Trip Report: JDA User Conference
I am fresh back from 2+ days at the JDA Software Focus 2012 user conference at the Aria Hotel in Las Vegas.
Before you run off thinking you are not a JDA customer, sit tight. There are a number of things in this column for everyone.
At about $670 million in 2011 revenue, JDA is the largest “best of breed” supply chain focused vendor by a substantial margin. That stature was reached largely through acquisition, notably of what arguably were the two most important BoB supply chain vendors in history, once rivals Manugistics and i2. On the planning side, JDA has a clearly dominant position among large retailers and consumer goods manufacturers, and I think JDA is right that going after that value chain in an integrated way is starting to really pay off, as both sides are “beginning to converge on what the real problems and opportunities are,” as JDA executive Tom Dziersk said in a meeting with press and analysts Tuesday.
"There is growing interest opportunity for retailers and manufacturers to get totally transparent relative to their respective logistics and supply chain costs, and thus find areas for improvement. But how will the gains be shared?"
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I think he is correct. The industry has talked that way for years, but it was never really true. That is starting to change, as both sides realize that they have maxed out many internal paths to increasing profits in developed markets, and can only juice the bottom line from a cost and revenue perspective through working more smartly together.
There is always a bit of ying and yang between whether customers drive the software industry or the reverse, and the reality is it is a little of both. So given its position overall, what JDA is doing matters even if you are not currently a JDA customer.
The environment at the conference was a positive one, with a little more than 2000 people, a very good sized crowd and the largest ever for Focus (though I will note i2’s Planet conference I believe hit six or seven thousand at the height of e-commerce and general i2 mania more than a decade ago - those heady days for conferences are gone forever.). A show of hands at one of the general sessions indicated a substantial percentage of the attendees were attending Focus for the first time - a good sign if you are a software company.
Customers overall, I must say, seemed quite happy. The upbeat mood I think was also due to the recognition that there are some real supply chain challenges that need to be addressed, including in the consumer goods to retail sector new multi-channel commerce pressures, the need to get supply chains more connected to the store shelf (and technology is playing a key role in making that happen), building integrated planning and execution capabilities, the need for true collaboration as mentioned above, etc.)
The biggest news of the conference was JDA CEO Hamish Brewer telling the audience on Monday that JDA was making major commitments to move all of its solutions to the Cloud, and that over the next few years this will become the way JDA will actively push customers to adopt its solutions. The strategy, Brewer said, was in large part due to the substantial efficiencies JDA itself said it has seen from its work in managed application services for some 100 customers where it hosts the software for those companies. Rather than the weeks of time it takes to bring up a system in a traditional “on premise” deployment, JDA can now bring up a system in just some three hours using the Cloud, Brewer said.
A couple of years ago, I predicted that on-demand software would dominate the supply chain landscape by 2015, and a few pundits scoffed at me. I remember one telling me it was only really good for applications, like transportation management, where there was some kind of “network effect” under which shippers and carriers could be integrated in some kind of ecosystem for mutual advantage. Well, there are advantages in that scenario, but the skeptics were wrong that these would be the only areas where on-demand would take hold, for the reasons Brewer outlined: faster time to value, more consistency of delivery, lower costs, easy, automatic upgrades, etc.
The question on the mind of many attendees after Brewer’s announcement, however, was whether this move would also involve a change to the “subscription” type pricing model generally associated with on-demand/Cloud deployment, which wasn’t really clarified in the general session. At the press meeting, Brewer said that the idea was rather to continue to sell these Cloud applications under a traditional license program, which he said is usually cheaper than subscription for customers if they keep the software more than 3-4 years - and he is generally correct about that. But he made clear if a customer wants subscription, they can have subscription. He also made it clear that this wasn’t going to be a “hard left” change - customers will be able to keep deploying on-premise solutions if they want for the considerable future. Conversely, there will be programs for customers to move their on-premise solutions to the Cloud, a path which may be especially attractive for an upgrade.
There is quite a bit to cover here, and not much space, but will do my best. You can also access my video review and comment, which has some additional coverage (see JDA Focus 2012 Video Review and Comment).
Massive airline delays caused me to miss most of the meeting of JDA’s Demand Optimization Council (DOC), but I caught up a bit at dinner and through conversations with some participants over the next two days. The DOC is interesting because it includes a number of JDA’s top retail and consumer goods customers, who talk about overall industry issues and opportunities mostly outside of a software context. Always makes for an interesting and educational day.
I am limited in what I can report, but here are a few tidbits. The head of supply chain for a very large retailer told me he firmly believes the challenges of multi-channel commerce will be disruptive and really separate winners and losers. He agreed with me that the big issue really was technology, and who has the best vision for what technology is needed and how fast and effectively that supporting technology is deployed will be key. I will note separately that, for example, a Macy’s executive said in a breakout presentation that her company had identified 16 separate combinations of where demand will come from and from where product will be fulfilled, which became sort of the blueprint for much of the process and technology they are building.
The DOC meeting also included a discussion that as retailers (finally) start using time-phased order forecasting and sharing that data with suppliers, they feel manufacturers are benefitting from this collaboration, but that this isn’t showing up in price discounts to the retailers. On a similar note, there is growing interest opportunity for retailers and manufacturers to get totally transparent relative to their respective logistics and supply chain costs, and thus find areas for improvement. But how will the gains be shared? These programs also have to be crafted very carefully to avoid issues with Robinson-Patman act and other rules around competition.
I really am out of space, but you can find more info on presentations - such as PepsiCo’s brilliant approach to pre-building models and data templates for supply chain network design, and Kraft’s changing manufacturing strategy to focus on production leveling and fixed schedules (very interesting) - on the video and in coming articles from SCDigest.
In a company running on all cylinders I see two business challenges for JDA: (1) how the company navigates this important migration to a full on-demand approach (though its history of how it has handled its acquired companies shows it has managed this somewhat related challenge in a customer-centric way), and (2) how it will allocate product development, sales, marketing/messaging, and other resources towards the consumer goods to retail value chain that is the company’s core relative to the high tech and other more industrial sectors (largely coming from the i2 customer base and focus areas). There is no right answer here - these are just the kinds of business decisions all software companies have to make. It will be interesting to see how this plays out.
Finally, JDA had a minor technical glitch near the end of an otherwise interesting demo during the Day 1 general session (note to self and others: remember live demos, especially if using wireless in convention hall, is risky business) relative to... Wait, never mind. I just remembered that even in supply chain, what happens in Vegas stays in Vegas.