Descartes poised to turn vision into reality

Descartes Systems Group has long been recognized as a visionary in the logistics execution space. While that vision has failed to turn into steady profits, the company now says its technology investments have reached the point where they are about to pay off.

"We have turned a corner," Manuel Pietra, Descartes' president and CEO, commented at Descartes Directions, a press and analyst event held last December. "We just reported our third successive quarter of revenue and sales growth."

Though Pietra points to improved reported losses, the company isn't expecting to turn a profit just yet. "It would be very easy for our business to be profitable tomorrow," he says. "But that would be very shortsighted in terms of a future for our company. It is about balance—balancing investment in the right areas to position the company for long-term success."

One of the first things Descartes needed to do was to consolidate a variety of acquired technologies. According to Pietra, the organization has accomplished that. "We now have a commitment to a common strategy and common architecture. Now all our products are core businesses for us."

Descartes used the December event to launch the Logistics Network Operating System—or LNOS—an integrated platform for real-time supply chain control. The architecture is aimed at a point of convergence between business document exchange, the supply chain, and mobile resource management—in particular technologies such as RFID, global positioning, and instant messaging.

"The consolidation of these markets creates an addressable market opportunity of $2.8 billion," says Pietra. "There are a lot of companies in each of these areas, but we don't see any that cover all three. This provides us an opportunity to take leadership position in the consolidated space."

Analysts believe Descartes now has to execute. Says Jeff Woods, a Gartner principal analyst, "The biggest challenge Descartes is facing is putting an operational focus back on the company. This is a company that has always had a lot of great ideas, but had trouble turning that into a successful company. Manuel has the capability. He's an operator.

"Now they need to become a trusted strategic advisor," Woods continues. "Descartes needs to make the jump to being more than a point-solution provider to a strategic solutions provider."