J.D. Edwards Targets CRM

Acquisition of YOUcentric takes ERP supplier into customer relationship space

Denver  August 16, 2001  Enterprise applications provider J.D. Edwards & Co. this week moved into the customer relationship management (CRM) field with the acquisition of Charlotte, N.C.-based YOUcentric, a privately held CRM software provider.

J.D. Edwards plans to acquire 100 percent of the capital stock of YOUcentric, valued at approximately $86 million, in exchange for J.D. Edwards common stock and cash. The mix of common stock and cash will be determined upon closing, which is expected to be in 60 to 90 days, subject to regulatory approval.

YOUcentric had approximately $16 million in revenues in 2000, according to information posted on the J.D. Edwards Web site. YOUcentric, with 180 employees, reportedly has 35 customers. J.D. Edwards, with 4,800 employees and 6,100 customers, reported 2000 revenues of $1 billion.

YOUcentric offers Java-based CRM software, including applications for sales force automation, campaign management, contact center management and partner relationship management.

The acquisition represents an extension of J.D. Edwards' current offering of enterprise resource planning (ERP), advanced planning and scheduling (APS) and supplier relationship management (SRM) applications. "Our customers and prospects are demanding software that delivers more value through enhanced customer experiences," said C. Edward McVaney, chairman, president and CEO of J.D. Edwards. "By combining J.D. Edwards and YOUcentric, we will provide our current and future customers the benefits of a very adaptable and integrated collaborative CRM application suite."

The acquisition comes at a time when analysts are predicting the CRM applications market is set to explode. Technology consultancy AMR Research has estimated this market will expand over the next five years by a 29 percent compound annual growth rate (CAGR). Technology research company IDC said this week that the CRM applications market will grow from $6.2 billion in 2000 to $14 billion in 2005.

J.D. Edwards says its own research shows limited penetration of CRM applications among its customer base, with at least one third of its customers expressing intent to purchase CRM technology within two years.

"There is a clear propensity for organizations to utilize the CRM capabilities of their ERP backbone providers due to the inherent benefits of pre-integration," says Steve Bonadio, senior program director for IT research firm META Group. "In fact, our research reveals that CRM integration costs can amount to 60 percent of the total implementation cost associated with the average CRM project. Furthermore, organizations must look to application suppliers that provide flexible, standards-based architectures to more readily integrate third-party data and systems."

J.D. Edwards said that the first phase of integrating the two companies' applications should be completed by the end of this year. Most of YOUcentric's executive team and employees are expected to remain with J.D. Edwards in Charlotte and join with other parts of J.D. Edwards to create a competency center for customer-facing applications.

Dave Weaver, senior vice president for CRM services at YOUcentric customer Bank of America, reacted positively to news of the acquisition. "We believe it makes good sense for both companies," Weaver said.

Besides Bank of America, YOUcentric serves such customers as Seagate Technologies, FedEx, Hertz, ScanSource, Riverstone Networks and McGraw-Hill.