Pandesic LLC, the SAP/Intel e-commerce joint venture, has been suspiciously silent since the company made its first product splash at SAP’s Sapphire User Conference in September 1997. Following the resignation of CEO, Bryan Plug, in March last year over a ‘difference in corporate strategy’, the company has been redefining corporate objectives. We’ve been a little quiet, admits Pandesic president, Pete Wolcott, It’s taken us a few months to figure out precisely what we are and what we do.
Pandesic has now resolved these issues, according to Wolcott. The company has itself a cohesive strategic vision and a new release of its eponymous e-commerce suite, Pandesic 3.0, which will be launched today. Furthermore, some of the problems that have haunted it in the past are gradually disappearing. Pandesic has defined its target audience and is now trying to deliver that message to the market. We were finding that a lot of SAP customers wanted to talk to us. But our business model is targeted at a different market. We want to find new R/3 customers because we are geared up for the SME [small and mid-cap enterprise] marketplace… We want to take R/3 downstream, says Wolcott.
The assumption that its products are aimed higher up the food chain is perhaps an easy mistake to make. Pandesic, after all, uses R/3 as its e-commerce backbone and a monolithic application the size and complexity of R/3 is traditionally associated with enterprise accounts, rather than small to mid-sized operations.
Furthermore, customer confusion is more likely to occur when a joint venture is funded and staffed by two companies with radically different corporate cultures and target markets, as is the case with Pandesic. Ex-CEO Plug came from the German ERP stable, and for him an expansion into Europe and a move to secure larger corporate deals would have been a far more natural direction in which to lead the company. (In fact, this time last year international expansion was firmly fixed on the corporate agenda.)
But that has all changed. Wolcott, who seems to have taken charge of running the company in the absence of a CEO, is trying to keep the company focused on closer shores. As an ex-Intel man he is in a better position to attack the small to mid-sized marketplace in the US. And it is a market he is knows well. By virtue of his Intel Server/PC background he has considerable experience with SMEs. We need to get results, and we need to get results here in North America, he told us.
However, this task is proving easier said that done. Pandesic has found a mere 40 customers in its 17-month history and only half of these have gone live; the rest are still at the implementation stage. With an average deal size of $25,000 for the Pandesic hardware/software combination, it could be argued that Pandesic has priced itself out of the market. How many $10 million companies would want to spend $25,000 at the very least on software. And may be as much again on integration just to get their e-commerce system up and running? (The $10 million-100 million company revenue segment is the one it is trying to attract.) And the expenses do not stop there. Pandesic asks for anything between 1%-4% of customers’ monthly e-commerce revenues -which can only be an added disincentive. The installation of a Pandesic e-commerce system also requires a company to rip out its back-end system and install R/3, and not every company would necessarily want to standardize on R/3.
Pandesic’s argument is that customers need a clean slate to implement a complete e-commerce system – and that it alone can provide a complete suite of e-commerce products plus services. The alternative is the piece part offerings made by other vendors in this space. And there is some truth to this. Pandesic is regarded as delivering one of the most complete e-commerce systems out there today. Unlike most other e-commerce vendors, Pandesic does provide ‘one stop shopping,’ offering a comprehensive, self-contained solution that usually requires little tailoring. It is also based on well-know and trusted components, including Intel servers from Compaq, Microsoft’s Windows NT and Commerce Server and SAP R/3, argues Tom Welsh, a ComputerWire analyst and lead contributor to ComputerWire’s Inter/intranet Tools Bulletin.
Pandesic also claims that the system does not share the legendary implementation times associated with R/3 and can be installed in weeks rather than quarters owing to the fact that it has been heavily tweaked by both SAP and Pandesic. And with Pandesic 3.0 the company has broadened its e-commerce focus to provide more user flexibility. Release 3.0 has a customer service module to help with customer credit issues and facilitate faster searches for customer names, and a credit module to enable customers to be pay credit each month.
However, for Pandesic to get back on track it is going to need more than product improvements. A cohesive strategy and a strong focus are vital to build a customer base, generate revenues and achieve profits. It will need to make some headway in marketing itself behind a single, unambiguous sales message before it sees any upturn in incomes.
