A Quiet ERP Vendor Merger That's Worth a Closer Look
Mergers and acquisitions (M&As) among enterprise resource planning (ERP) providers are hardly uncommon, but by now the market has become accustomed to witnessing either “mega-mergers” or those involving at least one participant with a global presence. Thus, not many heads turned in April 2007 when two low-profile (or even obscure) vendors from Canada and the UK respectively announced their merger to create a more notable international ERP entity, if not a true force in the global enterprise applications arena.
One of the merging parties was privately held, Toronto (Canada)-based CMS Software (www.cmssoftware.com), which had, since 1986, been a respected supplier of ERP systems to midsize manufacturers, distributors, and wholesalers in the US and Canada. In the last two decades, the vendor had built a good reputation within certain market segments for its vertical industry savvy and software engineering, which is reflected in the standing of its flagship IBM iSeries-based ERP product CMSi5, and the much newer CMSm5, built using the latest Microsoft .NET Framework technologies.
The other merging party was XKO Software Limited (www.xko.co.uk), which had, since 1981 (albeit not always under same name, shape, and form) been a supplier of midrange ERP systems to over 1,000 manufacturers, distributors, and merchants in the UK and Europe. XKO offers applications that cater to the needs of specific vertical markets, and since 1999, the vendor has been growing by force of its own offerings and through several acquisitions. XKO's products and services thus have a number of brand names, such as Concerto, K-Open, Varius, X3, Xeres, XKO1, and others.
Marlin Equity Partners (www.marlinequity.com), a Los Angeles, California (US)-based private investment firm with the mandate to help corporations and stakeholders meet their business development and cash flow needs, has provided financing for the transaction. Prior to this event, Marlin Equity Partners had bought XKO, the formerly London Alternative Investment Market (AIM)-listed business, in 2006.
The merged business is expected to have sales of over $50 million (USD), and with its employee base of 300, will provide service to more than 1,400 clients from offices in Europe, North America, and Asia. Initially, the business continued to trade separately as CMS and XKO, though further financial details of the merger agreement were not disclosed. As announced in early November 2007, CMS Software re-branded as Solarsoft Business Systems (www.solarsoft.com), and is planning further vendor acquisitions. XKO will continue to do business in the UK under its new name, Solarsoft Business Systems Limited.
Market Impact
Especially in view of a slew of ERP providers that have merged, been acquired, or gone out of business in the last several years (many of which were former ERP leaders and market favorites; see Rapidly Consolidating Enterprise Applications Market: The Worlds of “Organic Growers” and “Aggressive Consolidators”), one logically wonders about the sustainability of many of the remaining smaller and “under-the-radar” (low key) players.
This merger between the former CMS and XKO too could be one way for the two cash-depleted (or at least cash-stretched), smaller, and lesser-known regional vendors (which have admirably survived the Y2K conundrum, dot-com's en-masse demise, and repeated economic up-and-down crunches) to keep themselves abreast of the growing demands on the underlying collaborative product architecture and functionality breadth. Customers remain understandably cautious about the vendors' viability. Attaining these goals under their own steam would likely have been a tall order since—until lately—many remaining independent vendors have also been keeping staffing levels constant (or in tune with their modest growth) in order to curb costs, while at the same time introducing ambitious new product developments. Needless to say, such cash outlays continue to come at a time of heavy product discounting and similar competitive sales practices of many competitors that are much more well-known and on financially better footing.
After the “top ten,” the next biggest players in the ERP market have a market share well less than a few percentiles, and although even 1 percent of the market, estimated at $20 billion (USD) or so, still represents significant value, this is only valid from a business perspective when there is an abundance of new sales opportunities. Therefore, for the vast majority of smaller vendors (apart from a few niche specialists in some vertical segments), it really becomes a case of fighting for the “crumbs.” Although during a blossoming market this is less of a problem (and high levels of consistent growth throughout the 1990s saw many of these vendors grow to a significant size), it is no longer the case. Therefore, growth and market expansion through acquisition seems to be the most viable option lately. One should note, however, that for the formerly named CMS and XKO, there has not been any apparent disappointment, as has been the case for many other peer vendors' “shotgun” (out of financial necessity) mergers and acquisitions. Quite the contrary: 2006 and 2007 were years of notably more aggressive growth and product research and development (R&D) achievements for CMS. Most recently, in April 2007, the company announced its entrance into the Turkish market. To that end, EEE, a long-standing CMS partner in Europe, has partnered with Byte, a leading IBM business partner in Turkey, to provide the CMSi5 ERP to the Turkish manufacturing market.
Turkey is a strategic manufacturing market in Europe and has long been regarded as the gateway to the Middle East. Byte and EEE have already secured the first CMS customer in Turkey, Mega Polietilen, a manufacturer of foam products for a variety of industries, including automotive, electronics, and consumer goods. With the reportedly high level of interest exhibited thus far, the vendor expects several more new CMSi5 customers in Turkey by the end of the year.
This follows on the heels of CMS's establishing, in mid-2005, a foothold in the expanding market for ERP solutions in the Asia-Pacific region, and the associated opening of its operations for the People's Republic of China, in Shanghai. CMS-Shanghai has since been tasked with expanding CMS Software's market share in China, where several CMSi5 systems had already been implemented in plants owned by North America-based CMS customers. By virtue of these established CMSi5 “footprints,” and because the ERP solution has been fully translated into Chinese, CMS has since been positioned to exploit the opportunities presented by the Chinese economy as it continues to evolve.
Moreover, CMS's Asia-Pacific regional headquarters is now located in Hong Kong. Through this office, the vendor has extended the market reach for CMSi5 beyond mainland China to manufacturing and distribution enterprises in established economies, like Japan's and Australia's, as well as to emerging markets, such as India's.
This concludes part one of the three-part series A Quiet ERP Vendor Merger That's Worth a Closer Look. Part two discusses how CMS's (now Solarsoft) ERP software solutions provide electronic data interchange (EDI), traceability with its Bar Code Labeling/Serialization module, as well as warehousing, distribution, and other supply chain features and functions.
For more information and to start your own custom solution comparison, please visit
http://www.technologyevaluation.com/research/articles/a-quiet-erp-vendor-merger-that-s-worth-a-closer-look-19176/
Thursday, January 20, 2011
Scient Finds That Golden Eggs Can Bite
Event Summary
Scient Corp. announced that one of its clients, a dot-com company named Verde Media, had filed for protection against its creditors under Chapter 11. Verde Media owes Scient $2 million for two full months of work; its shareholders have reportedly promised to pay off their debt, but companies filing under Chapter 11 typically pay only a fraction of what they actually owe.
The previous week another Scient customer, Inacom Corp also filed under Chapter 11. Not even remotely a dot-com, Inacom is number 336 on the Fortune 500, with 1998 sales of $4,258 million.
Market Impact
Scient and its plethora of e-business service provider competitors (see TEC's selection model: Business Service Provider) have been children of the dot-com age. It's hardly surprising that after the bubble-squeezing market correction there would be small dot-com companies that are short on cash; a number of larger ones have already folded and even Amazon recently suffered a 19 percent drop in its stock price after it received a less than glowing credit quality report.
Scient has not been, and will not be, the only company affected as the smaller (and not so small) dot-coms flounder. AppNet Inc. was hurt so badly by bad debt when one customer folded its tent that AppNet eventually had to sell itself to Commerce One.
Although Scient has a fairly high exposure, with an estimated 25 percent of its clients being dot-coms, there's no reason to assume that the company is in serious danger. Scient has another dependence on dot-com companies with its recently launched Internet incubator (see Dot.Coms Getting Bred By Scient). However, some companies in its space will suddenly be in serious danger. It's largely the luck of the draw which ones get hit by one too many bad debts or delayed contracts.
User Recommendations
The uncertainty about the financial status of some customers will make e-business service providers cautious. They will probably seek to do work for riskier clients in smaller phased units rather than large all-or-nothing projects. This would be a good way for many companies to work with companies like Scient, both to protect themselves from any difficulties their ebsp might run into and because, as in the rest of IT, well-defined phased projects succeed where others fail.
http://www.technologyevaluation.com/research/articles/scient-finds-that-golden-eggs-can-bite-15913/
Scient Corp. announced that one of its clients, a dot-com company named Verde Media, had filed for protection against its creditors under Chapter 11. Verde Media owes Scient $2 million for two full months of work; its shareholders have reportedly promised to pay off their debt, but companies filing under Chapter 11 typically pay only a fraction of what they actually owe.
The previous week another Scient customer, Inacom Corp also filed under Chapter 11. Not even remotely a dot-com, Inacom is number 336 on the Fortune 500, with 1998 sales of $4,258 million.
Market Impact
Scient and its plethora of e-business service provider competitors (see TEC's selection model: Business Service Provider) have been children of the dot-com age. It's hardly surprising that after the bubble-squeezing market correction there would be small dot-com companies that are short on cash; a number of larger ones have already folded and even Amazon recently suffered a 19 percent drop in its stock price after it received a less than glowing credit quality report.
Scient has not been, and will not be, the only company affected as the smaller (and not so small) dot-coms flounder. AppNet Inc. was hurt so badly by bad debt when one customer folded its tent that AppNet eventually had to sell itself to Commerce One.
Although Scient has a fairly high exposure, with an estimated 25 percent of its clients being dot-coms, there's no reason to assume that the company is in serious danger. Scient has another dependence on dot-com companies with its recently launched Internet incubator (see Dot.Coms Getting Bred By Scient). However, some companies in its space will suddenly be in serious danger. It's largely the luck of the draw which ones get hit by one too many bad debts or delayed contracts.
