Relax. Obviously you did not get my point which is that he was wasting space....this board has a low volume of messages and I wait for companysleuth to let me know when there is a new message here. It is annoying to see a new message indicator and then you come over and it is just a posting of a readily available press release....THAT is wasted space as any news link for this stock will have it...at a minimum he could have asked what we thought of it and pray tell he might even have considered providing his insight as to what it means for the company and its stock.....anyhow, here is something I put together for the Yahoo board last night....I hope it meets your criteria of not wasting space...
I think it will take me a few days to really grasp all of the information that was in it and put it into the right perspective. I have a LOT of thoughts on it...
First off, I have had HUGE reservations about how ASDV might be approaching the e-business marketplace and have to say my reservations were TOTALLY UNWARRANTED....in the conference call they adequately addressed each and EVERY one of my concerns...I am officially eating crow for second-guessing early...only a little though as I think they were legitimate concerns....so hat's off to ASDV management in terms of selecting the strategy...vision has never been lacking...
I almost get the feeling that the company stopped and contemplated the internet in regard to every part of their business much the same way that MSFT did a few years ago….ASDV is embracing the internet and B2B business model HEAVILY….they are however still holding onto their core market philosophy which is to provide decision support systems, tools and content for inbound supply chain management….they have just augmented their product line and delivery methods with the internet and B2B opportunities/technologies in mind and embraced them completely….additionally they have expanded their target customer base from the top 1,000 manufacturers to literally all markets….as Dury noted they will cover all verticals and all business sizes with this new approach which means they go from roughly 1,000 companies to 4,000+ companies as targeted customers…this was a very inopportune day to announce a bunch of new ‘dot com' initiatives but they could not have known in advance that this would be a tough day for the internet stocks as a whole and the reality is that they aren't looking to be a ‘dot com' company per se but are instead just leveraging the internet as a tool to improve both the delivery and functionality of their product and the portion of the new initiatives that is a ‘dot com' company (e-supply center) in brick and mortar clothing for now will probably be spun-off next year as a subsidiary IPO and then distributed via a stock distribution to current shareholders sometime after that…they were unspecific and non-committal but it was clear that they are planning on that as their timetable unless an assumption changes….such as this current downdraft on the whole internet sector…
I have had to read and re-read the press releases on all of this stuff to assemble in my mind how it all fits together. It is VERY confusing because some products are being positioned both in the direct channel and discussed there and will also be offered on AspectWeb.com, it would have been very helpful for them to publish some of the graphics depicting the market which were described in the CC….I am not going to cap on the press releases but honestly text alone can be a challenging way to introduce a whole new business model…
The ‘new' initiatives are as follows:
1) Internet enabled versions of ASDV modules (which are available now for current customers to upgrade to – some will have to pay for the upgrade and some will get it for free depending on how their original purchase contract is structured) now dubbed e-design, e-source, and e-operate
2) AspectWeb – which is a new portal operating right now at www.aspectweb.com which is comprised of:
a) e-content – the entire ASDV content offering available on the web to subscribers of the service and is the source of the content to be used by the partners in the B2B realm noted in the press release at this URL aspectdv.com for the Ariba announcement and strangely they didn't announce it in a separate release but ASDV has a similar deal already in place with SAP….
b) CSM Express – web-hosting of new internet enabled versions of ASDV modules noted above which can be coupled with e-content AND linked to your own system which means you can leverage your own internal systems data and maximize your ROI now…
c) Links to the supported partnership portals such as the Ariba and SAP portals
3) Support of partners B2B initiatives for transaction execution
4) New ‘dot com' which will be spun off currently called e-supply center. This new subsidiary will be reported with separate financial statements going forward from July FY99. In future reports you will see financial statements for this new unit, one for the core ASDV and then combined ones which will be the ‘consolidated' financials. They expect to invest $5 to $7M in FY99 with revenues of approximately $500K. They expect to have the website operational in Q4 of this year. They expect to invest $10M in FY00 and record between $5 to $10M in revenue and then they expect to breakeven or make a small profit in FY01 on revenue of approximately $20 to $35M….
The Product Strategy is now four fold:
1) The original business model is pretty much the same – the enterprise software plus content will continue to be marketed in pretty much the same way to the 1,000 largest manufacturers….this is considered to be a $600M market now and will grow to a $2B market into the future
2) CSM Express (offered on AspectWeb and through direct channels – see discussion later) this essentially fills the gap in their product line for which I proposed the CSM Lite solution which I have been ranting about in the past….This is a version which is completely web-enabled and therefore lends itself to be a hosted product which can then be purchased or ‘subscribed' similar to how large software products were ‘timeshared' to small companies in the late 70's early 80's by the likes of ASK to lower the cost of ownership….when you buy or subscribe to this product you will create links to your legacy data using some ASDV tools and be up and running achieving fantastic ROI's at a lower entry cost…I may be wrong but based on the call it sounds like they have developed a ‘web-server' version of the CSM suite which interacts with the database in the same way in which the C++ client server product does and can and will in some installations run in parallel to the C++ version based on the client needs….the web product is native to the web environment and therefore fully extensible…that is a very elegant solution to a problem that most companies tackle in the cheap but painful way of just wrapping the web around their C++ products (a faster but in the long run less stable method)….this will be sold both direct and via VAR partners…looking to expand relationships with the mid-market ERP players and other large ERP players….Obviously SAP, BAAN, JD Edwards and I expect more….I am hoping for Platinum as we use it at my office and I would like us to be able to buy this solution at my start-up in the next year or so (Romesh indicated this is a good solution for the mid-size companies that need between 5 and 500 users…). The ability to integrate your legacy data solves the problems of AspectOnline part proliferation I wrote about the other night….I say Bravo to this move as it expands their target businesses from the 1,000 mentioned in the above item to 4,000 business who will represent procurement of up to $1 TRILLION dollars of which 25% is expected to be conducted via the web – wow what a segue to the next trinket….
