ANNUAL REPORT 2008
CONTENTS
Jeeves in Brief 3
The Year in Brief 3
Message froM The Ceo 4
Business ConCepT, vision, goals and sTraTegies 6
MarkeT 8
Business Model and parTner sTraTegY 10
parTner Case 13
MarkeT offering 14
produCTs and CusToMer exaMples 16
CusToMers 17
CusToMer Case 18
personnel 20
adMinisTraTion reporT 23
risk and sensiTiviTY analYsis 24
share daTa 26
finanCial overview 28
appropriaTion of profiTs 30
inCoMe sTaTeMenTs 31
BalanCe sheeTs 32
Changes in equiTY 34
Cash flow sTaTeMenT 35
noTes 36
audiT reporT 47
Board of direCTors and Board proCedures 48
ManageMenT TeaM 49
hisTorY 50
annual general MeeTing
The annual general Meeting (agM) will be held at 5 pm on Tuesday, May 26, 2009, at Jeeves’ offices on the 6th floor of kungsgatan 37, stockholm, sweden.
parTiCipaTion
shareholders intending to participate in the agM must be registered in their own name in the share register maintained by euroclear swe- den (formerly värdepapperscentralen vpC) no later than Tuesday, May 19, and must notify Jeeves information systems aB of their intention to participate (see address below). The Company must receive notification no later than 4 pm on Tuesday, May 19, 2009.
agenda for The MeeTing
The agM will consider business required under the swedish Com- panies act and the Company’s articles of association.
finanCial reporTs in 2009 q1 interim report april 24, 2009 q2 interim report July 23, 2009 q3 interim report october 23, 2009
ordering finanCial inforMaTion
financial and other pertinent Company information is published at www.jeeves.se.
information can also be ordered from:
Jeeves information systems aB
Box 1042, se-101 38 stockholm, sweden phone: +46 8 5870-9900 fax: +46 8 5870-9999 info@jeeves.se
invesTor relaTions ConTaCT Bengt-Åke Älgevik, Chief executive officer phone: +46 8 5870-9900, bengt.algevik@jeeves.se disTriBuTion
The 2008 annual report is sent to all shareholders shortly before the agM. it is also available as a pdf on www.jeeves.se, under
“Corporate & ir.”
The annual report is prepared in swedish and translated into english. in the event of differences between the swedish version and the english translation, the swedish version prevails.
Jeeves in Brief
small and medium-sized growth enterprises
Jeeves’ three complete ERP systems – Jeeves Universal, Jeeves selected, and garp – are aimed at small and medium-sized growth companies with 5-1,000 employees.
high value in business at a low cost of ownership
Jeeves’ ERP systems are distinguished by their high value in busi- ness and their low cost of ownership. They are:
• easily adapted to a customer’s unique processes
• easily integrated with other systems
• easily and quickly upgraded.
Modern platform
Jeeves’ ERP systems are based on a modern technology platform.
The tailored design preserves all customer-specific modifications in every upgrade. The system offers multi-platform support for Microsoft windows NT/2000/xP/2003, Linux, Unix, and Microsoft sqL server.
Attractive partner model
Jeeves’ business model is based on Jeeves developing and pack- aging ERP system products itself, while a network of highly qualified partners provides sales, delivery, and support to end-customers.
Partners also adapt offerings to local markets and specific sectors.
Jeeves’ customers
The Year in Brief
• Jeeves’ sales advanced 22% (9)
• The new ERP system Jeeves selected was launched, aimed at
small enterprises.
• during the year, many new customers began using Jeeves’ ERP
systems:
o Jeeves Universal – 129 new customers o Jeeves selected – 17 new customers o garp – 82 new customers
• Jeeves continued to cultivate its international partner network:
o the Norwegian Logit gruppen was acquired o a Master Partner, Jeeves North America, was estab-
lished in the North American market
“Jeeves is a fast-growing Swedish supplier of ERP systems with an increasing
international presence”
kEY figUREs 2008 2007
sales, sEk million 158.3 130.1
Operating profit, sEk million 16.6 18.4
Profit after tax 13.1 14.8
Operating margin, % 10 14
Equity/assets ratio, % 32 34
Earnings per share after tax, sEk 4.6 5.0
dividend, sEk 1.5 1.5
JEEvEs ANNUAL REPORT 2008
4 MEssAgE fROM ThE CEO
A solid year with international overtones
i am proud of what we have achieved together: Jeeves, our employ- ees, and our network of partners. Through long-term and persistent efforts, Jeeves has created a competitive offering in the international market for ERP systems. we have championed the idea that such systems should make it simple for enterprises to work efficiently and to evolve. Our unique offering has consisted of a low cost of owner- ship in combination with high flexibility and functionality. in sweden and abroad, only a few players have been able to sell to new cus- tomers. That Jeeves is one of these also makes me proud.
