Mapping Australia's CRM future
Customer Relationship Management (CRM) might be a staid topic but unlike the Latham-Howard "great debate", at least the chief executives of two leading software companies -- Intentia and PeopleSoft -- had some pertinent views to exchange.
ZDNet Australia finds out how PeopleSoft's David Webster and Steve Ironside from Intentia sees the future of CRM software in Australia.
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WEBSTER: While Australia and New Zealand are relatively mature markets in terms of enterprise applications, there are always industries looking to technology to drive down costs, increase efficiency, and increase competitiveness. The mid-market space in general is becoming a real driving force, competing increasingly on a global scale. They are looking to put systems in place that will offer a low cost of ownership and high returns. Industries like manufacturing are entering a new era, where they need to be demand driven. Again, that requires a new type of solution that's only now available.
Financial services companies continue not only to look to technology to sharpen their edge through CRM and analytics, but also to help with compliance, which is still a major issue. Of course the public sector is increasingly looking to innovate. Areas like case management, Smart HR, workforce performance, CRM (or constituent relationship management as I've heard it called!) are all new areas of e-Government that Australia and New Zealand are taking a lead on.
WEBSTER: High on Intentia's agenda are job cuts to improve profitability. With 16 percent of the workforce set to be axed, how will you continue to support your customers or invest in R&D?
IRONSIDE: It is absolutely no secret that ensuring a strong platform for sustainable profitability is one of Intentia's priorities, and is fully supported by customers, employees and shareholders alike. Globally, our new operational plan will enable redeployment of the right resources to areas that promise the strongest growth, improve the speed of product to market and ultimately strengthen our leadership in the mid-market.
The outcomes of these short-term initiatives are primarily focused on the more mature European markets. In the A/NZ region our trend line is somewhat different and we fully expect to continue with current growth plans, strong customer support developments and positive financial performance -- as evidenced by a successful first half year licence revenue growth of 74 percent over 2003.
If anything, the new plan underscores that we are sharpening the focus and discipline of our business activities and R&D which will continue generating the value that our mid-market customers demand and give them the knowledge that we will be with them for the long term.
IRONSIDE: PeopleSoft's acquisition of JD Edwards has no doubt caused a few integration headaches. How has the merger of the two companies and their cultures progressed in A/NZ, and what challenges are you still overcoming?
WEBSTER: Actually, the "headaches" have been surprisingly few. A successful integration is one that happens quickly. The focus for A/NZ was to bring our people together as soon as we could (once the merger was finalised) and reach out to our customers. This has been a complementary merger and that extends to the cultures of the two companies. The integration was actually completed by November last year. The main "headache" around the integration was the FUD (fear, uncertainty, doubt) that many of our competitors tried to seed, through the media or directly to our customers. Thankfully our customers and employees saw the FUD for what it was. Just that.
WEBSTER: To finance your cuts and "restructuring" you've also announced new financing to the tune of US$50 million from Tennenbaum Capital Partners in new debt and equity. With your revenues still being problematic, how will you pay these debts?
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As such, we are now well positioned to gain significant returns from our past investments, based upon current market share and business volumes. Any such "debt" as referred to, can and will be satisfied by our balanced performance against key objectives. Potential market upturns or market share increases will simply enhance our overall financial performance. In this regard our future is very certain and we are able to manage our own destiny accordingly on behalf of all stake holders of the business.
IRONSIDE: Some press reports in A/NZ over recent months have highlighted certain troubled PeopleSoft ERP implementations and support. In your experience, what do you see as the primary reasons behind customer projects not going to plan?
WEBSTER: Over 500 businesses across A/NZ are running their mission critical systems on PeopleSoft. Key to their success is often involving us in a significant way, not only through the sales cycle but also during the scoping and implementation phases. We call it having "skin in the game". While we work closely with our partners, we encourage our customers to enable us to have a greater degree of involvement to ensure success. We've invested significantly in PeopleSoft Consulting as well as new implementation services and training to ensure our customers can lean on us wherever they need to.
