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  Supply Chain Trends and Issues: Our Weekly Feature Article on Important Trends and Developments in Supply Chain Strategy, Research, Best Practices, Technology and Other Supply Chain and Logistics Issues  
 
 
  - Jan. 6, 2014 -  

Supply Chain News: Well-Known Descartes Systems CEO Art Mesher Hangs them Up, for Now

Former CSCMP Distinguished Service Award Winner Led One of Greatest Turnaround Stories in Supply Chain Software History

 
     
     
  by SCDigest Editorial Staff  
     
 

In somewhat surprising news, Descartes Systems CEO Art Mesher announced a few weeks ago his retirement from the post he had held for almost a decade.

SCDigest Says:
Against long odds, Mesher was able to turn the ship around, including famously firing all the company's current salespersons within days of becoming CEO.

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Mesher had made a major name for himself as an analyst at Gartner in the mid to late 1990s, where among other accomplishments he develop the framework of the "three V's of supply chain," which were visibility, velocity and variability. That piece is still very relevant today, some 17 years later.
In the early 2000s, Mesher took a job as head of strategy for Descartes Systems, a provider of EDI, visibility, transportation management systems and other logistics products and services.


Like other companies in that era, Descartes appeared a high-flyer, its stock for a while soaring, while it spent substantial amounts on sales and marketing. Far too much in the end, as it quickly developed significant financial troubles.


In 2004, the then CEO was fired and Mesher was offered the position. It is believed the company at the time was just weeks or even days from going under.


Against long odds, Mesher was able to turn the ship around, including famously firing all the company's current salespersons within days of becoming CEO.


"Art executed one of the most dramatic turnarounds in Canadian corporate history," said Tom Liston Difference Capital Managing Director, who began covering Descartes as an analyst in 2006. "Descartes head $30 million in debt and $30 million in cash and Art was able to restructure the company and build a first class culture of service. We spoke to dozens of customers over the years and the common element was Descartes employees all shared this culture of service and ensured their clients were successful. He led to the company from a nearly untenable position to over $920 million in market cap today."


Key to that transformation was moving to a "recurring revenue" model, in which sales are not made based on a large upfront license payment for software, but rather through a subscription or transaction basis, common today in various cloud or "software as a service" offerings, but not back then.


"We cut 70% of the cost out of the company and built a recurring revenue model. We now have 90% of our revenue as recurring," Mesher said in a 2011 interview. "I removed the whole sales force so that my expenses were equal to my recurring revenue. This changes the behavior of our entire company and the power we have in negotiating with customers. Put it this way: if we fail to sell anything new, what happens? We still break even. Imagine another software company failing to sell anything for a quarter. What happens? They lose a ton of money - because their expenses are not aligned with maintenance revenue."


(Supply Chain Trends and Issues Article - Continued Below)


 

 
 
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Mesher said he was leaving to "due to health and personal issues".

Descartes announced that chief commercial officer Ed Ryan will replace Mesher as CEO.

Mesher told SCDigest he was far from done with supply chain, however.

"I have retired from the public company life and decided to slow down some - not completely but some," Mesher said. "My son said it best: "my dad just likes to help people." So I will do my best to help people."

In 2008, Mesher received CSCMP's distinguished service award, generally recognized as the supply chain industries most prestigious honor. In his acceptance speech, Mesher focused on supply chain's role in making the world a better place.

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