An agreement to acquire Toronto-based Numetrix Ltd. gives J.D. Edwards & Co. a competitive edge in the e-commerce chapter of the ERP story, according to Gerry Bleau.
The new president of Numetrix and former vice-president and general manager of J.D. Edwards (Canada) said the reason for choosing Numetrix was clear. “When we looked at the functionality, the fit with our technical architecture and also the cultural state of the employees vs. our culture it was unanimous. Numetrix was in our opinion at the head of the pack. They’re ahead of anybody else, functionally, on the advanced planning system,” Bleau said.
Under the terms of the agreement, J.D. Edwards will acquire the stock of Numetrix for approximately US$80 million cash. The deal is expected to close in June.
The acquisition of the Internet supply chain vendor, which will necessitate the integration of the Numetrix/3 supply chain management software with J.D. Edwards’ SCOREx supply chain initiative, offers the Denver-based ERP vendor a number of advantages, Bleau said.
Among them, the ability to sell into the SAP install base, because a significant number of Numetrix’ current customers are running SAP. For this reason, he added, “we want to keep the Numetrix piece as much intact as we can.
“Our intentions are to continue to market and support the Numetrix products on a stand-alone basis, but also to attach it to the J.D. Edwards ERP solution so that we can sell a fully-integrated solution to those customers that want it. As well, we can go into customers that don’t run J.D. Edwards as their backbone, for example, and still be able to sell the Numetrix product.”
Although it has always been the strategy of J.D. Edwards to “write our own stuff,” Bleau said, “you just can’t do that anymore. If you want to get to market quickly while the market’s hot, you can’t wait the two years it’s going to take you to develop your own code.”
About a year-and-a-half to two years away from market for their own advanced planning systems, he said, “this has given us a two year leap-frog into something that we were doing on our own.”
According to Stamford, Conn.-based Gartner Group, the move represents a major shift in thinking for the ERP vendor. J.D. Edwards is relatively inexperienced at acquisitions.
“J.D. Edwards is changing their typical business modus operandi. They have never been in the acquisition game,” said Kyle Pond, senior ERP analyst with Gartner Group.
“Their strategy is always, ‘We’ll build the functionality ourselves,’ very similar to SAP. This is a big change for the company as it moves them into taking a strategy to buy applications to expand their footprint of some capability,” Pond explained.
As an inexperienced acquirer, however, Gartner said the company will face some challenges with the deal, specifically because Numetrix has experienced declining revenue since 1997 due to weak sales, marketing and positioning. For that reason, building a solid supply chain planning business (SCP) with Numetrix will be difficult.
Explained Pond: “Numetrix had a long tough road over the last couple of years. It was a combination of being able to compete and grow compared to other leaders in the market, at the time i2 and Manugistics.”
Paul Barker, director of technical marketing for J.D. Edwards, agreed. He said despite Numetrix’ 20 years of experience, specialty in advanced planning and scheduling and exceptional technology, the company was held back by management.
However, the deal could become “a win-win for everyone,” Barker said. “We wanted to do this to round out our OneWorld offering, our ActivEra e-business offering, but at the same time, we could bring this technology, this product, out of the shadows and make it shine in the marketplace.”
Pond agreed, adding that the acquisition ultimately spells good news both for Numetrix and J.D. Edwards customers. For Numetrix customers, the acquisition quashes any concerns about the viability of the company. And, “for J.D. Edwards clients that are process-oriented, this gives them a supply chain planning solution to market and helps J.D. Edwards round out its applications,” Pond said.
The key to success, according to Gartner, will lie in J.D. Edwards’ ability to put together a market-savvy SCP management team, rationalize its discrete manufacturing SCP development efforts with the Numetrix products, and retain implementation and development experts from Numetrix.
According to Numetrix’ Bleau, this is something J.D. Edwards has already considered. “The product development group that is presently with Numetrix in Toronto will be brought under the umbrella of our product development group in Denver and they will stay in Toronto and continue to do the work that they have been doing, but in concert with the overall product line that we’ve got,” he said.