Last week, my RSR partner Steve Rowen and I attended JDA’s annual user conference, JDA Focus 2017. This was the first big US conference since JDA announced an equity investment of $570M from private equity companies Blackstone and New Mountain Capital last August. Additionally, the Las Vegas event was the first time a lot of JDA customers and observers got to meet new CEO Girish Rishi. And finally, this was our first opportunity to interact with our former analyst industry colleague Kevin Sterneckert since he took on his new assignment as GVP for Global Innovation Strategy. These things are all related in an interesting way.

An Infusion Of Capital

First and foremost, it’s apparent that the capital infusion from Blackstone and New Mountain Capital is fueling energy and innovation at JDA. And that’s really important, because JDA has a huge install base of customers, and various pieces of its software portfolio are considered tools of the trade. For example, RSR partner Paula Rosenblum was the very first U.S. CIO to reconcile department and store plans using the Arthur allocation planning system, in the mid-1980’s. JDA bought Arthur from Comshare in 1998, and although it was recently taken off the menu of available products, it is still being used throughout the industry. Another such example is Intactix, the retail industry’s swiss army knife of space planning software. But the centerpiece of JDA’s offering is its supply chain portfolio, which is in wide use by both manufacturers and retailers. And a big part of the company’s install base includes i2 Technologies‘ supply chain management solution (acquired by JDA in 2010).

It’s because of the wide use of JDA’s solutions that the industry has been closely watching the company’s direction even before former CEO Hamish Brewer left in May 2014 (right after that year’s Focus event). Even though during his tenure JDA had merged with RedPrairie in 2014 (which was owned by the aforementioned New Mountain Capital), the company seemed to be treading water to modernize its legacy solutions at precisely the same time that competitors began to accelerate. By 2014 retailers were clamoring for pre-integrated solutions, mobile user interfaces, and the ability to infuse analytics into all their operational systems. And technology companies were starting to push hard in the direction of true software-as-a-service offerings, single-instance-multi-tenant applications delivered via a “cloud ” as an alternative to on-premise and usually heavily modified licensed solutions. JDA’s response to all of this seemed a little flat-footed at the time.

In 2016, that started to change. Arguably the biggest new thing that JDA announced last year was Retail.me, the company’s new SaaS-based assortment planning solution, and the company has been focusing more on innovation since then.

The infusion of new capital happened at precisely the same time that JDA was working to integrate new concepts from JDA Labs as regards to user interfaces and advanced algorithms into its solutions. The “silicon valley ” (the concept, not the place) vibe has intensified, perhaps because of the more entrepreneurial mindset that private investment groups tend to have. Whatever the reason, by this year’s Focus conference, customers could see the results. For example, JDA is experimenting with robotics, IoT, and machine learning technologies to automate warehouse operations in new ways. During his keynote speech to the conference attendees, Dwight Klappich, Vice President of Research at Gartner, said that the next generation of warehouse operations will be “people-less “, and feature autonomous mobile and humanoid robots – both which were on display in the conference demonstration center.

But while people-less warehouses might still be out in the future, JDA has still delivered a significant improvement to warehouse operations by integrating labor optimization to its warehouse management solution (this is an outcome of the JDA/RedPrairie merger). In a conversation with other industry analysts, the conclusion that the group came to was that the new warehouse management system is “the one to beat “. That’s good news for current customers, and of course for JDA.

New Leadership

Innovation starts at the top, and Focus conference-goers got to meet new CEO Girish Rishi. Mr. Rishi has only been in position since January (after stints at Motorola, Zebra, and Tyco International), and so he might have been forgiven if his remarks came from the “20,000 foot level “. But he resisted that temptation, instead commenting on how JDA can help companies achieve their own “digital transformation “. Specifically, he talked about improvements JDA is making in its offerings for planning, distribution, and retail, to “consume data science “, sense information at “the edge ” (data generated from the edge of the enterprise and beyond, such as social media, IoT, and “externalities ” like the weather), and JDA’s API-driven integration strategy ( “FLEX “). Wayne Usie, JDA’s Chief Market Development Officer, followed up on Girish’s comments by calling JDA’s next generation solutions “JDA.next “, describing the future as one driven by intuitive human interfaces, micro-services delivered over the cloud, and very fast “speed to value ” for technology investments.

The infusion of leadership energy goes well with the infusion of capital to move the company toward becoming an innovation leader. And that was the focus of a presentation that new Group Vice President for Global Innovation Strategy Kevin Sterneckert gave to a gathering of industry analysts at Focus 2017. Kevin, known in the industry for his time at Gartner, where he was VP of Research for Retail Merchandise & Supply Chain Optimization, is a key player in JDA’s new partnership with dunnhumby (a deal that was inked just days before the Focus 2017 event). dunnhumby should be well known to most decision-makers in the retail industry; the company is a pioneer in using customer insights to drive better results for both retailers and Brands. In the new partnership, dunnhumby brings its expertise and methodologies, and JDA brings its execution systems. Kevin discussed how the joining of the two will bring dramatic new capabilities category and assortment planning, store layout, price and promotion optimization, and personalization. As Kevin said, the objective is to “encourage <customers to make> one more trip and one more item per trip “.

Beyond the dunnhumby deal, Kevin talked about how JDA is moving aggressively to enable “the digital supply chain “, offering innovations in planning and execution for returns forecasting, attribute-based forecasting for new product intro, inventory optimization for slow movers, and dynamic task optimization in the warehouse.

Investments In Applied Innovation

During his talk with the industry analysts, Kevin turned to conversation over to Suresh Acharya, the head of JDA Labs. Suresh has been with JDA since 2009, and head of the labs since 2015. Suresh has a passion for data science, but also has a clear understanding that complex algorithms have to be usable by business people without advanced math degrees. To that end, he talked of the labs’ focus on “algorithms as a service “, and fusing innovations into the company’s products in ways that are differentiating. As an example of how lab innovations make it into products, he said that “while we <the labs> can’t take credit for inventory optimization <the software product>, we can take credit for the slow mover algorithms that are now in the product. “

Beyond infusing math and data science to move various of JDA’s products to go beyond “rules based ” logic, JDA Labs demonstrated some true “pure innovation ” energy at the event. Like many of its competitors, JDA is using “design thinking ” methodologies to develop innovations in user interfaces ( “UX “), and that has led the company into thinking about next-gen UX’s, for example “augmented reality ” technologies. And JDA is investing heavily in robotics (we were treated at the conference to a fun and fascinating conversation with “Pepper “, a humanoid robot at the Montreal labs). These innovations have targeted uses in mind, as the company seeks to (as Mr. Sterneckert said) “leap ahead rather than make incremental improvements “. In fact, Kevin said that the company, taking a lead from its innovation minded investors, is focused on “ROII, return on innovation investment “. Said, Kevin, “we’re taking kind of a ‘VC’ <venture capitalist> approach to unlock innovation, many investments delivering a few home runs – we’re looking for something like a $1 in, $50 out ROII “.

Mind The Gap

Sometimes the gap between a technology company’s vision and a retailer’s people/process/technology capabilities is astounding. But that doesn’t mean that tech firms should scale back on their investments in innovation. In fact the world is moving so fast that “incrementalism ” is an almost sure-fire formula for failure. The goal for technology companies must be to simultaneously move their customers forward while at the same time constantly looking for breakthrough innovations that will leapfrog incremental improvement in some dramatic way, and then finding “pilot ” or “lighthouse ” or “alpha ” (or whatever label Marketing can come up with) customers to try them out.

That was the focus at JDA Focus 2017, and it should be encouraging news for customers and prospects alike.