User Recommendations
The uncertainty about the financial status of some customers will make e-business service providers cautious. They will probably seek to do work for riskier clients in smaller phased units rather than large all-or-nothing projects. This would be a good way for many companies to work with companies like Scient, both to protect themselves from any difficulties their ebsp might run into and because, as in the rest of IT, well-defined phased projects succeed where others fail.
http://www.technologyevaluation.com/research/articles/scient-finds-that-golden-eggs-can-bite-15913/
QAD Ends Its Protracted Dry Season, Not Yet On an Easy Street
QAD Inc. reported $0.06 of diluted net income per share, or net income of $2.1 million, on record total revenue of $70.9 million for the fourth fiscal quarter ended January 31, 2000. This compares with $0.16 of diluted net loss per share or a net loss of $4.9 million on total revenue of $65.4 million in the fourth quarter of fiscal 1999. License revenue was $33.5 million for the fourth quarter-up 62% from the third quarter- compared with $33.0 million in the same period last year.
License revenue and development fees from QAD's e-business solutions exceeded $9 million in the fourth quarter. QAD e-business solutions include the QAD eQ suite of Business-to-Business (B2B) applications, with Sell-Side Replenishment and Fulfillment, Buy-Side Management, and Supply Chain Optimization. For the fiscal year ended January 31, 2000, QAD reported of diluted net loss per share of $0.54 on total revenue of $239.3 million and license revenue of $95.1 million. This compares with diluted net loss per share of $1.22 on total revenue of $193.3 million and license revenue of $105.9 million for the prior fiscal year.
Karl F. Lopker, QAD chief executive officer, stated: "We are very pleased with the fourth quarter results and with our establishment of QAD as a leader in the B2B space. The record revenue performance demonstrates both a recovery from the Y2K spending freeze and our aggressive move into the B2B space, with strong customer demand for new sites as well as for QAD e-business solutions. Customers are embracing QAD's e-business vision and our web-enabled solutions to drive their e-business B2B initiatives."
"In the quarter, the Company received the largest order in its history, for $22.4 million-including QAD's e-business solutions - from Framatome Connectors International," said Lopker. "Combined with a successful beta and live operation of QAD eQ at a large multinational customer, these actions demonstrate that QAD is aggressively competing for large global opportunities requiring breadth of products and services, with e-business solutions."
Market Impact
We believe that QAD finally stemmed its tide of losses, and this upbeat report is mainly of psychological importance for the wary market place rather than a display of an impressive performance (See Figures 1 & 2). In fact, the revenues were only slightly higher than year ago. Nevertheless, the Company has successfully curbed expenses while expediting the delivery of its eQ product, whose prolonged and exorbitantly expensive development has seriously affected the Company's financial performance during the last two years.
There are a number of reasons to expect a brighter future for QAD.
The first is the Company's well-established leading global position in Small-to-Medium Enterprises (SME) and lower-end top-tier segments of the ERP market, where QAD has a large loyal customer base and a dispersed global network of offices and indirect channel.
Second, QAD is very competitive in speed and ease of global multi-site implementation due to its global service and support capabilities.
Third, QAD has a very tight vertical and vertical sub-segment focus (e.g., with solutions for the after-market, OEMs, and suppliers segments within the automotive industry).
Finally, QAD was one of the first mid-market ERP vendors to incorporate concepts of e-Commerce, Supply Chain Management, Customer Relationship Management, and integration with other vendors' products, which provides QAD with a 'one-stop shop' capability and an opportunity for sustained future license and service and support revenue. Its products also run on a broad range of platforms and QAD was one of the first mid-market vendors to port its product to Linux.
User Recommendations
We recommend including QAD in a short list in any selection within the following industries: Automotive, Electronics, Food & Beverage, and Medical Devices. However, any organization evaluating QAD products should still exercise moderate caution and consider existing functionality only, until the Company regains consistently profitable financial performance. Overall, fiscal 2000 was a negative financial year for QAD, and it was not that long ago when the Company called on a venture capitalist to help it survive the downturn in the ERP market and its consequential hardships.
http://www.technologyevaluation.com/research/articles/qad-ends-its-protracted-dry-season-not-yet-on-an-easy-street-15645/NetGenesis Predicts The Future From Mouse Trails
Vendor Genesis
NetGenesis, Inc. (NASDAQ: NTGX) has been developing web analytics software since 1994. Their original product, NetAnalysis, provided metrics to measure site traffic. It has since evolved into the NetGenesis 5 product suite that provides analytics to measure stickiness, frequency, and other sophisticated site visit characteristics. The analytics applications can be used in conjunction with third party campaign management and content management products from vendors such as Annuncio and Vignette. The analytics data can be merged with catalog and transaction data. This enables sites powered by NetGenesis to provide relevant content, marketing campaigns and site promotions targeted to customers based on their web behavior and purchasing history.
NetGenesis targets the Fortune 500 and high traffic dot-coms whose client web traffic ranges from 10 - 200 million hits per day. Retail, financial services and high technology are strong vertical markets. Some of the company's flagship clients include 3Com, Lotus, Barnes & Noble, and Charles Schwab.
NetGenesis hopes its new product suite will speed revenue growth; since 1996 NetGenesis has watched its own revenues grow at slower pace than those of its competitors. Figure 1 shows annual revenue from 1996 though 1999. Figure 2 shows quarterly data for the first three calendar quarters of 2000.
Figure 1.
*Accrue's Fiscal Year Ends 3/31, thus data reflects revenue one quarter ahead of the other vendors
Figure 2.
*Accrue's Fiscal Year Ends 3/31, thus data reflects revenue one quarter ahead of the other vendors
NetGenesis' average annualized revenue growth from 1997 through 1999 was 148%. Accrue, its closest competitor, had average annualized revenue growth of 487% over that same period. NetGenesis has experienced significant stock devaluation since going public at the end of February this year. The stock traded at $59 per share on 2/29/2000, approximately 95% higher that its current price of $2 5/8 per share on 11/14/2000. Accrue, Net Perceptions, and WebTrends are each off their 12-month highs, but NetGenesis has had the largest devaluation (current price as a percentage of 12-month high price) and has the lowest market capitalization of the group.
WebTrends competes primarily in the low to mid-market, but does have a presence in many large organizations. It is also quite likely that WebTrends will compete in the mid to high-end market in the near future. Net Perceptions is a borderline competitor in this market because it focuses primarily on personalization software, but it does have a web analytics product that analyzes web data at the transaction level.
TEC considers relative revenue growth and stock valuation as important indicators to long-term viability in the web analytics market. This market is primarily composed of small, unprofitable vendors with low revenue multiples for the software industry. Thus consolidation is likely to occur. WebTrends and Accrue both reported profits for 3Q00, and as of 11/14/2000 WebTrends had a revenue multiple considerably higher than any of the other vendors.
Accrue Software, Inc. (NASDAQ: ACRU) sells Accrue Insight 5, a suite of applications grouped into four categories that provide analytics for campaign management, content management, e-commerce transactions, and partner relationship management. WebTrends, Corp. (NASDAQ: WEBT) sells two enterprise level products, Commerce Trends 3.0, which provides web analytics and campaign management, and Enterprise Reporting Server, which provides reporting and report management. Net Perceptions, Inc. (NASDAQ: NETP) sells applications primarily in three categories: commerce, knowledge management, and personalization.
Vendor Strategy and Trajectory
NetGenesis' strategy has been to increase the functionality of NetGenesis 5 over previous products such as NetAnalysis, and to develop web analytics consulting services to move the company away from being a niche web statistics vendor towards being a supplier of online-customer information. This is an important move as the e-businesses of NetGenesis' target market become more sophisticated.
NetGenesis' competitive advantage comes from the combination of scalable, sophisticated analytics applications and analytics consulting services. Services represented 42% of the $6.5M in revenue generated in 1999, and 43% of the $5.8M in revenue generated during 2Q00 (note that the 3Q00 10-Q was not yet released at the time of writing). Future product and service enhancements are focused in these areas:
- Improving scalability to handle high traffic websites
- Improving integration by focusing on multiple database support, metadata schema extensions, and data source independence
- Improving analytic capabilities by enhancing metrics, segmentation, and predictive modeling
- Expanding reporting capabilities with report groups for vertical industries
- Enhancing consulting offerings in strategy and analysis, training, and implementation
NetGenesis has forged partnerships with a number of technology vendors to support these enhancements. Business development has focused on three areas:
- E-business Platform Vendors - Partnerships with vendors such as IBM, Oracle, Sun, and Vignette include co-development agreements to allow NetGenesis applications to integrate with widely used databases, servers, and content management software.
- Marketing Applications Vendors - Partnerships with Annuncio, Net Perceptions, and Double Click expand the analytics functionality of NetGenesis applications.
- Systems Integrators - Partnerships with integrators such as Deloitte, Digitas, and IBM Global Services provide NetGenesis with an indirect sales channel and implementation services.
NetGenesis told TEC that future partnerships would continue in these areas, with a particular emphasis on marketing applications vendors. NetGenesis will focus on ensuring that its applications can run synchronously with technology from other vendors.
ANALYSIS
Vendor Strengths
NetGenesis is in the right market at the right time. Net Perceptions is the only vendor facing shrinking revenues, and it is unclear if its web analytics product is to blame. Besides Net Perceptions, demand is high and double to triple digit revenue growth is the case across the board.
NetGenesis has a comprehensive analytics product and its Professional Services organization has expertise in designing measurement strategies for e-businesses. The company offers both standard implementation services and strategic analytics consulting services. NetGenesis has also produced an e-metrics white paper, which it claims has been recommended reading at a number of universities and has led to winning numerous customers.
NetGenesis 5 includes a core analytics platform and a packaged extensibility layer (NetGenesis Developer Kit) that is leveraged both by NetGenesis and its partner community to build on top of the platform. This allows third parties to offer value-added solutions that leverage the core platform. The company's product has a number of useful capabilities including, near real-time integration of online data into a data mart and sharing summary profiles of customers' web behavior with offline data. NetGenesis also claims to be a leader in the areas of user identification, analysis of dynamic sites, and analysis of multi-property sites.
