- Pushing for consistent profit growth, JD Edwards is shifting its focus to supply-chain management offerings and launching a reorganisation that will slash $US75 million from its operating costs over the next 18 months.
JD Edwards, which once focused almost exclusively on ERP (enterprise resource planning) solutions, will be honing its focus on supply-chain planning solutions, which now account for 45% of the company's total revenue, compared to making up only 25% of its sales for the fourth quarter last year, company officials say.
"We're competing head to head with i2 and Manugistics and winning consistently," says Glenn Tubb, senior vice president of product development at JD Edwards. "We have that complete integration with our advanced planning engine. We have a very strong fulfillment engine tied with a very strong optimisation engine."
As part of the cost-cutting measures, the company is consolidating sales regions and eliminating 10% of its vice president positions, according to Hank Bonde, new COO at JD Edwards, in Denver, Colorado.
In addition, JD Edwards will be eliminating three management layers separating its customers from its senior level management as part of a plan to offer customers better support, Bonde says. Despite this news, Bonde says he does not expect the company to have "widespread layoffs," adding that 50% of the cost cutting will result from operating efficiencies resulting from CRM (customer relationship management) and automated procurement. The company is also splitting its consulting services division from its field sales division to boost sales, Bonde adds.
The software maker has struggled with posting a consistent profit, posting net income losses for the first three quarters of 2000 and for the year. In addition, the company announced this past October that it would shelve its ASP (application service provider) business less than a year after launching the hosting division.
JD Edwards' reorganisation details follow official release of first quarter earnings. Revenue for the first quarter of fiscal 2001 was $US217 million, compared to revenue of $US231 million in the first quarter of fiscal 2000. The company posted a net income of $US191,000 for the quarter compared to a net loss of $US31,000 in the first quarter of 2000.
"There are several opportunities associated with driving more revenue," Bonde says. "We're spending more of our resources on what's important to customers: product development and customer support. It's back to the common vision of providing collaborative solutions for our customers."