For new J.D. Edwards CEO Bob Dutkowsky, the world is not enough.
Dutkowsky accepted the role two months ago, replacing Ed McVaney, who held the position on and off since 1987. With the release of the software maker’s latest
product, J.D. Edwards 5 — “”Not JDE5, not version 5, not 5,”” insists Dutkowsky — the software maker is trying to shed the OneWorld label it has traditionally used for its products and put the company name front and centre.
That isn’t the only change forthcoming at J.D. Edwards. Dutkowsky says he plans to place a greater emphasis on providing services support for J.D. Edwards 5 and aggressively sell new additions to the company’s portfolio, like customer relationship management (CRM), to longstanding customers.
In an interview with Computing Canada, Dutkowsky explains why he isn’t afraid of being called an ERP company president and the difference between McVaney’s “”vision”” and his own brand of “”pragmatism.””
CC: J.D. Edwards 5 is aimed at large to mid-sized companies. Is this a change in direction from the small to mid-market that Edwards is known for?
Bob Dutkowsky: We have historically been targeted at that mid-market segment. We define mid-market as companies with somewhere between $200 million in sales and $2 to $3 billion in sales. I think the misconception is that J.D. Edwards has tried to upscale or J.D. Edwards has tried to go downscale. Actually, what J.D. Edwards 5 does is solidify the position in the market that we’ve held for 25 years. We’ve been trying to articulate our selected market as mid-market to mid-cap. If you think of us that way, that cuts out the Global 1000 and it cuts out the SOHO (small office/home office), but everything else in the middle is the place where we think our value very much lines up with the customer requirements.
CC: You emphasized enterprise analytics and business intelligence tools in 5. Are you trying to get away from the view of J.D. Edwards as an enterprise resource planning (ERP) company?
BD: There are seven big product families underneath J.D. Edwards 5. They are our historical strengths, like ERP, supply chain management. We added customer relationship management with the acquisition of Youcentric (last year). We’ve always been strong in areas like business intelligence and collaboration and XIP technologies. This isn’t an effort to reposition us anywhere other than where our strengths are. We’re not trying to change our selected markets and we’re not trying to change our selected technologies or the things that our customers have come to know us for. What we are trying to (promote) is the idea that the value that you get when you do business with J.D. Edwards comes from J.D. Edwards. If you think about it, our products used be called things like World and OneWorld. As I talk to our customers, they say, ‘I’m a OneWorld customer.’ I want to get them to say, ‘I’m a J.D. Edwards customer.’ That’s where J.D. Edwards 5 comes in.
The second thing we tried to do with J.D. Edwards 5 is make it easier for our customers to absorb our value. Historically, we asked customers to buy big chunks of our software. We’ve broken up the software into pieces — thus these (seven) families — and now the customer can just buy the family that addresses the business requirements they have.
CC: Canada country manager Bob Pozzobon has suggested that J.D. Edwards could derive half its revenue from services and half from software licenses in the near future. Does that still hold true?
BD: In Canada, that could be realistic. When you look at the company around the globe, though, probably the right balance for us would be 35 per cent license revenues and 65 per cent services. That’s a global statement for almost a US$1 billion company. When you go to Canada, which is a much smaller business for us, one or two customers could skew that off pretty aggressively. Suffice it to say, what our customers are asking us for is flexible integrated technologies, and then the consulting and services support to help them get that return on investment.
We have aggressively ramped up our services business in the last six or nine months. You’ve seen in our (second quarter financial results) that the business has grown very nicely around the globe.
CC: According to the financial results released Wednesday, your software revenue fell 13 per cent compared to Q2 of last year. Is that because you’ve experienced a sluggish ERP market?
BD: I think our software performance is far more indicative of the health of the global economy and in particular the global economy’s (lack of) desire to absorb enterprise software right now. Yes, our results are off 13 per cent, but those are dramatically better than most of our competitors. It’s all relative. The metric that we take great solace in is, from quarter one to quarter two, our software revenues are up 23 per cent. Our ability to get our value in front of the fewer number of customers that are making decisions appears to be strengthening.
CC: A year ago at your annual user conference in Denver, chief marketing officer Les Wyatt said that J.D. Edwards had identified a US$209 billion revenue opportunity over five years. Does that number still stand?
BD: I guess that number’s a little smaller right now. In the last 12 to 18 months, customers have not spent as much money on software and collaborative software as maybe what the projections showed a few years ago. Consequently, the buyer has become far more educated and capable of cutting through the marketing hype and getting to where the real product is. We think the educated buyer plays right into our strength.
CC: Are customers telling you they want to customize solutions more?
BD: I could give you as many answers to that as we have customers. Every customer uses that continuum slightly differently. “”Should I buy it? Should I build it? Should I buy it and modify it? Should I build it and then modify it?”” There’s all kinds of different iterations of that question. What J.D. Edwards 5 is intended to address is the idea that customers can’t take the time to implement huge chunks of software. It’s the old saying: It’s a big bite and a long chew versus a quick nibble. If the customer can take a piece of J.D. Edwards and integrate it into either their legacy systems or implement a piece of J.D. Edwards with slight modifications . . . then they get a return on their investment much quicker. The real question customers ask is not “”Should I buy it or build it?”” it’s “”How quickly can I get a return on my investment?””
CC: How has your CRM business taken off since you bought Youcentric last year?
BD: The product has been very well accepted. It’s been an important criterion in some of the big wins that we had in quarter two. We continue to stay focused on the opportunity in our install base. Less than 10 per cent of our customers have anyone’s CRM installed, so there’s a big opportunity there. Obviously, in the new account marketplace, CRM is important for us in terms of competing there.
CC: How aggressive how you been in trying to sell CRM to your existing customer base?
BD: In Q2 of 2001, 38 per cent of our revenue came from our installed base. In Q2 of 2002, 47 per cent of our revenue came from our installed base. That says we’re being more aggressive in going to our existing customer base. More of our installed base are buying additional applications.
CC: What’s your plan for the company overall? Now that you’ve stepped into Ed McVaney’s shoes, what changes do you plan to make over the next year?
BD: (McVaney) was real visionary in this space and he’s built a company that has done tremendous work around the globe with customers and (J.D. Edwards) has potential to do even more. That was the thing that attracted me to the company: the opportunity to join the team and help the company find a different footing in the global market place. The idea of us having a more comprehensive suite of products is the future of the company. We’ve said that in the next two years, we’ll deliver more functionality to the market than we have in any other two-year period in the history of the company.
I’m not a big fan of visionary kinds of views, I’m a little bit more pragmatic. I want to see the company grow — and grow aggressively.
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