Pushing for consistent profit growth, J.D. Edwards & Co. is shifting its focus to supply-chain management offerings and launching a reorganization that will slash US$75 million from its operating costs over the next 18 months.
J.D. Edwards, which once focused almost exclusively on ERP (enterprise resource planning) solutions, will be honing its focus on supply-chain planning solutions, which now account for 45 percent of the company's total revenue, compared to making up only 25 percent of its sales for the fourth quarter last year, company officials said.
"We're competing head to head with i2 [Technologies Inc.] and Manugistics [Group Inc.] and winning consistently," said Glenn Tubb, senior vice president of product development at J.D. Edwards. "We have that complete integration with our advanced planning engine. We have a very strong fulfillment engine tied with a very strong optimization engine."
As part of the cost-cutting measures, the company is consolidating sales regions and eliminating 10 percent of its vice president positions, according to Hank Bonde, new COO at J.D. Edwards, in Denver, Colo.
In addition, J.D. Edwards will be eliminating three management layers separating its customers from its senior level management as part of a plan to offer customers better support, Bonde said. Despite this news, Bonde said he does not expect the company to have "widespread layoffs," adding that 50 percent of the cost cutting will result from operating efficiencies resulting from CRM (customer relationship management) and automated procurement. The company is also splitting its consulting services division from its field sales division to boost sales, Bonde added.
The software maker has struggled with posting a consistent profit, posting net income losses for the first three quarters of 2000 and for the year. In addition, the company announced this past October that it would shelve its ASP (application service provider) business less than a year after launching the hosting division.
J.D. Edwards' reorganization details follow official release of first quarter earnings. Revenue for the first quarter of fiscal 2001 was US$217 million, compared to revenue of $231 million in the first quarter of fiscal 2000. The company posted a net income of $191,000 for the quarter compared to a net loss of $31,000 in the first quarter of 2000.
"There are several opportunities associated with driving more revenue," Bonde said. "We're spending more of our resources on what's important to customers: product development and customer support. It's back to the common vision of providing collaborative solutions for our customers."