Analyzing MAPICS' Further Steps After Frontstep Part Three: Market Impact
For the last several months MAPICS has shown both the signs of significant changes and the persistence of a number of its historically recognizable invariant tenets of operation. Following the acquisition of its former competitor, Frontstep, (see MAPICS To Leap Forward In A Frontstep Way), MAPICS, Inc. (NASDAQ: MAPX) became possibly the largest global provider of extended enterprise applications for solving the challenges of discrete manufacturers.
MAPICS has never departed from its conservative approach of delivering practical innovations and bulletproof applications for its customers, nor from its proverbial fiscal discipline. The Frontstep acquisition has obviously provided MAPICS with a boost in terms of product choice, having solutions on both leading platforms—Microsoft and IBM. With MAPICS SyteLine 7, the vendor now boasts a notable application built on a .NET architecture. However, the loyal AS/400 install base should rest assured of MAPICS' continued support for the platform. The big news on the MAPICS ERP for iSeries product side is that version 7.3, which is slated for December, will feature Double Bytes support, and expanded Java 2 Enterprise Edition (J2EE)-based client technology.
Other developments detailed in this note are:
* MAPICS Field Service and Support (covered in Part One)
* A Global Partnership with Systems Union (covered in Part One)
* Primus Knowledge Solution Results
* Certified Partner Program
* Pacejet Logistics, Inc. is a Certified Partner
* A Revised Sales Strategy
As already sensed so far, much has changed, while also much has remained the same at MAPICS during 2003. First of all, with the February finalization of the Frontstep acquisition, MAPICS has become quite a large enterprise applications provider, with projected revenues of more than $210 million, and with over 800 employees across the globe, more than 10,000 manufacturing sites in 70 countries, and nearly 150 worldwide affiliates offering product service and support. The acquisition of Frontstep has positioned the vendor near (if not at) the top among vendors that focus on the mid-size discrete manufacturing market.
Moreover, the Frontstep acquisition also provided MAPICS with a much-enhanced choice of products. MAPICS ERP for iSeries (formerly MAPICS XA) has long been the company's sole ERP system for the IBM iSeries (formerly AS/400) platform. Thus, in the second half of the exuberant 1990s, MAPICS had already earned veteran status in the market, but its former IBM AS/400 platform confinement and its inability to rejuvenate its own mature product had given it a real negative "old and unexciting" perception. To make things worse, its attention to the bottom line during times of flat revenues often came at the expense of cutting into resellers' margins, which made some channel partners at least consider exploring other options.
Although the company had long sought to embrace new technologies while at the same time providing a smooth migration path for existing customers, it had suffered from continually being perceived as late to market with its new technology forays. Its protracted inability to deliver an all-the-rage Windows NT platform-based product made it struggle to sustain momentum in the then booming mid-market, which was increasingly intrigued with the low-cost and pervasive Microsoft technology. To that end, owing to the acquisition of its former struggling competitor Pivotpoint (see How Has MAPICS Been Extending?), MAPICS had delivered since early 2000 a number of new e-business modules and expanded its platform reach from its solely IBM iSeries and DB2 platforms to include Microsoft Windows NT, UNIX, and Linux operating systems and the Oracle database platform.
However, while expanding its offering and platform support bundled with the functionally strong former Pivotpoint Point.Man ERP product for high-tech industries, the company had also been burdened with an immense task of blending different corporate cultures (i.e., the less formal Pivotpoint's versus the more rigid and conservative MAPICS one) and with the inherited problems of Pivotpoint, which at the time of the acquisition was in a state of a flux—it had poor financial viability, channel erosion, employee exodus, and a poor service and support record. The management of dual flagship product lines had also initially and long after been awkward for MAPICS and its affiliate channel. One is to expect that, three years later, MAPICS will have learned important lessons, which it will have leveraged in the case of Frontstep's acquisition as another attempt at harnessing Microsoft's technology.
