JD Edwards Re-FOCUSes
JD Edwards used its annual meeting, FOCUS, to announce that it
is voluntarily stepping down from the premier leagues.
For two years or so, JD Edwards has gone head-to-head with SAP
over big deals. It won its share. (Example: Reynolds Metals, where
it actually replaced SAP in one division.)
But its cost of sales was astronomical.
So this year, JD Edwards announced that it would go back to its
roots, the mid-market, where presumably SAP or Oracle or PeopleSoft
would never dare to follow.
I've always had a soft spot in my heart for this company, and I
find this announcement worrisome. Partly, it's the details--the
definition of the mid-market is contorted, the product and target
markets often don't match well.
But mostly, it's that the mid-market isn't much of a haven.
While JD Edwards was putting its best sales talent into big deals,
companies like Intentia or QAD were improving their mid-market offerings,
Great Plains was hatching its plans, and the Oracles and SAPs were
putting some resources into the mid-market. There are plenty of
broad footprint B2B products now that look plenty plausible to that
market. JD Edwards is no longer the default choice.
And saying, "Oh, OK, we'll go back to the small pond, and
everything will be as it was," is problematic for yet another
reason: it doesn't confront the real problems at the company.
Going back to the mid-market doesn't do anything about the fact
that JD Edwards has too many salespeople who are doing too little.
It doesn't do anything about a glacial pace of development.
In any market, JD Edwards must do the following:
- Fix the cost structure
- Fix the pricing structure
- Go after its "natural" market in a much more effective
way.
- Broaden the footprint of the product
- Push the process management capabilities-where it has a product
lead-much more effectively
- Go after the installed base.
In Ed McVaney's now-annual mea culpa keynote speech, he did acknowledge
some of this. To fix the cost (and presumably, the pricing) there
is a new management team. To pursue the market, there is a new head
of marketing. (Alas, he has not yet ended those embarrassing "Collaborate
or Die" advertising campaigns.) To broaden the footprint, there
will be a CRM product. And finally, McVaney promises to provide
"collaboration" capabilities to his somewhat puzzled mid-market
customers.
I would like to be convinced, but I'm not. The new team has had
the same 100 days Bush has had, but there is no comparable tax cut.
Bottom line: the real problems with the company won't be fixed
by the mid-market focus. Expect more stagnation, more re-focusing,
more change, and finally, a limping recovery.
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