Analyzing MAPICS' Further Steps After Frontstep Part Five: Challenges

Analyzing MAPICS' Further Steps After Frontstep Part Five: Challenges

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 (covered in Part Two)
* Certified Partner Program (covered in Part Two)

* Pacejet Logistics, Inc. is a Certified Partner (covered in Part Two)

* A Revised Sales Strategy (covered in Part Two)

There will ultimately be inevitable rationalization within the remaining maze of likely redundant product sets detailed earlier. In particular, the APS direction is still clouded, since the former independent companies, MAPICS and Frontstep, even had a short partnering stint in the past. The former Frontstep (previously called Symix) was even regarded by some as the originator of the extended ERP concept (i.e., with its erstwhile customer synchronized resource planning or CSRP concept), which had once proven to be so attractive to mid-market enterprises that two other leading mid-market vendors (i.e., MAPICS and former JBA International, now part of Geac) had entered into specific R&D and licensing agreements with Symix to gain access to its former SyteAPS product. However, the MAPICS ERP for iSeries' current supply chain planning (SCP) module, an expansion of the planning application originally developed by Thru-Put, which MAPICS acquired when it bought Pivotpoint, might also be integrated with SyteLine.

While it might be contested that different approaches to APS technology (i.e., different APS algorithms) are applicable in different environments and industries, it is highly unlikely both will benefit from MAPICS' finite R&D pool. One could imagine a number of other similar conundrums analogical to a coach that has an extremely crowded reserve bench and has to let many good players go. In any case, the jury is still out on whether MAPICS will reduce its APS choices.

While the benefit of obtaining a .NET-based product is evident, the downside is also that due to the former independent companies' dissimilar technologies in the past, MAPICS will now have the burden of looking after both its AS/400 and SyteLine Progress based customers with ageing product instances. Some of existing SyteLine and Extended Systems customers' exodus should also be reckoned with (for example, Progress or Oracle loyalty or simply for reluctance to change), although MAPICS (and former Frontstep too) has taken many steps to protect their current technology investment.

Existing customers will be given a still unspecified a time bracket (during which, they will be supported as usual) to make a decision to migrate to the new SyteLine 7 environment, which means a departure from the Unix OS, and Progress or Oracle databases, respectively. It will be a maintenance upgrade rather than a new system implementation, which should supposedly be much less steep and expensive. Although the pledge has been reiterated many times, only time will tell whether this approach will prove to be the right one.

The positive news is that using applications such as portals, PLM, or EAM (and supplier relationship management [SRM] in the future) as coarse grained Web Services (e.g., the pricing, inventory, supplier performance, order management, and catalog components within SRM) on top of both .NET- and J2EE-based ERP products' foundations should result in synergies, despite the downside that it cannot be done within the core ERP products owing to a huge gap between the products' technologies and functional capabilities.

While the idea to enable the R&D team to gain economies of scale by building common application components as commodities that can be deployed within the entire product portfolio is tempting and promising in the very long run, the flagship back-office product lines will likely remain on separate tracks for quite some time to come, owing to their disparate proprietary technologies and respective user bases that are still using these. If Microsoft Business Solutions (MBS), with its huge resources and a single .NET and SQL Server platform foundation delivered in-house does not foresee delivering a unified ERP foundation for at least the next three years (see Microsoft Lays Enforced-Concrete Foundation For Its Business Solutions Part 3: Challenges), one can only assume that it would take MAPICS significantly longer, given its much more modest resources and a task of deploying onto multiple platforms.
On the other hand, the technological foundation disparity of the products will likely take its toll by multiplying the development expenses and for delivering product integration. This also complicates the tracking of third-party partnerships to compensate the products' different respective weak areas. Thus, MAPICS' challenge in its new technology foray will also be to effectively move its partners with it, as they will also need to invest in new skills. While they do, service may drop below MAPICS' stringent standards because the company might find its own resources spread too thin to fill in the service gaps created by inexperienced VARs. Another risk is that as the likes of SAP, PeopleSoft, and Oracle move down market and MBS and Best Software come up market and invade MAPICS' market space they might actively lure its qualified VARs for sales and service, potentially restricting MAPICS' ability to expand its market presence, and leaving its customers at risk of losing local support.

The competition will, of course, not end with these vendors. Taking the iSeries software first, main competitors include Intentia, SSA GT, Geac, and J.D. Edwards. As for the .NET-based SyteLine product, the peers list seems almost never-ending, with QAD, IFS, and SYSPRO leading the way. Therefore, executing the above-announced ambitious initiatives with its modest albeit solid resources compared to the above competitors will be a notable challenge. Any hiccups and delays in its product development execution, possibly bundled with continued limited sales execution (that has until recently relied largely on the support and maintenance revenue stream rather than on new licenses), may put further significant strain on the company's performance and keep it in the difficult position of having to maintain tight cost controls, while executing a visionary strategy. MAPICS will either have to produce significantly higher revenues or it will have to protract its products delivery deadlines, given its dedication on preserving a profitable bottom line at the same time.

Nevertheless, to that end, the recent success of gaining traction comes in handy for the merged companies, both long in a conundrum of declining or flat revenues, given the competition will not ease any time soon. MAPICS may have done the acquisition in time, as to be ready with a compelling product portfolio when the market eventually recovers. While the market will have forgotten about former Frontstep's protracted troubles, on the other hand, MAPICS has shed its antiquated image (i.e., association with the ancient looking green-screen, iSeries-based product), since the addition of a .NET product will have helped help modernize its image. Also, many unpleasant questions about the less successful Pivotpoint acquisition will have now become moot. Moreover, MAPICS will have also recently got its affiliate channel both excited about the product portfolio and consequently bolstered the channel's ability to sell rather than to defect to some other .NET camp.