More importantly however, with the Frontstep acquisition MAPICS has inherited a technologically advanced and functionally strong product. Frontstep solved a big piece of its long-plaguing predicament of developing a next generation product and then migrating its large user base. Thus, newly enlarged MAPICS logically has become an active dual (i.e., both J2EE and Microsoft .NET compliant) platform vendor. To that end, the company will continue to sell and enhance its traditional breadwinning product for the IBM iSeries platform within that IBM world where the iSeries, J2EE, and WebSphere are important to users and prospects, along with the MAPICS SyteLine 7 product, which was relatively recently, albeit immediately before the Frontstep acquisition, completely rearchitected on Microsoft .NET (see Frontstep Ups The .NET Ante)
Consequently, MAPICS initially ended up with three key ERP offerings: 1) MAPICS SyteLine (formerly Frontstep SyteLine and Symix SyteLine), 2) MAPICS ERP for iSeries (the original venerable flagship MAPICS XA AS/400-based offering) and 3) MAPICS ERP for Extended Systems (derived from the acquired Point.Man).
Since its inception in 1978, the MAPICS ERP for iSeries product has evolved into a broad range of functionality for discrete manufacturing enterprises. Its strength remains largely in the discrete manufacturing arena, and until not long ago, its sweet spot has been within single plant installations. With features such as rate-based planning, serial number traceability, and product data management (PDM), the product can handle make-to-stock (MTS), assemble-to-order (ATO) and less intricate engineer-to-order (ETO) manufacturing environments. With the addition of its International Financial Management (IFM) module a few product releases back in the mid 1990s, its corporate financial management functionality became even more competitive. A payroll module has long been available, which always represents an attractive extra for its target market. The MAPICS focus has also long been on embedding workflow functionality designed to support business processes across many functional areas. MAPICS first delivered this capability for design and engineering functions, and recently expanded workflow throughout the entire product.
On the other hand, MAPICS ERP for Extended Systems has stronger MTS and repetitive manufacturing capabilities, including "pay point" processing, with the ability to report material, labor, and overhead costs from individual operations within the entire routing sequence. An important differentiator should be the product's ability to support virtual manufacturing enterprises that outsource manufacturing operations to third party subcontractors. An engineering change management (ECM) capability and actual costing have also been available. Contrary to its iSeries counterpart, the Extended Systems product (as the name suggests) has also long offered multisite interdependent functions, centralized sales, and purchase order management, but it has partnered with niche specialists to harness forecasting, quotation, payroll, tooling, and preventive maintenance functionality. Its financial modules are capable of consolidation and drill-down functions across multiple entities, although they have been best used and proven in US-based enterprises.
Like its new parent MAPICS, with its recently enhanced functionality to natively deliver solid SCM and CRM modules (see Mid-Market ERP Vendors Doing CRM & SCM In A DIY Fashion), former Frontstep had also positioned itself as a primary business systems provider that offers comprehensive enterprise solutions with integrated CRM and SCM capabilities, on top of a strong discrete manufacturing ERP capability and experience rather than as a mere ERP vendor. In that regard, the MAPICS SyteLine suite for mid-sized manufacturers, by and large offers support for customer service, order processing, inventory control and purchasing, manufacturing production management, production planning and scheduling, cost management, project control and financials, sophisticated product configuration for sales order management and manufacturing, advanced planning and scheduling (APS), business intelligence (BI), workflow automation, with business process definition and execution, and advanced forms. The traditional shortcomings in terms of multinational financial management modules will supposedly be overcome with the alliance with SunSystems.
As Microsoft-centric technology and the .NET initiative have become mainstream in the business applications mid-market, MAPICS has had to get over its traditional IBM platform preference and sentimental hang-ups, and to bow to its prospects' preference for Microsoft solutions that incorporate .NET and the SQL Server database technologies. To that end, SyteLine 7 is a solid solution for those Microsoft-oriented customers and prospects. Further, while the rearchitecture to .NET is important, it is the combination with new functional capabilities in areas like APS, flexible multi-site deployment, and flexible business process automation that position the product better going forward, particularly now as a part of a larger entity with a strong balance sheet and market clout.
