While most of the attention in the integrated business applications market has focused on the potential of Oracle Corp, Baan Co NV, and PeopleSoft Inc to wrestle control from market leader SAP AG, JD Edwards & Co, says Dennis Keeling, a widely respected independent industry consultant, is the one company that could actually do it. With 1996 revenues of $478m, up 40% over 1995, the Denver-based company is the fourth largest business application vendor in the world but, as the only private company in the leading group of players, it is also the least well known. That, however, looks set to change with JD Edwards rumored to be investigating a stock market flotation later this year. As a public company, JD Edwards could be a formidable force. It has already overtaken System Software Associates Inc to become the leading business applications provider on the AS/400 and is now well positioned to seize market share in the burgeoning Microsoft NT market. The company’s OneWorld applications set, based on its configurable network computing architecture, has received much praise since its launch last year. Keeling calls it the most advanced client/server implementation in the world. The key selling point is that the software is truly multi-platform, running identically on the AS/400, Unix and NT. It is also extensively internet-enabled. Despite the technological strengths of OneWorld, the bulk of the company’s business still comes from the legacy AS/400 product WorldVision. JD Edwards is also continuing to develop WorldVision, announcing plans to internet and Java-enable it in April.
Outlook is healthy
The decision to keep enhancing the AS/400 product appears to be a good one. The company has picked up a significant amount of new AS/400 business over the past year – both from rivals and from selling into new AS/400 accounts. In total, the company now boasts 4,100 customers, 623 of which were added last year, in 90 countries. For 1997, the outlook is equally healthy. The company is expected to finish the year with revenues in excess of $650m, equating to a growth rate of close to 40%. But as the company’s power and influence grows, so too will the attention it receives from rivals. Indeed, JD Edwards already seems to be set on a collision course with its larger rivals. With the top tier of the business applications market (organizations with revenues in excess of $500m) becoming increasingly saturated, SAP, Oracle and others have already begun to move into JD Edwards stronghold, the mid-sized business space (companies with revenues between $50m to $500m), creating fiercer competition. There is also the pressure of becoming of a public company. If JD Edwards does float later this year, the company’s executives, will suddenly become subject to the incessant, three-monthly demands of Wall Street. It does, however, have a good track record of growth. According to Ed McVaney, the company’s chief executive, JD Edwards has enjoyed a compound annual growth rate of 50% since inception in 1977 and has never had an unprofitable year.
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