Ed McVaney, the softly spoken CEO of JD Edwards, is no smooth marketing supremo. His description of the JD Edwards culture is characteristically blunt: We’re reliable, we’re stable, we’re very, very conservative it’s almost boring. Despite this modesty, 1997 was an exciting year for JD Edwards. After 20 years in private ownership, it completed its initial public offering last September, raising $417.9m. The IPO, say some analysts, was long overdue. After all, as McVaney points out, the company enjoyed a compound annual growth rate of 50% since its 1977 inception, and had never had an unprofitable year. The move to public status was so smooth, says McVaney, We hardly missed a beat. The company’s results for fiscal 1997 reflect continued steady growth. Net profits rose to $22.8m from $18.2m a year earlier, and revenue increased 36% to $647.8m. McVaney says the outlook for 1998 is also promising. As a major supplier of applications software for IBM’s midrange AS/400 server, JD Edwards is well-established in the mid-market. But as SAP AG, Baan NV and PeopleSoft International Inc begin to focus on such customers, competition will increase. McVaney says he is unperturbed. JD Edwards, he says, has an established sales model and a proven track record in the mid-market that the giants do not. However, the company is not taking any chances. In the past 18 months, it has extended its offerings beyond the AS/400 to embrace open systems and the growing Windows NT market. It now has highly-rated open systems technology in the form of its OneWorld package, but has yet to make much impact in terms of sales. In the first financial quarter of 1998, 90% of license fees still came from the AS/400 platform. But there are signs of progress. At the end of the quarter, the company had about 26 ‘live’ reference sites using OneWorld, up from six at the end of the previous quarter, according to merchant bank BancAmerica Robertson Stephens. JD Edwards is by far the most successful vendor in making the transition between the AS/400 and open systems. Other companies in the mid-market JBA, Marcam and SSA, for example have all fallen on their swords, says McVaney. But whether or not JD Edwards has the strength to compete head-to- head with the ERP giants outside its AS/400 stronghold remains to be seen. Computer Business Review.
