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P4875 JDEC - JD Edwards Product Market Strategy: Making It Actionable, Discussion Document

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Government Exhibit P4875

LAN010531003-18001-824

Layout the roadmap for ? Communications, Prep for ? - avoid detailed tactics.

CONFIDENTIAL

JD Edwards Product Market
Strategy: Making it Actionable

JD Edwards logo

Discussion document

May 31, 2001



This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from McKinsey & Company. This material was used by McKinsey & Company during an oral presentation; it is not a complete record of the discussion.

JDEC-01-030440

SUMMARY OF TODAY'S DISCUSSION

  • In our last discussion, we recommended that JD Edwards aggressively focus on their historical core mid-market business segments to become a $2.5 billion-4.5 billion company by 2005
  • To reach this target, JD Edwards should further focus within the core, create a compelling marketing plan, and reallocate and improve productivity of resources
    • JD Edwards should further focus on "sweet spot" accounts in specific business segments/verticals within the $500 million-3 billion range to focus JD Edwards' constrained resource pool
    • JD Edwards should then create a compelling marketing plan targeted at these verticals, including value propositions, product and service bundles, and appropriate marketing vehicles
    • JD Edwards should then use these marketing programs to reallocate sales, product development and consulting resources to align against the opportunity, as well as improve productivity to achieve a competitive cost structure
  • To execute this strategy, JD Edwards should develop detailed action plans and begin executing across marketing, product development, sales, and consulting

JDEC-01-030441

LAST DISCUSSION, WE RECOMMENDED THAT JD EDWARDS FOCUS AGGRESSIVELY ON ITS HISTORICAL CORE MID-MARKET BUSINESS SEGMENTS

Table showing business segments and company size based on revenue[D]

Source: JDE financial data; McKinsey analysis

JDEC-01-030442

FOCUSING ON THESE SEGMENTS COULD RESULT IN REVENUES BETWEEN $2.5 BILLION AND 4.5 BILLION BY 2005 Conservative and Agressive. Cannot differentiate between them

Bar charts of revenue forecast when focusing on core mid-market segments[D]

Source: JD Edwards financials; customer interviews; McKinsey interviews; AMR; McKinsey analysis

JDEC-01-030443

SINCE OUR LAST DISCUSSION, WE FOCUSED ON THREE ISSUES

  1. Further define JD Edwards core mid-market "sweet spot" in terms of company size and target verticals
  2. Frame necessary changes to marketing, including value proposition, product/service bundles and pricing
  3. Define the implications for resources, skills, and productivity required for
    • Sales
    • Product development
    • Consulting

JDEC-01-030444

SUMMARY OF TODAY'S DISCUSSION

  • In our last discussion, we recommended that JD Edwards aggressively focus on their historical core mid-market business segments to become a $2.5 billion-4.5 billion company by 2005
  • To reach this target, JD Edwards should further focus within the core, create a compelling marketing plan, and reallocate and improve productivity of resources
    • JD Edwards should further focus on "sweet spot" accounts in specific business segments/verticals within the $500 million-3 billion range to focus JD Edwards' constrained resource pool
    • JD Edwards should then create a compelling marketing plan targeted at these verticals, including value propositions, product and service bundles, and appropriate marketing vehicles
    • JD Edwards should then use these marketing programs to reallocate sales, product development and consulting resources to align against the opportunity, as well as improve productivity to achieve a competitive cost structure
  • To execute this strategy, JD Edwards should develop detailed action plans and begin executing across marketing, product development, sales, and consulting

JDEC-01-030445

JD EDWARDS MUST FURTHER FOCUS ITS DIRECT RESOURCES — AS IT CANNOT COVER THE ENTIRE CORE MID-MARKET

Number of companies between $25 million-1 billion
Bar chart showing number of companies at 100%=181,500		 Number of companies JD Edwards could cover given 277 current AEs

Bar chart showing number of companies[D]

 Arrow pointing right How should JD Edwards target their limited sales resources?

