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Reeling from a slumping economy and the inability to predict and substantially close sales, Manugistics Group Inc. is realigning its supply chain management software development focus.
After reporting sinking sales and a net loss in its most recent quarter late last month, Chairman and CEO Greg Owens said the company will focus on products for those verticals that are performing well—scheduling and supply chain planning in manufacturing and demand planning, distribution and fulfillment in transportation.
Manugistics also will put its development effort into its services parts management software and into building out its pricing and revenue optimization software.
“Pricing optimization and pricing management will become one of the next waves in software as companies look to improve their margins and grow revenue,” said Owens, in Rockville, Md. “We continue to get strong traction in pricing, and SRM [supplier relationship management] will be our strong growth engine as companies look to automate their huge direct spends.”
Bruce Richardson, an analyst at AMR Research Inc., thinks Manugistics PRO (profit and revenue optimization) module may make the companys entire product line attractive.
“PRO allows executives to simulate the effect of price and other variables on volume and profit,” said Richardson, in Boston. “I was skeptical about the opportunity. Now, Im a believer. In fact, I think it will help sell most of the rest of [Manugistics] solution.”
Manugistics announced $18.4 million in losses for its fiscal year 2003 first quarter ended May 31, compared with an adjusted net income of $2.2 million for the same quarter last year. Total revenue decreased 19 percent, to $74.6 million, in the recent quarter, from $92.4 million for the same period in the prior year.
To spark its services parts management software effort, Manugistics acquired two companies during the first quarter, Western Data Systems of Nevada Inc. and Digital Freight Inc. WDS brought a pretty hefty customer base in aerospace and defense, as well as services parts management software. Digital Freight provides collaborative logistics software that facilitates real-time bids for global transportation contracts.
But even as it sharpens its development focus, Manugistics cut about 180 jobs, or about 12 percent of its work force and contractors. It also realigned its sales force into four global regions directly reporting to Owens. Last week, the company announced that Rich Bergmann, president of worldwide sales, was taking a personal leave of absence.