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Q: JDA and Manugistics are both strong in the retail/CPG sector, but Manugistics provides solutions in other areas as well. What will you do with those non-retail-specific solutions?
Brewer: When we look at Manugistics, obviously its solutions for retail and CPG manufacturers are a natural convergence for JDA as we also are in both of those businesses-no surprise there. But when you think about the non-CPG manufacturing businesses that Manugistics supports, we absolutely see those as strategic to the company going forward and we want to continue to develop compelling solutions for those markets. We see the revenue management business that Manugistics has been operating, for example, as strategic to our combined business going forward and we certainly plan to continue to develop solutions in that area. For the business that Manugistics has been operating under the title of Government, Aerospace and Defense, we see that as two different spaces. One is the government piece, into which Manugistics has primarily sold its core products. Although recently this has represented only a small part of total revenue, it is not a distraction for us to continue to serve that market and our intention is to do so. The marketplace where we still have a lot of analysis work to do is the aerospace and defense area. Manugistics has a specific solution for aerospace and defense manufacturers and we have not yet come to a final determination as to how we will proceed with that market. That one is still somewhat open to discussion.
We see Manugistics's transportation management business as a huge add-on for JDA. We have 1,400 retail customers around the world. Only a small number of them today are using the Manugistics transportation solution and we want that to be a big number. So even in our heritage market of retail we see a huge opportunity for expanding the transportation solution.
Mitchell-Keller: Another thing to recognize when we talk about the various industries that Manugistics serves is that government, in particular, is very interested in following commercial best practices. So the fact that we do have such a good focus on consumer goods actually makes us very attractive to the government market. If you think about it, what they are most interested in is the distribution of lots of goods to the troops, which is very similar to the consumer goods model.
Q: What can you tell us about plans to integrate JDA and Manugistics products?
Brewer: Everything will be integrated, with a couple of exceptions. We have no plans right now to integrate Manugistics's yield management solutions, which reside inside of revenue management. And we have no plans at this stage to integrate Manugistics's ERP manufacturing system for aerospace and defense. Other than that, everything else will be integrated.
In doing this, our primary focus is how we can provide an end-to-end series of optimization solutions that will help step up the global supply and demand chain and enable better decisions. We will do this by providing visibility and insight into end consumer demand and by leveraging information at various stages in the supply chain and demand chain so that users in the manufacturing, wholesale distribution and retailing areas can make superior decisions. We believe the optimization opportunity starts right from the beginning with planning for new product introductions, goes through raw materials sourcing for that product, into manufacturing and on through distribution to business customers and, ultimately, to the end consumer. That whole flow and all its different stages offer huge opportunities to improve decision making and provide concrete return-on-investment for stakeholders in the global supply and demand chain. We will offer a suite of solutions capable of being deployed separately or together to help companies build a solution that makes sense for their particular operations. Some customers might be simply in the business of distribution, while others might be vertically integrated and need a solution that goes all the way from raw materials to the end consumer and everything in between. We want to enable superior decision making within individual companies and also collectively among companies as they collaborate and share information.
In this process, we don't plan to do wholesale rewrites of anything except in a few cases where we have product overlap and it can't be avoided. Manugistics had been previously building its solutions using J2ee technology. JDA had previously been building on a next-generation platform using Microsoft technologies. But the key point is that both of us were building solutions using an open, service-oriented architecture and we intend to leverage those service-oriented architectures to integrate our solutions with a minimum amount of rewrites. Our goal is to bring this combined solution to market in an integrated manner in 18 to 24 months.
Mitchell-Keller: We have done a lot of proving out to make sure that we can actually integrate our technologies very seamlessly using the integration technologies and web services that we have. There certainly will be solutions that we will put into the market which have combined capabilities from both our J2ee heritage and JDA's .Net heritage, but it should be seamless to the user. Today, when a customer implements Manugistics, they don't actually know that it is J2ee. They don't know that we are using BEA WebLogic because we make that a black box to them. So using combined technologies shouldn't be that much of an issue. What really is the crux is that by combining the two functional capabilities, we will be able to give our clients a much better end-to-end solution. There is a strong move afoot for many retailers to become vertically integrated and for many CPG manufacturers to build stronger relationships with retailers, so offering a common solution that they can use up and down the demand and supply chain will provide very high value.
Q: How and what are you communicating to your customers?
Brewer: We are immediately implementing a Customer Outreach program. Through various channels, including our sales and marketing people and customer relationship mangers, we are providing our customers with as much information and education as we possibly can about our strategy and direction and the value proposition that we believe we are capable of offering today and that we are expecting to offer in the future. In a situation like this, probably the biggest risk is a lack of information, which might lead people to draw conclusions that are invalid. So our goal is to reach out proactively to our customers. For example, we plan to publish a solution road map for our entire product suite to our combined customer base by the end of this month [July].
Q: How long was this deal in the works?
Brewer: I guess it depends on how you look at it. Formally, the process in which Manugistics contemplated the option of selling the company has been going on since about last September. More informally, JDA and Manugistics have been getting to know one another since around 2000. I would say we have had a long, slow courtship.
Q: Do you see Oracle as your primary competitor now?
Brewer: We consider Oracle and SAP to be our two primary competitors. Those companies are not mirror images of JDA and we do not try to be a mirror image of them. They both are both huge software companies-$10bn in revenue each-and they cross multiple industries and provide horizontal solutions in areas like banking and insurance and all kinds of other places that we have no interest whatsoever in getting into. But the fact is that they both are interested in becoming strong solution providers in the global supply and demand chain market space.
But this is a huge market and we believe, without a doubt, that there is a position for a company like JDA-one that is financially strong and able to drive innovation into this focused vertical market. We are confident that if we stay focused on that market, even though we have less overall financial resources than those two, we can bring to bear more innovation in a shorter period of time, and bring more value to customers, than can those two larger companies. Simply because of the overhead and length of time it takes them to get things done. If you look historically at our respective pace of innovation, JDA and Manugistics have outstripped SAP and Oracle in terms of capabilities in this market, because it is all we do, it is all we focus on. It is our intention to be recognized as the global specialist in this marketplace to deliver innovation at a pace superior to either of those companies despite their greater financial resources; though I am sure we will be competing against them for a long time to come.
Q: What do you see as your biggest opportunity and biggest challenge in the next 12 to 18 months?
Mitchell-Keller: I think the biggest opportunity is for the two companies to learn from one another. As we have gotten closer together, there are best practices across different areas of the company that we each have been using. For instance, some of the development processes within JDA, particularly its methodology for rapid innovation to market, are head and shoulders above what Manugistics has been doing. I believe our clients will be very pleased to see innovation coming out of the combined company at a faster pace. In terms of challenges, I think the only challenge that we really have is getting to know each other and making sure that we discover each other's strengths. The cultures are very, very similar. We both are very hands-on cultures and, more importantly, we both define our success by the success of our clients. I don't really see any big issues to overcome.
Brewer: I would support everything Lori said.
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