No Summer Vacation for Intentia as it Preps for Lawson Merger

by Alex Woodie

Intentia International may be in the middle of a merger with Lawson Software, but that isn't stopping it from making the most of its summer. Last month the Swedish ERP software vendor made several notable announcements, including a new release of its ERP system, a new optimization tool designed to improve food and beverage makers' inventory efficiencies, several new customers, an iSeries award from IBM, and an increase in second quarter revenues.

In early June, Intentia and Lawson announced plans to combine their operations into a single company, to be headquartered at Lawson's offices in St. Paul, Minnesota (see "Lawson Acquires Intentia to Rule the Midrange"). Few objections to the $480-million transaction merger are expected, but there are still many regulatory and legal processes to complete, and the deal is not expected to close for months. In the meantime, the two vendors have plenty of work to do, writing software and providing support for their combined 4,000 customers located in 40 countries.

In mid-July, Intentia formally launched Intentia Application Suite 5.1, the newest version of the ERP suite formerly known as Movex (the Movex name is now used to refer to individual components with the Intentia Application Suite). Intentia is touting the new service oriented architecture (SOA) capabilities within three of the eight components of IAS, including CRM, SCM, and Foundation and Tools.

Within CRM, the Intentia e-Sales module boasts new channel, category, and market analysis functionality, which Intentia is providing through an OEM agreement with Cognos, designed to improve a company's ability to implement sales strategies, Intentia says. The supply chain planning modules of the SCM component includes new sales quotas, transport rules, and purchase agreements functionality designed to increase planning efficiency and optimize profit by controlling what, how much, when, and from whom products are purchased, how and where they are processed and moved, and to whom they are sold, the company says. Finally, Intentia is helpings its customers reduce the time and cost of supporting IAS applications by including new validation wizards, improved language editing, and one-click analyses in the Movex Adaptation Kit (MAK) module of its Foundation and Tools component.

Waste Not, Want Not

The food and beverage business is one of Intentia's strongest verticals, and to help its customers in this industry, the software vendor unveiled a new "stock build optimization" product last month. This new application, which runs on PCs running Windows XP, is designed to maximize manufacturers' stock mix and reduce surplus finished goods inventory by up to 20 percent to avoid "stockouts" and product waste, the company says.

The volume of food products that go to waste in the United States is quite high. Intentia cites a report from the Food Marketing Institute and Grocery Manufacturers of America that found product waste (or products that aren't sold and are returned to the manufacturer or hauled to the local landfill) cost food manufacturers almost $2.6 billion in 2004.

Perhaps even more troubling, from a business point of view (if not a humanitarian viewpoint) are the lost retail sales from "stockouts," that unholy condition that results when demand for a product outstrips its immediate supply at the retail level. According to the same report from the FMI and GMA, stockout conditions commonly run as high as 13 percent during promotion periods, resulting in a whopping $6 billion in lost sales.

Because the complexity of calculating stock builds--a process that must take into account variables including changes to capacity, shelf-life and cost constraints, margins, new products, and changes to recipes and manufacturing processes--increases exponentially as the number of products increases, relying on spreadsheets becomes troublesome when more than just a few products are involved.

Intentia's solution calculates the optimum target stock per period by product stock keeping unit (SKU) to meet peaks based on demand forecast, available production capacity, existing inventory and costs. The software takes into account customer service levels and profit margins, and the shelf life of each product, regardless of whether they are stored at room temperature, chilled, or frozen conditions.

"Our solution has been developed to reduce the risk for manufacturers that are often left with excess product that will likely exceed its shelf life, while stockouts occur on other products," says Andrew Dalziel, the supply chain management product director at Intentia. Installation of the product, which doesn't have a formal name, takes 15 to 20 days, the company says.

Customers, Awards, and Financials

Intentia, which has long been an iSeries-centric developer, was also honored by IBM with an iSeries Innovation Awards for the Asia Pacific region. The award, which was presented at the annual regional iSeries Strategic Planning Conference held in Perth, Australia, was reportedly the only award given to an ERP or SCM software vendor.

Mark Shearer, iSeries general manager, says the Intentia-IBM relationship stands "tall on a record of overachieving" business objectives. "We are very proud of this relationship and will continue to work together in delivering real business value to our mutual clients," Shearer says.

One of those mutual clients is Moran Furniture, an Australian manufacturer of high-end "lounge suites" that has signed a contract worth about 1 million Australian Dollars (about $750,000 USD) to license and implement Intentia's software. Moran says replacing its 20-year-old legacy system with Intentia's Java-based suite will enable the company to cut customer order-to-delivery times by up to 60 percent.

Another recent customer win for Intentia is Ingram Book Group, a La Vergne, Tennessee, book wholesaler that carries more than 1 million titles. "After considerable research, we chose the Intentia solution because it offers robust functionality, simple integration and a high degree of openness," Ingram's CIO, Dan Laidlaw, says. "We are a high-volume, fast-moving operation and we have to remain focused on the book business. The Intentia solution allows us to keep that focus." Ingram will install Intentia's software on an iSeries.

A week and a half ago, Intentia released its bi-annual "Interim Report," in which it disclosed its financial results for the January through June 2005 period. The company's second quarter results increased almost 4 percent to 826.5 million Swedish Kronor (SEK), or about $106.5 million at current exchange rates. The combination of increased revenue and cost cutting led to a significant increase in profits, from 6.3 million Kronor for the second quarter of 2004 to 48.2 million Kronor for the second quarter of 2005.

Intentia had a great second quarter, but it couldn't entirely balance out a poor first quarter, and as a result, revenues were down 1.4 percent for the entire six month period. In terms of profit, Intentia incurred a loss of 28.1 million Kronor. This was, however, an improvement over the 106.4 million Kronor loss it posted for the first half of 2004.