3) E-commerce partnerships….ASDV did get SAP buy-in to the ASDV strategy which is to provide the content and tools to facilitate B2B procurement transactions and link in with their partners who are SAP and Ariba right now and is expected to expand. These are the tools used by companies buying and selling directly to one another…this is an important point as there are two ways transactions occur electronically – Business2Business and the other is over the web where individual consumers or businesses will go to portals which will feature products from multiple vendors by distributors or some other form of an aggregator – hey look another segue….and I do this for free…
4) E-commerce portals – These are the aggregated markets where you can come and shop and compare various items featured on the site such as Chipcenter focused on microchips…expect to see MANY more as the company plans on providing the content cut to many different verticals in the future – NOTE: Chipcenter is expected to come on line this week….
Listening to the CC is indeed invaluable as you get insight into management philosophy and not just EPS plans and revenue targets...here are a few of the philosophical elements I felt were KEY (in no particular order):
1) Content will begin to proliferate on the internet in forums such as chipcenter...to protect their subscription fees for the full VIP and MRO databases the company is adopting the approach of cutting the data down to the key essentials needed to conduct a transaction online and preserving the full detail of the data set for the subscription databases….they will either collect a per transaction fee for providing the ‘transactional' databases or some form of a subscription fee
2) Open-model to partnerships – this is CRUCIAL and we have SAP buy-off on this concept (see discussion of product strategy mentioned earlier)….ASDV wants to be THE standard and THE dominant player in every business it enters and plays in…therefore they will focus on the business elements they do best and partner with EVERYONE who does the portions where they don't have the forte or market position to be a dominant player (such as the web-requisition/transaction fulfillment business which has many players already in it and represents skill sets that ASDV does not have) therefore they can't lock in with exclusive deals as that leaves room for competitors and if you think about it would FORCE companies to compete with the ASDV solution…I think you are going to see Oracle come ASDV's way once they realize they need the content to be any good competing against the businesses that have access to it….
3) ASDV is going to be seeking to expand their marketing efforts to raise the overall visibility of the company and the marketplace so that it will no longer be the ‘best kept secret' in the businessworld…look for placement in Forbes, Fortune, etc for print, the likes of CNBC for television, and an expanded presence at conferences and tradeshows
4) In-house or separate business unit? I think a lot was revealed in the CC about how ASDV determines when to keep something in house as opposed to setting up a new business entity for it…The company is going to keep AspectWeb in house as it is focused on providing a different delivery vehicle for current web-enabled versions of the core product line, they are going to keep the support of transaction portals in house as that represents providing modified current products such as the e-content to partners of the business BUT they will probably spin-off the e-supply center web effort as it represents a new undertaking which has a focus outside of the decision support role of inbound SCM
5) View of the procurement market – As you look at the ‘procurement' market you will see that ASDV us partnering in the area with the highest competition and some of the lowest ROI's….they wont discuss it that way as it slams their partners but it is the truth. The four components of the procurement market are as follows:
a) Web requisition tools for B2B market – this is a heavily saturated portion of this market so ASDV is using partners here (see B2B discussion previously discussed)
b) Content for decision support – ASDV owns this market so will continue to entrench this product group – I think you will see ASDV develop a certification market here as well as their data model becomes an industry standard then you will see a need for an ASDV certification program of electronic content.…
c) Catalog solution – although there is a lot of competition in the catalog publishing side, ASDV has market leading solutions and will compete for this segment – this makes sense even though it flies in the face of the ‘must be market dominant to want to compete' mantra noted above as these are tools that are crucial to being successful in other areas and they might as well generate some revenue from them and they can use their success in part ‘b' and part ‘d' here to achieve dominance in this market
d) Decision support – market dominance here
Additional insight gained during the CC, the company expects to have 65 direct sales reps by the end of the year which I believe is just about DOUBLE what they began the year with….
Conclusion: I like very much what they are doing, how they are doing it and the speed with which they are moving. Romesh made a great point toward the end of the call. These are not lofty ideas which wont reach fruition for many years but instead are real solutions to real problems which are either already operational or will be by the end of Q4 and are expected to add to the revenue in a very short time frame…this is not just jumping on the bandwagon but instead taking a real assessment of the opportunities that the new internet and B2B paradigms offer and responding to them….Congratulations to everyone who are obviously working very hard at ASDV….on to 100! |
