Today, JD Edwards is thought to have cornered somewhere between 15 and 20 percent of the South African ERP market, and is second only to SAP, which currently enjoys a market share of more than 40 percent. The ERP company`s investment in the country paid for itself within 18 months, says Simon Griffiths, national marketing and alliances manager at JD Edwards SA.
The South African subsidiary contributes around two percent of the multinational`s revenues in an average year, although its contribution in some years has been significantly higher, he adds.
Good timing accounts for at least some of JD Edwards`s good fortune in South Africa. The company entered the market just as it started shifting from its AS/400 base into the open systems world, and many of the South African customers its former distributor won in the eighties and nineties were preparing to make the same move.
Another factor that helped was the presence of fewer competitors slugging it out for dominance than in US or European markets.
In South Africa, even large companies compare to what Europe or America know as medium-sized companies, at best. This is particularly well suited to JD Edwards`s strengths in the mid-range market.
While some end-users have awarded large ERP deals in the past two years, such as the City of Cape Town`s R300 million SAP implementation, the average deal is smaller than it was five years ago.
Snatching deals
That suits JD Edwards fine: the company is confident of strong growth going well into the future as the low to middle end of the South African market starts to look for ERP solutions. “We also believe there are many opportunities left for us in the higher end of the market,” says Griffiths.
And, as more South African companies put ERP backbones in place, more opportunities will arise for JD Edwards to sell its supply chain management (SCM) and customer relationship management (CRM) products, he adds.
Although JD Edwards is thought of as a mid-range supplier in South Africa, it has on more than a few occasions surprised rivals by snatching deals from them at top-tier clients such as
The South African subsidiary`s priorities for the next two years include a drive to increase its revenues from services. JD Edwards has doubled its South African headcount over the past year, mostly in an effort to bolster its consulting business.
“In the past, we`ve acted mostly as a sales, marketing and support office, but we have grown our services business in line with an international strategy. That doesn`t mean we no longer have business partners,” Griffiths says.
Customers are looking for more direct involvement from their vendors in ERP projects, and JD Edwards is meeting their expectations, adds Griffiths. Most of JD Edwards SA`s direct engagement with customers hones in on areas such as high-level project management and emerging applications such as SCM and CRM, leaving much work for the channel to do.
“People shouldn`t be surprised – it is just one of the signs of the market maturing. It`s a fact of life that more vendors are increasing direct business. We are not looking to do 10 out of 10 engagements,” says Griffiths.
Although the company is more or less on track with its employment equity plan, it does admit that finding black staff and resellers with skills in its software is difficult.
“This is complex software, and skills are rarely transferable between one product and another. It`s not just the technology – it`s also about knowing how to speak to the customer in his space, so we need people who have a mixture of JD Edwards and vertical industry experience,” says Griffiths. “We have engaged with black economic empowerment (BEE) resellers on various projects, and we`ll accelerate that in the coming months.”
JD Edwards has won several deals in the public sector, such as the rollout of systems for the Durban Metropolitan Council, Umgeni Water, the Medical Research Council and Nala Muncipality. Griffiths says it has worked closely with BEE resellers in each of these deals.
Model outpost
To date, JD Edwards SA has outstripped most of its parent company`s expectations in terms of growth, revenue and profitability. For that reason, the South African operation is being used as a model subsidiary as the company seeks to transform itself from a US-based company with offices in other parts of the world into a truly international company. So says Victor Chayet, corporate communications director at the JD Edwards headquarters in Denver.
He says the company staffs each of its global subsidiaries with local people, rather than expatriates. The company has different pricing strategies for emerging and developed economies to ensure its product is affordable for customers in countries with weaker currencies.
“We think our distance away from Silicon Valley is a good thing because we`re less obsessed with flavour of the month technology,” says Chayet. “We don`t shy away from a fight, but this is not a pressure cooker. We pride ourselves on not surprising our peers and customers.”
That same work ethic is evident in the South African office, which JD Edwards has recognised as its global subsidiary of the year for three years running.
“South Africa is a microcosm of the global culture. It has a cohesiveness that is unusual in a remote office,” Chayet says.
And JD Edwards, for its part, has a global orientation that is unusual among American software companies.
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