J.D. Edwards Trims Workforce, Drops Hosting Plans

SAN MATEO (05/23/2000) - Middle-tier ERP (enterprise resource planning) provider J.D. Edwards & Co. said yesterday it will cut its global workforce by 800 as part of a reinvention of itself as an e-business. The company also has decided against providing hosting services for business-to-business trading exchanges as some of its competitors are doing.

The layoff, which will hit hardest its operations in Germany and Japan, is an effort by J.D. Edwards to get its costs in line with its revenues, said C.

Edward McVaney, J.D. Edwards president, CEO, and chairman.

Saying "this was a very tough but very necessary decision," McVaney said that those idled by the layoffs would get outplacement training. The goal is for J.D. Edwards to become "more nimble and responsive to market changes," he said.

During the first six weeks of his return to J.D. Edward's, McVaney said it has become "very clear to me that our key to success is Internet e-business."

Even though the ERP software vendor has experienced a 20 percent jump in software license revenues during the first half of the current fiscal year, the surge was not enough to keep up with the company's cost structures, McVaney said.

Further layoffs are not expected because the elimination of these positions has re-set cost structures to conform with revenues, which will pave the way for a return to profitability, J.D. Edwards officials said. The vendor also will be taking advantage of computer-based training alternatives for customers, cutting back on office space and other overhead expenses, officials said.

In another move, J.D. Edwards has decided not to provide hosting services for business-to-business trading communities, an idea that had been considered by its executive management, said company officials.

"That's not our business; not our cup of tea," McVaney said.

However, J.D. Edwards will continue to offer the software needed by businesses to establish and work with business-to-business exchanges, said Gayle Sheppard, vice president of the JDe.sourcing division. "[But] we're not going to be a trading exchange," he said.

The decision will not affect the vendor's other application hosting services, which will continue for an array of offerings including its staple ERP software as well as its supply-chain and knowledge management applications.

The layoffs will not affect J.D. Edwards' customer support department, which might get a staff increase, officials said. J.D. Edwards also hopes to garner savings from using its e-procurement solutions. The company's ultimate aim is to become an efficient, agile organization.

Alliances with major players such as Siebel Systems and Ariba are going to stick, according to McVaney. These arrangements will fit in well with J.D.

Edwards view that "e-business will be heterogeneous," McVaney said. "We want to allow customers to implement their ideas as rapidly as possible."

J.D. Edwards & Co., in Denver, is at www.jdedwards.com.

Eugene Grygo is an InfoWorld senior editor.

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