The Canadian software company that last fall bought D&B Corporation's business software unit is trying to propel a once-popular business applications suite back into the mainstream.
This week, Geac Computer said it will abandon the fledgling SmartStream manufacturing software that it acquired as part of the deal, and focus its energies on selling more successful SmartStream accounting and human resources software to health care providers, financial institutions, and business services companies.
Steve Ely, Geac vice president of worldwide marketing for the SmartStream product line, said the company hopes the effort will help SmartStream revenues regain the kind of triple-digit momentum enjoyed a few years ago.
The Markham, Ontario-based Geac is a holding company with $550 million in annual sales, accumulated largely by acquiring and remaking struggling software companies.
Since purchasing the Dun & Bradstreet Software Services unit for $191 million last October, Geac has reorganized the operation, and moved the lucrative mainframe software, services, and support business into a separate division. It moved the SmartStream unit to the center of its client-server business and renamed the applications Geac SmartStream.
Geac picked up the operation after an earlier, pricier acquisition agreement between Dun & Bradstreet and Boston-based investment house Bain Capital stalled. When Geac finally closed the deal last fall, it capped a year of nailbiting at Dun & Bradstreet Software's Atlanta headquarters. Uncertainty about the future of SmartStream had resulted in flat sales revenues of about $105 million in 1996, compared to $102 million in 1995. It was a major downshift for the unit which had seen sales expand by 150 percent between 1994 and 1995.
Geac hopes to eventually recapture some of that lost momentum. Ely said the company, which has about 800 customers today, has set its sights on a modest growth in sales of about ten percent this year as it battles to regain credibility and win new business.
Company officials have made no secret of hopes to use the former D&B unit as a trampoline to double annual sales and to possibly launch a Wall Street stock offering. However, company officials and financial analysts said the realization of such ambitions is still a long way off and hinges on Geac's ability to resurrect the SmartStream operation.
The decision to phase out the manufacturing apps is expected to present the first hurdle. The company is bowing out of the market segment just as many of its competitors move in the opposite direction, plunging deeper into manufacturing operations with end-to-end software to unite supply chains from the purchase of raw materials to the tracking of inventory on store shelves.
Ely said Geac has no plans to keep up with much larger applications makers such as SAP, Oracle, and PeopleSoft that have been pouring millions of dollars into the enormous manufacturing market segment.
"You don't want to get into a head-to-head battle with a gorilla like SAP," said Ely. Instead, Geac engineers are building an application programming interfaces (API) that will allow SmartStream apps to interoperate with SAP's R/3 system and other software. The SAP API will be ready for deployment in about 18 months, he said.
Yet it remains to be seen if Geac's customer base--companies with annual revenues of between $100 million and $2 billion--will buy the "best-of-breed" approach, or opt for the ease of one-stop shopping with the competition, said Bobby Cameron, an analyst with Forrester Research
"It is going to be tough from a third-tier player like Geac to survive by selling accounting and administrative software by itself," Cameron said. "It is very important for Geac not to ignore its operational applications, especially the manufacturing apps. The lack of aggression in the manufacturing applications could hurt them in the long run."