Vendor Challenges
Although NetGenesis has developed an extensive partnership network, the long-term impact of its agreements may cause problems. Consider the partnership with Net Perceptions. NetGenesis partnered with Net Perceptions to use its personalization technology and since that agreement was signed Net Perceptions has added campaign management and e-commerce analytics applications to its product line. These applications compete with NetGenesis' offerings and incorporate Net Perceptions personalization technology. Furthermore Net Perceptions had shrinking revenues, layoffs and management departures during 3Q00. Thus continued support for NetGenesis' products by Net Perceptions is questionable.
Gaining certification for analytics metrics by an independent third party is a challenge to all web analytics vendors. The industry lacks a widely accepted, formal certification process similar to, for example, ISO certification for manufacturers. Auditing organizations such as ABC Interactive and IAB do exist, but these standards organizations have yet to agree on simple web traffic measurements (see Traffic Audits Make Strange Bedfellows: Part I - The Why's And What's Of Auditing and Traffic Audits Make Strange Bedfellows: Part II - The Audit Process).
BOTTOM LINE
Vendor Predictions
NetGenesis should continue to enjoy triple digit revenue growth over the next 12 months. The demand for sophisticated web analytics is just beginning to explode and NetGenesis is among the top vendors, positioned with a sophisticated offering to take advantage of the opportunity. As Figures 1 and 2 indicate, NetGenesis has not had the momentum of some of the other web analytics vendors. The introduction of NetGenesis 5 and related consulting services should help fuel growth provided that investments in sales and marketing and product development remain strong. Figures 3 and 4 illustrate NetGenesis' spending compared with other web analytics vendors.
Figure 3.
*Accrue's Fiscal Year Ends 3/31, thus data from 1Q00 was used to represent this calendar period
Figure 4.
*Accrue's Fiscal Year Ends 3/31, thus data from 1Q00 was used to represent this calendar period
Figure 3 indicates that NetGenesis' raw spending is consistent with other vendors. Although revenues continue to be lower than competitors, NetGenesis has not cut off spending in these key areas. Figure 3 indicates that NetGenesis' expenses as a percent of revenues is very high. This suggests that available cash is being funneled towards sales and marketing and product development. These factors are critical to their long-term chances of success.
TEC predicts that over the next 12 months market pressures will force larger CRM vendors to acquire small web analytics vendors with good technology to integrate in their own offering. Many potential clients are demanding a single vendor solution to meet their CRM related needs. As NetGenesis attempts to sell its products to larger clients it must be aware that web analytics is a key component of a CRM initiative that may include traditional business intelligence, personalization and recommendation, campaign management, call center management, and many other analytics and operational components. Thus NetGenesis is an attractive acquisition target for CRM vendors. This would be beneficial to clients because tight integration among CRM components enhances functionality and reduces implementation time.
Vendor Recommendations
In the short-term NetGenesis appears to be on the right track with its product and service enhancements. A particular focus on scalability and integration with other business application vendors should be a top priority.
In the long-term NetGenesis needs to consider how they plan to remain competitive in a young, consolidating market. NetGenesis does claim to be on a track to profitability, but a low valuation makes the company a prime target to be acquired by a larger vendor (within either the web analytics market, the business intelligence market, or the CRM market) for its technology. NetGenesis should consider focusing future business development and product development on making its product integrate seamlessly with products from the top vendors in each of these markets.
User Recommendations
Organizations looking to add sophisticated reporting and web behavior analysis tools should consider NetGenesis' offering. The list of vendors providing web analysis tools as sophisticated as those of NetGenesis is relatively short. A small number of vendors represent the majority of the market. You may consider other vendors such as Informix that have web analytics tools (see: Informix Decides To Start Analyzing Websites) but these tools are not as sophisticated in analyzing web behavior.
Integration with other systems may be a concern if you plan to include web analysis and multi-channel campaign management as part of a larger CRM initiative. NetGenesis is still a niche product compared to full CRM suites such as those sold by Siebel or E.piphany. NetGenesis does have an open data model built on top of a standard relational database as well as a rule-based import process, adapters and activators, but the company has no formal co-development partnerships in place with any major CRM vendor. Without CRM partnerships, potential clients should be particularly cautious of integration issues between their CRM applications and NetGenesis' applications. Be sure to get references from previous clients who faced integration of the same products before making a purchase decision.
http://www.technologyevaluation.com/research/articles/netgenesis-predicts-the-future-from-mouse-trails-16219/
Nortel and Clarify: Was There Ever Synergy Enough to Support this Marriage?
The Nortel and Clarify Marriage
On October 18, 1999, Nortel Networks, proclaimed that it was entering into a definitive merger agreement with the CRM vendor Clarify Inc., at the time the world's second largest provider of "front office [read: "CRM"] solutions for eBusiness." Nortel was buying all the common shares of Clarify for US$2.1 billion in its common shares. The deal closed on March 16, 2000.
Clarify, in 1998, reported revenues of $130 million and net income of $7.3 million. In the third quarter of 1999, the last quarter that Clarify independently reported its financials, it reported $63 million in revenues and net income of $5.9 million, with net assets of $98 million.
At the time of the acquisition, my colleagues and I were scratching our heads in disbelief and confusion. $2.1 billion seemed an outrageous price to pay for a company doing $250 million in revenues and net income of a miserly $5.9 million, but we must remember the timing. In 1999, there were many billion-dollar payments for million dollar companies by large companies seemingly frantic to grab that piece of e-Business technology they didn't have and believed they needed to have to compete in the dot-com world and in an effort to "grab the land" before it was gone. What about the corporate strategy for acquiring a CRM vendor? The best that we could come up with was that Nortel expected to be able to bundle Clarify's CRM Call Center and eBusiness functionality with Nortel's telephony and access technologies to provide hardware and software bundles to small and medium size enterprises looking for one-stop shopping.
This view was supported by reading part of a May 20, 2000 announcement, which focused on Nortel and SAP's agreement to use Clarify technology in SAP's mySAP.com offering (more on that below). In the footer section of the press release, Nortel stated:
"The Nortel Networks Clarify eBusiness Applications unit is ushering in the second wave of eBusiness, delivering complete solutions that leverage the high-performance Optical Internet, CRM and multimedia contact centers to enable seamless, personalized customer experiences. Current offerings include Clarify eFrontOffice, Periphonics' leading speech recognition technologies, and Nortel Networks' contact center solutions, providing companies with a single view of all aspects of the customer life cycle."
OK, sounds plausible, but was Nortel delivering on that vision?
The Discarded Housewife
Though it may have been Nortel's intent to give at least some emphasis to its vision of delivering complete contact center solutions, its actions since the Clarify acquisition don't bear this out. Nortel went on to make several additional acquisitions, including Otera (optical networking systems) in January of 2000, CoreTek (optical components maker) in March of 2000, Architel (IP services) in April of 2000, Xros (photonic switching) in June of 2000, Epicon (ASP distribution software) and CoreTek (tunable laser for the optical market) in June of 2000, Alteon WebSystems (content-aware switching) in July of 2000, and Sonoma Systems (high speed integrated communications) in October of 2000.
Nortel, even as recently as February of this year, laid down $3 billion for a unit of JDS Uniphase involved in optical networking. Nortel's core business was in server switches, voice services, IP, Optical networking, Wireless technologies, and ATM devices. There were no significant integration efforts conducted between Nortel technologies and Clarify, and very little interesting news in the Press. Among the slim pickings:
Nortel did announce in May of 2000 that it had entered into an agreement with SAP, the well-known ERP vendor looking for a front-office solution, to develop and integrate industry-specific "customer interaction solutions" to extend the scope of "collaborative CRM." As part of the agreement, SAP embedded within mySAP.com customer interaction applications from the Nortel Networks Clarify eBusiness Applications. It included plans to integrate Clarify's capability to accept multi-channel customer inquiries (such as Web, phone, and fax), and tailored initially to several verticals, namely, banking, insurance, high-tech, and communications. SAP was also hoping to create what they called "virtual communities of vendors" to provide the customer who had purchased from several collaborating vendors, one interface point. Yet, according to John Geralds writing in an article for VNUNet.com recently, "a reseller agreement with SAP, in which SAP was to resell Clarify call center software [mySAP.com], did not amount to any sales during its ten-month tenure." Any.
Also in May of 2000, IBM's consulting division announced a new practice in support of the Clarify eBusiness Applications suite, adding native DB2 support into Clarify's technology mix.
In January of this year, Nortel announced the release of Clarify 10.0 eFrontOffice, which essentially upgraded users on a Unix backend server with functionality to match users on a Windows backend server. Initial support is for Solaris on Oracle, with planned HP-UX/Oracle and AIX/UDB support. Yawn.
There was one tantalizing headline just last month. On June 4, IBM and Nortel jointly released a Press Release entitled: "IBM, Nortel Networks Build Relationship to Provide eBusiness Solutions to Service Providers, Enterprises." Sadly, however, in reading the press release, one quickly understood the relationships intent: joining Nortel's Optical Internet and Ethernet solutions with IBM's server components, including the WebSpere application server software and network management tools. It was purely a network integration solution. Clarify was not mentioned in the announcement.
Other telling notes of disillusionment: not only did Clarify's chief exective Tony Zingale leave the company last year, but his replacement, William Conner, left after only a few months for the President and CEO post at Entrust Technologies. This is in addition to a raft of other Clarify executive defections.
Finally, at the national CRM Conference held in Boston in June of this year, all of the players in the CRM space, big and small, were in attendance and showing their wares at the Vendor Exposition all except Nortel's Clarify. Clarify's notable absence was explained away by a presenter whose simple observation was that "Nortel was bleeding money and this was probably a cost-saving move and nothing more." We're not so sure.
Nortel in Trouble
On the surface, the calendar year 2000 was a good one for Nortel. They consistently saw record growth looking at it year over year (US$7.82 billion in sales in the June quarter; $7.3 billion in sales in the September quarter, and $8.7 billion in sales in the December quarter). Share price peaked at $89 on September 25. But the writing was on the wall. If you were to look closer, you would see trouble. By the end of the year, Nortel had recorded a total of $30 billion in revenues for the year, but a total net loss of $3.4 billion. By December, its share price was chopped over half, down from its peak of $86/share on July 26, to end the year at $32/share. The financial slide was on.
