When I heard the rumor that JDA was acquiring Manugistics I didn’t even bother to write about it because I figured it was such a non-event (even in the event Oracle acquired them it would have been a non-event).
One of my very good friends was a bag carrying guy there last year when Jeremy Coote was still the president of the company. Some of you will recall that Jeremy was the CEO of SAP America after Paul Wahl left (and 6 months later ended up at Siebel where the current CEO of SAP America, Bill McDermott, reported to him… it’s a small industry). Anyway, Coote ran SAP America up to the edge of the cliff and then resigned; the CFO at the time, Kevin McKay was appointed CEO and he promptly drove it off the cliff and didn’t even leave any skid marks. Thank God for McDermott and for the wisdom of our Executive Board for hiring him, whatever we are paying him he is worth it.
There is an entire generation of enterprise software executives who represent the business as it was and not where it is going. For all of his personal charisma and selling ability, Coote is not the guy I would recruit to run a company that is representative of the complexities of today’s business with technology change underfoot, new business models, radically different economics, services, and multi-faceted direct selling channels. He’s also not a guy that I would put in a startup and that points to the complexity of hiring executives today when so much weight is put on their resume as a qualifier.
One of the best startups CEO’s I witnessed was Tom Reilly at Trigo (now IBM). When I looked at the Trigo deal back in 2002 (?) it was very much an enterprise software company slugging it out in the nuclear winter that was the time. Robin Vasan at Mayfield called me up and asked if we might be interested, which I was and I met with Tom, Byron, and Venky a couple of times and ended up not investing primarily because I was getting a lot of a triple-A from our internal guys who said they were too competitive (got that a lot, in this case I thought there was actually a higher probability that it would play out that way). Some of the other investors that I talked to who were looking at the deal said “yeah Tom is a solid guy but he’s never been a CEO before and right now we think you need someone experienced to get through this.” I didn’t subscribe to that viewpoint and I was pleased to see Robin stick with Tom to what ultimately was a very successful outcome for the company. I also know that Tom is on a lot of shortlists for CEO gigs whenever he wants to pull that trigger.
We should be hiring executives less on their resumes and more on their capabilities as testified to by their peers. It’s not that you need someone who is deep in every operational category, but someone who is cognizant of the challenges facing software companies today and armed with thoughtful strategies for succeeding in these market realities. The CEO has 4 jobs: plan, control, develop people, and develop culture. It is the direct reports that actually bring success to the company and the best people in this business simply won’t work for a CEO that they don’t have confidence in, so what ends up happening is the same roster of back benchers gets recycled because the B-team CEO doesn’t have the insight or confidence to hire fresh faces into executive roles, they are always looking at the resume.
Spend Matters: Manugistics Goes Out with a Whimper:
According to Lora Cecere’s summary from the AMR peanut gallery, “JDA Software is acquiring Manugistics for $211M in cash, approximately 1.2 times Manugisticsâ€™ FY06 revenue.
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