Why PeopleSoft went after JDE and JCIT

PeopleSoft's renewed commitment to the manufacturing space was a central theme at its PeopleSoft Leadership Summit, a three-day conference held May 17-19 in Las Vegas, and attended by high-level executives in the PeopleSoft customer base.

PeopleSoft CEO Craig Conway conceded his company has trailed the competition when it comes to manufacturing functionality, but he said last year's $1.8-billion acquisition of J.D. Edwards provided a foundation for PeopleSoft to build a formidable set of manufacturing applications.

"Acquiring J.D. Edwards was equivalent to completing a new investment cycle," Conway said. "We got a set of new products—such as solutions for asset-intensive industries and midmarket companies—that gave us entrée into new markets. We couldn't have done that investment on our own, at least not in a timely fashion."

Les Wyatt, a former J.D. Edwards executive who now is general manager for EnterpriseOne, PeopleSoft's midmarket software suite, said PeopleSoft's new manufacturing solutions support a demand-driven business model. Analyst firms including Boston-based AMR Research are promoting this model, which calls for linking production levels to actual customer orders (see AMR conference report, page 14).

At the summit, PeopleSoft introduced six new products it says fit the demand-driven business model (Editor's note: a complete product listing can be found in the digital edition of this article in July MSI Online, www.msimag.com). Among the most significant, according to Wyatt, is a lean procurement module that allows companies to align purchasing processes with what PeopleSoft calls "demand flow" methodologies.

Demand Flow—a variant of the Toyota production system—was developed by Denver-based JCIT. PeopleSoft purchased an exclusive license to use the Demand Flow methodologies from JCIT in late 2003. Wyatt said those methodologies will permeate all of PeopleSoft's manufacturing offerings, including an application for designing production lines to fit the Demand Flow model. That package, called Demand Flow Manufacturing, is scheduled for release Q4 2004. The other components of the PeopleSoft Demand-Driven Manufacturing suite were released in June.

"Demand-driven manufacturing has become a requirement for gaining a competitive advantage," Wyatt said, in explaining why PeopleSoft is anchoring its manufacturing product strategy on this concept. "It is being pushed by the volatile nature of demand in the marketplace and the increasing dependence on global supply networks."

Wyatt said the components are available to users of both PeopleSoft Enterprise and PeopleSoft EnterpriseOne. The former product is built for large enterprises, while the latter is geared toward medium-size companies, which PeopleSoft defines as any organization with less than $1 billion in annual revenues.