JBA Holdings Plc, the beleaguered UK-based ERP vendor, has been forced into a major retreat just as the big players such as SAP AG move down into the SME sector that is its core market. The company has pulled out of high-end ERP operations and is to focus on four vertical markets that currently account for about 60% of current revenue. It claims the move will reduce annual costs by roughly 5m pounds ($7.8m) with a one-time cost of 800,000 pounds ($1.2m) for staff cuts.
The spin JBA is putting on the move is a return to its roots, as it always concentrated on the mid-market and was only tempted up- market by the huge growth in demand for ERP solutions by large companies in the mid-1990s. The result was an over-stretching of the business, which increased volumes and costs but did not deliver the margins required for profitable operations, the company admitted.
JBA now plans to focus on its strong position in apparel and footwear, food and drink, automotive components and the electronics industry. However, it is consolidating in the SME sector at the very time that the heavy hitters are attacking this market. JBA boasts that the mid-market is predicted to grow at a rate faster than the big corporate sector – precisely the reason why competitors are attracted to it.
A run of setbacks have reduced JBA’s credibility on the market and the one factor giving any buoyancy to its share price is that such a weakened company, with a substantial base of customers, is an ideal takeover candidate for a big ERP player looking for a quick way to increase market share.
