JD Edwards on road forward after setback

By ADAM GIFFORD

Software and implementation problems which left JD Edwards facing legal action from dissatisfied customers should now be behind it, says the head of the Denver-based business software company.

"In 1999-2000 JD Edwards lost its way. It tried to become a company it wasn't," chief executive Robert Dutkowsky told the Quest Australia and New Zealand user group conference in Sydney last month.

"It tried to offer services and products it was not able to match up with what it could deliver."

In the United States, eight early adopters of JD Edwards' OneWorld suite have called in arbitrators because of failed or excessively difficult roll-outs.

The American Arbitration Association ordered JD Edwards to pay US$2.3 million ($4 million) damages to Texas pet products and sporting goods manufacturer Dockocil Manufacturing, after ruling that it supplied a defective product.

JD Edwards said the problem with processing sales orders was caused by Microsoft SQL Server database locking up, and it was resolved when Microsoft released a new version at the end of 1998.

In New Zealand, liquor retailer Glengarry Hancocks threw out a multi-million-dollar JD Edwards system and installed a $500,000 Exonet package.

In a reference letter on the Exonet website, executive chairman Jak Jakicevich said the JD Edwards system "failed us completely" and "cost the business big time" in licence fees, software and hardware, implementation, consultants and a huge number of temporary staff required to keep the company going.

Jakicevich told the Herald his company was not contemplating any action against the company.

Across the Tasman, the struggles of wine company Yalumba to implement an early version of OneWorld are an industry legend but, with considerable resource pumped in by JD Edwards, it completed the task, upgraded to a more recent and stable version, and is now a reference customer.

JD Edwards' New Zealand manager, John Speed, does not expect the United States cases to have any impact on the business here.

Dutkowsky said when he joined the company in 2001 it was losing money, market share and customer goodwill. "Customers had expectations of the company greater than we were delivering. We missed some deliveries of products, some products were not the best quality.

"It all came back to lessen JD Edwards in the eyes of the customers," Dutkowsky told the Herald.

While its rivals - SAP, Peoplesoft, Oracle, i2, Manugistics, Siebel - saw licence sales, revenues and profitability stay the same or fall, JD Edwards made gains. In its first quarter ended January, it netted US$6.5 million profit on revenue of US$206 million, compared with a US$4 million loss the previous year.

Now it is back in the black, JD Edwards is ploughing 15 per cent of revenue into R&D, mostly to strengthen verticals - versions of its software for specific industries such as real estate or construction - and to enhance and more closely integrate acquired technology like the Youcentric customer management and Numetrics supply chain products.

Dutkowsky said the average price of JD Edwards' software sales last quarter was down, which indicated customers were buying smaller pieces and not the big monolithic pieces of software.

His prescription for survival was to reconnect the company with its customers and to focus on its strengths - making software for mid- market companies in sectors such as manufacturing.

"ERP [enterprise resource planning] penetration in high-end businesses is in the 80 per cent range. Penetration in the mid-market is in the 20 to 30 per cent range. JD Edwards is a leader in the mid-market, and that is where we see growth."

Dutkowsky said that was one reason JD Edwards had done well in New Zealand, where all but the largest of large companies would be considered only mid-market by global standards.

Dutkowsky, a former executive assistant to former IBM boss Lou Gerstner, has reforged JD Edwards' bonds with Big Blue, which were weakened by the shift to open systems from the AS/400 platform (now known as the iSeries).

The latest release, JD Edwards 5, can be bought with IBM technologies including WebSphere middleware, application server, portal, Tivoli security and DB2 database already embedded.

*Adam Gifford travelled to Sydney as a guest of JD Edwards.