In the first quarter of 2001, Nortel reported revenues of $6.2 billion and a net loss of $2.6 billion. They ended the quarter with their share price down to $14/share.
In June, John Roth, President and CEO commented that it was Nortel's plan: "to streamline our business around our core growth areas of Metro Optical, Optical Long Haul, Wireless Internet, Core IP/Intelligent Internet and Internet Telephony; and to focus our investments to deliver the key next generation networking solutions." They announced plans to cut 30,000 jobs by September, and to end their share dividends distribution program.
After the close of trading on July 19, Nortel announced its June Quarter, 2001 earnings, declaring $4.61 billion in revenues, with a net loss of $1.6B. With restructuring and write-off charges associated with acquisitions, they declared a total net loss for the quarter of $19.4 billion, $6.08 per share. It is one of the largest corporate losses in history. Roth said the company could not give any financial guidance for the rest of this year, and he doesn't see the company's business turning around until the middle of 2002. Its stock opened on July 20 at $7.68, a 91% drop from its high about a year ago. Ouch.
What Now, Clarify?
It seems clear to us that Clarify is on the block. They were not mentioned in any of John Roth's re-structuring statements as being core to the company, and in restructuring times, companies must focus solely on their core and most profitable businesses. Also, in the sixteen months that the two companies have been joined, Nortel has failed to show any compelling symbiosis between its technologies and those of Clarify, simply doing one significant re-sell deal with SAP and one alliance deal with IBM. Both moves Clarify could have conducted without the benefit of Nortel incorporate. It's time for Clarify to move on.
Where will they go? One possibility is SAP, who already has a large investment in time and technology in Clarify through their OEM deal to create mySAP.com. This makes sense, too, in the technology consolidation and integration environment that we currently find ourselves in. Vendors believe that customers are tired of having to both implement multiple, disparate systems, and tie those systems together with a gooey layer of EAI (Enterprise Application Integration) to get more meaningful information between departments and to consolidate reporting and analysis.
Witness integration within the CRM space: Kana Communications must be the poster child for integration within the CRM space. They started out as a simple Email-handling software vendor for support organizations, and through the acquisition of Silknet (online self-service), Connectify (EDM, or electronic direct marketing), ServiceSoft (integrated web communications), Broadbase (data warehousing and business intelligence), and Business Evolution and NetDialog (both web-based customer service tools companies) and through multiple key alliances, they have turned themselves into a self-proclaimed vendor of "complete eCRM solutions." In the world of Back Office and Front Office integration, Oracle is a primary example. After having a suite of Back Office applications for years, they're now going through the rocky development of an integrated Front Office offering called simply the Oracle E-Business Suite.
Maybe IBM will want Clarify, since IBM announced consulting support for Clarify and also helped Clarify add native DB2 support to the platform. But this solution might be less sensible, since IBM consultants might be wary of losing consulting dollars from other CRM implementations.
On October 18, 1999, Nortel Networks, proclaimed that it was entering into a definitive merger agreement with the CRM vendor Clarify Inc., at the time the world's second largest provider of "front office [read: "CRM"] solutions for eBusiness." Nortel was buying all the common shares of Clarify for US$2.1 billion in its common shares. The deal closed on March 16, 2000.
Clarify, in 1998, reported revenues of $130 million and net income of $7.3 million. In the third quarter of 1999, the last quarter that Clarify independently reported its financials, it reported $63 million in revenues and net income of $5.9 million, with net assets of $98 million.
At the time of the acquisition, my colleagues and I were scratching our heads in disbelief and confusion. $2.1 billion seemed an outrageous price to pay for a company doing $250 million in revenues and net income of a miserly $5.9 million, but we must remember the timing. In 1999, there were many billion-dollar payments for million dollar companies by large companies seemingly frantic to grab that piece of e-Business technology they didn't have and believed they needed to have to compete in the dot-com world and in an effort to "grab the land" before it was gone. What about the corporate strategy for acquiring a CRM vendor? The best that we could come up with was that Nortel expected to be able to bundle Clarify's CRM Call Center and eBusiness functionality with Nortel's telephony and access technologies to provide hardware and software bundles to small and medium size enterprises looking for one-stop shopping.
This view was supported by reading part of a May 20, 2000 announcement, which focused on Nortel and SAP's agreement to use Clarify technology in SAP's mySAP.com offering (more on that below). In the footer section of the press release, Nortel stated:
"The Nortel Networks Clarify eBusiness Applications unit is ushering in the second wave of eBusiness, delivering complete solutions that leverage the high-performance Optical Internet, CRM and multimedia contact centers to enable seamless, personalized customer experiences. Current offerings include Clarify eFrontOffice, Periphonics' leading speech recognition technologies, and Nortel Networks' contact center solutions, providing companies with a single view of all aspects of the customer life cycle."
OK, sounds plausible, but was Nortel delivering on that vision?
The Discarded Housewife
Though it may have been Nortel's intent to give at least some emphasis to its vision of delivering complete contact center solutions, its actions since the Clarify acquisition don't bear this out. Nortel went on to make several additional acquisitions, including Otera (optical networking systems) in January of 2000, CoreTek (optical components maker) in March of 2000, Architel (IP services) in April of 2000, Xros (photonic switching) in June of 2000, Epicon (ASP distribution software) and CoreTek (tunable laser for the optical market) in June of 2000, Alteon WebSystems (content-aware switching) in July of 2000, and Sonoma Systems (high speed integrated communications) in October of 2000.
Nortel, even as recently as February of this year, laid down $3 billion for a unit of JDS Uniphase involved in optical networking. Nortel's core business was in server switches, voice services, IP, Optical networking, Wireless technologies, and ATM devices. There were no significant integration efforts conducted between Nortel technologies and Clarify, and very little interesting news in the Press. Among the slim pickings:
Nortel did announce in May of 2000 that it had entered into an agreement with SAP, the well-known ERP vendor looking for a front-office solution, to develop and integrate industry-specific "customer interaction solutions" to extend the scope of "collaborative CRM." As part of the agreement, SAP embedded within mySAP.com customer interaction applications from the Nortel Networks Clarify eBusiness Applications. It included plans to integrate Clarify's capability to accept multi-channel customer inquiries (such as Web, phone, and fax), and tailored initially to several verticals, namely, banking, insurance, high-tech, and communications. SAP was also hoping to create what they called "virtual communities of vendors" to provide the customer who had purchased from several collaborating vendors, one interface point. Yet, according to John Geralds writing in an article for VNUNet.com recently, "a reseller agreement with SAP, in which SAP was to resell Clarify call center software [mySAP.com], did not amount to any sales during its ten-month tenure." Any.
Also in May of 2000, IBM's consulting division announced a new practice in support of the Clarify eBusiness Applications suite, adding native DB2 support into Clarify's technology mix.
In January of this year, Nortel announced the release of Clarify 10.0 eFrontOffice, which essentially upgraded users on a Unix backend server with functionality to match users on a Windows backend server. Initial support is for Solaris on Oracle, with planned HP-UX/Oracle and AIX/UDB support. Yawn.
There was one tantalizing headline just last month. On June 4, IBM and Nortel jointly released a Press Release entitled: "IBM, Nortel Networks Build Relationship to Provide eBusiness Solutions to Service Providers, Enterprises." Sadly, however, in reading the press release, one quickly understood the relationships intent: joining Nortel's Optical Internet and Ethernet solutions with IBM's server components, including the WebSpere application server software and network management tools. It was purely a network integration solution. Clarify was not mentioned in the announcement.
Other telling notes of disillusionment: not only did Clarify's chief exective Tony Zingale leave the company last year, but his replacement, William Conner, left after only a few months for the President and CEO post at Entrust Technologies. This is in addition to a raft of other Clarify executive defections.
Finally, at the national CRM Conference held in Boston in June of this year, all of the players in the CRM space, big and small, were in attendance and showing their wares at the Vendor Exposition all except Nortel's Clarify. Clarify's notable absence was explained away by a presenter whose simple observation was that "Nortel was bleeding money and this was probably a cost-saving move and nothing more." We're not so sure.
Nortel in Trouble
On the surface, the calendar year 2000 was a good one for Nortel. They consistently saw record growth looking at it year over year (US$7.82 billion in sales in the June quarter; $7.3 billion in sales in the September quarter, and $8.7 billion in sales in the December quarter). Share price peaked at $89 on September 25. But the writing was on the wall. If you were to look closer, you would see trouble. By the end of the year, Nortel had recorded a total of $30 billion in revenues for the year, but a total net loss of $3.4 billion. By December, its share price was chopped over half, down from its peak of $86/share on July 26, to end the year at $32/share. The financial slide was on.
In the first quarter of 2001, Nortel reported revenues of $6.2 billion and a net loss of $2.6 billion. They ended the quarter with their share price down to $14/share.
In June, John Roth, President and CEO commented that it was Nortel's plan: "to streamline our business around our core growth areas of Metro Optical, Optical Long Haul, Wireless Internet, Core IP/Intelligent Internet and Internet Telephony; and to focus our investments to deliver the key next generation networking solutions." They announced plans to cut 30,000 jobs by September, and to end their share dividends distribution program.
After the close of trading on July 19, Nortel announced its June Quarter, 2001 earnings, declaring $4.61 billion in revenues, with a net loss of $1.6B. With restructuring and write-off charges associated with acquisitions, they declared a total net loss for the quarter of $19.4 billion, $6.08 per share. It is one of the largest corporate losses in history. Roth said the company could not give any financial guidance for the rest of this year, and he doesn't see the company's business turning around until the middle of 2002. Its stock opened on July 20 at $7.68, a 91% drop from its high about a year ago. Ouch.
What Now, Clarify?
It seems clear to us that Clarify is on the block. They were not mentioned in any of John Roth's re-structuring statements as being core to the company, and in restructuring times, companies must focus solely on their core and most profitable businesses. Also, in the sixteen months that the two companies have been joined, Nortel has failed to show any compelling symbiosis between its technologies and those of Clarify, simply doing one significant re-sell deal with SAP and one alliance deal with IBM. Both moves Clarify could have conducted without the benefit of Nortel incorporate. It's time for Clarify to move on.
