading collaborative supply chain solutions while we're working to solve additional business problems for our customers," Edenfield says. "One of the major challenges we address is helping them manage their supply chain as they increasingly turn to off-shore manufacturing partners to source products."

New global sourcing management functionality in Release 7.0 helps automate the strategic-sourcing process from proposal to advance shipping notification. Equally important to off-shore sourcing is visibility. "Regardless of where the source is, it's critical that brand owners have detailed visibility into what's happening," Edenfield says.

Logility also offers an Internet portal that incorporates key performance indicators (KPIs) and summarizes the current status of supply chain operations. Failure to achieve select KPIs triggers alerts. Later this summer, Logility plans to announce a new sales & operations planning offering.

Simplifying enterprise analytics

Informatica's software grabs raw information from enterprise, customer, and supply chain management systems, organizes it, and presents it to users who can create their own "dashboards" that monitor inventory levels and other need-to-know information.

"It's easier said than done," senior vice president Sanjay Poonen says of pulling together the needed intelligence. "The data that runs an enterprise resides in countless different formats and applications."

In March of 2003, the company released a major upgrade to one of its core products, PowerAnalyzer 4.0. Poonen says the core goal of the release is to make business intelligence as easy as navigating and personalizing Amazon.com's Web site.

On other fronts, Informatica announced Linux support across its entire business analytics product family. Additionally, Informatica's data integration platform products received SAP certification for bidirectional data integration across the entire family of SAP applications

Informatica has more than 1,700 customers, including nine of the top 10 global manufacturers. Manufacturing customers include HP, General Electric, BMW, and Cisco.

With its large customer base, repeat business is an important driver for Informatica. For the first quarter of 2003, the company signed repeat business with 119 customers. Among these were numerous manufacturing enterprises, including Campbell Soup, DaimlerChrysler, Johnson & Johnson, Lockheed Martin, and Toyota USA.

While the company recorded a $15.6 net loss for 2002, it narrowed its loss significantly from the $45.0 million net loss in 2001.

This merger seems to be working

Viewlocity just might have the lowest profile of any supply chain management software vendor. Even Jeffrey Simpson, CEO, concedes, "Unless you follow our market really closely, you probably haven't heard of us."

At the same time, Simpson says, a growing number of high-profile manufacturers are becoming aware of Viewlocity. And he believes that trend is helping Viewlocity weather the current economic downturn better than some of its larger competitors.

"Over the past year, we signed contracts with Dell and Nissan," Simpson says. "Those are big deals for us."

Simpson says these companies are attracted by Viewlocity's "unique" solution set, which combines the elements of supply chain planning and supply chain event management. "We really are unique," he says. "No new supply chain players have been funded since 1999, while we picked up $30 million in new venture funding in 2002."

The new funding coincided with last November's merger of Viewlocity with SynQuest, which brought the planning components to Viewlocity's combined planning and execution software suite. In addition to blending those two technologies, Simpson says Viewlocity is closing new deals because it has focused on building out-of-the-box solutions that meet specific requirements of companies in its target markets.

Those solutions cover areas such as distributed inventory management, supplier relationship management, and inbound logistics planning and execution. Simpson says Viewlocity has relied on partnerships with well-known consultants to snare business from large manufacturers. As a result, Simpson believes Viewlocity, while still a small company, is "in position to be a leader in the adaptive planning and execution space."

A focus on performance

The past year has been a tumultuous one for Webplan. Like other supply chain planning vendors, the company suffered through the recession. In thinking about its future, it looked closely at its installed base and the market it serves.

As a result, the president and CEO, the CFO, and the vice president of marketing left the company. Now the vendor is refocused on what it thinks will be a growth market.

"Our new focus is on corporate performance management for manufacturers and distributors," says Dave Haskins, executive vice president of development. "Business intelligence is an area that is seeing growth where the traditional planning solutions aren't."

Webplan has always been about the real-time enterprise. Its solutions have the ability to mine information from back-office systems as the basis for multiple "what-if" scenarios. Until now, this ability has been applied to resources and capacity planning and scheduling.

"We have consistently focused on up-to-date visibility of supply chain information, combined with analytics and decision support," says Haskins. "If you consider traditional business intelligence tools, they do analysis of historical data. But you can't count on the future to look like the past. You need more up-to-date information."

It may not sound earth shattering, but the next step is the release of an Excel interface.

"Today, Excel is probably the world's most successful data analytics tool. The new interface will allow us to broaden our usage base and to target the kind of analytics financial types and executives like to see."

This gives the new offering a broader appeal, says Haskins. "The basic concept of Webplan comes down to a few things: powerful, fast analytics; the ability to do multiple "what-if" scenarios; and to link these to the simplicity of an Excel-like interface. That's very generally applicable."