J.D. Edwards & Co.'s acquisition of customer relationship management vendor YOUcentric Inc. stands to benefit customers of both companies, though the J.D. Edwards sect will have to wait a little longer than their YOUcentric counterparts to reap the rewards.
The US$86 million cash and stock deal announced last month gives YOUcentric customers something to bank on right away: Vendor viability. For privately held YOUcentric, with its 35 customers and 2000 revenue of $16 million, survival was uncertain in the crowded CRM market.
"On its own, YOUcentric had limited resources in a highly fragmented market," said Gartner analysts Yvonne Genovese and Wendy Close in a recent research report. The company needs J.D. Edwards' cash assets and the sales opportunities presented by its 6,000-strong installed base - one-third of which have expressed interest in acquiring CRM technology within two years, according to the J.D. Edwards-sponsored research.
FedEx implemented YOUcentric's sales force automation tools last year. Scot Struminger, vice president, corporate headquarters systems at FedEx Services, views the acquisition as an opportunity for the companies to bolster product development. "The FedEx - YOUcentric relationship has been a strong one, and the merger with J.D. Edwards has the potential to add the needed capital investment to propel the application to the big leagues," Struminger says.
For J.D. Edwards, YOUcentric will fill a gap in its software lineup, which is strong on enterprise resource planning (ERP) and supply chain management (SCM) but not CRM. Specifically, the YOUcentric deal will provide J.D. Edwards customers with sales force automation, call center and marketing applications, as well as wireless capabilities.
Those features interest Grant Schwartz, who is corporate director, information technology at Drug Trading Company Limited, a retail pharmacy services company headquartered in Ontario, Canada. The company is in the process of implementing J.D. Edwards' financials, sales order, inventory, distribution and procurement applications, as well as its manufacturing and customer service suites. Schwartz said Drug Trading would consider adding CRM to its arsenal of J.D. Edwards software, once the integrated YOUcentric product is available.
J.D. Edwards "has a proven track record of selecting 'best of breed' and we feel this acquisition is no different," Schwartz said.
YOUcentric's hallmark is its 110 Java-based CRM components, which users assemble as needed. While packaged CRM applications typically require enterprises to load and maintain customer data within the application, YOUcentric lets enterprises map CRM functionality to pre-existing back-end databases.
This data model is one major reason J.D. Edwards was attracted to YOUcentric, says Dave Siebert, vice president of J.D. Edwards' WorldSoftware division. The company considered 10 different CRM companies and settled on YOUcentric in large part because of its flexible architecture, which would allow the companies to quickly integrate product lines, according to Siebert. J.D. Edwards estimates preliminary product integration will be completed by year-end 2001, with integration continuing over the next 12 to 18 months.
Prior to the YOUcentric acquisition, J.D. Edwards relied on a reseller agreement with Siebel to deliver CRM functionality. In a conference call detailing the YOUcentric deal, J.D. Edwards executives said Siebel's product was too complicated for the mid-market. Not surprisingly, the two companies have terminated their 18-month old reseller agreement.
From a competitive standpoint, the YOUcentric deal could give J.D. Edwards the functionality it needs to go up against vendors such as SAP, PeopleSoft and Oracle that offer CRM, SCM and ERP software. It puts the vendor ahead of pure SCM vendors such as Manugistics and i2.