SYSPRO says it's not going down without a fight; focuses on industry-specific solutions

Growing the business while dodging the merger-and-acquisition mania that's sweeping the enterprise applications markets is testing the resolve of the remaining independent vendors. SYSPRO, a provider of enterprise software to medium-size enterprises, is a classic case-in-point. Privately held SYSPRO counts 6,000 businesses—in eight key verticals and 50 countries—as customers and business partners (see profile).

Despite past success, remaining independent, competitive, and profitable has come with its share of challenges for SYSPRO. Yet the vendor believes it has a plan—to focus on the needs of specific vertical industries in manufacturing and supply chain—that will ensure continued independence.

"In the past three years, the product chain has changed dramatically. We need to understand these industries and anticipate the needs of vertical markets. But we believe that's where our strength is—developing enterprise software to meet those needs," says Joey Benadretti, a company VP.

Midsize enterprises have new, clearly defined needs unmet by previous generations of enterprise systems, Benadretti adds. "Our customers are looking to improve productivity through the use of business systems even as they downsize, form new partnerships, move offshore, and adopt new technologies. They must make better use of information technology as a means to respond to demands for lower prices."

Performance Machines, a La Palma, Calif.-based manufacturer of motorcycle disc brakes and wheels, uses SYSPRO's enterprise software throughout its business. "We must have software that's versatile and that's what SYSPRO offers. We're now setting up a system where volume dealers can order online and we use SYSPRO's software for sales, accounts payable, production control, and just about everything. We've grown together," says Nancy Sands, company controller.

SYSPRO is changing to respond to the growing needs of companies such as Performance, refocusing on specific target markets while declaring its intention to remain privately held.

"We're not going to buy up other software companies and grow through mergers and acquisitions," Benadretti explains. "We know there are challenges to growing organically and we have certainly changed in the past 25 years, but we have remained successful. Now our mission is to grow into a world-class provider of enterprise software."

SYSPRO targets heavy machinery, medical devices, and food and plastics makers—all of which need focused solutions in traditional areas of enterprise management, from the back office to the shop floor, but also are extending their reach out into the supply chain.

SYSPRO says the enterprise market is splitting into distinct categories. The first, which includes the largest "mega" vendors—including SAP, Oracle, and PeopleSoft—will service multinational companies requiring enterprise solutions that link disparate regions and markets. The second will feature smaller independent vendors capable of addressing niche markets in depth with specific functionality.

"What's interesting is the relative level of maturity by this software vendor in its adoption of [Microsoft] .NET," says Louis Columbus, senior analyst with Boston-based AMR Research. "SYSPRO's destiny is in its own hands. If it continues to service and upsell its installed based, it will survive and grow. SYSPRO has one of the most educated reseller channels ever, which is a major asset, as is the company's willingness to speed development to accomplish its product roadmap objectives."

The answer is having functionality and a distribution model, concludes Brian Stein, president of SYSPRO. "Our strategy is now to put more feet on the ground in vertical markets and add new products that will differentiate us from our competition. We know we have to own more real estate in the new vertical markets."