The software sector has been one of the hardest hit by the industry slowdown, but that didn’t stop Bob Dutkowsky from taking over at JD Edwards (JDE) last January.
What’s more, Dutkowsky became the first outsider at the helm of the company, replacing Ed McVaney 25 years after he founded the enterprise resource planning supplier.
It has been a difficult couple of years for JDE, but already the new man is making a difference. Its second-quarter financial results showed increased profits, and the latest version of its software – JD Edwards 5 – was unveiled at its Focus user conference in Denver last week.
AccountancyAge.com’s sister publication Computing talked exclusively to Dutkowsky about the challenges of being the new man in town.
What were your first impressions of JDE?
Ed McVaney had done a marvellous job of seeing the opportunity for packaged software years ago, and he built a team to deliver that to customers.
JDE, in 25 years, has won 6,500 customers. It was a live, active business that I came into. The board was looking for someone to take it to another level.
If you listen to your customers you’ll hear what you do well and what you don’t do well, and it then becomes clear what you must spend your energies on.
Customers have a loyalty to this organisation that I haven’t seen before. People really want us to be successful. They also had choices. They could easily have picked Oracle or SAP, but they picked us because of the quality of our products and the quality of our people.
My training says that combination should be a successful business model; more successful than it was proving at JDE.
So what was wrong?
I think the company lost its way a couple of years ago when it tried to become all things to all markets. There wasn’t a customer or prospect we didn’t think we could win. We spent a lot of energy in places where our products didn’t match up very well.
We spent energy in geographies where we didn’t have the critical mass to serve the customer in the right way. So we ratcheted up to take care of those market opportunities when the reality was that they didn’t fit our sweet spot very well.
There was probably a certain amount of a ‘not invented here’ mentality in the company. Fresh eyes can come in and say: ‘I don’t know how we do it, so why don’t we do it a different way?’.
A new guy can come in and ask a million questions. I think Ed probably couldn’t see the forest for the trees quite a lot of the time, but it was his forest – he invented it and built it.
I had the ability to come in and ask: ‘Why do we develop products that way? Why do we market ourselves that way? Why is that the right support structure to offer customers?’ Just a million whys.
That caused the company to think through things differently. That process is going to go on here for a while. It’s not a case of on your 91st day you stop asking why.
What was the first thing you needed to change?
One of the biggest questions I’ve asked the company to address is where the senior management team should spend its time. Are they all in internal meetings or are they out in front of the customer helping to drive business?
I think part of the reason we did better in the second quarter is that we asked senior management to get in front of prospects and customers and articulate the company’s values: to make the commitments to customers that they need to hear so they can trust and do business with JDE.
There are some places in the company where we haven’t had that focus on customers.
Ed McVaney was a development guy. He’d wake up in the morning and think about code and elegance of software. I’m a customer guy. I wake up in the morning and think: ‘Are we taking care of our customers? Are we positioning our products in a way that we can win? Are we competing effectively against the SAPs and the Oracles of the world?’.
That’s the big difference since I came here. The company hasn’t had someone with that mentality for 25 years.
How much further do you have to go to achieve your objectives for JDE?
I’ve asked the company to look at three things. The first is that I want the company to be very focused on what it does. I don’t want to go back to being all things to all people.
Our focus is mid-market companies with a turnover of more than $200m. That’s a big range. It includes some of the biggest firms on the planet, as well as thousands of smaller customers.
If we’re talking to prospects outside of that range I want to know why. If we’re developing products that fit out of that range, I want to know why. Focus is the number one task I’ve asked the company to do. Don’t get distracted by things outside our market.
Second, I’ve asked that execution be stepped up in everything we do. That’s why I’m so pleased with our latest results.
Why did we do it? Because our people executed better. One example is our days of sale outstanding: how long it takes between when we sell something and when the customer pays us. We’re down from 100 days to 72 days.
That is unheard of in the business world. Why did it happen? We compressed the process. You can improve every process through better execution.
Third, do all this with a sense of urgency. A 25 year-old company can get a little sluggish. In technology, 25 years is ancient. I don’t want to say that we had a hardening of the arteries, but we did. We were getting slow and bureaucratic. I just want the company to move quicker.
A job done today is better than a job done tomorrow. Don’t sacrifice quality, but work fast. Speed wins in IT. I think we stepped up our pace and look at the results. But I’m not declaring victory, we’re not done yet.
You’ve also announced a new product version: JD Edwards 5. How significant is this release to the company?
JDE 5 is the umbrella under which all the products will exist, from enterprise resource planning to supply chain to customer relationship management. Customers want an integrated solution from suppliers all the way through their business processes to their customers.
In the next two years we’ll deliver more software to the marketplace than we have in any two-year period in our history.
JDE 5 is also a branding exercise. It will put a long-lasting umbrella around our product set and forever more we will refer to our value as JDE 5 or 6, or whatever.
JDE 5 is also an architecture that allows us to deploy web services more aggressively as well as to break our software into smaller pieces.
We want to continue to bring innovation to the market, and JDE 5 is the beginning of that.
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