JDA Software, by far the largest supply chain focused software provider, with annual sales of somewhere around $1 billion, announced current CEO Bal Dail was stepping down, to be replaced by Girish Rishi, an experienced executive who has been on the periphery of supply chain but not really been at a major software company.
I wasn't expecting this change, but am not surprised either, as I will explain later.
Some history here is in order.
Gilmore Says... |
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| Is that "last mile" train already leaving the station (not obvious yet if the answer is Yes), or is this where Rishi is going to push JDA to go next, or perhaps better said to accelerate current efforts? |
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Longtime JDA CEO Hamish Brewer, who had architected the company's acquisitions of first Manugistics and then i2 Technologies that really led JDA to transition from a retail POS and merchandising vendor to a supply chain company, was pushed out in May of 2014.
The reason cited was that Brewer was not moving fast enough on a series of strategies - which can be said to have largely been grouped around getting closer to customers - and that someone else was needed to accelerate the transformation.
Dail was then chairman at JDA and a partner at private equity firm New Mountain Capital, which owned JDA after RedPraire, privately owned by New Mountain, in effect acquired the then public JDA in late 2012 and took the combined companies private.
Indeed, challenges in the integration of RedPrairie into the new company - dominated by JDA execs, including of course Brewer - led to some rocky financial times for JDA, and was in part behind the need for transformation at the company.
Dail was named interim CEO when Brewer was let go. I predicated in these columns and to Dail himself at the time that he was likely going to wind up as permanent CEO. Why? I got the sense Bai was enjoying the role, but more importantly, for reasons I won't spend time on here, that there was not much upside and a lot of downside to taking the JDA CEO spot right then, chasing away I suspect top potential candidates.
Additionally, while interim CEO and I think a bit before, Dail had orchestrated a number of organizational and personnel moves, bringing in a whole new leadership team (a few from inside JDA).
That meant a new CEO would have had his or her hands fairly tied for a while in terms of organization and key execs - and new CEOs want freedom to make those decisions.
In fact, one of the first things they do is to make changes in top execs and organizational structure.
So as I predicted, after a fruitless search for a new CEO, Dail become permanent CEO in late October of 2014.
Since then I think JDA has been generally moving in a positive direction. As I private company, you can only go by what they tell you, but I have heard from several sources inside the company that 2016 was a fairly strong year financially.
In the press release announcing Rishi as CEO, JDA said "In the last few years, JDA has seen accelerated software demand bookings growth, increased profitability and substantially expanded its global customer base."
That's a bit vague, but my sense is things are in fact going pretty well for JDA right now.
So why the change at the top? That is no clear answer yet to that question.
I was unable to make the press conference call with JDA on the news Wednesday afternoon, but would have asked just that if I had been on-line.
I did listen to the short replay of the call the next day. I say short because none of the press asked any questions after Rishi made some brief opening remarks. In fact, in a similar call in 2014 announcing Dail as CEO, I was the only one then to ask a question.
Odd.
 So since I couldn't ask my question, we will have to speculate. My speculation will start with the fact that JDA received a substantial investment from another private equity company, Blackstone, last August. This allowed JDA at the last minute to avoid being acquired by Honeywell, as had all but been announced.
A transaction of some kind had to be done to help JDA get relief from a debt overhang of some $2 billion, with lots of its cash flow going to debt service instead of product development or marketing.
I wrote at the time that while the move was good for JDA employees and customers versus what would really have been an odd fit inside Honeywell, the price was having "another cook in the JDA kitchen" - that being Blackstone.
When you spend hundreds of millions to acquire a share in the company, you will have some thoughts about how it should be managed and who will head the ship.
It could Blackstone decided someone else was needed to take JDA to the next level.
It also could be that having all told done a good job in changing JDA's direction and culture, Dail had simply had enough of the crazy software world, and I wouldn't blame him for that.
Before joining New Mountain, Dail had been a successful insurance industry executive, among other roles. All industries have their own stresses, but software has them in bunches.
However, It's not like Rishi himself has a deep background in software.
Most recently, he was at Tyco International, responsible for the firm's global retail solutions (not sure what all that involved, but includes for sure some EAS and RFID solutions) and its North America building automation business.
All told, Rishi was managing a combined $4 billion business unit, so he has experience with running a much larger firm than JDA.
Rishi also worked years ago for the old Symbol Technologies (where I intersected with him just a little bit), and then at RFID company MATRICS, later acquired by Symbol. Back at Symbol, he went to Motorola Solutions when it acquired Symbol, then was an executive at Zebra Technologies when it acquired Motorola.
Then came the move to Tyco.
In the press conference, Rishi said two things attracted him to JDA.
First were all the opportunities in omnichannel, both in the retail sector and especially beyond. Nothing surprising there.
More interesting, Rishi cited the opportunities to digitize "last mile" logistics. Here we probably see some of Rishi's data collection roots coming through, as he enthusiastically talked about the opportunities to "light up" logistics execution through the Internet of thing (IoT) and other visibility tools. His experience in unning Tyco's home automation business may also have moved Rishi's focus to the opportunities with IoT.
What is most interesting about that is that this would be really a very different business direction for JDA, which of course was primarily a supply chain planning company before it acquired RedPrairie and its WMS business.
Is that "last mile" train already leaving the station (not obvious yet if the answer is Yes), or is this where Rishi is going to push JDA to go next, or perhaps better said to accelerate current efforts? The traditional planning market is very mature and well saturated, so perhaps this is a new place JDA can go to drive growth - but again, it is very different.
When the new CEO comes in, there are usually some changes in the executive ranks below that. Maybe this will be the exception, but new CEOs usually have some execs from pervious posts that they trust and want to join the team.
Will keep you posted on that one. Congrats to Rishi. Look forward to learning his vision in more detail.
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