Where will they go? One possibility is SAP, who already has a large investment in time and technology in Clarify through their OEM deal to create mySAP.com. This makes sense, too, in the technology consolidation and integration environment that we currently find ourselves in. Vendors believe that customers are tired of having to both implement multiple, disparate systems, and tie those systems together with a gooey layer of EAI (Enterprise Application Integration) to get more meaningful information between departments and to consolidate reporting and analysis.
Witness integration within the CRM space: Kana Communications must be the poster child for integration within the CRM space. They started out as a simple Email-handling software vendor for support organizations, and through the acquisition of Silknet (online self-service), Connectify (EDM, or electronic direct marketing), ServiceSoft (integrated web communications), Broadbase (data warehousing and business intelligence), and Business Evolution and NetDialog (both web-based customer service tools companies) and through multiple key alliances, they have turned themselves into a self-proclaimed vendor of "complete eCRM solutions." In the world of Back Office and Front Office integration, Oracle is a primary example. After having a suite of Back Office applications for years, they're now going through the rocky development of an integrated Front Office offering called simply the Oracle E-Business Suite.
Maybe IBM will want Clarify, since IBM announced consulting support for Clarify and also helped Clarify add native DB2 support to the platform. But this solution might be less sensible, since IBM consultants might be wary of losing consulting dollars from other CRM implementations.
Enlightened Self-interest Launches CRM Information Source
Peppers and Rogers Group, an internationally known consulting group that specializes in 1-to-1 marketing, announced that it has joined with Net Perceptions (NASDAQ: NETP) to launch a series of conferences and publications on personalization tools, techniques, and tactics. Net Perceptions is a leading vendor of software that is used to track and analyze customer behaviors and to create personalized experiences based on both individual and aggregate patterns.
One publication has already been announced, with topics tentatively including ROI analysis for personalization, vendors, and getting management buy-in for personalization initiatives. This publication, 1to1 Personalization, is scheduled to begin publishing in November of 2000.
Market Impact
This announcement underscores the growing importance and strength of the personalization market. As B2C commerce heats up, companies are finding that the first sale to a customer might entail a net loss of $50 or higher when the advertising and promotions needed to attract that customer are taken into account. Reducing the cost of acquiring customers and turning visitors into loyal repeat customers is now recognized as being of paramount importance for any retail web site.
User Recommendations
We believe that any B2C website that does not have CRM and personalization in its strategic plan should start looking for the nearest exit ramp from the information highway.
Peppers and Rogers Group has the ability to bring to the table industry leaders to philosophize and discuss trends, and to have them joined by users of various products who can discuss real-world experiences. The publications from this venture are likely to be an excellent source of information in an area where it's almost impossible to learn too much.
B2B websites will also find it valuable to pay attention to this area. While there are of course differences in approach, B2B sites often interact with real people who will respond to excellent service and targeted offerings.
It would be natural to wonder whether the backing of Net Perceptions is likely to slant the coverage in some way. The Publisher for 1to1 Personalization, Karen Burka of Peppers and Rogers, guaranteed that the editorial coverage would be entirely free of influence by Net Perceptions. "Net Perceptions has an excellent record in 'coopetition,'" she said. "They created the Personalization Summit, to which they invite all of their competitors." Indeed, customers at vendor booths in the Personalization 2000 Summit in Boston were heard discussing their appreciation of Net Perception's sponsorship of the three-day event.
http://www.technologyevaluation.com/research/articles/enlightened-self-interest-launches-crm-information-source-15721/
One publication has already been announced, with topics tentatively including ROI analysis for personalization, vendors, and getting management buy-in for personalization initiatives. This publication, 1to1 Personalization, is scheduled to begin publishing in November of 2000.
Market Impact
This announcement underscores the growing importance and strength of the personalization market. As B2C commerce heats up, companies are finding that the first sale to a customer might entail a net loss of $50 or higher when the advertising and promotions needed to attract that customer are taken into account. Reducing the cost of acquiring customers and turning visitors into loyal repeat customers is now recognized as being of paramount importance for any retail web site.
User Recommendations
We believe that any B2C website that does not have CRM and personalization in its strategic plan should start looking for the nearest exit ramp from the information highway.
Peppers and Rogers Group has the ability to bring to the table industry leaders to philosophize and discuss trends, and to have them joined by users of various products who can discuss real-world experiences. The publications from this venture are likely to be an excellent source of information in an area where it's almost impossible to learn too much.
B2B websites will also find it valuable to pay attention to this area. While there are of course differences in approach, B2B sites often interact with real people who will respond to excellent service and targeted offerings.
It would be natural to wonder whether the backing of Net Perceptions is likely to slant the coverage in some way. The Publisher for 1to1 Personalization, Karen Burka of Peppers and Rogers, guaranteed that the editorial coverage would be entirely free of influence by Net Perceptions. "Net Perceptions has an excellent record in 'coopetition,'" she said. "They created the Personalization Summit, to which they invite all of their competitors." Indeed, customers at vendor booths in the Personalization 2000 Summit in Boston were heard discussing their appreciation of Net Perception's sponsorship of the three-day event.
http://www.technologyevaluation.com/research/articles/enlightened-self-interest-launches-crm-information-source-15721/
Enlightened Self-interest Launches CRM Information Source
Peppers and Rogers Group, an internationally known consulting group that specializes in 1-to-1 marketing, announced that it has joined with Net Perceptions (NASDAQ: NETP) to launch a series of conferences and publications on personalization tools, techniques, and tactics. Net Perceptions is a leading vendor of software that is used to track and analyze customer behaviors and to create personalized experiences based on both individual and aggregate patterns.
One publication has already been announced, with topics tentatively including ROI analysis for personalization, vendors, and getting management buy-in for personalization initiatives. This publication, 1to1 Personalization, is scheduled to begin publishing in November of 2000.
Market Impact
This announcement underscores the growing importance and strength of the personalization market. As B2C commerce heats up, companies are finding that the first sale to a customer might entail a net loss of $50 or higher when the advertising and promotions needed to attract that customer are taken into account. Reducing the cost of acquiring customers and turning visitors into loyal repeat customers is now recognized as being of paramount importance for any retail web site.
User Recommendations
We believe that any B2C website that does not have CRM and personalization in its strategic plan should start looking for the nearest exit ramp from the information highway.
Peppers and Rogers Group has the ability to bring to the table industry leaders to philosophize and discuss trends, and to have them joined by users of various products who can discuss real-world experiences. The publications from this venture are likely to be an excellent source of information in an area where it's almost impossible to learn too much.
B2B websites will also find it valuable to pay attention to this area. While there are of course differences in approach, B2B sites often interact with real people who will respond to excellent service and targeted offerings.
It would be natural to wonder whether the backing of Net Perceptions is likely to slant the coverage in some way. The Publisher for 1to1 Personalization, Karen Burka of Peppers and Rogers, guaranteed that the editorial coverage would be entirely free of influence by Net Perceptions. "Net Perceptions has an excellent record in 'coopetition,'" she said. "They created the Personalization Summit, to which they invite all of their competitors." Indeed, customers at vendor booths in the Personalization 2000 Summit in Boston were heard discussing their appreciation of Net Perception's sponsorship of the three-day event.
http://www.technologyevaluation.com/research/articles/enlightened-self-interest-launches-crm-information-source-15721/
One publication has already been announced, with topics tentatively including ROI analysis for personalization, vendors, and getting management buy-in for personalization initiatives. This publication, 1to1 Personalization, is scheduled to begin publishing in November of 2000.
Market Impact
This announcement underscores the growing importance and strength of the personalization market. As B2C commerce heats up, companies are finding that the first sale to a customer might entail a net loss of $50 or higher when the advertising and promotions needed to attract that customer are taken into account. Reducing the cost of acquiring customers and turning visitors into loyal repeat customers is now recognized as being of paramount importance for any retail web site.
User Recommendations
We believe that any B2C website that does not have CRM and personalization in its strategic plan should start looking for the nearest exit ramp from the information highway.
Peppers and Rogers Group has the ability to bring to the table industry leaders to philosophize and discuss trends, and to have them joined by users of various products who can discuss real-world experiences. The publications from this venture are likely to be an excellent source of information in an area where it's almost impossible to learn too much.
B2B websites will also find it valuable to pay attention to this area. While there are of course differences in approach, B2B sites often interact with real people who will respond to excellent service and targeted offerings.
It would be natural to wonder whether the backing of Net Perceptions is likely to slant the coverage in some way. The Publisher for 1to1 Personalization, Karen Burka of Peppers and Rogers, guaranteed that the editorial coverage would be entirely free of influence by Net Perceptions. "Net Perceptions has an excellent record in 'coopetition,'" she said. "They created the Personalization Summit, to which they invite all of their competitors." Indeed, customers at vendor booths in the Personalization 2000 Summit in Boston were heard discussing their appreciation of Net Perception's sponsorship of the three-day event.
http://www.technologyevaluation.com/research/articles/enlightened-self-interest-launches-crm-information-source-15721/
The Benefits of Focusing on a Niche and Serving it Well: EcFood - A Dot-com Making It
Food and beverage industry strategic sourcing vendor ecFood, recently announced exceptional results for 2001 with dramatic increases in revenue, gross margin, transaction volume, customer acquisition and services. The privately held company closed out the year with record-breaking performance, including an 815% increase in gross margin from 2000 and revenue of $37.6 million. ecFood also acquired a major dairy industry purchasing association, retained two top ten food company accounts, and expanded its list of products and services.
ecFood (www.ecFood.com) was a pioneer in bringing web-enabled sourcing software tools and services to the industrial food sector. Founded in 1998 and headquartered in Santa Clara, Calif., ecFood combines substantial food and beverage industry knowledge with e-commerce technology. According to Dave Laukat, CEO of ecFood, "We provide online methods that reflect real world purchasing practices in the industrial food industry. ecSourcing, our suite of sourcing and bidding solutions, takes the "best practices" of the industrial purchasing system and blends them with the inherent efficiencies and savings of the new economy."
