JBA Holdings Plc has an image problem. It irritates us that we don’t have the glamor and glitz of an SAP AG or a Baan Co NV, says Alan Vickery, chief executive at the Birmingham, UK-based company. Irritation aside, Vickery knows that his company has thrived by pursuing a radically different business model from the […]
JBA Holdings Plc has an image problem. It irritates us that we don’t have the glamor and glitz of an SAP AG or a Baan Co NV, says Alan Vickery, chief executive at the Birmingham, UK-based company. Irritation aside, Vickery knows that his company has thrived by pursuing a radically different business model from the one that has brought fame to its rivals. While JBA’s System 21 product is just as generalized in terms of product functionality as competitive offerings, JBA has attacked the market in a completely different way, targeting a set of broad vertical markets that are often ignored by the leading players. It is the world’s largest supplier of applications software to the clothing and footwear industry, and it ranks number three in the food and drink and the business equipment sector. And in the US, it is a top three vendor of applications to automotive components suppliers. These sectors may seem an arbitrary bunch, but they have two crucial elements in common that play to JBA’s advantage. First, they are sectors populated by thousands of suppliers. While SAP, Baan and Oracle Corp all salivate at the thought of winning a deal with BMW or Ford, JBA homes in on the ‘tier 1’ automotive parts makers, for example, who supply the major car manufacturers.
The second element has more to do with staying out of the way of the heftier competition. We are very heavily focused on our chosen markets, says Vickery. We have to be better than SAP and Baan to win. By doing so we can prosper without being smashed in the face by the big boys. That strategy has proved highly, if not spectacularly, successful. In 1996, JBA turned in revenues of 161.8m pounds or $262.1m, up 31% on 1995. And in its 15th year of steady unbroken profits, the company reported net income of 6.2m pounds or $10.1m, up 42% on 1995. Growth of 38% during 1996 brought US revenues to $140m or 86m pounds, making the US by far the company’s largest unit. In contrast, UK revenues rose 25% to 40m pounds or $65m. That US success has been achieved through a two-pronged approach. Through 300 US resellers of its products, JBA targets small and medium sized businesses who are seeking a ‘turnkey’ package of software, hardware and services, while JBA’s direct sales force sells primarily to larger companies, its ‘traditional’ strategy. Two thirds of JBA’s new sales are still on IBM AS/400 servers, although the company also sells Unix and NT-based software. Meanwhile, the company has been expanding through acquisition. Most notably, it bought Germany’s financial software house Ratioplan Unternehmensberatung Datenverabeitung GmbH in 1995, and in April of this year acquired French AS/400 distributor as well as software seller Presys SA. Now, the London-listed company is looking to sharpen its profile through a secondary flotation on the US NASDAQ exchange. But that is not something that is pre-occupying Vickery. We would like to have a higher image, but the business people in the industries we have chosen to specialize in know us well. The rest can wait. We will just stick to our knitting, he says.