Agilisys, Inc., the former Process Manufacturing and Distribution division of SCT Corporation (see iProcess.sct Enters Golden Gate Opportunity), has been showing us lately that it has swiftly moved beyond expected spin-off tremors, by leveraging its legacy of a prominent pure-process industries enterprise applications provider to 1) gain new customers, and 2) release new products under its new brand name and as an independent company.
A series of recent announcements and a summary of the Agilisys' product offerings are detailed in Part One and Part Two of this three-part note.
Still, although it is indisputably better that Agilisys had not stayed any longer under a parent that did not quite fathom its direction, and had even imposed a heavy overhead burden on it to be part of that company, and hindered its growth, the company faces both new and many old challenges.
* Impending Marketing Effort: The former Process Manufacturing & Distribution Solutions division of SCT Corporation had always been challenged to establish itself as a name brand in the process segment owing to its late market entry and a small client base, which is still vastly North America based. Its marketing efforts had been both limited by and over shadowed by traditionally conservative parent company that manages a plethora of other businesses within diverse industries with different marketing dynamics. Although Agilisys should now have more resources available to grow unfettered by any parent's corporate direction and overhead, and it can now focus exclusively on the process manufacturing sector, its new name is nonetheless a liability since the market still largely does not know what Agilisys is, what it stands for, or what it does. The company must therefore launch an aggressive name recognition program in its target market, media and analysts. Since as a division of SCT, it had never fully addressed its marketing needs, it has yet to prove the past will not be an indicator of the repeated (bland marketing) future. Agilisys' management also needs to continue to meet with and communicate the vision to the customers, prospects and employees.
* Low International Presence: Although Agilisys' customer base features a strong selection of both large and mid-market companies, including household names like Coca Cola, Molson Brewing, Glaxo Smith-Kline, Safeway Inc. and a selection of smaller companies like Horizon Organic, Spraylat and Basic American Foods, its relatively small client base (well below 1,000) is also predominantly North American, resulting in insignificant brand awareness and an undeveloped channel outside of the North American market. This is further aggravated by the fact that its product exhibits at best only adequate multi-national capabilities and supports only a few languages beside English. A result may be a number of missed opportunities as companies are increasingly seeking global providers for its supply chain management and collaboration requirements. Since the process manufacturing market is highly global, Agilisys must therefore expand its global coverage to address the needs of its current and intended customers. Although its international customer base includes such brand names as Bernard Matthews, Scottish Courage, Godiva, Heineken, UCB, and Organon, all of which are European based companies, the room for improvement largely remains.
* Product Offering Rounding Work-in-Progress: Despite its breadth, Agilisys Suite does not cover all the bases. International financials, warehousing management, e-procurement, product lifecycle management (PLM), laboratory information management systems (LIMS), and plant maintenance are some of functionality that peers, like Ross Systems, Baan Process, and Infinium may tout as superior, let alone the Tier 1 vendors. Furthermore, its former incarnation had not moved in a timely fashion into the customer relationship management (CRM) market and this lack of functionality had limited its marketability in some situations. However, we expect the RNM solution (that tackles CRM, Supply Chain Event Management (SCEM), Supply Chain Visibility (SCV), Partner Relationship Management (PRM), PLM, and Enterprise Portal) to address this weakness going forward.
Also, the former SCT division had not adequately addressed the buy side of its e-business applications, as it had not aggressively moved in the area of e-procurement. While SCT had formed a partnership with ecFood.com, a leading food ingredient exchange, as part of its buy side e-business efforts, it has not yet added similar partnerships for the remaining segments (chemical, life sciences, etc.) of its targeted process markets. The market should expect Agilisys' remedial actions in that regard, as its investors may also be interested in further acquisitions of two possible company profiles -- a technology-based provider, or a peer process-manufacturing-focused vendor with a large international customer base.
Agilisys' strategy going forward may also be impeded by the seemingly disparate ERP and SCM products amenability tto different market segments (mid-market vs. Tier 1). While the first product appears to be a better fit for mid-size enterprises (although the apparent company's aloofness from Microsoft .NET platform support may mean some strategy misalignments for the Microsoft-infatuated segment), which often require resellers/VARs, the latter one is seemingly able to satisfy even the needs of the largest multi-national corporations, encroaching thereby at the Tier 1 territory. The technological foundation disparity of the products (i.e., proprietary vs. Java and other contemporary Web-based technologies) has also likely taken its toll by doubling the development expenses and in delivering products integration, which will likely continue due to existing customers' tardiness in upgrading to the latest product releases on unified technology.
* Undeveloped Indirect Channel and Third-Party Implementation Partners Network: Agilisys still relies mainly on its direct sales and consulting force, which we consider as a cost ineffective (and possibly insufficient) sales and service and support approach within the lower mid-market segment. The company will have to demonstrate substantial progress in developing an indirect channel to supplement its strong direct sales and product implementation force. Without it, we believe the company's growth and international expansion will be hampered.
* Intensifying Competition: The enterprise applications market in general has not been very strong since the late 1990s. Although the process manufacturing and consumer packaged goods (CPG) target markets, comprised of more than 8,000 manufacturers, have long been under-served by traditional ERP vendors who primarily designed their products for discrete manufacturing, the situation has been rapidly changing recently, with the process ERP market becoming quite cramped with competitors. The recent revival of its direct competitors such as Geac, Baan Process and especially Ross Systems, while hinting a strong opportunity, also reveals the challenges all the players might face (see Geac Hopes To See System21 Shine Again Like 'Aurora' and Ross Systems � A Bright Spot On A Difficult Enterprise Application Landscape).