Source: Dun & Bradstreet; McKinsey benchmarking

JDEC-01-030446

THERE ARE ADDITIONAL BENEFITS TO FOCUS

  Focus means... ...which results
Sales
  • More targeted sales coverage
    • Fewer segments verticals to know and sell to
    • Simpler value proposition to sell
    • Fewer relevant products to know and sell
  • More proactive vs. reactive sales (e.g., named accounts)
  • Increased efficiency
    • Simple, more efficient training
    • Higher win/loss ratio
  • Increased sales
    • More effective, skilled sales people
    • Higher prices (fewer competitive RFPs)
 
Marketing
  • Simpler, easier to understand marketing messages (i.e., one value proposition)
  • More focused marketing spend across fewer verticals
  • Increased sales
    • Higher overall brand awareness
    • Increased effectiveness of targeted marketing dollars
 
Product development
  • Fewer vertical-specific products to develop
  • Less customization required given single mid-market value proposition
  • Less QA, given similar problems across customers
  • Increased efficiency and sales
    • Products with a better feature/functionality match
    • Increased investment in new product development with redeployed resources
  • Faster time to market
 
Consulting
  • More targeted consulting coverage
    • Fewer segments/verticals to learn
    • Fewer products to know
    • Simpler value proposition to learn and sell
  • Single set of similar business partners
  • Increased efficiency
    • Simple, more efficient training
    • Higher utilization, less ramp up time
  • Increased sales
    • Simpler customer story

Acquisition ?

JDEC-01-030447

TO ACHIEVE THIS FOCUS, JD EDWARDS MUST DETERMINE ITS CORE MID-MARKET SWEET SPOT ILLUSTRATIVE
Table showing a circle with the text-Where is the sweet spot?-at the center

[D]

 Arrow pointing right Criteria to determine the sweet spot
  • Business segment/vertical
    • JDE market share
    • JDE fit with segment functionality requirements
    • JDE ability to close functional gap
    • 2005 market size and growth
  • Customer size
    • Buying behavior
    • Average deal size
    • Gross margin

JDEC-01-030448

JD EDWARDS SHOULD FOCUS ON HIGH POTENTIAL VERTICALS Focus
  Business segment Vertical JDE share of market Percent 2005 worldwide software market 2000-02 CAGR Percent New product requirements Total 2005 software market Percent
JDE strong today • Asset intensive • Enery (oil exploration) 23 13 -30    
• Project-oriented/KM • Professional services 19 470 39    
• Asset-intensive • Professional maintenance/repair services 16 366 25    
• Manufacturing • Pharma/biotech 16 327 12    
• Manufacturing • CPG 13 278 0    
• Manufacturing • Primary fabricated materials (IFA) 10 182 -14    
• Asset-intensive • Mining 9 112 20    
• Asset-intensive • Construction 9 234 39    
• Distribution • Electronics 8 397 24    
• Manufacturing • Machinery 5 393 -2    
• Distribution • Health care 4 412 26    
• Distribution • CPG 4 416 0    
• Manufacturing • Chemicals 4 550 11    
• Manufacturing • Automotive/transportation 4 473 2    
• Manufacturing • Paper products 4 104 -10    
• Project-oriented/KM • Construction 3 234 39    
• Distribution • Automotive/transportation 3 203 2   21
Strong/ growing market and could close the gap • Manufacturing • Electronics 2 3,207 24 • Shop floor tracking, material requirement planning, design and project management  
• Distribution • Transportation/warehousing 1 2,708 41 • Transportation planning and monitoring  
• Distribution • Wholesale trade 1 918 9 • Transportation planning and monitoring  
• Distribution • Telecom/cable/satellite 1 594 54    
• Asset-intensive • Real Estate Unreadable Unreadable Unreadable    
• Asset-intensive • Telecommunications 0 5,537 54 • Billing, KM, service provisioning  
• Project-oriented/KM • Defense contractors 0 630 26 • Project Management 56
JDE weakness/ too difficult to clost the gap • Project-oriented/KM • Medical devices 2 71 18    
• Asset-intensive • Utilities 1 622 11 • Billing/provisioning  
• Manufacturing • Apparel 1 127 -7 • Customer design/configuration tie-in to supply chain  
• Project-oriented/KM • Textiles 1 630 -5    
• Project-oriented/KM • Education 0 630 28 • Student administration  
• Project-oriented/KM • Electronics 0 1,603 24 • Project management  
• Project-oriented/KM • Health services 0 964 26 • Insurance billing  
• Project-oriented/KM • Information providers 0 728 18 • KM content management  
• Project-oriented/KM • Pharma/biotech 0 327 12 • Project management  
• Manufacturing • Aerospace 0 203 5 • Project management 23

