We are a leading provider of sophisticated enterprise software solutions designed to enable planning, optimization and execution of supply chain processes for manufacturers, wholesale/distributors and retailers, as well as government and aerospace defense contractors. Additionally, we provide pricing, yield management and demand management solutions for travel, transportation, hospitality and media organizations. Our solutions enable customers to manage and optimize the coordination of supply, demand and flows of inventory throughout the supply chain to the consumer. We have invested nearly $900 million in developed and acquired technology since 1996 when we became a public company. We have licensed our software to more than 5,800 companies worldwide. We believe the quality and breadth of our product offerings promote customer loyalty and drive repeat business as 74%, 65% and 79% of our software sales were made to existing customers during 2008, 2007 and 2006, respectively. As of December 31, 2008, we employed over 1,700 associates and conducted business from 24 offices in three geographic regions: the Americas (includes the United States, Canada, and Latin America), Europe (Europe, Middle East and Africa), and Asia/Pacific. Our corporate offices are located in Scottsdale, Arizona.
Historically, the process by which goods are manufactured, distributed, and ultimately sold to consumers has been known as the supply chain, running forward from the suppliers of raw materials to manufacturers and the distribution of products to meet the anticipated demand of customers and consumers; and the demand chain, extending back from the consumer to the retail store and its distribution centers. Providers of software solutions have focused on different vertical markets within these broad segments and attempted to help customers optimize the various processes relevant, in the case of the supply chain, to supplying goods to customers and retail outlets, and in the case of the demand chain, to selling and delivering goods to the ultimate consumer. JDA has been integrating solutions to address the full supply and demand chain since 2000, with the fundamental belief that the processes used in both markets are often common and could benefit from collaboration to optimize their visibility, planning and decision making systems. Today we see retailers becoming increasingly focused on the upstream manufacturing supply chain and we also see manufacturers increasingly focused on becoming consumer centric.
Throughout the supply and demand chains, businesses increasingly face new challenges created by global operations and increasingly demanding consumers. These two factors are in conflict with one another as the extended global supply chain introduces longer lead times while the accelerated pace of change in consumer demand requires increased responsiveness. Consumer preferences can change rapidly and without notice, and intensified competition ensures that an organization’s production, inventory, distribution or allocation mistakes will be costly and their impact felt instantly in the market. The global economic crisis has created an environment where it is becoming increasingly important to optimize the number one cost for most manufacturers, wholesale/distributors and retailers — their inventory. Further, the long-term challenges faced by the supply and demand chains are further exacerbated by rapidly fluctuating commodities costs, logistics costs and an intense focus on margin improvement in light of weak consumer confidence and declining sales.
We primarily sell to one large segment of the market — consumer products supply and demand chain companies, which encompass retail companies as well as manufacturing and wholesale distribution vertical industries — and market our products as modular, yet integrated suites of solutions that are designed to give our customers one synchronized view of product demand across their enterprise and extended supply chain. Our integrated suite of solutions combines the functionality of planning, optimization, execution and analysis applications to enable our customers to develop an integrated enterprise plan to track and optimize the flow of inventory through the supply and demand chain while optimizing their resources, operating efficiencies and financial results. Our customers can select individual products from our suite and implement them on a stand-alone basis or they can implement various combinations of our products to create an integrated solution. This flexibility provides speed to value which is highly desirable in the current economic environment.
Our product suites include Demand Management solutions to improve the accuracy of forecasting different product sales behavior, shifts in demand from new product introduction to end of life and other data to minimize inventory carrying costs and reduce lost sales; Allocation, Replenishment & Fulfillment solutions for core planning and replenishment decision making to optimize order management and execution processes; Merchandise Planning solutions that synchronize all planning metrics, including sales, margins or turns across functional organizations to optimize strategic financial and operating planning activities; corporate level Merchandise Operations Systems, which enable retailers to manage their inventory, product mix, pricing and promotional execution and enhance the productivity and accuracy of warehouse processes; Space and Category Management solutions that enable the planning and execution of category and merchandise plans designed to achieve demand-based precision merchandising; Revenue Management solutions which enable travel, transportation, hospitality, gaming and media companies to optimize their profits by managing the pricing and availability of finite time sensitive inventory; such as hotel rooms; Transportation and Logistics Management solutions, which are designed to enable manufacturers, distributors, retailers, shippers, consignees, carriers, trading partners and logistics service providers to effectively manage the complexities of transportation and logistics, including multiple modes of transport such as by air, rail, sea and road; Contract Manufacturing solutions for manufacturers of aerospace and defense products including order management, repair management and financial management; and Store Systems, which provide retailers with point-of-sale and back office applications to capture, analyze and transmit certain sales, store inventory and other operational information to corporate level merchandise operations systems. Our solutions also include a comprehensive set of tools for advanced decision support and analysis covering strategic business planning, forecasting, promotional planning, distribution planning, manufacturing planning and scheduling, price and revenue optimization, inventory optimization, collaborative synchronization of inventory, distribution, production and material plans, category management and workforce management. Many of our products can be and are sold to multiple customer types and most of our products are sold across each of our geographic regions.
JDA Business Segments
We organize and manage our operations by type of customer across the following reportable business segments:
Retail. This reportable business segment includes all revenues related to applications sold to retail customers.
Manufacturing and Distribution. This reportable business segment includes all revenues related to applications sold to manufacturing and distribution companies, including process manufacturers, consumer goods manufacturers, life sciences companies, high tech organizations, oil and gas companies, automotive producers and other discrete manufacturers involved with government, aerospace and defense contracts.
Services Industries. This reportable business segment includes all revenues related to applications sold to customers in service industries such as travel, transportation, hospitality, media and telecommunications. The Services Industries segment is centrally managed by a team that has global responsibilities for this market.
Business Opportunities and Growth Strategies
JDA has served the retail industry since 1985. In 2000, we expanded into the manufacturing and wholesale-distribution markets through strategic acquisitions. Our market expansion has been primarily achieved through a series of ten acquisitions over the past eleven years, the largest being the acquisition of Manugistics Group, Inc. which we completed in July 2006.
JDA plans to further expand its markets through a combination of organic growth and acquisitions. We believe organic growth can be achieved as we cross-sell acquired solutions within our existing customer base and through sales to new customers in our target markets. We have established long-term business relationships with many major customers in our target markets, and as our product offering grows, we believe we can successfully leverage those relationships to create follow-on sales opportunities. We historically realize 70% to 75% of our annual software license sales from existing customers.
The second driver of long-term growth at JDA is acquisitions. JDA has a proven track record of successfully integrating software companies and creating profitable growth for both JDA and the acquired businesses post acquisition. Our future growth plans include additional acquisitions to further expand our markets and improve our offering, revenue and profitability. Although acquisitions remain a long-term growth strategy, we will be cautious about commencing a large acquisition until the credit market stabilizes.
In today’s market, our customers are primarily focused on technologies which will enable them to reduce the costs of doing business and/or increase their sales performance. These types of offerings are typically planning or decision support solutions rather than the traditional transaction or ERP-type (enterprise resource planning) systems. The resulting focus on planning and operational improvements during the current economic crisis has created a counter-cyclical business opportunity for JDA, not only in terms of near term sales performance but also opportunities for the longer term as we expand our share of the supply chain planning market. JDA is a recognized leader in supply chain software solutions as we are able to offer companies supply chain planning and optimization solutions and services that provide a high return on investment and deliver rapid results.