Oldest name in manufacturing ERP acquires one of the newest

Mapics, one of the oldest names in manufacturing ERP, is to acquire loss making Frontstep, formerly Symix, one of the newest – to create one of the largest mid range extended-ERP system providers in the world, and with a wide spectrum of systems and platforms and over 10,000 customer sites globally. The deal is expected to close during the first quarter of 2003. Combined annual revenues are more than $200 million (Mapics $128.3 million to September 30, 2002, and Frontstep $92.6 million), and Mapics is on record as one of the few showing profitability for the last two years. Terms of the deal include 4.2 million shares of Mapics’ stock for all outstanding Frontstep shares (0.30 Mapics shares for each Frontstep share). Mapics also assumes up to $21.5 million of Frontstep debt. Details in terms of products and services from the two in the future remain sketchy, but Dick Cook, Mapics’ president and CEO, says: “Offerings from both organisations [will] be marketed under the Mapics brand.” However, he also talks about building on “the investment Frontstep has made in delivering SyteLine 7 on Microsoft .NET,” so for now we can assume continued development and certainly support of the existing ranges. Ultimately, there is bound to be rationalisation. It is curious, for example, to note that Mapics, which had been a Pritsker APS (advanced planning and scheduling) system user until its acquisition by Symix at the time – and then itself bought Pivot Point with its ThruPut APS – now also owns the Pritsker technology. While it might be argued that different approaches to APS technology (ie: different algorithms) are applicable in different circumstances and industries, it is highly unlikely both will benefit from Mapics’ R&D resources. And it is fair to say that there is considerable overlap, both in terms of technologies/application offerings and geographies – which are bound to lead to head count reductions as Mapics looks for economies of scale and opportunity from its enlarged customer base. In the UK, for example, OBS (Open Business Solutions) is the preferred VAR, but with Frontstep’s own organisation in Birmingham some manoeuvring seems inevitable. As for products, Syteline ERP, now at v5, is Frontstep’s flagship suite spanning the whole manufacturing business bit, and including project control and financials. Key add-ons cover: product configuration, APS, business intelligence, workflow, with business process definition and execution and business process modelling. Beyond this, there’s: SyteDistribution for distributors, with obvious coverage; Frontstep Front Office for employee and customer self-service over the web with integration to various ERP systems (including CRM and sales force automation functionality); and Active Link for application integration, business process automation and collaboration. Other modules include Web Configuration for the product and sales order configuration, and Advanced Pricing. And there’s considerable software for supply chain management. Key modules include Intelligent Sourcer, Point Promiser (the promising engine for ATP collaboration across suppliers), Capacity Promiser (for cross supply chain capacity promising) and full APS, which extends to cascading supply chain synchronisation. But Mapics already has its ‘ERP for iSeries’ and ‘Mapics ERP for Extended Systems’ (the latter on Windows NT/2000, Unix and Linux), as well as substantial software ‘components’ that span the two and take them out to supply chain interaction and some product lifecycle (PLM) coverage. Both these systems now link to partner-provided suites for CRM (customer relationship management from Cameleon), manufacturing management, (schedule, make, pick, pack and ship), PLM (from Majic and including levels of product data management, multimedia data attachment, integrated workflow, enquiries, etc), and financials and business analytics. There’s also: full APS (as described); maintenance and calibration management software for automated plant asset management; and what’s termed ‘collaboration process management’ software via the Mapics Portal, linking in customers, suppliers and partners via the web. Says Stephen Sasser, Frontstep’s president and CEO: “This combination of two very seasoned and successful companies creates a financially stable business that has the strength and resources to continue to support the customer base while investing in enhancements and new product innovation. Both current and future customers will benefit from our proven solutions, manufacturing expertise and employee talent.” And analysts concur. As Dwight Klappich, senior programme director of Meta Group, says: “Mapics’ acquisition of Frontstep strengthens their organisation by bringing together two established manufacturing-focused software companies that can now leverage a large combined customer base with new sales channels and complementary offerings. “The manufacturing software market has historically been very fragmented, and market consolidation has been anticipated for several years. Companies, especially mid-market manufacturers, now rank vendor viability very high on their list of evaluation criteria.” Cook presides over a company that had been relegated to ‘legacy land’ by many commentators, but which has in recent years rebuilt its technologies and its implementation partners, and thus rebuilt an impressive customer base – and retained profitability and security while doing so. This is a company that will continue to strengthen. As Alain Gauthier, European vice president, says: “This operation will give to the combined company a tremendous opportunity to capture new markets.”