On the offensive Featured

9:36am EDT July 22, 2002

Steve Sasser says in the 24 years he's been in business, he's never seen things move as fast as they do now.

Hence, the president and CEO of Symix Systems Inc. must move his own company even faster -- a task that's requiring him to change the way his $133 million public company does business.

"We have to reinvent ourselves," Sasser says. "That's the process we're going through right now -- a very rapid metamorphosis to reinvent ourselves."

Sasser describes today's Symix as "the recognized leader" in enterprise resource planning -- allowing mid-sized manufacturing companies to electronically control all facets of their businesses, from ordering to delivery, from costs to profits.

His description of the Northeast Columbus company changes, however, when he looks at the future of Symix, which he expects one day to be the recognized market leader, not just in ERP, but in all e-business for manufacturing as well as distribution companies.

That means his customers will rely on Symix to provide solutions for electronically coordinating their businesses not just from within but also with the outside world of clients and suppliers.

Already, Sasser's been successful in growing and guiding Symix through turmoil in the technology realm. The company has grown from a $40 million business when he joined it in 1995 to $129 million this fiscal year. That includes more than $5.5 million in e-business-related products and services sold to approximately 75 companies since Symix launched its e-business efforts in January.

The company's nearly 30 percent annual growth rate is now flattening out -- even taking a dip into the red -- as it prepares for its latest metamorphosis. This summer, Symix released its fiscal year 2000 results, showing a net loss of $10.1 million. In the previous fiscal year, it realized net income of $4 million.

Sasser expects investment in e-commerce, supply chain management and customer relationship management -- issues that will matter most to his customers -- to drive future growth and return Symix to profitability in the second half of this fiscal year. By 2001, he expects it to resume its fast growth, possibly showing increases as high as 50 percent annually.

Coaching changes

When Sasser joined Symix five years ago, the company faced a great opportunity in the ERP market, he says, but it just wasn't playing its best game.

"The company was not strategically in sync with the basics like product development, product deliveries and what the sales channel was selling," he says.

His first move was to improve the coaching staff.

He brought in a new management team, including new faces in development and human resources, as well as a new CFO. New second-level management also came on board, many of whom had worked with Sasser in previous positions at Goal Systems, a company that was later purchased by Legent Corp. and then by Computer Associates.

Sasser's goal: "We were looking for, first, people who understood how to build a software business; had business sense and values to build a quality, world-class company; and who had experienced bigger situations."

He wanted executives who had managed businesses the size of what Symix would become.

Under their leadership, Symix began to grow through acquisitions, including operations in France, Australia and Germany.

Sasser expanded the company's product line from ERP to CSRP -- customer synchronized resource planning. This meant a whole new view for Symix. Previously, it helped manufacturing businesses, well, manufacture. It was a view of the inside of the client company.

Now, Symix turns to what Sasser calls "the outside game" -- helping manufacturing and distribution companies coordinate the entire supply chain among themselves and their suppliers and their customers.

"It's about making customers happier, driving revenue and making suppliers better," Sasser says.

He also changed the reward and measurement system for employees, specifically on the sales side, to help them better understand where the company was headed.

Those moves created a foundation from which Symix could launch its latest transformation, but to Sasser, they're ancient history.

"The only relevant part to all that is through its 20-year history, the company has been able to see market changes, anticipate market changes, lead those changes," he says. "It's the test of time, a test of making the company ready to play pure offense now in the new economy."

A new game plan

Because its industry is growing so rapidly, the only way for Symix to keep up is to anticipate where it needs to be -- and get there before the boom arrives.

Four years ago, Sasser recruited Jorge Lopez as vice president of corporate development and strategic planning. He's a key player in keeping Symix ahead of the game.

"My role is to try to understand what's happening out there, or even better, what should be happening," Lopez says. "We think we're better off building a future we have imagined than to try to figure out someone else's vision of the future."

To do this, he does a lot of "scenario planning."

"It's not like you're predicting the future like a fortune teller," Lopez says of scenario planning. "What you're trying to do is get some of the likelihood of things occurring."

He not only looks at the likelihood, but examines what options Symix would have should each scenario hold true.

"It turns out that change is accelerating," Lopez says. "So I think the best you can do is to try to map out as many different scenarios as you think you can do based upon the different forces you think are shaping the future.

"It's actually a fun game," he continues, adding that businesses large and small can use the tool of asking "What if?" and, more important, coming up with answers.

For example, Symix, and every software company, Lopez says, deals with the possibility that everything it sends out now on a CD-ROM might eventually be available on the Internet.