Source: VSS & Interviews; McKinsey analysis; JDE financials

JDEC-01-030449

ON THE HIGH END, CUSTOMER BEHAVIOR SUGGESTS JD EDWARDS VALUE PROPOSITION IS LESS ATTRACTIVE WITH COMPANIES ABOVE $3 BILLION IN REVENUES

Bar chart depicting buying criteria based on company's revenue

[D]
Examples of JD Edwards' large enterprise customers
  • Dole Foods Company ($5 billion) - currently evaluating best-of-breed players for SCM, middleware, and information management software. Company strictly evaluates economics of software investment, including ROI and payback period
  • LVMH ($12 billion) - key software needs in next 18 months include SCM, CRM, direct/indirect procurement, and middleware. Company leverages software to capture synergies between its 650+ subsidiaries
  • Shell International Petroleum Company (>$75 billion) - strictly purchases software on best-of-breed basis and prefers customized integration. Believes JD Edwards current partnership strategy (e.g., Ariba, Siebel, and MicroStrategy) is attractive to large enterprise customers, but not mid-market

Source: Customer interviews

JDEC-01-030450

ONE CONSIDERATION FOR THE LOWER LIMIT IS PROFITABILITY AND DEAL SIZE

Bar chart depicting estimated gross margin based on deal and company size

Arrow pointing down

Although not a clean break, deals below $400 million-500 million tend to be smaller and therefore tend to be less profitable

 Pricing, Sell back to installed BASC

Source: Rolling Thunder, McKinsey analysis

JDEC-01-030451

  WW  
IN ADDITION, THERE IS SUFFICIENT OPPORTUNITY IN THE $500 MILLI0N-$3 BILLION RANGE TO FULLY FOCUS RESOURCES ON THESE SEGMENTS Sweet spot
  New Bus  

Number of companies by business segment and size[D]

Source: Dun & Bradstreet, McKinsey analysis

JDEC-01-030452

JD EDWARDS SHOULD FOCUS ON COMPANIES IN THE $500 MILLION-3 BILLION RANGE IN TARGET VERTICALS Key for image below - JD Edwards 'sweet spot'

Table showing focus companies by business segment and size[D]

JDEC-01-030453

SUMMARY OF TODAY'S DISCUSSION

  • In our last discussion, we recommended that JD Edwards aggressively focus on their historical core mid-market business segments to become a $2.5 billion-4.5 billion company by 2005
  • To reach this target, JD Edwards should further focus within the core, create a compelling marketing plan, and reallocate and improve productivity of resources
    • JD Edwards should further focus on "sweet spot" accounts in specific business segments/verticals within the $500 million-3 billion range to focus JD Edwards constrained resource pool
    • JD Edwards should then create a compelling marketing plan targeted at these verticals, including value propositions, product and service bundles and appropriate marketing vehicles
    • JD Edwards should then use these marketing programs to reallocate sales, product development and consulting resources to align against the opportunity, as well as improve productivity to achieve a competitive cost structure
  • To execute this strategy, JD Edwards should develop detailed action plans and begin executing across marketing, product development, sales, and consulting

JDEC-01-030454

MARKETING IMPLICATIONS

As competitors are aggressively targeting JD Edwards "sweet spot", JD Edwards must create a compelling marketing plan targeted at these segment verticals

  1. JD Edwards must understand the needs of each segment and vertical and develop a compelling value proposition to attract them
  2. JD Edwards must create appropriately priced product and service bundles to cater to each target segment and vertical
  3. JD Edwards must translate this into an actionable marketing plan to realize the revenue potential in target segments

JDEC-01-030455

TOP TIER COMPETITORS ARE TARGETING JD EDWARDS "SWEET SPOT" WITH TAILORED MARKETING PLANS JDE target vertical
Competitor 1999 ERP revenues in mid-market*
Percent		 Target business segments and verticals Mid-market buying behavior
Functionality fit Integrated offering Low cost solutions
SAP 53 All 4 core business segments, especially strong in
  • Pharma/biotech
  • Energy
  • Electronics
  • Auto/transportation
  • CPG
  • Chemicals
  • Health care
  • Preconfigured, industry-specific solutions in more than 50 verticals
  • Fast Trak ERP - rapidly implemented, preconfigured solutions in ERP, SCM, procurement, and CRM
  • Fixed price packages for software and services designed for mid-market
  • Promote 40% lower cost and 30% less integration time than traditional solutions
  • Delivery through a network of business partners and hosted solutions