User database preference was another driving factor for MAPICS in deciding which one of the two Microsoft-centric suites to actively market to Microsoft-oriented shops. MAPICS' products had long been deployed to a very narrow set of databases, i.e. former MAPICS XA could only run on an IBM DB2 database, whereas former Point.Man could only run on an Oracle database. Not providing support for Microsoft SQL Server has resulted in a number of missed opportunities within the cost conscious mid-market segment of MAPICS' focus. While SyteLine has had a long history of supporting both Windows and the UNIX OS, and Progress Software's database, the 7 release in 2002 solely took advantage of Microsoft technologies, as well as Microsoft's SQL Server database. Having surveyed the MAPICS ERP for Extended Systems users, MAPICS claims to have heard back from them that what they wanted were .NET and SQL Server-based solutions. Hence, MAPICS made a crucial decision to do that by providing a smooth migration path and conversion tools to SyteLine 7, rather than to embark on redevelopment of the Extended Systems product.
The Extended Systems suite will nevertheless continue to be supported for users that choose to stay on it. MAPICS maintains its product development teams have already mapped the functionality of the two products and the unique features of Extended Systems will be added to SyteLine during forthcoming future releases, which will be fleshed out shortly. Thereafter, the vendor pledges to work with customers in those industries to help them transition to SyteLine only when they are ready to make the change. Otherwise, SyteLine offers almost everything that the Extended Systems product has to offer, and more in both functional depth and breadth, so that one should anticipate incentives for users to migrate. At least, Frontstep should solve MAPICS ERP for Extended Systems' shortcomings in terms of limited multinational features and in terms of its dichotomy of running only on a higher-end of the market amenable Oracle database, while providing the functional features for the lower-end of the market.
Thus, given its highest prosperity in the market, the SyteLine product release schedule is the busiest amongst all the other products in the family. In June, the SyteLine 7.02 release, which includes the UK localization and translation toolset, was made available in the US, Canada, and the UK. The current release has 120 total implementations, whereby over 65 percent of these are the customers coming from North American affiliates, and over 20 percent are from the international markets. Then, the SyteLine 7.03 release that will feature the generic financial interface, and the updated Planner module based on additional APS capabilities, an update to core SyteLine for additional planning parameters, workflow security and data management enhancements, international enhancements, several new reports and report enhancements, complete FASB 52 compliance, and improved upgrade and custom code management, should "hit" China, Southeast Asia, Australia, and New Zealand in late 2003 (and still works for the US, UK, and Canada).
With dates yet to be determined (at the moment only projected for summer 2004), the SyteLine 7.04 release, featuring integrated SyteLine Enterprise Financials, more complete additions to the APS Planner and Scheduler functions, international enhancements including additional tax enhancements, final country packs for Mexico, Japan, and France, more workflow enhancements, user interface (UI) tuning and enhancements, and projects to support selected verticals and to support MAPICS ERP for Extended Systems to SyteLine conversions, will be released in Mexico, France, and Japan (and the other countries already mentioned). Finally, Germany, Italy, and Russia will only see the SyteLine 7.05 release some time in 2005. The release should complete the internationalization process; will have final country packs for Germany, Italy, and Russia; should complete the planner and scheduler functional improvements; and the integration of the ntelligent Sourcer, as well as the gap projects to support the selected verticals.
The integration between SyteLine 7.04 and SunSystems is planned for 2004 against the SyteLine 7.04 intended availability. The SyteLine Enterprise Financials module that leverages SunSystems is currently available in a stand alone mode (e.g. professional service level of integration) within the following modules: foundation, accounting, fixed assets, allocations, connect, etc. Two customers have reportedly purchased SyteLine Advanced Financials this way—Krone and Dornier Medtech. This should alleviate the conundrum for penetrating the higher-end of the market since MAPICS (and the former Frontstep alike) has never been at the forefront of providing native multinational financials/consolidation, budgeting, project accounting/management, and human resources (HR) functionality. Without these in hand, it is a tall order for any like vendor to penetrate the corporate management level competing against the likes of Oracle, SAP, and PeopleSoft. Production management remains MAPICS' strongest spot, and thus it has often been implemented only in manufacturing divisions of large global organizations that use a tier one ERP product for corporate financials or HR applications.
