Insights and updates from the GT Nexus user conference.
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San Francisco 2004. All forty of us attendees met in a conference room to explore the world of global transportation and then huddled for a beautiful but chilly cruise in the harbor. Fast forward 11 years to Hollywood, Florida, and about 500 of us share—both a look back and look forward—at our changing world and the technology that powers it all.
From the Top
Looking back at the last year’s accomplishments, Sean Feeney, CEO of GT Nexus, provided us with some key fast facts on GT Nexus. Network growth is one of those critical stats indicative of a network supply chain’s value. With 5,000 new connections added and with a doubling in shipping orders in the last years, the network is one of the largest B2B in the world. New members ultimately lead to more business. As GT Nexus continues to add mega-companies, they bring along their many suppliers and carriers into the network. GT Nexus is a bit different than many of the players, providing a unique configuration for the supply chain—material transportation and financial flows—Information, Product, and Cash that power the chain, an “ERP for their supply chain,” as some of their customers call it. Although always a fan of GT Nexus and TradeCard,1 the combined energies have really taken the company, I believe, to a depth that they did not have before.2
The investments they are making in the product now will set them on course for more accelerated growth. Interestingly, GT Nexus customers in high tech and retail3 are growing and profitable, with major contributions from their supply chain strategies and technologies. Firms like Lenovo and HP, for example, who major international companies rely on, stretch and innovate their supply chains in unique ways with GT Nexus support, adding shareholder and competitive value to their firms.
What is interesting is that in the last year GT Nexus has begun digging deep into what I would call the 21st century supply chain challenges, leveraging newer technologies to solve several critical global challenges that supply chain managers have been struggling with. (More on that later.)
Major product releases plus over 450 customer projects in the last year keep the worldwide development team pretty engaged. Nestor Zwyhun, GT Nexus CTO, told me that this was accomplished due to investments GT Nexus has made in the recent past in their architectural approach. Nestor also told me, “We watch the successes and mistakes of Salesforce and NetSuite very carefully so we have a long-term adaptable platform to develop solutions that evolve with our customers." Another very insightful point he made was that, “Java would never have been so popular and become what it has if Sun had just kept Java as a propriety environment for their own use. Hadoop was also open source and now is the map reducer of choice.4 Java and Hadoop have been modified, enhanced and are everywhere due to their open status. NetSuite and Salesforce, as well,” he said, “have become what they are due to the common development platform they provide to their partners and customers.” Thus, GT Nexus’s strategy going forward is to be that nexus for the cloud developers of supply chain.
GT Nexus’s information strategy is to leverage all that nexus data from their multi-stream, Hadoop-enabled big data environment, to create performance and predictive analytics. Their Shipper Council, comprised of major customers, is a driving force for GT Nexus and is deeply involved in ensuring the analytics are scalable, real-time, and provide the needed insights.
Into the Not So Future….
Kurt Cavano, Chief Strategy Officer, provided the new release picture for what we can expect next. Playing off many innovations coming from the next generation of entrepreneurial trends, he aligned GT Nexus’s direction with the current hot and significant trends in the applications market and the new generation of consumer web services.
Visibility is the often talked about, but very challenging, issue that supply chain operators plead for the most. So GT Nexus has taken the leap in partnership with TransVoyant (and other partners) and created a new generation of visibility systems.5 In a comment that I think is prescient, Kurt predicted that one day we will not rely on data from the carriers (which is often late), but get it directly from the thing, bypassing the legacy systems in use today.6There are multiple streams of private and public data that TransVoyant has that can provide the real-time location and context of shipments, carriers, and people in motion. This enables all the players to orchestrate and manage critical time-sensitive processes and handoffs between each other and their dependencies (inbound intermediaries such as port drayage, rail and trucking firms). Users can actually know where the shipment is and when it will arrive—a precise time of arrivalvs. an estimated time of arrival.
Supplier Collaboration: Another often talked about but challenging issue is supplier collaboration, an area in which GT Nexus has been a leader with their trade finance capabilities. Combined with their Factory Management and direct procurement, Procure-to-Pay, they deliver on the concept/solution, Source to Pay. Many OEMs and retailers are seeking to have the entire partner management spectrum on a single network platform to manage all the partner interactions across the supply chain—from forecasting, purchasing, and WIP status, to inbound to supplier, to the multi-leg destinations, and to payment. These are current capabilities within GT Nexus. Of note, many of their customers are, step-by-step, adopting more of this platform whether they are retailers, pharmaceutical, or high-tech companies. As one of the keynote customers, Jim Cafone, Vice President of Supply Operations at Pfizer said, “ERP sees data as ‘ones’…whereas the supply chain (GT) can interpret ‘many’”;7 thus GT Nexus becomes their “ERP for the Supply Chain… our Network of Networks.” Brooks Brothers also made a similar statement. Their largest supplier/trading partner, TAL, in fact, had introduced the idea of GT Nexus to manage the Brooks Brothers supplier network, just as they do for TAL. As Brooks Brothers re-organized their many businesses and facilities into a holistic unified Brooks Brothers, GT Nexus became that “ERP for their supplier management.”