 
Oracle 60
  • Manufacturers, distributors, asset-intensive, retail, and public sector, especially strong in
    • Energy
    • Chemicals
    • Electronics
    • CPG
    • Telecommunications
    • Defense contractors
  • Aerospace
  • Utilities
  • Education
  • Financial services

 
  • Software solutions designed for mid-market, including ERP, procurement, CRM, and SCM
 Fast Forward solution provides bundled solution including software (ERP, SCM, CRM, and procurement), consulting, training, and maintenance Fast Forward solution model offers fixed-time, fixed-price solutions
PeopleSoft 55
  • Project-oriented/KM, public sector, manufacturers, and distributors, especially strong in
    • Phama/biotech
    • Auto/ transportation
    • CPG
    • Telecommunications
    • Health care
  • Utilities
  • Financial services
  • Education
  • Full suite of software solutions for core verticals, including financial, HRMS, CRM, SCM. and procurement
  • Accelerated Solutions designed specifically for companies between $100 million-500 million in revenues, including software (ERM, SCM, CRM, and procurement), consulting, training, and maintenance
  • Preconfigured, package including hardware, software, operating system, and database
  • Fixed-price solutions for companies between $100 million-500 million

* Mid-market defined as $30 million-1 billion

JDEC-01-030456

JD EDWARDS SHOULD UNDERSTAND SEGMENT/VERTICAL NEEDS TO CRAFT A COMPELLING VALUE PROPOSITION EXAMPLE
  Mid-market buying behavior
  Potential value proposition to segment/vertical
1. Feature/ functionality fit 2. Integrated offering 3. Low cost solutions
General manufacturer's value proposition
  • Primary needs
    • Demand planning/ manufacturing
  • Secondary needs
    • Procurement
    • Transportation management
    • Warehouse management
    • Business analysis
  • Data must flow seamlessly between modules within ERP and other relevant modules
  • Preference that products are developed by JDE or offer a seamless integration to own products

 
  • Total cost of ownership is competitive
  • Risk reduction through fixed price contracts
 Arrow pointing right "JD Edwards is the leading provider of manufacturing software offering a low-cost, low-risk integrated solution"
Specific vertical value proposition (CPG manufacturers)
  • Primary needs - manufacturing
    •  
    • New product design/ development
    • Material production planning/scheduling
    • Discrete production (some process production)
  • Secondary need - CRM
    • Sales force automation
    • Marketing automation
 Arrow pointing leftShould not vary significantly by verticalArrow pointing right Arrow pointing right "JD Edwards knows the needs of mid-market CPG manufacturers better than any other ERP vendors"

JDEC-01-030457

JD EDWARDS SHOULD CREATE APROPRIATELY PRICED PRODUCT AND SERVICE BUNDLES EXAMPLE

[D]

JDEC-01-030458

JD EDWARDS SHOULD TRANSLATE THIS INTO AN ACTIONABLE MARKETING PLAN EXAMPLE
  Customer adoption life cycle - CPG manufacturing
Step 1 - generate awareness/interest Step 2 - drive initial purchase Step 3 - drive repeat purchase
Target audience
  • All key influences/ decision makers, including CEO level
  • Primary - CTO/CIO
  • Secondary - CFO, other business heads
  • Primary - CTO/CIO
  • Secondary-CFO, other business heads

 
Marketing message
  • JD Edwards has a credible, proven history with CPG manufacturers
  • JD Edwards can meet your specific feature/functionality requirements with a low cost, low risk integrated solution
  • JD Edwards can seamlessly integrate additional functionality into your current ERP systems

 
Marketing vehicle
  • Trade shows
  • Industry seminars/ conferences
  • Advertising through publications, Internet, etc.
  • Sales collateral
  • Special interest groups
  • Direct mail
  • Canned demos for unique CPG manufacturing needs
  • Credible reference clients (e.g., 3 leading CPG manufacturers)
  • Same as awareness vehicles plus
  • Targeted collateral
  • Targeted sales calls
  • Telemarketing

