Manugistics Forges Ahead

License revenues dipped, but CEO Greg Owens sees opportunity for Profit Optimization product.

Despite a 38 percent decrease in software license revenues in Manugistics Group Inc.s recently completed fiscal third quarter, Chairman and CEO Greg Owens is bullish on the supply chain planning software developers future. The Rockville, Md., company is targeting a modest increase in sales and a smaller loss for the current quarter. With increased sales activities, a healthy pipeline and a focus on its Enterprise Profit Optimization product, Owens believes Manugistics—and the economy—are facing better times this year. The company has reduced costs by laying off about 180 workers, or 12 percent of its staff, in the wake of a sales hit that Owens blamed on the September 2001 terrorists attacks. It is bolstering its products with Web-based order management technology it bought from SpaceWorks Inc. last summer. Owens recently spoke with eWeek Senior Writer Renee Boucher Ferguson about Manugistics prospects.

eWeek: Are you planning any additional layoffs or a restructuring as a result of your third-quarter earnings?

Owens: No. We are actually seeing very positive business signals, and we exceeded analysts expectations—the revenue was about 10 percent higher than expected. From our standpoint, business is picking up.

eWeek: When do you expect to be profitable?

Owens: We expect to reach profitability in [the first quarter] of 2002. We are seeing the business increase, weve got good visibility into this quarter and weve seen revenue continue to increase.

eWeek: Are you seeing signs of overall good health for the economy?

Owens: Overall, were seeing the economy pushing back. In exceeding analysts expectations, particularly given that we had only two months to operate—September was a wash—we did a good job. And were continuing to see business environments improve. Companies are spending more money on our applications, particularly on our Pricing Optimization apps, which bring operational efficiencies that enhance revenues.

eWeek: Which vertical areas do you expect to see sales growth in?

Owens: Consumer packaged goods, life sciences, retail, government and automotive are a number of areas of strength, where we expect next quarter to be a good quarter.

eWeek: How is the integration of SpaceWorks going?

Owens: As we integrate more transactional products to our optimization engine, its been a fairly easy integration. We had our first major sale of the Order Management system with our Optimization suite to DHL [International Ltd.] this quarter.

eWeek: Will you develop more products around the SpaceWorks technology?

Owens: Yes. Well go with both sell-side and buy-side order management. The buy side will be used in supplier relationship management [products], and the sell side will be more coupled with our optimization engine on the demand side.

eWeek: When will those products be released?

Owens: SpaceWorks had both of those products when we purchased [it]. Now were working on additional features and functionalities. Well follow our normal release schedules, with the release of 6.1 this fall, and Version 7.0 will be released this spring.

eWeek: Are you considering any additional acquisitions?

Owens: Were pretty comfortable that we have the areas filled out that we need.

eWeek: What should we expect from Manugistics in 2002?

Owens: It will be a growth year for us. Id like to get a little more of this quarter under our belt before I put a percentage out there. As the economy ramps up, we can [expect to] see some pretty good increases [in sales].

eWeek: Do you have any plans for adding Web services capabilities to your software?

Owens: Our Web-based architecture right now lends itself to doing Web services on a hosted basis. We will continue to see some clients migrate towards that.

As you get into a more robust economy, you will see more and more of private trading networks, and [companies] will try and offer some level of Web services out to trading partners, as well.