We speak with Ian Hodge, managing director of J D Edwards, Australia/New Zealand, about the future of business software and services.

With all major players experiencing big drops in sales, is there light at the end of the tunnel for CRM solutions?

I believe so. CRM has had its boom and bust. The underlying strength of these solutions becomes evident when they support genuine business initiatives driven by customer strategy. Specifically, when organisations can link value growthâ€"revenue increases or cost reductionsâ€"to customer-facing projects.

The negative perception of CRM came from the classic technology project issues, namely cost and time overruns. However, strategic CRM opportunities remain for smart companies that know how to harness them. People are starting to realise that it's relationships that drive CRM. Technology is just a way to do it better. Technology alone doesn't make you a great CRM practitioner.

What sets J D Edwards' products apart from those of Siebel and PeopleSoft?

Aside from the technology strengths, the business advantages of J D Edwards' CRM lie in the integration of front and back office processes. Specifically, J D Edwards has the ability to add value to the customer relationship by enabling the organisation to deliver on its promise. To be able to literally promise delivery dates at time of order by linking order processing to real-time supply chain data is a big differentiator for J D Edwards.

We strengthen our CRM customers by supporting rapid service delivery by providing a full view of parts and labour availability and enabling order accuracy in complex ordering environments. Other vendors do classic sales force automation well, and so do we.

What they can't provide is the intrinsic integration of business processes that raises CRM from a -promise" to a -deliverable".

Whose market share are you targeting in the coming months?

Our nearest and dearest competitors'. We've captured market share this year by taking from the higher-end at the expense of Oracle and SAP. New customers such as Crane Group, Thiess, and Beringer Blass are evidence of this.

In the mid-market, we've shown greater sustainability than, say, Intentia or some of the more traditional vendors while the niche players in supply chain and CRM are struggling to provide complete integration and vertical industry solutions.

In New Zealand, the competition has largely packed up and gone home. We have an excellent business in NZ. It's a strong domain for us, and one that we intend to capitalise on further.

What do you think of Microsoft's recent acquisitions and move into the business applications market? Do you see it as a threat?

Microsoft is a threat wherever it applies resources in a concerted manner. So yes, it is a big blip on our strategic radar and when it arrives in force it's bound to make a mess in the sandpit, as it were.

That said, I'd suggest Microsoft will struggle to develop the vertical industry strengths and understanding of enterprise business requirements that are the core competencies of enterprise players like J D Edwards. Ultimately, I would say Microsoft will struggle with the classic issues of diversity.

What is J D Edwards' most profitable product worldwide? Is it the same in Australia?

Our most profitable line of business is the value inherent in our proposition to customers that says, -We will stand behind our solutions and work with you to implement them in such a way that you can capture value earlier and consistently through the life of your investment."

We make money when we are able to deliver value to customersâ€"lower cost of ownership, faster time-to-value and greater flexibility. And greater value to our customers means greater profitability.

Is Australia a different sell for CRM solutions than, say, the US?

In some areas, yes. In many industrial businesses, as opposed to consumer-intensive industries like telcos and financial services, there is less emphasis in Australia on managing huge volumes of customer data and more on getting the processes right.

Many industries are quite concentrated, retail being the classic example. So getting agreement on the -rules" in the industry, building trust, and determining common practice are prerequisites. Many Australian companies have inherent knowledge of their major customers' requirements, so consistent delivery along an integrated process is more important than investing in managing complex warehouses of customer data.

On the other hand, there is a lot to learn from the US experience, and in many ways the changes in customer expectations are driven by practices that come out of that market.

If lack of understanding of CRM's benefits is one of the main reasons behind stalled sales, how does J D Edwards plan to educate the market?

I think our customers have a good understanding of where the benefits of CRM lie. We are mindful to point out to our customers and to the market in general that technology vendors should be prepared to work closely with the end user to deliver successful projects and beyond to capture value.

J D Edwards understands the pitfalls, we take responsibility and we understand the importance of seeing things through to the point of delivering tangible business benefits. Where our customers have been particularly smart is in saying, -How can I capture those benefits in a way that this CRM project adds value to my bottom-line business?"

But it's not surprising to see that, in view of the collateral damage of project overruns in large-scale ERP and early CRM projects, many organisations have waited before dipping their toe in the water. It's a lack of confidence as much as a lack of understanding.

Is J D Edwards looking at any acquisitions at the moment? If so, what type of company would best improve your mix of offerings?

That remains to be seen though I will say that that the focus of our business is growth through acquisition of new customers. For our existing customers, this means acquisition of new benefits.

You've mentioned converging trends in business applications. What trends do you see converging?

The convergence of those cycles and trends that have influenced demand for business applications. For example: the bottom of the economic cycle in first half 2002; the collapsed business investment resulting from terrorist activity last year; the absorption of excess software inventories in the customer base; and the trend towards business-case driven investment in software applications that has changed buying behaviour.

