One of the original names in material requirements planning (MRP) is still chugging away--turning profits and finding itself in a good position as all eyes turn to the middle market for the next wave of growth in enterprise-level software sales.
For its third quarter ended June 30, Mapics, based in Atlanta, this week posted profits of $4 million, or 17 cents per share. That's up 35 percent from last year's like quarter of $3 million, or 16 cents per share.
Revenue for the period was up 46 percent from the like period last year to $32 million from $22 million. For the nine-month period, revenue was $90.6 million, up 37 percent from $66.2 million last year. Profits for the nine months rose 30 percent to $12.3 million, or 54 cents per share, from last year's $9.5 million, or 49 cents per share, when adjusted for the public offering in July 1997.
Mapics, which stands for Manufacturing Accounting and Production Information Control System, began in 1978 as an IBM division and product. It was the first MRP system commercially available for manufacturers and held the lion's share of the marketplace for many years.
But then a little thing called client-server computing began to take hold of the marketplace and, with this new technology, came a small German software company known as Systemanalyse and Programmentwicklung. Later shortened to SAP, the firm's software system began to find its way into manufacturers' hearts with the next generation of MRP called ERP, or enterprise resource planning. Unlike MRP, ERP covers the entire scope of corporate back office operations, from the plant floor to the accounting office and human resource department.
At about the same time in 1993, IBM sold Mapics to Marcam Corporation in Newton, Massachusetts. Marcam held on to it for four years before spinning Mapics off into its own publicly traded company.
Mapics now offers an ERP system on IBM's AS/400 midrange server platform and competes heavily in the middle market, which is comprised of companies or divisions of large companies with sales under $1 billion. The market is quickly becoming one of the hottest around as even the big ERP vendors such as SAP, Oracle, and PeopleSoft fight for a piece of the territory.
"One advantage Mapics has is so much of the AS/400-based competition has disappeared," said Jim Shepherd, analyst at AMR Research in Boston. And while SAP and PeopleSoft have ported their products to the platform and are in some deals, Shepherd said for the most part Mapics and J.D. Edwards are the two primary competitors in the space.
"The AS/400 world is a funny one," Shepherd explained. "It is almost like religion. People have trouble believing SAP is really serious about the AS/400. Mapics keeps its options open to the possibility of going to [Microsoft's Windows] NT platform, but realistically they have a very nice franchise with the AS/400. With that technology reviving, they should do fine."
Shepherd said that also working to Mapics' advantage is its extremely low employee turnover, which makes for a very stable organization. It also has been around so long and on the same platform that the majority of its research money is spent enhancing functionality rather than keeping up with the latest technology fad.
But Mapics may find itself dependent on IBM, because Mapics' success will be directly related to IBM's ability to successfully market the AS/400.
"The good news is that IBM is doing a better job at it than they have in a long time," Shepherd said. "The bad news is they have the most serious midrange competition they have ever had in NT and SQL Server."
Still, Mapics executives are confident they can compete and gain ground on the current platform.
"The overall momentum in our business remains very strong," said Dick Cook, chief executive and president of Mapics. "Mapics' leadership in the ERP market is especially well-established among mid-sized manufacturers.
"As we continue to enhance the functionality of our ERP solution, we expect to hold this competitive position in what is an attractive, expanding category of the industry," he added. "We also expect to advance in broadening our business profile to include working with larger corporations with multisite and multinational operations."