From a series of articles on the leaders in the business applications software field originally published in Computer Business Review, a sister publication.
When Michael Quinlan, a former IBM Corp executive, took over from Paul Margolis, co-founder of Marcam Corp, as chief executive of the manufacturing and planning control specialist in early 1996, he said his primary goal was to return the company to solid growth. To that end, he immediately embarked on a restructuring process, with the aid of a $10m investment from General Atlantic Partners, selling off non-core parts of the business. Following the shakeout, Marcam, which claims over 15,000 sites for its products, is left with four main products Mapics, the discrete manufacturing package acquired from IBM in 1995, Prism, a home- grown process manufacturing suite, Protean, the highly praised, object-oriented successor to Prism, and Avantis, an asset management suite.
One sector specialists suffer
But, as the market has moved towards integrated business applications, covering financials, manufacturing, human resources and distribution, companies such as Marcam, which specialize in only one sector, have suffered. Despite the fact that the company claims a 20% share of the manufacturing market, Marcam’s revenues were virtually static in 1996 at $201m, and the company continued to struggle with profitability, reporting a $26.3m loss compared to a $34.4m deficit the year before. To try and overcome the constraints of its niche, in 1995 Margolis set up the Open Applications Group OAG designed to develop specifications to allow interoperability between different vendors’ applications and to encourage users to buy ‘best of breed’ applications. Last June, on the back of the OAG, Marcam signed a deal with financial specialist Coda to create close links between the two companies’ products, as well as taking steps to integrate its products more closely with those of SAP AG and PeopleSoft Inc. Analysts argue, however, that the OAG is making little headway and its scope is limited. Certainly the company’s second quarter results showed little improvement. Revenues were down from $47.4m to $43.8m, coupled with a net loss of $5.3m. However, product license revenues were up 18%. Even an 18% rise is still significantly inferior to the growth being demonstrated by many of the company’s key rivals, so, in April, the company announced a radical plan to split Marcam into two separately traded companies – Mapics Inc, targeting discrete manufacturers, and Marcam Solutions Inc, focusing on process manufacturers. The aim is to execute a $75m public share offering of Mapics and to spin off to Marcam stockholders the portion of the business relating to the company’s Prism, Protean and Avantis product lines. The move is expected to be completed by September. Quinlan’s hope is that, by separating the process and discrete portions of the business, Marcam will re-discover its dynamism and return to profit. But while there is a lot of praise for Marcam’s products, and particularly for Protean, it looks set to remain, at best, a niche supplier. And the split heralds Marcam’s disappearance from next year’s top 20.
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