Manugistics CEO: Best Time To Invest In IT Is Now

During the company's Envision 2002 user conference, CEO Gregory Owens and former GE CEO Jack Welch stress the need for continued investment in IT despite the economic downturn.

InformationWeek Staff, Contributor

May 6, 2002

3 Min Read

SAN DIEGO--Manugistics Group Inc. unveiled Monday the latest version of its integrated suite of business-management and analytical software as CEO Gregory Owens urged customers at the company's Envision 2002 conference to think of the current economic downturn as the best time to invest in technology. Owens also revealed the acquisition of privately held Western Data Systems.

"This is going to significantly enhance our position in government, aerospace, and defense," Owens said of the acquisition during his keynote. WDS, headquartered in Calabasas, Calif., makes service and parts-management software for the aerospace industry and had $28 million in revenue last year. Financial details of the stock and cash deal were not released. WDS customers include Boeing, Lockheed Martin, Northrop Grumman, and BAE Systems.

Manugistics' business applications suite includes supply-chain management, supplier-relationship management, service and parts management, and pricing and revenue optimization. With Manugistics 7, a Web-based portal framework has been added as the user interface for underlying applications and a workflow engine for moving forms, documents, and files among managers and project team members throughout an organization.

The upgrade supports emerging Web services standards--Soap and XML--for accessing and aggregating data from multiple data sources. Soap, or Simple Object Access Protocol, is often used as a standard communication protocol for requesting and receiving data in portals through XML. The two technologies sometimes simplify the process of connecting to business applications through a corporate portal.

Investing in IT now to reduce costs and boost productivity can improve a company's position when the economy rebounds, Owens said. To bolster his argument, Owens led a question-and-answer session with Jack Welch, the former CEO of General Electric Co. Welch, who led GE for 20 years, said the economy is cyclical, and the time to gain advantage over competitors through the use of better technology is during tough times. "Technology drives productivity, and productivity drives the wealth of the nation," Welch said.

Welch accused the media of failing to keep the sluggish economy and recession in perspective. Even the Enron Corp. debacle was handled poorly by the press, which treated the downfall of the once high-flying energy company as if it were unique from other financial scandals, such as the savings and loan crisis of the 1980s, Welch said. "There are some bad apples. But bad apples aren't new. Get it in perspective," Welch said, claiming the media reacted to Enron out of embarrassment. "They're all angry about Enron, because they got fooled," Welch said.

In giving advice to corporate execs, Welch focused on the importance of generating passion and excitement among employees. He also stressed the importance of candid, straightforward appraisals of workers' performance. "If you tell them they're in the bottom 10%, they often won't have a problem," Welch said. "They'll find a place that's right. They'll move on." On the other hand, companies need to let top performers know they are the best and reward them accordingly.

Welch also stressed the need to build loyalty by giving customers something they can't get from the competition. "You have to find a way to keep that customer tied to you, because commoditization in the Internet world is suicide," Welch said.

Owens tried to get Welch to endorse Manugistics' analytical software, which helps customers find the best price for products based on the overall market, individual customers, cost of production, and other factors. Even though GE is a Manugistics customer, the retired Welch didn't exactly give a ringing endorsement, acknowledging that he knows very little about software. "I have no idea if this stuff works," Welch said, getting a laugh from the audience.

For the fourth quarter ended Feb. 28, Manugistics reported its third straight quarterly loss as software sales dropped 23%. The company posted a net loss of $25.1 million for the period, compared with a net loss of $16.7 million a year ago. Revenue fell 10% to $80.9 million. Quarter to quarter the company showed improvement, reporting a 17% revenue increase, which executives say came at the expense of rivals SAP and i2 Technologies Inc.

Never Miss a Beat: Get a snapshot of the issues affecting the IT industry straight to your inbox.

You May Also Like

More Insights