While the dot-com and technology bubble burst in early 2001, ecFood kept pace as one of the top web-based Procurement Service Providers for the food and beverage industry. ecFood increased alliances with various purchaser and suppliers in 2001, including new customer relationships with two top ten international food companies. With the acquisition of the Masters Group (formerly Master Dairies) in September, ecFood's annualized revenue volume increased to more than $250 million. The purchase also significantly strengthened ecFood's demand aggregation strategy. In its first full quarter since being acquired by ecFood, the Masters Group dairy purchasing association realized significant savings and economies of scale on dairy ingredients and materials such as resin, vinyl gloves, and liquid sugar.
Services offered by ecFood include demand aggregation, specification management, auctions, RFP and RFQ. Additional services added in 2001 were invoicing and payment programs, which expedited the supply chain process for both sides involved in the supply chain process. Plus, ecFood expanded aggregated product programs in packaging, logistics and ingredients. ecFood currently provides online transaction and membership-based group buying services to over 40 industry leaders from several segments of the food industry. Segments include major consumer brand manufacturers, processing manufacturers, bakeries, dairy, foodservice, retailers, cooperatives and buying groups.
But the proof is in the savings for ecFood's customer base, some sample savings across different types of food industry purchases include:
| Ingredients | Packaging | Supplies | |||
| Orange Juice | 3.0% | Labels | 15.0% | Uniforms | 12.0% |
| Olive Oil | 10.0% | Closures | 15.0% | Vinyl Gloves | 25.0% |
| Beans | 9.7% | Bubble Wrap | 32.5% | Bulk Fuel | 3.5% |
| Citric Acid | 20.0% | Stretch Wrap | 30.0% | Transportation | 8.1% |
| Walnuts | 6.0% | Milk Crates | 11.2% | Plastic Pallets | 11.2% |
Customers further prove ecFood's business model by repeat use of the ecFood services. Sample ecFood customers includeInternational Multifoods, J.R. Simplot, Pillsbury, Wawa, Inc., Shamrock Foods, and Furman Foods.
Food companies should investigate strategic sourcing services like ecFood to increase the effectiveness of their procurement operations. These services leverage the abilities of existing buyers to increase efficiency and lower prices. EcFood should be placed on the short list of strategic sourcing services for any food company.
While proving its business model through growth and a growing customer list, ecFood should expand its market presence within the food industry through increased marketing efforts.
http://www.technologyevaluation.com/research/articles/the-benefits-of-focusing-on-a-niche-and-serving-it-well-ecfood---a-dot-com-making-it-16624/
News Analysis: Dot.Coms Getting Bred By Scient: Will Scient Spawn Into a Giant or Will Andersen Have the Edge?
Scient (NASDAQ SCNT) announced in February that it intended to act as an incubator for dot.com companies through its Systems Innovation services. The accelerated programs would mean a rapid growth in the number of companies that Scient helps, and potential continued partnerships with them. This could establish for Scient a network of companies with a mutual parent: Scient.
However, the heat is on as Andersen Consulting is pouring $1.2B into its campaign to accelerate dot-coms to IPOs, and other vendors join the already expanding market to attract dot-coms.
Market Impact
SCIENT is a leading Digital Business Service Provider (DBSP) that assists businesses in becoming digital (read web) enterprises. It describes itself as an "eBusiness Systems Innovator". It's clients include Chase and First Union - established Brick and Mortar (B&M) financial companies - and dot.com's.
Scient is betting the dot.com's it incubates will become long term partners as they grow and mature By using an incubator approach, Scient can well propel these dot.com's to a successful business launch - after all, it did it itself not too long ago (1997).
The incubator essentially provides a low cost environment where business planning is assisted by the incubator's dedicated staff, and business launch occurs with minimum overhead. The key is the ability for the incubator to provide the fundamentals to building a business - business model development, business planning, financing, office facilities, and launch assistance. Once launched, the baby should at some point grow big enough to support itself and leave the incubator for the real world. Its empty nest is then ready for another bird.
Scient is also well placed by being in the heart of U.S. IPO country - and geography can still count. An analysis of 3,169 U.S. IPOs shows that about 21% of all IPOs originate in California, and the west as a whole contributed nearly 32% (see figure). The second largest is the Northeast where NY and MA account for 16% of the 25% of IPOs. This is a good indicator of the distribution of the IPOs with a confidence of order 97%.
It is also interesting that the total from the rest of the world where Andersen et. al. play accounts for slightly under 10% of all IPOs on U.S. exchanges (365 out of 3,534). Canada, Israel, the UK and China (23 from the mainland and 10 from Hong Kong) have respectively the largest IPO volumes for single countries outside the U.S. These figures are indicative (confidence level is between 85%-90%) of the creation rates of technology companies in these countries. It is notable that China exceeds recently democratized Russia by 10:1.
From its own history, Scient's culture is geared for dot.com startups, and has had its main strength is in digital strategy. These two background building blocks give it an advantage over legacy companies like Deloitte Consulting, PriceWaterhouse, and Andersen Consulting. However, the latter three should not be overlooked. These gargantuan legacy vendors have established venture capital funds for dot.com's, or investment programs which leverage partnering relationships with the technology upstarts (oops, I meant startups). They also have reputations that can be used for credibility with clients.
Andersen Consulting has created a global network of 17 launch centers for dot-coms, largely, it seems, aimed at the B2C side. Andersen however is not so liberal with trust - it requires financing and good management to be in place prior to taking on the company, so it isn't a startup incubator. I'd also bet that you need globules of money - some Andersen consultants can cost $700 an hour or more. Further, the locations of these incubators, as one might expect, are in the hotbeds of IPO generation.
It should be noted that Scient's offering is a true incubator, and willing to go the mile of arranging funding, business planning, etc. Another player in this area is Xcelerate, which is a much smaller organization than Scient, but has the basis for providing lower cost engagements in its e-Business Supercenters. The intent in these Supercenters is to provide fast implementation rather than detailed and careful business planning and financing.
IXL also has a program directed at dot-com's. Ospry and NEXGENIX, two other DBSPs derive about 50% of their revenue from dot-com launches. Successful dot-com launches typically take about 90 days provided sound business plans and business models are understood by all - a fact sometimes related to the culture match of the DBSP and the new business management.
These companies - amongst others - recognize the enormous potential of startups to earn money on NASDAQ, where market caps run up to (end even beyond) 50 times revenue. While this high market cap markup persists, you can bet that programs like Scient's will increase (95% probability) in number, and others in the marketplace will follow, maybe more cautiously. Proxicom, for example, provides a discount on its services to dot-coms in return for what amounts to sweat equity, but no incubation facilities per se.
As yet, there seems no sign that the stock market markup bubble will burst (I rate the current probability of it bursting badly at 1-2% over the next eighteen months, though there will be some major ups and downs). The potential of the Internet for business is deemed so vast (in the trillions of dollars) that the current losses incurred by Internet companies (as well as the high investment costs) are bets against at least some of these dot.com's becoming the IBM's, Microsoft's, and DELL's, and HP's of the future. Scient's program will make at least some other players ponder.
As well, one should not overlook the potential of incubating a baby. As baby grows it can start making money, and one would guess go to daddy or mommy for advice. In turn, if Scient plays its cards right, it will develop a network of businesses in which it has investments. This could prove a bigger and more attractive play than its own current (known) business model.
That's roughly how Mondragon (see www.mondragon.mcc.es/ingles/ ) started out - a cooperative with about a dozen young guys supported by a local priest who had the vision and raised love money from the town of Mondragon's people and businesses. They used their culture to create similar-cultured and networked industries that today have well over 40,000 members spread over hundreds of businesses (with, I might add, success rates of well over 90% in creating and launching and 'surviving' those businesses compared to around a 75% failure rate of current internet spawned businesses). (Mondragon is the world's most successful Cooperative movement. It began in the Mondragon region of Basque country in Franco's 1950's Spain.)
The prey of dot-com start-ups by established companies - young and old - will definitely heat-up, though good business sense should prevail most of the time. Vendors currently draw between 30% and 50% of their revenue from (mostly) funded dot-coms.
Vendor Recommendations
Vendors should be aware that the market competition is stiffening up for dot-com business. Having programs in place which provide smooth processing of acceptable business plans are essential in attracting this type of business.
Growing a network of client companies is an opportunistic method for future revenue growth and annuity relationships. By being selective, it is possible to breed interrelated businesses with potentially very high long-term business success rates.
User Recommendations
If you've got a good idea, and can stand the pressure, dot-com'ing is getting attention, and competition to support you should heat up in the market place (95% probability). You should look around and check out what Service Providers can do for you. You may be surprised by the responses. If you're well financed and well structured, and come from a B&M, then take a look at the larger firms. Just remember, they come with a name and price tag to match. It depends if the name is what you want more than the price tag.
The lessons of Mondragon are that a culture fit with a good all-round mentor and good planning leads to a high success rate. But you still need the business and technical savvy to carry it off. Mondragon was driven by ideals and self-earned hard cash and love money; this marketplace is driven by other people's money, and they will want a return - a major one - at the end of the day. That'll include anyone you choose as a mentor. The bottom line is that the right partner is worth more than money.
Glossary
DBSP - Digital Business Service Provider
IPO - Initial Public Offering
B&M - Brick & Mortar (non e-business with established building facilities)
Dot-com - an Internet driven company using largely the Internet as a means to do business
http://www.technologyevaluation.com/research/articles/news-analysis-dot.coms-getting-bred-by-scient-will-scient-spawn-into-a-giant-or-will-andersen-have-the-edge-15371/
Subtle (or Not-so-subtle) Nuances of Microsoft .NET Enablement
Microsoft .NET is a comprehensive software development environment that was introduced in 2000 as Microsoft's next-generation programming environment. Pronounced "dot net," and widely known as the Microsoft .NET Framework, it was designed to compete with the counterpart Java-based Java 2 Enterprise Edition (J2EE) platform. The .NET Framework is the Microsoft Web services strategy for connecting information, people, systems, and devices through software, with the promise of "information anytime, anywhere, on any device." Integrated across the Microsoft platform, .NET Framework-based technology provides the ability to more quickly build, deploy, manage, and use connected, security-enhanced solutions with Web services.