A series of recent announcements and a summary of the Agilisys' product offerings are detailed in Part One and Part Two of this three-part note.
Still, although it is indisputably better that Agilisys had not stayed any longer under a parent that did not quite fathom its direction, and had even imposed a heavy overhead burden on it to be part of that company, and hindered its growth, the company faces both new and many old challenges.
* Impending Marketing Effort: The former Process Manufacturing & Distribution Solutions division of SCT Corporation had always been challenged to establish itself as a name brand in the process segment owing to its late market entry and a small client base, which is still vastly North America based. Its marketing efforts had been both limited by and over shadowed by traditionally conservative parent company that manages a plethora of other businesses within diverse industries with different marketing dynamics. Although Agilisys should now have more resources available to grow unfettered by any parent's corporate direction and overhead, and it can now focus exclusively on the process manufacturing sector, its new name is nonetheless a liability since the market still largely does not know what Agilisys is, what it stands for, or what it does. The company must therefore launch an aggressive name recognition program in its target market, media and analysts. Since as a division of SCT, it had never fully addressed its marketing needs, it has yet to prove the past will not be an indicator of the repeated (bland marketing) future. Agilisys' management also needs to continue to meet with and communicate the vision to the customers, prospects and employees.
* Low International Presence: Although Agilisys' customer base features a strong selection of both large and mid-market companies, including household names like Coca Cola, Molson Brewing, Glaxo Smith-Kline, Safeway Inc. and a selection of smaller companies like Horizon Organic, Spraylat and Basic American Foods, its relatively small client base (well below 1,000) is also predominantly North American, resulting in insignificant brand awareness and an undeveloped channel outside of the North American market. This is further aggravated by the fact that its product exhibits at best only adequate multi-national capabilities and supports only a few languages beside English. A result may be a number of missed opportunities as companies are increasingly seeking global providers for its supply chain management and collaboration requirements. Since the process manufacturing market is highly global, Agilisys must therefore expand its global coverage to address the needs of its current and intended customers. Although its international customer base includes such brand names as Bernard Matthews, Scottish Courage, Godiva, Heineken, UCB, and Organon, all of which are European based companies, the room for improvement largely remains.
* Product Offering Rounding Work-in-Progress: Despite its breadth, Agilisys Suite does not cover all the bases. International financials, warehousing management, e-procurement, product lifecycle management (PLM), laboratory information management systems (LIMS), and plant maintenance are some of functionality that peers, like Ross Systems, Baan Process, and Infinium may tout as superior, let alone the Tier 1 vendors. Furthermore, its former incarnation had not moved in a timely fashion into the customer relationship management (CRM) market and this lack of functionality had limited its marketability in some situations. However, we expect the RNM solution (that tackles CRM, Supply Chain Event Management (SCEM), Supply Chain Visibility (SCV), Partner Relationship Management (PRM), PLM, and Enterprise Portal) to address this weakness going forward.
Also, the former SCT division had not adequately addressed the buy side of its e-business applications, as it had not aggressively moved in the area of e-procurement. While SCT had formed a partnership with ecFood.com, a leading food ingredient exchange, as part of its buy side e-business efforts, it has not yet added similar partnerships for the remaining segments (chemical, life sciences, etc.) of its targeted process markets. The market should expect Agilisys' remedial actions in that regard, as its investors may also be interested in further acquisitions of two possible company profiles -- a technology-based provider, or a peer process-manufacturing-focused vendor with a large international customer base.
Agilisys' strategy going forward may also be impeded by the seemingly disparate ERP and SCM products amenability tto different market segments (mid-market vs. Tier 1). While the first product appears to be a better fit for mid-size enterprises (although the apparent company's aloofness from Microsoft .NET platform support may mean some strategy misalignments for the Microsoft-infatuated segment), which often require resellers/VARs, the latter one is seemingly able to satisfy even the needs of the largest multi-national corporations, encroaching thereby at the Tier 1 territory. The technological foundation disparity of the products (i.e., proprietary vs. Java and other contemporary Web-based technologies) has also likely taken its toll by doubling the development expenses and in delivering products integration, which will likely continue due to existing customers' tardiness in upgrading to the latest product releases on unified technology.
* Undeveloped Indirect Channel and Third-Party Implementation Partners Network: Agilisys still relies mainly on its direct sales and consulting force, which we consider as a cost ineffective (and possibly insufficient) sales and service and support approach within the lower mid-market segment. The company will have to demonstrate substantial progress in developing an indirect channel to supplement its strong direct sales and product implementation force. Without it, we believe the company's growth and international expansion will be hampered.
* Intensifying Competition: The enterprise applications market in general has not been very strong since the late 1990s. Although the process manufacturing and consumer packaged goods (CPG) target markets, comprised of more than 8,000 manufacturers, have long been under-served by traditional ERP vendors who primarily designed their products for discrete manufacturing, the situation has been rapidly changing recently, with the process ERP market becoming quite cramped with competitors. The recent revival of its direct competitors such as Geac, Baan Process and especially Ross Systems, while hinting a strong opportunity, also reveals the challenges all the players might face (see Geac Hopes To See System21 Shine Again Like 'Aurora' and Ross Systems � A Bright Spot On A Difficult Enterprise Application Landscape).
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