JDEC-01-030459

SUMMARY OF TODAY'S DISCUSSION

  • In our last discussion, we recommended that JD Edwards aggressively focus on their historical core mid-market business segments to become a $2.5 billion-4.5 billion company by 2005
  • To reach this target, JD Edwards should further focus within the core, create a compelling marketing plan, and reallocate and improve productivity of resources
    • JD Edwards should further focus on "sweet spot" accounts in specific business segments/verticals within the $500 million-3 billion range to focus JD Edwards' constrained resource pool
    • JD Edwards should then create a compelling marketing plan targeted at these verticals, including value propositions, product and service bundles, and appropriate marketing vehicles
    • JD Edwards should then use these marketing programs to reallocate sales, product development and consulting resources to align against the opportunity, as well as improve productivity to achieve a competitive cost structure
  • To execute this strategy, JD Edwards should develop detailed action plans and begin executing across marketing, product development, sales, and consulting

JDEC-01-030460

SALES ORGANIZATION IMPLICATIONS

JD Edwards should alter its coverage model to capture the opportunity in the "sweet spot", and implement measures to improve overall productivity

  1. JD Edwards should focus and redeploy current AEs against opportunity in installed base and new "sweet spot" customers
  2. Independent of refocusing resources, JD Edwards should improve current productivity in-line with top-tier competitors
  3. Edwards should determine appropriate sales model, as future needs to migrate into smaller companies emerge

Inside Sales ?

JDEC-01-030461

JD EDWARDS SHOULD REALIGN SALES RESOURCES AGAINST THE NEW OPPORTUNITY

Bar charts showing how to realign resources[D]

JDEC-01-030462

JD EDWARDS SHOULD ALLOCATE SALES RESOURCES FIRST TO CURRENT INSTALLED ACCOUNTS AND SECOND TO NEW ACCOUNTS IN THE SWEET SPOT

JD Edwards recommended sales allocation

Bar graph depicting sales allocation

[D]

 Arrow pointing right Where should JD Edwards allocate additional resources?
  • Focus additional resources on the sweet spot with companies <$500 million
  • Dedicated large account team
    • 10 AEs could cover 50 companies >$3 billion
  • Public sector**
    • 10 AEs could cover 254 companies in "sweet spot"
underlined $3 billion. Under it ?/12 AE's - 44 Total

** Includes government, not-for-profit, and other public services

Source: D&B, McKinsey Analysis

JDEC-01-030463

JD EDWARDS SHOULD IMPROVE CURRENT PRODUCTIVITY IN LINE WITH COMPETITORS

2000 total revenues/S&M costs

Bar charts of 2000 total revenues/S&M costs for competitors and JDE[D]

Source: Compustat

JDEC-01-030464

THERE ARE A NUMBER OF LEVERS TO IMPROVE SALES PRODUCTIVITY

Sample of productivity levers

[D]

 Arrow pointing right Lead Gen/Processing, Sales ?, Sales Tools, Demost at the end


What is the optimum mix of those levers to raise overall productivity?

JDEC-01-030465

JD EDWARDS SHOULD DETERMINE AN APPROPRIATE SALES MODEL, AS FUTURE NEEDS TO MIGRATES INTO THE LOWER-END EMERGE
Number of required new target companies to reach target

Bar representation of number of required new target companies to reach target

[D]

 Arrow pointing right
  • Where should JD Edwards get additional target customers - upstream or downstream?
  • If JD Edwards migrate downstream, can you profitably serve through either a direct or indirect channel?

Source: D&B; McKinsey analysis

JDEC-01-030466

PRODUCT DEVELOPMENT IMPLICATIONS

JD Edwards is not currently spending enough on new product development to develop its future product pipeline and is potentially under-resourced. In order to solve this:

  1. JD Edwards may need to hire additional product development engineers to close the gap
 
Check mark 2. JD Edwards should reallocate resources to focus on core mid-market business segment needs (Handwritten checkmark next to this item)
 
  3. JD Edwards should determine how to free up QA/maintenance resources

JDEC-01-030467

JD EDWARDS IS CURRENTLY UNDER RESOURCED VS. COMPETITORS AND IS NOT INVESTING ENOUGH IN NEW PRODUCT DEVELOPMENT

Bar chart of new product development investment for JDE and competitiors[D]

Source: Compustat; analyst reports; McKinsey benchmarking

JDEC-01-030468

JD EDWARDS NEEDS TO EMPHASIZE NEW PRODUCT DEVELOPMENT GIVEN THE CURRENT STATE OF THE PORTFOLIO

Quadrant showing JDE 2000 software revenues and bar graph showing current development resources and revenues[D]

Source: AMR 2000; internal data; McKinsey analysis

JDEC-01-030469

JD EDWARDS MAY HAVE TO INCREASE THE NUMBER OF PRODUCT DEVELOPMENT ENGINEERS

Bar graphs depicting number of engineers and R&D as a percent of sales

[D]

 Arrow pointing right
  • Should JD Edwards hire more engineers in the short term?
    • How can additional capital be sourced to do this?