Part One of the series Subtle (or Not-so-subtle) Nuances of Microsoft .NET Enablement.
The Microsoft .NET environment includes what a business might need to develop and deploy a Web service-connected information technology (IT) architecture: smart clients, servers to host Web services, development tools to create them, applications to use them, and a worldwide network of more than 35,000 Microsoft Certified Partner organizations to provide any help users might need.
The Microsoft .NET Framework is an integral Microsoft Windows component for building and running the "next generation" of applications and extensible markup language (XML)-based Web services. Among the potential benefits of the .NET Framework-based technology is the ability to provide a productive, standards-based, industrial strength, enterprise-ready, multilanguage environment that simplifies application development. This should enable developers to make use of their existing skill sets, facilitate integration with existing software, and ease the challenges of deploying and operating Internet-scale applications. The .NET Framework is the infrastructure of the .NET platform, which includes the Common Language Runtime (CLR) and the .NET Framework class library. The CLR provides the environment for running .NET Framework-based applications, whereas the class library provides the foundation services, including Active Server Page (ASP).NET; ActiveX Data Objects (ADO).NET; WinForms (for building graphical user interfaces [GUIs]); and base class libraries for accessing Common Object Model (COM) services.
Programmers can chose from several different programming languages, such as Microsoft C# (C Sharp), Visual Basic .NET (VB.NET), J# (J Sharp), Managed C++, JScript.NET, and others. The European Computer Manufacturers Association (ECMA) has standardized .NET as the Common Language Infrastructure (CLI), and numerous other languages have been reengineered as CLI languages. ECMA also standardized the C# programming language, designed by Microsoft to be the flagship .NET Framework-based language.
Depending on the class libraries used, the output of .NET and CLI compilers may or may not be identical, since .NET compilers generate Microsoft Intermediate Language (MSIL) bytecode, and CLI compilers generate Common Intermediate Language (CIL) bytecode. MSIL is executed by the CLR, and CIL bytecode is executed by the Virtual Execution System (VES). Both the CLR and VES are run-time engines like the Java Virtual Machine (JVM) in Java, since they provide a fundamental set of services that all programs use. The difference is that Java bytecode can also be interpreted as well as compiled, but the JVM supports only Java, and not multiple programming languages.
As mentioned earlier on, the heart of both .NET and CLI is a cross-platform language system. Although similar to Java because it uses an intermediate bytecode language that can be executed on any hardware platform that has a run-time engine, it is also unlike Java, as it provides support for multiple programming languages.
Currently in a beta release, the Microsoft .NET Framework 3.0 (formerly called WinFX) includes a new set of managed code application program interfaces (APIs) that are an integral part of the upcoming Windows Vista and Windows Server "Longhorn" operating systems. It will also be available for Windows XP SP2 and Windows Server 2003. The Microsoft .NET Framework 3.0 includes version 2.0 of the CLR, and it consists of four major components:
Windows Presentation Foundation (WPF) (formerly code-named Avalon), a new user interface (UI) subsystem which is API-based on XML and vector graphics (it will make use of three-dimensional [3D] computer graphics hardware and Direct3D technologies);
Windows Communication Foundation (WCF) (formerly code-named Indigo), a service-oriented messaging system that allows programs to interoperate locally or remotely similar to Web services;
Windows Workflow Foundation (WF), which allows for building of task automation and integrated transactions using workflows; and
Windows CardSpace (WCS) (formerly code-named InfoCard), a software component that securely stores digital identities of a person, and provides a unified interface for choosing the identity for a particular transaction, such as logging in to a web site.
For a general discussion of the evolution of system architecture, see Architecture Evolution: Service-oriented Architecture versus Web Services.
Interoperability is Key
While more technical details on Microsoft's ever-morphing technology blueprint can be seen in What Do Users Want and Need?, a key aim of .NET is interoperability between systems, both internal and external. The framework uses Web services and componentized systems as building blocks to create more collaborative systems. A resulting enterprise system is componentized by creating business objects that can be independently accessed to perform specific business functions and processes. The .NET Framework uses the XML standard as its "glue" for transferring data between objects, and in and out of the core system, and it complies with the concept and freedom of a browser and Web services as a means of rendering the information to a user. The business object should act as a "gatekeeper" to the system by ensuring that the following three fundamentals remain intact:
Security is enforced by the mere fact that every time an object is accessed the user is authenticated, and the security level prescribed by the core application is adhered to.
The business logic of the underlying application is always protected, whereby parameters are simply passed to the object for processing. The object protects the underlying business logic, and processes the transaction based on the passed parameters as if a user was sitting at a client workstation and entering the transaction.
The underlying data integrity is always protected, as the raw data is never accessed, since all data manipulation is controlled by the protected business object. The integrity of the underlying system is kept intact at all times, while at the same time an environment is created to extend functionality with a minimum amount of time, cost, and expertise.
Thus, with the advent of .NET, Microsoft-centric users might have the "best of both worlds," as they can benefit immensely from a feature-rich core system and have the added advantage of being able to develop business-specific applications to extend the functionality around the core system. This comes without the concern that future upgrades of the core system might affect or break the business-specific application.
Yet the Microsoft .NET strategy continues to confuse many users and vendors, due to the lack of understanding surrounding the technology. Indeed, because of the massive marketing campaign undertaken by Microsoft on the benefits of its .NET Framework-based technology, many vendors have adopted a "too liberal" approach to marketing their .NET Framework-based initiatives. The fact is, as soon as a software product is enhanced to consume or emit XML, it is called a .NET Framework-based product. In an effort to have their offerings perceived as ".NET-enabled," numerous vendors are referring to their solutions as such, though their products fall short of fulfilling many of the Microsoft-defined .NET parameters, some of which were outlined earlier on.
Beware of Mere .NET Compatibility
Consider the case where the body of software code comprising the core of the enterprise system has already been written. This code encompasses the business logic—the vast collection of rules that define required business transactions, and the rules and conventions for ensuring data accuracy, integrity and completeness, and appropriateness. The vendor is naturally reluctant to rewrite that core (which was difficult to write and maintain in the first place) in a new language, or to make the major structural changes necessary to employ a newer, more powerful database or operating system (OS) platform technology. Analyzing the current state of affairs of .NET readiness amongst the independent software vendors (ISVs), the most basic categorization (but not necessarily the most prevalent) is the case of mere .NET compatibility. This means that legacy software simply runs on .NET-branded servers (Microsoft Windows). On a positive note, these Microsoft-centric vendors can run on the latest Microsoft OS and database platforms. But on the downside, the well-publicized benefits of Web services are possibly not easily achievable, although these are often the first things companies want to integrate.
http://www.technologyevaluation.com/research/articles/subtle-or-not-so-subtle-nuances-of-microsoft-.net-enablement-18744/
Part One of the series Subtle (or Not-so-subtle) Nuances of Microsoft .NET Enablement.
The Microsoft .NET environment includes what a business might need to develop and deploy a Web service-connected information technology (IT) architecture: smart clients, servers to host Web services, development tools to create them, applications to use them, and a worldwide network of more than 35,000 Microsoft Certified Partner organizations to provide any help users might need.
The Microsoft .NET Framework is an integral Microsoft Windows component for building and running the "next generation" of applications and extensible markup language (XML)-based Web services. Among the potential benefits of the .NET Framework-based technology is the ability to provide a productive, standards-based, industrial strength, enterprise-ready, multilanguage environment that simplifies application development. This should enable developers to make use of their existing skill sets, facilitate integration with existing software, and ease the challenges of deploying and operating Internet-scale applications. The .NET Framework is the infrastructure of the .NET platform, which includes the Common Language Runtime (CLR) and the .NET Framework class library. The CLR provides the environment for running .NET Framework-based applications, whereas the class library provides the foundation services, including Active Server Page (ASP).NET; ActiveX Data Objects (ADO).NET; WinForms (for building graphical user interfaces [GUIs]); and base class libraries for accessing Common Object Model (COM) services.
Programmers can chose from several different programming languages, such as Microsoft C# (C Sharp), Visual Basic .NET (VB.NET), J# (J Sharp), Managed C++, JScript.NET, and others. The European Computer Manufacturers Association (ECMA) has standardized .NET as the Common Language Infrastructure (CLI), and numerous other languages have been reengineered as CLI languages. ECMA also standardized the C# programming language, designed by Microsoft to be the flagship .NET Framework-based language.
Depending on the class libraries used, the output of .NET and CLI compilers may or may not be identical, since .NET compilers generate Microsoft Intermediate Language (MSIL) bytecode, and CLI compilers generate Common Intermediate Language (CIL) bytecode. MSIL is executed by the CLR, and CIL bytecode is executed by the Virtual Execution System (VES). Both the CLR and VES are run-time engines like the Java Virtual Machine (JVM) in Java, since they provide a fundamental set of services that all programs use. The difference is that Java bytecode can also be interpreted as well as compiled, but the JVM supports only Java, and not multiple programming languages.
As mentioned earlier on, the heart of both .NET and CLI is a cross-platform language system. Although similar to Java because it uses an intermediate bytecode language that can be executed on any hardware platform that has a run-time engine, it is also unlike Java, as it provides support for multiple programming languages.