Transportation Management: An area that GT Nexus is investing heavily in is Transportation Management. Major roll-outs of new functionality will happen this summer (2015). GT Nexus, though a player in the transportation space, never had a full TMS. These enhancements will provide increasing value to existing customers and contribute to GT Nexus’s future and growth over the next few years. The big message here centers around a global view of transportation across modes, regions, and existing TMS that the customer or their trading partners may already have. GT Nexus’s message is that a network approach to TMS eliminates silos and generates value with a control layer that sits across existing systems, regions, and modes. So instead of a massive rip-out-and-replace, the GT Nexus network approach seeks to tie together all of the separate parts8 into a cohesive, transparent environment.
Today, there is significant spending in the Transportation software market with all constituents—carriers, LSPs, and customers—seeking a refresh in their logistics capabilities. You have to have real depth here today to compete in this market.9 These new developments will allow GT Nexus to compete head-to-head for TMS or improve an existing customer transportation portfolio with enhanced capabilities.
All Those Apps
GT Nexus has a 3-tiered approach to their multi-tenant platform. One area of innovation is what they call AppXpress, where new ideas, whether generated by customers, partners, or GT Nexus engineers, can be rapidly built and made available to the community. This allows GT Nexus to bridge the traditional developer world and the ‘app world’ of those convenient small apps that have become so popular on your smart devices.
Some AppXpress apps do become core product features. Some of those little apps that solve pesky personal productivity problems should not be discounted. They are the path to user ‘happiness.’ Kurt, in David Letterman style, provided the top ten AppXpress apps so the whole user audience could see and adopt them.
Folks like those of us at ChainLink get to rummage around in these companies, knowing the people, the partners, and the software pretty well. We can get our questions answered with no obfuscation10—no buzz or bull.11 However, one outstanding question that many want to know is: what is the exit strategy for this valuable company?
Normally, it is not that critical to our assessments of companies. But over the last few years there have been many supply chain deals. Mostly, these have been quite good—not burying the accomplishments and uniqueness of what has been created. But rumors and hard facts (SAP deal) still swirl. GT Nexus is a jewel in the crown—so it won’t come cheap. However, because of its unusual approach to supply chain, fitting the puzzle together between an acquirer’s software and GT Nexus will not be easy. The current developments, especially in TM, could enhance their value to potential suitors. I can think of at least two dozen very large and rich software companies who don’t have much supply chain and virtually no TM, or who need a powerful cloud play. These could be suitors. One obstacle to acquisition is GT Nexus’s big company focus. This would greatly reduce the potential buyers list to one dozen wealthy companies. But even a company with focus on the mid-market can certainly leverage the cloud that GT Nexus’s easy onboarding and strong network will offer to their midsize customers.
My final question to Kurt Cavano about the exit strategy was answered with the strict party line: “I work for an investor-owned company. They could decide among many options.” Like a good politician, that was a way of saying ‘no comment.’
Gosh, I wish I had about $800 million12 in my pocket. Owning GT Nexus would be a fun and lucrative ride.
1 GT Nexus pioneers such as John Urban, Aaron Sasson and Greg Johnsen; and of course TradeCard pioneers Kurt Cavano and Bryan Nella, as well as early employees are still present in the company. -- Return to article text above
2 The 2013 Bridges was the first conference of the combined companies, which established the unique foundation—both technically and culturally—for a one-company management and focus. -- Return to article text above 3 HP, Lenovo, Wolverine, Abercrombie, P&G, Pfizer, Brooks Brothers, and others were speakers. I also had the opportunity to speak with these companies during our social hour and, clearly, today’s executive teams back at their corporate headquarters do understand that supply chain is not a place to squeeze, though it can bring significant costs savings if managed properly, but is a real member of the corporate strategy of innovation and competitiveness. -- Return to article text above 4 For those who are not well-versed, you can read more about Hadoop here. -- Return to article text above 5 See The Journey to Visibility. -- Return to article text above 6 More and more shippers are using their own devices that accompany shipments such as sensors, RFID, and GPS to track their own high value cargo. -- Return to article text above7 In essence, ERP can, he said, only handle one part or recipe, one transaction and so on, vs. a supply chain network that is able to integrate and align multiple sources of data and different types of data common in the supply chain. -- Return to article text above 8 Again, those ‘parts’ can come from GT Nexus or a module from another provider. -- Return to article text above 9 We will provide a look into this new TMS from GT Nexus in an upcoming article. -- Return to article text above 10 “Obfuscation is the obscuring of intended meaning in communication, making the message confusing, willfully ambiguous, or harder to understand.”—Source Wikipedia. This is a standard mode of operation employed by very large software companies to attempt to assert their messages onto analysts and the market in general. -- Return to article text above 11 Defined by Webster as “idle chatter” or “writing or speaking that implies the audience are fools,” in case you were thinking otherwise. -- Return to article text above 12 The amount that The Wall Street Journal indicated the value of the company to be. -- Return to article text above
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