JD Edwards Co-Founder McVaney Leaves A Legacy
September 2, 2020 Alex Woodie
Ed McVaney, who emerged from a frugal childhood in Nebraska to eventually lead one of the most successful enterprise software companies in the world, died this past June at the age of 79.
McVaney is best remembered as the co-founder and CEO of JD Edwards, the Denver, Colorado-based company that would become known as the gold-standard for ERP software on the AS/400 and its predecessor and successor machines. In 2016, more than a decade after JD Edwards was sold to PeopleSoft, McVaney founded NextWorld, a cloud ERP software company that is run by his daughter, Kylee.
McVaney was the third of four boys in family of modest means in Omaha, Nebraska. McVaney recalled his family lived very frugally with his father’s dentist salary, suffering through the extreme heat and cold of the high plains. McVaney was dyslexic and struggled in school, he recalled in a 2002 interview with Daniel S. Morrow of the Computerworld Honors Program. He paid for his private high school education by raising lab mice in his basement and tending pigs for a local veterinarian.
After losing his football scholarship at Iowa State Teacher’s College when the FBI confronted him for hacking a pay phone with a wire to talk free of charge to his future wife, Carole (he was never charged), McVaney went on to the University of Nebraska, where he graduated with a degree in Mechanical Engineering.
After obtaining a graduate degree from Rutgers University, McVaney went to work at Western Electric as an “operations research engineer” in 1964. At Western Electric, McVaney was exposed to IBM 1410 systems, which he programmed in machine language, he recalled in the Morrow interview.
After taking a job in New York City with Peat Marwick in 1966, McVaney was transferred to the company’s Denver office in 1968. Two years later, he took a job with the accounting company Alexander Grant/Grant Thornton, and that’s where he met his two JD Edwards co-founders, Dan Gregory and Jack Thompson.
The time that McVaney spent at Alexander Grant/Grant Thornton would be instrumental in forming the strong culture that JD Edwards would become known for. “I realized the culture of a public accounting firm is the antithesis of developing software,” McVaney told Morrow. “The idea of spending time on something that you’re not getting paid for — software development — they just could not stomach that.”
In 1977, the three of them co-founded JD Edwards. McVaney’s wife reportedly came up with the name, after Jack, Dan, and Ed. (“We were considering naming it Jack Daniels & Co.,” McVaney told Morrow, “but we thought J.D. Edwards sounded better than Jack Daniels.”)
In the early days, JD Edwards developed custom software on a range of systems. It wrote a COBOL-based system for the Colorado Highway Department that ran on an HP3000, developed an accounting package for McCoy Sales (a wholesale distributor) on an IBM System/3, and developed a system for Cincinnati Milacron, a machine tool company, on a computer developed by Cincinnati Milacron itself (the company was adamant that it would become a software company too).
Over the years, JD Edwards began to specialize in developing software for the IBM System/3 line, which McVaney lauded for protecting his company from emerging competitors in the nascent enterprise software space.
“The competitors were all segmented based upon computer hardware,” McVaney told Morrow “So we were in that whole niche, protected from Oracle and SAP and PeopleSoft because they didn’t work on those particular computers.”
JD Edward’s history is indelibly tied to the IBM midrange server. “Probably our most profound decision was selecting the IBM System/38 as our lead computer,” McVaney told Morrow. “We put our whole business behind the IBM System/38, which went on to become the IBM AS/400. You can imagine that everything blossomed from then.”
The decision to tie itself to the AS/400 gave JD Edwards some advantages, particularly against SAP, which like JD Edwards was developing an integrated suite of software for smaller companies. That focus on smaller firms forced both JD Edwards and SAP to think in an integrated manner, which would pay dividends later on, especially compared as the highly specialized software companies that catered to the biggest corporations, such as McCormick and Dodge, Dunn Bradstreet, and MSA.
“In small companies, you cannot think in a compartmentalized manner,” McVaney told Morrow. “You can’t just think about the payroll. You have to think how the payroll fits into the job cost accounting. You can’t just think about the general ledger; you have to think about how the accounts payable feeds into the general ledger.”
Unfortunately, that decision to tie JD Edwards to AS/400 would also cause problems. While it provided JD Edwards with a few “hot years” while SAP was making the transition from the IBM 4300 series of computers to Unix systems, it eventually made the move harder for JD Edwards with the shift from World to OneWorld (both of which are still supported by Oracle).
“We were late getting to Unix and open systems because we had such a sweet computer, the AS/400,” McVaney told Morrow. “And we, JD Edwards, ended up out of step with the world because we’re still on the AS/400 and we had to make that brutal transition.”
McVaney was a devoutly religious man, and that showed in the culture he built at JD Edwards. “Before the concept of corporate culture was popular, Ed created and lived out the JD Edward culture document where honoring God was the #1 corporate ideal,” it says in McVaney’s June 10 obituary in the Omaha World-Herald.
Doing the right thing even if nobody was looking was important for McVaney. “I came to the conclusion that corporate cultures are profoundly important, that 95 percent of the time managers don’t run businesses, cultures run business,” he told Morrow.
While McVaney had a religious upbringing, he had a moral awakening later in life. “I was probably 30, 32 years old before I really had a clue what integrity was all about,” he continued. “Up until then, I would have had a high school concept of integrity that you don’t talk behind your friends’ back and things like that. But in my early thirties it became profound to a point where I can’t lie about anything. If I were to try to lie, I would fail at it. It’s just not in my chemistry.”
Interestingly, McVaney was born a Catholic into an extremely Irish family, while his wife came from a Methodist family. Their interfaith marriage was a cause of concern back in the 1960s, particularly so for Carole’s family (her father reportedly had trouble walking her down the aisle in the Catholic church where the ceremony was held). But later in life, McVaney would convert to Presbyterianism. “I wish he had been alive for that,” McVaney told Murrow about his father-in-law. “It would have made him feel so good.”
Things were rolling for JD Edwards in the go-go 90s. It launched the client-server version of its ERP system, OneWorld, in 1996; finally went public with an IPO in 1997; and McVaney retired for the first time in 1998. However, problems soon began to emerge with OneWorld, and, with customers threatening to file a class-action lawsuit, McVaney returned to the helm. In 2000, he stated that the next release of the ERP system would “wait however long it took to have OneWorld 100 percent reliable.” That took place in late 2000 with the launch of OneWorldXe.
McVaney retired again in 2002, and, despite a blossoming fly-fishing addiction and an estimated net worth of $1.2 billion (which put him just behind Apple’s Steve Jobs, at least according to 1998 figures), he shipped off to Iraq. McVaney, who counted George W. Bush as a friend and a former customer, volunteered to be part of the Iraqi transitional government. He “slept in a trailer behind Saddam Hussein’s palace while he helped develop a database to track the bad guys,” according to his obituary.
In June 2003, JD Edwards agreed to sell itself to PeopleSoft for $1.8 billion. Within days, Oracle launched a hostile takeover bid for PeopleSoft sans JD Edwards. PeopleSoft went ahead with the JD Edwards acquisition anyway, and in 2005, Oracle finally took ownership of the combined JD Edwards-PeopleSoft organization. The rest, as they say, is history.
Asked by Morrow how he wanted to be remembered, McVaney said:
“He did it with integrity. He was the fulfillment of the American Dream. He was able to really enrich the lives of thousands of people. That’s just a wonderful feeling . . . to know that so many people have such good jobs because of what you’re able to do.”
A recording of a memorial can be watched at https://mcvaney.live.