Source: Compustat, JD Edwards Internal Data

JDEC-01-030470

STOPPING AND/OR REFOCUSING PROJECTS THAT ARE AIMED TOWARD NONCORE SEGMENTS WOULD FREE UP AN ADDITIONAL 76 FTES ? Contractual commitments
  Rationale Recommended actions/number of FTEs Number of FTEs gained
Stop or move into maintenance mode Projects are outside core mid-market business segments and/or are commoditized for core markets
  • Eliminate Advanced Order Configurator (12)

High end? Is intergration done?		 12
Redeploy portion of resources to new product development Resources could be utilized more efficiently in other higher value areas
  • Outsource B9 strategic enhancement tools and redeploy 25% of resources (33 out of 132)
  • Redeploy 50% of cross-industry applications (non-international component) (31 out of 62)
  • Donut (24) - do you need best 24 people on Donut?
  • Advanced Planning (95) - do you need 95 FTEs to develop a streamlined version of APS?
 64
Unicode
Refocus the project >Project is currently targeting large enterprise; refocus efforts to develop functionality that meets mid-market needs
  • Refocus advanced Planning (95)/Supply Chain Execution (13)
  • Refocus XPI applications (42)
  • Refocus Donut (24)
 0

Source: JD Edwards Product Development

JDEC-01-030471

JD EDWARDS SHOULD DETERMINE HOW TO FREE UP QA/MAINTENANCE RESOURCES

Table listing current FTEs by category and projects[D]

Source: McKinsey analysis; JD Edwards internal data/interviews

JDEC-01-030472

JD EDWARDS SHOULD DETERMINE HOW TO FREE UP QA/MAINTENANCE RESOURCES WHILE MEETING QUALITY DEMANDS

Bar graph depicting QA/maintenance resources[D]

Source: JD Edwards internal data;McKinsey analysis

JDEC-01-030473

CONSULTING IMPLICATIONS

To capture the opportunity in the core mid-market segments, JD Edwards should realign and retrain resources in the short term, while ultimately improving productivity

  1. JD Edwards should realign resources against the mid-market opportunity as the sales force pulls demand
  2. JD Edwards should retrain current consulting resources to meet "sweet spot" consulting needs
  3. JD Edwards should improve productivity, potentially through realization, utilization, and price levers

JDEC-01-030474

AS JD EDWARDS REFOCUSES ON THE SWEET SPOT, CONSULTING REALIGNMENT WILL FOLLOW NATURALLY

Bar graph depicting consulting time allocation[D]

Source: JD Edwards interviews; McKinsey analysis

JDEC-01-030475

CONSULTING WILL NEED NEW SKILLS TO EFFECTIVELY SERVE SWEET SPOT SEGMENTS

Mid-market need Explanation Current JDE performance Competitor performance
Targeted vertical expertise/ understanding Understanding of targeted "sweet spot" business needs is critical to successful mid-market offering
Solution Kits		 A half white and half black circle
  • JDE consultants/managers have sound experience with "sweet spot" verticals, with strongest presence in
    • Manufacturing
    • Distribution
  • Managers often do not know JDE product well enough to manage high-quality installation

 		 A three-quarters white and one-quarter black circle. Black is on top right.
  • Customers do not cite any competitors they prefer over JDE
Cross-trained technical skill
  • Application consultants should be cross-trained in multiple applications to limit cost and number of consultants
  • Technical programmers should be deeply experienced in IT architecture design so solutions can be developed by single resource

 		 A three-quarters white and one-quarter black circle. Black is on top right.
  • Applications consultants are generally trained in 1 application
  • Technical consultant skill also not broad enough for single resource
 A three-quarters white and one-quarter black circle. Black is on top right.
  • Skill sets are fragmented across software vendors, big 5, and local service providers
Project Management
  • Potential need for fixed price contract increases importance of strong project management
 A three-quarters white and one-quarter black circle. Black is on top right.
  • Project manager is not as skilled as needed on managing scope, costs, and technical challenge
 A half white and half black circle
  • While SAP and Oracle have adequate project management skills, the management layer is often too large and expensive
  • Big 5 have strong project management skills across technical and nontechnical dimensions but customer prefers vendor management

