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warehouse and DC space, Klappich
said. For example, if all Honeywell wanted from JDA was warehouse management
systems (WMS) capabilities, there are more
than 30 WMS vendors available at a fraction of the cost, he said.
Klappich added that he wasn’t sure
what value Honeywell would derive from
JDA’s strengths in supply chain planning,
merchandising, and pricing, areas where
Honeywell has little involvement.
In an Aug. 19 report issued before the
Blackstone investment was announced,
London-based consultancy International
Data Corp. (IDC) said Honeywell would
be overpaying for an asset of questionable
value. IDC acknowledged that Honeywell
CEO Dave Cote has said that about half of
the company’s 23,000 engineers are current-
ly working on software, but the consulting
company questioned whether those work-
ers have the “software industry acumen to
pull their objective off” or if Honeywell is
“investing in the hope that JDA’s current
leadership can do it—something it hasn’t
been able to do as of late.”
IDC acknowledged that any industri-
al automation vendor would covet JDA’s
huge installed customer base. However, it
wondered if Honeywell had “fully evaluated
the financial value of JDA, a company that
is struggling to keep its customers from
jumping ship for a more innovative and
future-proofed alternative.”
IDC noted that JDA was recently down-
graded by investment grading firm Moody’s
because of its high debt load.
John Santagate, an IDC analyst, said that
although New Mountain and Blackstone’s
investment would help JDA balance its
books, the news did not have any implications for the future of a potential Honeywell
merger.
“One thing for sure is that JDA understands there’s a debt issue, and they have
to take care of it,” Santagate said. “They
have two options on the table now: One is
a buyout by Honeywell and the other deal
is a capital injection by New Mountain and
Blackstone. Either way, at the end of the
day, the deal is good for JDA.”
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JDA pledged to allocate the funds
toward improving its software
portfolio by enhancing existing
on-premise software solutions and
by investing in cloud-based products. Businesses will need tools from
both areas as they adapt to industry trends such as the Internet of
Things, big data, and analytics, JDA
said.
“Clearly, some retailers in North
America are going through some
pain points, as there have been
announcements about store closures
and what have you because of the
move to online,” Dail said on the
conference call. “But overall glob-
ally we see opportunities in both
manufacturing and retail as well as
the other sector we serve, which is
third-party logistics [services].”
JDA plans to target those markets
by steering some of its new funds
into next-generation applications
such as Retail.me, the retail plan-
ning solution built on the Google
Cloud platform.
“The bulk of our $100 million
R&D budget is in current products,
so we can now accelerate investment
in next-generation products,” Dail
said. “We have a pipeline of things
we want to build on that platform,
around store logistics operations,
manufacturing planning, demand
and replenishment, and a next-gen-
eration digital hub.”
At the same time, JDA plans
to continue its support for soft-
ware applications that are hosted
on-premise, he said.
——Ben Ames and Mark Solomon
