For all CEOs and boards of directors, I think there’s been a massive progression to supply chain becoming an imperative. It’s no more ‘that thing on the fourth floor’; it’s an imperative for all of them to keep the business alive and, ideally, in a thriving state.
So says Girish Rishi, CEO of retail and supply chain management technology provider JDA Software. In his three years at the helm, he’s seen a significant progression in the markets that his firm serves:
Delivery of product is the number one item I hear from manufacturers, retailers and third-party logistics companies. The second thing is, the inclination to adopt agile capabilities is happening in a much more aggressive fashion now. The appetite to do it is much greater, the procrastination and the internal debate is reducing. There’s an ‘activist’ approach that our customers are taking. I was with HEMA, a retailer in the Netherlands, and we’re meeting a major oil and gas company tomorrow. Everywhere we see a great eagerness to deploy digitalisation technologies. The third change may be self serving, but I think people are coming to trust and rely on JDA a lot more. That means our engagements are much deeper, and we are getting access to the right levels laterally and vertically within organisations.”
Increasingly, the predictive artificial intelligence (AI) and machine learning (ML) capabilities of JDA’s applications promise customer organisations the ability to slice and dice operational data to predict future needs, rather than just react to peaks and troughs in the present. Some of that came onboard through the acquisition of Blue Yonder, which was completed a year ago.
If supply chain management has become more of a C-level issue, then it is a strategic, rather than a tactical and operational one? And if so, is that just a by-product of AI’s much-vaunted predictive capabilities, or something deeper? Rishi says:
I like to call it a focus on The Three 'A’s: Aldi, Amazon, and Alibaba. That’s not just for retailers; those three apply to manufacturers and third-party logistics companies too. Every company has them on target and they want to make sure they don’t lose market share or customers to them.
If you look at the last two or three decades, businesses looked at the supply chain as an opportunity to reduce costs and increase profitability, reduce inventory, streamline their networks. Supply chain was primarily a profitability and margin lever. But now, the proportion of the conversations that we are having with customers is about 60 percent top-line preservation and increasing revenue growth. That’s the difference.
That means retailers – and anyone that competes with Amazon and Alibaba in fulfilment, cloud, and logistics - need a strategy to take on The Three 'A’s. Rishi says:
Top of mind for every retailer is that you can't afford to have non-availability of product that’s in demand, either on the shelf or online. And there are a number of ingredients that go towards that. The categories that you carry, the forecast accuracy, and the timeliness of availability in the warehouse or retail store.
Category management, space planning, demand and fulfilment systems, warehouse management, how you’re managing your trucks, they’re all significant. So it’s visibility, visibility, and visibility – and on top of that, machine learning gives you predictive capabilities.
What we are also hearing from CEOs and Chief Supply Chain Officers is that they are looking for partnership. In the case of Alibaba and Amazon, they’re not only delivering goods, but also have their own cloud and technology capabilities. Not every retailer can afford that or even wants to go there. And now they’re seeing the duopoly of Microsoft and JDA as offering the same capability that Amazon or Alibaba have in house.
Another factor is the tension between Amazon-envy and Amazon-phobia that diginomica has covered extensively. Rishi sees two angles to this:
There are retailers that are head-on competing with Amazon. But – given the unstructured onslaught of Amazon and Alibaba – retailers, logistics companies and manufacturers don’t want to sit here three years from now and realise that all their inside data is sitting on an Amazon or Alibaba system that they have access to. Even if the data is proprietary, they don’t want them to have their metadata.
JDA recently turned in some healthy figures in its Q2 results: 101% SaaS bookings growth, 23% overall bookings growth, and seven percent revenue growth. According to the company, these trends are being driven by “strong interest” in its AI and ML capabilities. Rishi says:
Definitely our Luminate machine learning portfolio, that’s been a massive trigger. The interest we’ve seen in orders and pilots and deployment. But the core portfolio too, driven by Luminate, is significant. I would say a large portion of our growth and the results we are showing is due to the AI/ML portfolio, plus the Blue Yonder acquisition.
That’s resulting in new developments:
In January, we announced a joint product with JDA and Blue Yonder capabilities called Luminate Demand Edge, and in July we were publicly able to announce HEMA as a winner [user]. There are a number of other customers we can’t announce as they haven’t given us permission. The acquisition of Blue Yonder was heavily driven by our desire to accelerate on our road map to launch new products. Our thesis a year ago is that there are enormous cultural similarities between JDA and Blue Yonder, and a year on that has been proved. We are kindred spirits. We are both very mathematical, very machine-learning-based problem solvers.
Overall, the JDA of today is a different company to the one Rishi inherited three years ago:
The product roadmap needed to be rejuvenated. We had a technology debt that had crept up on us over the years and we needed to pivot on a technology, platform, and portfolio front. We’ve made good progress with the launch of half a dozen or so Luminate offerings, with more to come.
We were nowhere from a cloud strategy standpoint. There was not a single product on a public cloud, and now with Microsoft we’ve made significant progress. We were primarily a direct organisation and we were doing it all. So by recasting JDA as a platform company, our emphasis, our focus on partners, integrators, and technology ecosystem, is now in full motion.
There as also a cultural aspect:
I’m a huge student of culture. How do ‘John and Mary’ feel when they come to work? What is the collaboration they get? Is there an environment for them to speak candidly? Do they have free rein to go and innovate? And our internal metrics show we have made significant progress.
Before, we had a number of years of lack of growth. Now we are in the third year of significant top-line growth. But the CEO does little, it’s the team members in each region, the spirit of what they’re driving. We have a long way to go, but a very compelling roadmap.
We have 4,000 customers in our installed base, with that base going from anything from a year to a decade. And we have to bring them all to contemporary use cases and we are working hard at it. We’ve added over 700 associates in the last two years. I’m so pleased that the family of JDA has grown.
There is, he adds, “an aggressive plan of growth over the next three years” that the company is working to realise:
Today’s world is not just about application modules. It’s about applications that deliver to a business need, but integrate and provide APIs that provide extensibility. And with Mulesoft and Microsoft now, 1,500 APIs are available from almost zero a few years ago.
Our partners are talking us into all sorts of new industries, including into the second tier of the customer base. We made a bet three years ago that we’re going to invest significantly, organically, around the areas we’ve talked about. And now we have repetitive, quantitative metrics that those bets have played out well.
We held a global developer conference in May where we had 550 external developers come in with live API access, and they wrote their applications on top of the JDA platform. So the same way you see Salesforce and Workday in their domains as platforms, we are casting JDA as a platform company. It’s not a destination, it’s a journey.
Pragmatic and likeable, Rishi has made good calls on strategic renewal, platform, partnership, and product refreshment over a short timescale – late in the day in cloud platform terms, though he can hardly be blamed for that.
Now it will be interesting to see some hard metrics on AI and ML emerge from the company, so we can start to map delivery against promise. That ought not to be too big an ask from a supply chain specialist offering insight, and it’s a principle that applies right across the cloud platform industry.