JDEC-01-030476

JD EDWARDS SHOULD ALSO IMPROVE CONSULTING PRODUCTIVITY

65% Break even

Bar graphs depicting consulting productivity[D]

Source: JD Edwards financials; McKinsey best practices

JDEC-01-030477

PRODUCTIVITY CAN BE INCREASED BY PULLING ANY OF 3 LEVERS

300 client mgr's, avg 30% billable

Bar chart depicting productivity and productivity levers[D]

Source: McKinsey analysis; Web site

JDEC-01-030478

IF PRODUCTIVITY IS IMPROVED, FEWER RESOURCES THAN TODAY MAY BE NEEDED

Bar chart depicting productivity improvement[D]

Source: McKinsey analysis

JDEC-01-030479

SUMMARY OF TODAY'S DISCUSSION

  • In our last discussion, we recommended that JD Edwards aggressively focus on their historical core mid-market business segments to become a $2.5 billion-4.5 billion company by 2005
  • To reach this target, JD Edwards should further focus within the core, create a compelling marketing plan, and reallocate and improve productivity of resources
    • JD Edwards should further focus on "sweet spot" accounts in specific business segments/verticals within the $500 million-3 billion range to focus JD Edwards' constrained resource pool
    • JD Edwards should then create a compelling marketing plan targeted at these verticals, including value propositions, product and service bundles, and appropriate marketing vehicles
    • JD Edwards should then use these marketing programs to reallocate sales, product development and consulting resources to align against the opportunity, as well as improve productivity to achieve a competitive cost structure
  • To execute this strategy, JD Edwards should develop detailed action plans and begin executing across marketing, product development, sales, and consulting

JDEC-01-030480

JD EDWARDS MUST EXECUTE TARGETED INITIATIVES TO CAPTURE THE OPPORTUNITY IN CORE SEGMENTS FOR DISCUSSION

[D]

JDEC-01-030481

JD EDWARDS MUST EXECUTE TARGETED INITIATIVES TO CAPTURE THE OPPORTUNITY

  Step 1

Develop detailed strategy

 Step 2

Develop action plan

 Step 3

Execute
 
Develop and launch targeted product/market programs
  • Develop detailed product marketing strategies (SCM, CRM, One World, ERP)
    • Target customer
    • Value proposition
    • Feature/functionality
    • Pricing strategy
    • Communication program
    • Channel strategy
  • Develop overall customer management program (e.g., size of opportunity, tools, ROI)
  • Determine optimal approach to close product/market gaps
    • build internally, acquisitions, partnerships

 
  • Develop detailed action plans by function
    • Product development
    • Channel marketing
    • Sales (training, collateral)
    • External communication plan (audience, message, vehicle)
  • Develop communication tools/materials
  • Implement and train on new customer management system
  • Implement action plan
  • Distribute communication plan
  • Implement training program
Reinvent sales model for core mid market
  • Develop short term coverage model
  • Assess skill gaps
    • Verticals/segments
    • Product
    • Selling skills
  • Assess current sales process vs. customer needs and segment profitability
    • Resources
    • Demos
    • Qualification
  • Develop account plan
  • Design training program
  • Design new sales models that meet needs and profitability requirements for different segments
  • Execute plan
  • Execute training program
  • Pilot, refine and rollout

JDEC-01-030482

JD EDWARDS MUST EXECUTE TARGETED INITIATIVES TO CAPTURE THE OPPORTUNITY (continued)

  Step 1

Develop detailed strategy

 Step 2

Develop action plan

 Step 3

Execute
 
Develop a deploy a new consulting model
  • Develop consulting model to meet target customer needs (TCO, skills/timelines, partners)
  • Assess skills gaps to meet mid market consulting needs
  • Re-evaluate current consulting partnerships

 
  • Develop detailed action plan
    • Resource allocation
    • Training
  • Implement plan
Aggressively enter into new international markets
  • Develop a detailed strategy for each target country (products, customer segments, partners strategy, customer support)
  • Develop exit strategy for countries to divest
  • Assess localizaton requirements
  • Develop country-specific action plans
    • Sales strategies/account plans
    • Marketing programs
    • Consulting plan
    • Product localization plans

 
  • Roll out action plans
Technical Support
  • Assess technology support needsn for mid market
  • Assess skill gaps to execute against mid market needs
  • Develop training programs for new customer management system
  • Roll-out program to train technical consultants

 

Updated February 25, 2022