ERP reseller J.D. Edwards Australia and New Zealand realised its dream late on Friday night when it was acquired by business partner J.D. Edwards.
Set up to deal exclusively with J.D. Edwards solutions in 1987, the local partner was the ERP vendor's sole representative in the region, growing from its original $7 million dollars to a $60 million business last year.
"It now makes sense to have a direct presence locally and it was hard for us to constantly generate the capital we needed to operate a $60 million business," said Richard Matthews, the managing director of the new Australia and New Zealand division.
The acquisition was always intended, according to Matthews, with the reseller shaping its business model around the vendors, but now was an especially relevant time in the company's development. "Our competitors were saying to the high-end corporates we were dealing with 'you're a billion-dollar company, why are you dealing with a reseller?' We'll now have the backing and ability to invest more capital, giving us the ability to sell into larger corporates."
Matthews said that, paradoxically, J.D. Edwards Australia and New Zealand will now be able to provide its local customers with better service than it previously had. It will establish an advanced lab in Sydney and will have access to J.D. Edwards' intranet, enabling customers to receive information much more rapidly.
The buyout will also give J.D. Edwards more marketing clout, with Matthews saying that the local division plans to hire more sales and marketing staff and put on marketing campaigns. "A sales campaign in this industry can cost anywhere between $50,000 and half a million dollars. We can now invest in this type of activity."
Matthews assured staff and customers that the transformation would be smooth, with no management changes or staff retrenchments planned. "In fact we will actually grow the business. We didn't expect to get so big. We have been growing 80 per cent a year. Of course, last year we didn't grow that much but we expect growth to get back to about 35 to 40 per cent pretty soon."
Despite this optimism, Matthews is realistic about J.D. Edwards' third position in the ERP market worldwide, accepting the fact that SAP and Oracle "are pretty tough competition and it will take a while to catch up to them".
The good news extends to the reseller community as well, with Matthews more receptive to the idea of channel partners now that he resides in vendor land. "We have not been that keen on having any reseller partners for obvious reasons. We wanted to maintain our exclusive position. But once everything has settled down, in four or five months, we'd like to sign on some reseller partners, focusing on vertical industries or geographical locations such as Tasmania."
The deal will be finalised in March. No financial details were revealed.