WEBSTER: With your current financial status, do you feel you are at risk for a takeover, and what are you doing to protect yourself against this? Do you think the three Swedish firms -- Intentia, IFS, and IBS will become I3?
IRONSIDE: I'm surprised by this question given that PeopleSoft itself has long been the subject of a hostile takeover bid by Oracle, whilst still battling integration and customer support challenges resulting from the JD Edwards acquisition.
But, in a nutshell the answer to your question is "no". In fact, the mood within the group is such that I would even venture to suggest the contrary could be true. Intentia has a fabulous product in Movex which is both functionally rich and broad and technically one of the most advanced and modern products available today. All the hard development yards and investment in this area are behind us and a key focus for the future is simply to get it to market, thereby increasing market share.
It should also be noted that with its current investors, Intentia now has perhaps the most stable share register amongst its competitors. With this strong capital base, confidence of new investors, focused operational plan, and expanding product innovation -- illustrated by unique new launches such as Opportunity Analyzer -- Intentia is perhaps the least likely vendor in this space to be at risk.
IRONSIDE: With a number of distinct product families now in the mix, what can customers expect in terms of future R&D for both JDE and PeopleSoft products and what is your medium- to long-term strategy for integrating these portfolios?WEBSTER: Customers can expect continued development of and commitment to three product families. PeopleSoft Enterprise (formerly PeopleSoft 8), PeopleSoft EnterpriseOne (formerly JD Edwards 5), and PeopleSoft World (formerly World). Our plan is to continue to offer our customers choice. The "one size fits all" adage isn't something we believe in. Organisations have different needs depending on their size, their industry, their technology choices, and we aren't looking to force customers into a box. In terms of integration, there remain three distinct product families, although we have transferred intellectual property between PeopleSoft Enterprise and PeopleSoft EnterpriseOne families, to enhance functionality. For example, PeopleSoft has a very strong Human Capital Management solution. We have already made e-Recruitment functionality available to our PeopleSoft EnterpriseOne customers by transferring the proven Enterprise specification. Our investment in EnterpriseOne development has increased with new releases, and a new release to PeopleSoftWorld was also announced earlier this year, with more than 250 new enhancements.
WEBSTER: What is Intentia's policy on release of Service Packs to existing Java Clients?
IRONSIDE: Clients running Movex Java have Service Packs made available to them free of charge as part of their maintenance agreement. Service Packs are released on a regular basis according to a published schedule, typically three or four per year.
The Java platform is a brilliant enabler in achieving this rapid deployment of technological changes. As you most likely know, Intentia was the first ERP provider to commit to the Java platform some years ago. Today we have tens of thousands of users on Movex Java worldwide, more than validating our offering.
IRONSIDE: What is your response to some of the frank comments that Oracle's president was quoted as making during OpenWorld recently, which apparently suggested the inevitability of an eventual PeopleSoft takeover, and your user base being better off with Oracle?
WEBSTER: Customers know their business better than anyone and they have spoken out -- against Oracle. Customer after customer after customer testified in the Dept of Justice trial that an acquisition of PeopleSoft by Oracle would be bad for their business. They believe prices would rise and innovation would decline, as there would be less choice in the marketplace. Even Oracle customers testified about the damages this take over would cause.
WEBSTER: You appear to target organisations in the mid market. Obviously these organisations are often fast growers that need an organisation and applications that are there for the long haul and will grow with their business. How do you stack up against their needs?
IRONSIDE: Intentia already is, and has been, in the mid market for the long haul -- for over twenty years in fact. This is our home territory; it's an industry sector that Intentia has owned and grown up with for many years and we are trusted and respected by some 4500 mid-market manufacturing, distribution, and maintenance customers worldwide -- including long-established, valued clients in A/NZ such as Montana Wines, Kathmandu, Charles Parsons, Quiksilver, Ausco, Ballantyne, and Hagemeyer.
Our commitment has resulted in a flexible, mid-market focused portfolio and cultural fit that other vendors find very difficult to emulate. Our customers value us because we understand their issues, offer quality products and low cost of ownership, have an accessible open management structure close to the customer set, and an agile culture that means we are small enough to listen but large enough to act.
