I've got my big toe back in MANU. Here's something from AMR Research 1/21
Manugistics EPO Brings Supply and Demand Together
Manugistics' Enterprise Profit Optimization is a big step
toward the vital new perspective that costs and revenue can
be optimized. The vision is right on and the team credible.
Integrated functionality may take a while, but point
solutions are well worth considering.
Manugistics intends to be the preeminent software provider
of optimization services. This lofty goal is within reach
given two ingredients being baked together in a new product
dubbed Enterprise Profit Optimization. The first
ingredient is supply-side optimization, something familiar
to Manugistics, which has more than 1,000 customers
worldwide using its products. And last year's acquisition
of Talus Solutions for $366M brings the second ingredient,
demand-side optimization technology. The pedigree of Talus
is key: 150 existing clients, primarily in the
price-along-the-demand-curve hotbeds of airlines and
hospitality where experience in deriving and applying demand
behavior algorithms is an essential competitive edge.
For at least 10 years, Advanced Planning and Scheduling
(APS) has brought sophisticated mathematics to the largely
deterministic problem of cost management in a
resource-constrained manufacturing supply chain. The demand
side of the equation has meanwhile been left on a bit of an
island. Forecasting tools notwithstanding, little has been
done to actually marry the functionality of price,
promotion, and yield management to capacity planning in
manufacturing. Perhaps this reflects the gap between
Operations Research (OR), which models hard realities, and
microeconomics, which postulates behavioral tendencies. The
issue is profit creation, and EPO aims to reconcile these
two schools of thought with packaged software. The reward
is worth pursuing. AMR Research estimates that up to $95B
in annual incremental operating margin could be generated
with tools such as these in the U.S. manufacturing economy
alone.
At issue is integration. First, is integration of a $50M
formerly independent company into its acquiring parent.
Second is integration of Talus's applications into
Manugistics' applications. Step 1 looks good so far, with
Talus's boss, Bob Phillips, picked as Manugistics' corporate
CTO, and numerous joint sales cycles in play. Step 2
remains a hurdle, not least because Mr. Phillips, for all
his experience with demand optimization functionality, is
not the technology architect needed to knit these
applications together. His, and Talus's, client experience
is relatively service-intensive. Point solutions can
generate value right away for many users, but a tightly
integrated footprint will be a few man-years in the
making.--Kevin O'Marah |