"The customer may achieve the same ends by using a browser and pointing to a Web site that has that software already installed and operating," he says. "Instead of using software and buying software, they're becoming a subscriber to a site."

Symix saw the scenario as a very important piece of the future.

"What we've done in the past is, we've delivered software," Lopez says. "So we adjusted the business model to account for the fact that all this value is moving to the Web."

Symix, then, is predicting that companies will increasingly use the Internet to conduct business -- not just internally, but with their supply chains as well.

"We think the Web will continue to provide a facility for companies to work together in buying and selling," Lopez says, "so what we're concentrating on is the infrastructure required to do that."

Lopez points out he's not solely responsible for creating the company's vision.

"This is not 'The Jorge Lopez Show,'" he says. "It's more like you're part of a movie. There's a producer, writer, actor. I'm more in the producer role where I'm trying to get everyone to take a look at the new ideas and see if they make sense."

The process to change Symix's business model to facilitate that concentration is not something the company's executives just started.

"Accounting firms say, 'We can audit your books over the Web.' It takes the travel costs they're able to save and reduces the costs of doing the audit," Lopez says. "There are HR capabilities on the Web, payroll. So it's a very real, real scenario, and we're not fighting it.

"We actually, two years ago, sat down to think about this and realized we could take advantage of it if it occurred."

No time outs

Once Symix created its vision of the future, it had to make moves to get there faster, Sasser says, or risk coming in late behind competitors.

One of its first moves was to create a subsidiary, called Frontstep, dedicated to scouting out new clients and markets in e-business. Frontstep also is changing Symix's business model from primarily a direct sales mode to a channel strategy -- indirectly selling through partners including resellers and service providers.

"Frontstep is an e-business subsidiary created to accelerate our evolution of our company from what we used to be to what we want to be," Sasser says. "Basically it's our response to what's going on in the marketplace."

In May, Morgan Stanley Dean Witter Private Equity and Updata Venture Partners provided $13.6 million in financing to accelerate Symix's business plan through Frontstep. The money will be used to advance the company's business-to-business software suite, add new indirect sales channels and target markets, transition to new software delivery and pricing models and develop new strategic partners.

Still, Sasser notes, the partnership carries with it other benefits: Both investors "are highly-regarded names in the financial community, and their industry knowledge and associations will be valuable resources to us as we move forward."

Already Frontstep has helped Symix attract new markets: distribution companies and online trading exchanges.

"As you start building infrastructure for companies, you get measured against companies that built infrastructure in the past, for example SAP or Microsoft. SAP was very successful in selling software to businesses to manage their internal operations," Lopez says. "We're basically at the beginning of a new venture backed by the resources and skills of a public company."

In addition, a services group within Frontstep, called brightwhite, helps clients rethink their business models and use the Web.

"The significance of brightwhite at this early stage of the market is to do a good job of explaining what e-business is and provide a map toward the particular kinds of results a client wants," Lopez says, noting brightwhite might change as a result of the e-business marketplace.

"It could move to implementing a more standard kind of service built around products as they mature into a marketplace that has also matured because it understands things better. At the same time, it will be looking to adopt new things that are not well understood by the marketplace. So that would be a core competency for brightwhite," he says.

"We'll let it be the pioneer," Sasser agrees.

As for Symix as a whole, management is making sure it is ready to respond as the company's focus turns to these two new, promising parts of the business.

"Realistically, we're also managing an existing ERP business that customers still pay good money for," Lopez says. "It sort of matures to the next level so you have multiple business models within the same corporation."

Symix has doubled its research and development investment in the last year to support its new e-business strategy.

"We are creating a new image for Symix," Sasser says, "that we're with it -- we get this e-business stuff."

Early in the game

Already, Symix's offensive moves are scoring through Frontstep and brightwhite.

For example, eAmigo.com, a business-to-business trading portal that facilitates trade relationships between Latin American manufacturers and North American buyers, uses eStep Messaging, Frontstep's collaboration and communication solution, to speed the buyer/seller registration and application process.

Frontstep also has created partnerships to extend Symix's reach.

In February, Frontstep partnered with Commerce One Inc., giving Symix customers the ability to leverage Commerce One MarketSite Global Trading Portal to buy or sell products and services worldwide and to build and automate supply chain processes online.

As Symix continues its metamorphosis, Sasser expects a short break in the game during which his team can regroup.

"I think the business will grow much slower in the next couple of quarters," Sasser predicts. "In fact, we've been in a period of basically flat business. As the market matures, we'll start growing at a 30 to 50 percent clip again in 2001."

"We do believe e-business is here," Sasser says. "It's just starting, but it's real and it's significant. So we're going to rebuild the company around an e-business." Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.