J.D. Edwards Finds Its Inner-Self Within Its 5th Incarnation

This is yet another example of what difference a year can make, and of a vendor taking advantage of a given second chance. A year ago, J.D. Edwards was in a rather self-loathing mood amid sagging sales, massive layoffs and restructuring, and with rumors of a possible buyout abounding as well, all making existing customers quite concerned and potential ones extremely leery (see J.D. Edwards' QUEST To End Its String Of Pyrrhic Victories). Worse than that, there was a lingering general feeling that the company had long been unable to articulate a product strategy that was well-attuned with the market needs/trends. The appointment of the new Chairman and CEO Bob Dutkowsky, from the hindsight, after less than a year at the helm (J.D. Edwards' CEO Retires Again; This Time For Good?), appears to be just what the doctor had ordered, resembling to a degree a feat of the current PeopleSoft's CEO, Craig Conway. Bringing an outsider (even if he/she comes with a pedigree of the closest partner, IBM) at a helm of a company which had forever jealously guarded that position only for its dynasty ranks will have helped bring a new prospective on how to further satisfy the customers, and will have allayed sluggishness and a not invented here' mentality that typically comes along with ruling too familiar a territory for far too long.

Let's face it, J.D. Edwards is not stampeding like a raging bull amid the bad economy, but the new management team has at least attained many positive changes (including instilling a winning attitude) by leveraging a proven product and its congenial, albeit often ineffective and anemic organization in last few years, and by fathoming how to deliver pragmatic value to a born-again-loyal installed base and to the prospective fertile "midrange to mid-cap" target market, which consists of enterprises that are loath to any radical changes to their business practices, but are rather inclined to improving their businesses incrementally by adding additional functions around their core ERP investment.

First of all, Dutkowsky's natural initial focus on the company's improved financial performance, sales execution and continuation of products portfolio integration will have addressed the following two important issues: 1) the common perception of the troubled company, and 2) the difficulty of regaining confidence. To that end, important operational areas, like pipeline management, cash flow increase, collections/days of sales outstanding (DSO) reduction, margin improvements, etc., have all been improving, while increasing sales to the installed base, expanding the services business, and enhancing the company's market visibility has been happening as well.

While the new CEO has indisputably produced quick results and has boosted the company's posture (albeit he still has remaining work cut out for him), it would be unfair not to give credit to the former CEO for paving the way at least in part. McVaney not only co-founded J.D. Edwards, but he also navigated it through an Odyssey-like transition from solely the IBM AS/400 (now iSeries) platform to UNIX and Windows NT while keeping most customers committed and arguably content. This is in contrast to the experience of many contemporary AS/400-only ERP competitors, with some like SSA and JBA being fatally wounded in the process. McVaney, often disparaged by his counterparts and Wall Street pundits for his unsophisticated but effective managerial style, never managed to create a real software powerhouse though, other than a legacy of honest rather than glitzy competitiveness.

That is exactly what the new management team has finally managed to crack ? the company seems to have found its soul, as it has finally pinpointed the right offering for its target market (both geography, customer size, and vertical segments wise), and it also seems to be exuding an air of confidence without arrogance, which had rarely, if ever, been seen in the past. Listening to customers, deploying new emerging technologies, delivering more software in the next two years than it has ever happened in any two-year period since the company's inception, putting the latest version of its products portfolio under the unified umbrella brand (that is also marrying the company's name to the product for the first time, further enhancing the brand recognition), delivering industry-based functionality, renewed commitment to professional services, technology innovations via partnerships, a new modular product delivery approach to make the purchasing and upgrading of its portfolio of applications easier and more efficient for the customer to rationalize and digest — should all be the harmony of the music for the customers' ears.

In a nutshell, J.D. Edwards seems poised to deliver applications within its traditional verticals that are wide-ranging, integrated, and modular (loosely decoupled) at the same time, which is apparently a clearer message and a better business model for the company.

Still, McVaney should feel additionally vindicated by the fact that with him at the helm J.D. Edwards had started to put its house in order. The fact remains that the company had achieved a fair balance between the product functionality scope expansion and the product architecture flexibility still during his tenure (see J.D. Edwards On The Mend; This Time Might Be For Real). One is to expect that Mr. Dutkowsky will continue to emphasize the recently breadwinning products like OneWorld (recently renamed ERP 8) and supply chain planning & execution suite (coming mostly from former Numetrix) and a prospective breadwinner, CRM product from YOUcentric (see J.D. Edwards Fires Siebel, Hires YOU). The focus on industry solutions such as for high-tech/electronics, industrial fabrication & assembly (IFA), automotive, life sciences, and architectural & construction, should continue as well. The J.D. Edward 5 product family featuring solutions for CRM, SCM, supplier management, business intelligence (BI), and Web-based collaboration, as well as an architecture that is evolving to embrace Web services were likely hatched under McVaney's wing as well.

Using a deliberate approach of not jumping injudiciously on every latest technology bandwagon, the company has by and large successfully taken its customers from mainframe-based systems to the Web, without resorting to a ?rip-and-replace' strategy (in an evolutionary rather than revolutionary manner), while also delivering an increasingly broad set of solutions.

The following final touches of the new management are apparently what made the long awaited quantum leap possible:

* A new product development philosophy for J.D. Edwards 5, allowing the product to be enhanced incrementally without necessarily requiring customers to update all modules and products at once, and including a stringent software Quality Assessment (QA) process that brings requirements analysis and QA planning much sooner in the development cycle. J.D. Edwards 5 covers the entire suite of products that the company has developed or acquired so far, and going forward, each product grouping will be independently enhanced to meet the demands of customers, while also breaking the applications down into smaller modules should allow customers to purchase what they need when they need them, which is in tune with the current buying market. Despite a depressed economy, enterprises still need to upgrade and enhance those applications required to support collaborative processes for internal users and external trading partners, yet they must be able to prove a speedy return on the investment (ROI). This has proven to be crucial in selling additional functionality into the installed base, but it also gives J.D. Edwards' sales reps "multiple entry points" into new accounts.