Our go-to-market model also ensures that mid-tier businesses do not face the prospect of a myriad of implementation partners that the tier-one enterprise vendors usually introduce to the equation; which can increase complexity, ongoing cost of ownership issues, and frequently, quality implementation issues due to lack of accountability. Unfortunately, all too often businesses get caught in the cross fire of multiple partner projects.
IRONSIDE: To what extent do you think that SME Australian businesses are becoming more savvy about, and tuned-in to, the value of collaborative enterprise software apps to their organisations? Where do you see this most?
WEBSTER: Australia's SME community essentially is looking for solutions that produce the same results that a large enterprise looks for -- driving operational efficiencies, reducing costs, driving best practice business processes. However, they are constrained by not having the luxury of large IT budgets to be able to custom build collaborative applications -- hence the interest and demand for packaged solutions for the SME market. This is especially an issue for businesses that are consumer driven, particularly if you ship directly into the major retailers. The big players such as Coles Myer and Woolworths expect the same sophisticated e-business service from both small and large suppliers.
So we see strong interest in this sector for affordable packaged collaborative software apps that link directly to retailers and back out to key JIT suppliers.
WEBSTER: What facilities exist in Movex to support demand flow technology and line design, which are recognised by APICS as the critical issue for discrete manufacturers to adopt?
IRONSIDE: Movex has a range of planning algorithms that can be configured depending on the manufacturing strategy being used by the client. This includes the use of Theory of Constraints algorithms for discrete manufacturing. Discrete manufacturing is one of Intentia's strongest markets and where we have some of the most comprehensive functionality in our portfolio. Our scheduling technology works perfectly for customers.
Mixed model line design is only an important consideration for repetitive mixed model discrete manufacturers (ie, the automotive assemblers). The remainder of the discrete manufacturing sector such as the automotive component manufacturers, which is our primary customer base in this area, is very well served using TOC principles.
IRONSIDE: There are some perceptions that the newly launched World Express is essentially a rejuvenated or re-badged version of the original JD Edwards World product, in another attempt to broaden PeopleSoft's SME offering. What is your take on this view?
WEBSTER: Thanks for letting me bang the drum about World Express! The delivery of World Express is the latest release of solutions designed for the SME market and forms a key component of our portfolio of solutions for SMEs, depending on their size and needs -- again one size doesn't fit all. The new pre-configured solution does include PeopleSoft World enterprise applications, more than 30 industry-specific business processes, implementation services from certified channel partners and the IBM iSeries technology platform. Again the aim is to provide the small business with a complete solution and services. Its focus is on providing rich functionality through a low-maintenance solution that gives a rapid return.
WEBSTER: What is your life motto?
IRONSIDE: "Happiness is the journey, not the destination," -- probably a bit corny but nonetheless true and it reflects upon me accordingly. Yep, I have worked hard, played hard and whilst I take what I do seriously I do not take myself too seriously.
As you know running a business can be demanding, has many masters to serve and can be imposing upon personal time and priorities.
My premise is, if you don't enjoy it, get out. This is why I am still here after some 20+ years in the business. I love it.
IRONSIDE: What's your ideal place for a Friday night beer or two and would you buy me one?
WEBSTER: I'd love to buy you a beer. The place would have to be Chin Wag on Level 13, PeopleSoft House, Chatswood. Every Friday night we all get together and share stories from the week over a couple of drinks and nibbles. We'd have to get you special clearance to come, but perhaps you could be a guest of honour. The beer's actually free, and I'm sure you'd recognise some friendly faces! It's a small industry after all!
WEBSTER: You originally had your own software company, then became a distributor of Intentia, and were eventually bought out. What's next for you?
IRONSIDE: Do you know something I don't? This is as much a vocation or passion for me as it a job or a position. In part I think it is this attitude that has enabled Intentia A/NZ to achieve so much in a relatively short space of time. I have not thought much beyond Intentia A/NZ except that the idea of working in Europe during the middle of winter, with six hours of daylight and below-zero temperatures has absolutely no appeal whatsoever. So as a competitor, I'm afraid you are stuck with me!
This article was first published in Technology & Business magazine.
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