If you look at the last 12 months in the software industry, the tougher sales environment can be explained by looking at trends like these. More important for J D Edwards is the way we do business in the future, recognising how our customers are moving into the next cycle of growth and how we can help them grow stronger through that phase. And how we grow as a result.

Your CEO, Bob Dutkowsky, has said that J D Edwards' focus on supply chain management may take it into target markets where it has not ventured before. What markets are these?

With J D Edwards 5, we are delivering applications with a stronger vertical flavour. For the first time we are prescribing specialised pre-integrated processes across supply chain planning and execution steps, including collaborative scenarios across value chains. For example, although we've always had a strong customer base in consumer packaged goods, we are now delivering strong vertical solutions to this market with J D Edwards 5.

Part of the functionality originated from our local work with the wine industry. We have taken this functionality and made it more widely applicable to other CPG segments. We will soon have a world-class offering for industrial wholesale and distribution that will lead the market.

You've spoken about -integrating diversity". What does this mean?

The pace of change may be old news but it's very real and scary for our customers. Couple this with the range of responses that our customers need to have to the dynamics in their respective industriesâ€"customer initiatives, working capital initiatives, human resource initiatives, even corporate governance initiativesâ€"and you begin to have an understanding of the complexity our customers are facing.

For companies to lead in their industries, they have a constant need to adapt and stay ahead. Consider the underlying technology requirements to support these initiativesâ€"ERP backbone, CRM, SCM, HRM, BI, and so on. Each one is a project. For each project, there are internal and external resources. For each initiative, a technology selection.

Our customers are challenged to act, yet this brings a huge diversity of technologies, applications, vendors, service providers, projects. With diversity comes complexity, and with complexity comes risk and cost.

For managers, minimising risk and cost can be achieved by avoidance and delay. Or they can choose to integrate these diverse activities at several levels. Integrated vision, integrated architecture, integrated data and applications, integrated service provision. J D Edwards is focused on facilitating this process at a product and organisational level.

What size companies do you target with your software products? Is that changing?

We have an incredibly broad range of customers, by type and by size. To us this customer diversity is an asset. We will continue to target large, medium and smaller businesses and work with customers in ways applicable to their business requirements and cost realities.

The big change for us is that J D Edwards is involved a lot more with leading Australian companies. They're telling us they prefer our approach to business.

What is the rationale behind J D Edwards' recent move to standardise on IBM middleware such as WebSphere and DB2? Does it defeat the purpose of using an open standard like J2EE if you tie yourself into one vendor?

The IBM agreement comes from our customers telling us they want J D Edwards to remove technical complexity so they can get more value from our solutions more quickly. Customers also look to us for a single comprehensive solution. The obvious answer is to provide them with an infrastructure that is pre-integrated and shipped with J D Edwards' applications.

Our vision is to deliver simplicity and low total cost of ownership through the J D Edwards 5 open systems platform. All four components of IBM's infrastructure technology will come pre-packaged with our offering. Customers will have the flexibility to deploy all or a subset of the IBM products. The database is optional and can be interchanged for the customer's current database preference.

J D Edwards will be delivering significant value-added functionality in addition to these specific portal and security components, but customers will not be prevented from integrating other infrastructure technologies of their choice. We don't intend to tie ourselves to any one vendor. We will continue to support the J2EE and Microsoft .NET computing paradigms alongside IBM.

J D Edwards now offers a fairly comprehensive suite of back-office applications. Do you think the best-of-breed approach can still be useful in some situations?

In time, the -integrated vs best-of-breed" argument will disappear. Integration is critical to all our customers and they all want access to the best applications. As standards develop further, then the challenge will be for application providers like J D Edwards to offer -verticalised" component solutions that can satisfy discrete business requirements.

In that context, customers will have the flexibility to choose between vendors, perhaps more so than they feel they have today. But organisations may find life simpler by doing business with a provider that they trust, that can deliver the solution components that fit their business requirements and that comply with the integration standards of the day. Many of our customers are happy that J D Edwards meets these criteria.

Is there a trend from straight CRM to more extended relationship management (XRM)? What does it mean for businesses?

There's no question that the top organisations are developing broader vision beyond the walls of their businesses as way of -scanning" for value opportunities. For me this will be a really exciting aspect of business over the next few years. In some ways, we are all just -practising" getting good at CRM, understanding customers and what they want from us. Many organisations are already doing business with their customers' customers. Look at industry verticals like consumer packaged goods and automotive, where the manufacturers establish multi-channel -conversations" with end consumers.

Then there's Supplier Relationship Management and Partner Relationship Management. Ultimately the -X" you refer to becomes anyone who is a stakeholder in the organisationâ€"employees, employees' families, shareholders, communities, anyone really, individual or organisation. As with CRM, it's simply about relationships, facilitated by technology.

About J D Edwards Australia
As one of the top four global providers of enterprise software and services, J D Edwards' solutions are designed to enable collaborative commerce (c-commerce) for businesses.

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