Currently in a beta release, the Microsoft .NET Framework 3.0 (formerly called WinFX) includes a new set of managed code application program interfaces (APIs) that are an integral part of the upcoming Windows Vista and Windows Server "Longhorn" operating systems. It will also be available for Windows XP SP2 and Windows Server 2003. The Microsoft .NET Framework 3.0 includes version 2.0 of the CLR, and it consists of four major components:
Windows Presentation Foundation (WPF) (formerly code-named Avalon), a new user interface (UI) subsystem which is API-based on XML and vector graphics (it will make use of three-dimensional [3D] computer graphics hardware and Direct3D technologies);
Windows Communication Foundation (WCF) (formerly code-named Indigo), a service-oriented messaging system that allows programs to interoperate locally or remotely similar to Web services;
Windows Workflow Foundation (WF), which allows for building of task automation and integrated transactions using workflows; and
Windows CardSpace (WCS) (formerly code-named InfoCard), a software component that securely stores digital identities of a person, and provides a unified interface for choosing the identity for a particular transaction, such as logging in to a web site.
For a general discussion of the evolution of system architecture, see Architecture Evolution: Service-oriented Architecture versus Web Services.
Interoperability is Key
While more technical details on Microsoft's ever-morphing technology blueprint can be seen in What Do Users Want and Need?, a key aim of .NET is interoperability between systems, both internal and external. The framework uses Web services and componentized systems as building blocks to create more collaborative systems. A resulting enterprise system is componentized by creating business objects that can be independently accessed to perform specific business functions and processes. The .NET Framework uses the XML standard as its "glue" for transferring data between objects, and in and out of the core system, and it complies with the concept and freedom of a browser and Web services as a means of rendering the information to a user. The business object should act as a "gatekeeper" to the system by ensuring that the following three fundamentals remain intact:
Security is enforced by the mere fact that every time an object is accessed the user is authenticated, and the security level prescribed by the core application is adhered to.
The business logic of the underlying application is always protected, whereby parameters are simply passed to the object for processing. The object protects the underlying business logic, and processes the transaction based on the passed parameters as if a user was sitting at a client workstation and entering the transaction.
The underlying data integrity is always protected, as the raw data is never accessed, since all data manipulation is controlled by the protected business object. The integrity of the underlying system is kept intact at all times, while at the same time an environment is created to extend functionality with a minimum amount of time, cost, and expertise.
Thus, with the advent of .NET, Microsoft-centric users might have the "best of both worlds," as they can benefit immensely from a feature-rich core system and have the added advantage of being able to develop business-specific applications to extend the functionality around the core system. This comes without the concern that future upgrades of the core system might affect or break the business-specific application.
Yet the Microsoft .NET strategy continues to confuse many users and vendors, due to the lack of understanding surrounding the technology. Indeed, because of the massive marketing campaign undertaken by Microsoft on the benefits of its .NET Framework-based technology, many vendors have adopted a "too liberal" approach to marketing their .NET Framework-based initiatives. The fact is, as soon as a software product is enhanced to consume or emit XML, it is called a .NET Framework-based product. In an effort to have their offerings perceived as ".NET-enabled," numerous vendors are referring to their solutions as such, though their products fall short of fulfilling many of the Microsoft-defined .NET parameters, some of which were outlined earlier on.
Beware of Mere .NET Compatibility
Consider the case where the body of software code comprising the core of the enterprise system has already been written. This code encompasses the business logic—the vast collection of rules that define required business transactions, and the rules and conventions for ensuring data accuracy, integrity and completeness, and appropriateness. The vendor is naturally reluctant to rewrite that core (which was difficult to write and maintain in the first place) in a new language, or to make the major structural changes necessary to employ a newer, more powerful database or operating system (OS) platform technology. Analyzing the current state of affairs of .NET readiness amongst the independent software vendors (ISVs), the most basic categorization (but not necessarily the most prevalent) is the case of mere .NET compatibility. This means that legacy software simply runs on .NET-branded servers (Microsoft Windows). On a positive note, these Microsoft-centric vendors can run on the latest Microsoft OS and database platforms. But on the downside, the well-publicized benefits of Web services are possibly not easily achievable, although these are often the first things companies want to integrate.
http://www.technologyevaluation.com/research/articles/subtle-or-not-so-subtle-nuances-of-microsoft-.net-enablement-18744/
The Net Market of the August Moon
Whether you think of it as 10,800,000,000,000 (10.8 quadrillion yen) or as merely $100 billion, the B2B opportunities in Japan are tremendous. Calico Commerce intends to be a major power behind that flow of currency by providing tools to build net marketplaces, and has announced the opening of Calico Japan K.K., a wholly owned subsidiary. Calico Japan will sell localized versions of Calico Market Maker and Calico Advisor. Yoshiyuki Tanaka, who previously launched and served as Managing Director for TIBCO's Japanese office, will pilot the new company.
Calico Market Maker is an application for building a net market, including relationship management, catalog, and transaction processing features. It is built from a base that Calico acquired when it purchased connectinc.com(See "Connect to Sport Calico Label"). Calico Advisor exhibits one of Calico's core strengths - the configuration and sale of complex products. Advisor assists in the selection of assemble-to-order and pick-to-order products. Calico also has a similar product for configuring engineer-to-order products, as well as tools for enabling business-to-consumer e-commerce, but these are not part of the initial product offerings for Calico Japan. Both products are Java-based, although Calico's original product was a Microsoft solution.
Calico has vertical specializations in telecommunications, retail and high-tech and industrial manufacturing. The company has also seen a recent increase in interest on the part of dot-com customers.
Calico is getting off to a relatively early start in Japan. US Bancorp Piper Jaffray recently observed that the major B2B firms have been slow to penetrate the Japanese (and other international) markets. Commerce One has been the leader in building e-commerce relationships (see "Commerce One: Everything but Profits"); this paid off recently with the announcement of its MRO marketplace built and operated jointly with NTT Communications.
In January, 2000 VerticalNet and Softbank Commerce Corp., a wholly owned subsidiary of Softbank Corporation (Tokyo Stock Exchange 9984), announced creation of a company to replicate VerticalNet's strategy of building and operating vertical marketplaces that are augmented by content and community services.
However, Calico's model is different from each of these. Calico does not in general host or participate in the markets that its software is used to build. This gives it a potentially much wider market, and it makes its money up front instead of depending on transaction fees that have so far been somewhat elusive for other companies. Flush with capital from its October 1999 IPO the company is well positioned to make a significant impact in Japan, and its specialization in procurement of complex products and assemblies is likely to be especially appreciated there.
Japanese businesses interested in becoming Net market makers will definitely appreciate the appearance of a powerful product in their market. North American and other companies will be interested in this development for three reasons.
First, those that have interest in extending their operations to Japan or working with Japanese partners will see possible advantages to using Calico software as a base.
Second, the experience that Calico gains by developing its Japanese company will be invaluable as it continues to expand internationally.
Finally, Calico needs to build up its customer base. In the last fiscal year, ending in March, ten customers accounted for 61% of its revenue - and half of that derived from only two customers.
In addition, the company derives just over 50% of revenues from services. Neither of these metrics from last year is necessarily an indication of future performance, but an expansion into Japan should help improve both. The result would be to enhance the company's stability.
There's an obvious danger that rapid growth might strain the company's resources, but while that's something potential customers should always be concerned about, the upside to this situation is that should this happen to the Japanese company it won't be likely to have much of an impact in North America. On the other hand, effort that the company puts into building training programs for alliance partners and developers will be of benefit on both sides of the Pacific.
http://www.technologyevaluation.com/research/articles/the-net-market-of-the-august-moon-16001/
Calico Market Maker is an application for building a net market, including relationship management, catalog, and transaction processing features. It is built from a base that Calico acquired when it purchased connectinc.com(See "Connect to Sport Calico Label"). Calico Advisor exhibits one of Calico's core strengths - the configuration and sale of complex products. Advisor assists in the selection of assemble-to-order and pick-to-order products. Calico also has a similar product for configuring engineer-to-order products, as well as tools for enabling business-to-consumer e-commerce, but these are not part of the initial product offerings for Calico Japan. Both products are Java-based, although Calico's original product was a Microsoft solution.
Calico has vertical specializations in telecommunications, retail and high-tech and industrial manufacturing. The company has also seen a recent increase in interest on the part of dot-com customers.
Calico is getting off to a relatively early start in Japan. US Bancorp Piper Jaffray recently observed that the major B2B firms have been slow to penetrate the Japanese (and other international) markets. Commerce One has been the leader in building e-commerce relationships (see "Commerce One: Everything but Profits"); this paid off recently with the announcement of its MRO marketplace built and operated jointly with NTT Communications.
In January, 2000 VerticalNet and Softbank Commerce Corp., a wholly owned subsidiary of Softbank Corporation (Tokyo Stock Exchange 9984), announced creation of a company to replicate VerticalNet's strategy of building and operating vertical marketplaces that are augmented by content and community services.
However, Calico's model is different from each of these. Calico does not in general host or participate in the markets that its software is used to build. This gives it a potentially much wider market, and it makes its money up front instead of depending on transaction fees that have so far been somewhat elusive for other companies. Flush with capital from its October 1999 IPO the company is well positioned to make a significant impact in Japan, and its specialization in procurement of complex products and assemblies is likely to be especially appreciated there.
Japanese businesses interested in becoming Net market makers will definitely appreciate the appearance of a powerful product in their market. North American and other companies will be interested in this development for three reasons.
First, those that have interest in extending their operations to Japan or working with Japanese partners will see possible advantages to using Calico software as a base.
Second, the experience that Calico gains by developing its Japanese company will be invaluable as it continues to expand internationally.
Finally, Calico needs to build up its customer base. In the last fiscal year, ending in March, ten customers accounted for 61% of its revenue - and half of that derived from only two customers.
In addition, the company derives just over 50% of revenues from services. Neither of these metrics from last year is necessarily an indication of future performance, but an expansion into Japan should help improve both. The result would be to enhance the company's stability.
There's an obvious danger that rapid growth might strain the company's resources, but while that's something potential customers should always be concerned about, the upside to this situation is that should this happen to the Japanese company it won't be likely to have much of an impact in North America. On the other hand, effort that the company puts into building training programs for alliance partners and developers will be of benefit on both sides of the Pacific.
http://www.technologyevaluation.com/research/articles/the-net-market-of-the-august-moon-16001/
