Washington, D.C. -- Emphasizing its manufacturing market strengths and single architectural focus, QAD Inc. today announced major extensions to its enterprise applications suite aimed at simplifying the way globally distributed manufacturers manage their businesses.
At its Explore User Conference here, the company launched Global Enterprise Edition (GXE), (previously known as MFG/PRO version eB2.1), a Service-Oriented Architecture-based platform based on Progress Software's Sonic architecture that is said to help
customers manage distributed instances of their applications running on a common database. In addition QAD disclosed new and enhanced application modules for GXE, including a JIT sequencing software formally released last week, as well as enhancements said to improve the usability of its financial accounting applications, among other updates.
Moreover, QAD launched a new e-learning service aimed at helping customers (on maintenance) to accelerate their mastery of key manufacturing concepts -- such as lean manufacturing -- without leaving their desks.
The crucial deliverable, however, is GXE, which QAD said enables operational flexibility that other ERP vendors, such as SAP A.G. can't match. For instance, customers can have several instances of software that are synchronized using QAD's QXtend middleware; or they can chose to keep local copies of a general ledger application, for instance, in markets such as in Brazil (with specific regulatory and /or accounting mandates) that can later be rolled up to meet corporate reporting requirements.
The announcements are a welcome sign to QAD customers, amid slow but steady consolidation across the enterprise software market, that the Carpinteria, CA software vendor is not only delivering specialized functionality critical to globally distributed manufacturers, but is keeping pace technologically with the competition. "Improved financials is something we were looking forward to," said one attendee in the medical equipment manufacturing business, who requested anonymity.
In fact, company officials reiterated that it is not QAD's ambition to be the largest ERP vendor, but to be the most admired and best for the markets it serves (automotive, consumer products, electronics, medical and food and beverage, among others). "SAP has credibility in delivering financial applications that are complex and serve many industries," said QAD president Pam Lopker. "We're not looking be a generic [player] but to be a leader for global manufactured product companies."
And don't expect QAD to buy competitors -- and their customers -- to build economies of scale. Company officials repeatedly said QAD won't participate in the ongoing roll-up mania any time soon, noting how dilutive it is to development and maintenance initiatives. "We chose three years ago not to particulate when we saw [consolidation] coming and we will not in the future," noted Karl Lopker, QAD's chief executive officer, during his keynote address.
Jumpstarting stagnant growth is something the company hopes GXE, as well as updated functionality and usability enhancements, will overcome. The new SOA and feature upgrades, which were anxiously awaited, should give customers off maintenance additional incentives to re-up, noted Kevin Mixer, an analyst with AMR Research.
"These [upgrades] make it easier for QAD customers to manage off-the-shelf software in a custom environment," he added. "It should also reduce the cost of doing business with QAD."
Revenues in QAD's recently concluded Q4 and year-end fiscal 2005 were flat ($60.7 million and $231 million, respectively), though profits reached a record $23.4 million in the year due to tight management controls and the benefit of a Q4 real estate transaction, the company previously said.
Two things in QAD's favor could pay near-term dividends: it's historically strong cash position (the company has $40 million on its books) and its singular application architecture, which company officials said is a market differentiator. In fact, the company expects to increase software development expenditures beyond the $30 million spent annually over the past few years, Karl Lopker said.
Two long-term development projects -- code named Green and White -- will likely benefit from the increased spending. Project Green will provide enhanced internal controls to GXE, such as more precise audit trails and the ability to provision more flexible and secure account and data access privileges. Built on the Microsoft .Net user interface and driven by its experience helping customers achieve lean manufacturing environments, Project White will deliver enhanced financial accounting, such as smarter evaluations of inventory exceptions and should reduce clerical requirements (e.g., allowing scanned documents to be linked to internal data) and will support the company's shared financial services model.
QAD, however, isn't counting on increased spending alone to keep it a viable alternative to the big ERP vendors -- and their so-called "stack traps." The company, for instance, is considering borrowing a page from the open source industry: inviting customers to contribute their application extensions to future code updates.
"That would increase from 350 to 30,000 developers we have working on our software," Pam Lopker said.
It's initiatives like this that could help the company convert disenfranchised manufacturers struggling with ERP vendor consolidation to consider becoming QAD customers. In fact, the company's middleware allows manufacturers to build a web services architecture to preserve their investment in their existing application code base. The company recently announced a formal initiative for JDE customers.
One QAD prospect at the conference liked what he heard from company executives, but was non-committal on whether his company would be swayed. "It should be interesting to see what they ultimately deliver," he said.