A good ERP system adds value to an enterprise
The choice of ERP system is crucial for an enterprise that wants to compete in the long run. The winners will be those who have control of their business and are quick to deal with changes in the world around them. winning demands coordination between strategy, business processes, organization, and key performance indicators.
An ERP system is the glue that holds together these parts and en- sures that they work and develop in tandem with one another.
successful channel strategies
The fundamental strategies that Jeeves has held on to since our in- ception in 1992 now give us the prerequisites to successfully compete with deep self-confidence in a tough market. By daring to choose a different path, we have built an effective delivery and development or- ganization with a fantastic product. Our business model is based on a channel strategy by which local partners sell and deliver Jeeves’ ERP systems. They provide expert support to customers to help them de- velop their operations using the ERP system. we at Jeeves focus on development, packaging, and maintenance of the software as well as on support to partners. with each part focusing on its own stage in the value chain, each one can deliver with the highest possible efficiency.
The best of two worlds
in our industry, a debate is under way on the advantages and disad- vantages of selecting a standardized system compared to develop- ing a tailored ERP system wholly adapted to the specific demands of the company. The standardized system is cheaper and can be easily upgraded to new, more modern versions, but it is often difficult for the client to adapt the system to specific demands in their own operations. when the system needs to be upgraded, the adaptations have to be redone. Costs tend to become so high that the customer chooses to put off the upgrade and thus foregoes new functionality.
A tailored system, on the other hand, can be made wholly customer- specific but is more expensive to develop and more difficult to main- tain and enhance with new functionality.
for Jeeves customers, this is not an issue. They have access to the best of two worlds: a standardized system easily adapted to the cus- tomer’s unique needs – at the lowest cost of ownership in the market.
Tough market
Jeeves has encountered a slowdown in the market for ERP systems during the second half of 2008, with fewer closings and longer deci- sion-making processes, chiefly among large customers. it is my opin- ion that the slowdown is temporary, because a good ERP system is part of the solution to many profitability problems for companies. we see healthy underlying demand and expect investment in ERP sys- tems to continue.
At the same time we are encountering harsh competition. Our part of the market, the segment for small and medium-sized enterprises (sMEs, with 5–1,000 employees), has several large and competent suppliers with substantial resources for product development and marketing. however, many of our competitors have old systems that do not offer the flexibility that customers demand today. Thus the sales of these suppliers often are limited to maintenance of existing systems. New licenses are sold only by a few suppliers, and i am pleased to report that Jeeves expanded its customer base by 20%
during 2008. i see that as ample evidence that our offer of flexibility and a low cost of ownership are appreciated by the market.
steady financial progress
Jeeves continues to show steady financial progress. The growth was 22% during the preceding year, which includes our Norwegian ac- quisition financed entirely with cash. Our operating margin of 10% is in line with our target. On the other hand, the cost of our international expansion initiatives pulled down profit. At the same time, it is very positive that the proportion of revenue that our international partners contributed increased in 2008.
Our financial strategy, to achieve healthy growth with balanced earnings, is an important strength. we have a strong balance sheet and at the same time a large part of our revenue consists of recurring
“Today only a few players are able to sell to new customers.
That Jeeves is one of these
makes me proud.”
JEEvEs ANNUAL REPORT 2008
5
MEssAgE fROM ThE CEO
maintenance of our products. That gives us both endurance and latitude to continue to grow and acquire companies. But above all, our customers can feel secure in Jeeves as a long-term and stable supplier of ERP systems.
Cornerstones for international expansion
Large customers and long-term growth require international expansion.
Our internationalization is one of the major challenges we are facing and has been a high-priority area since i became CEO two years ago.
Through our partners in different countries, we have improved di- versification of risk, because the different geographic markets lie in different phases. Except for france, where the market was weak in the latter half of the year, our foreign partners enjoyed success with sales in 2008.
during the past year, we have taken important steps forward.
Our acquisition of the Norwegian Logit gruppen gives us a platform on which to expand in the Norwegian market. in North America, a Master Partner was established. Together with our previous new bridgeheads in Europe, this means the critical cornerstones for our international strategy are now in place. in the future, our focus will be on developing our operations in these markets.
in this context, i also want to spotlight our domestic market. Jeeves’
strong position and success in the swedish market is decisive when we are establishing ourselves as a supplier in other countries. Our customers often bring us along when they expand across the world.
A strong team
in an organization like Jeeves’, every associate’s input is significant.
To succeed, we must be skillful in many areas, not least develop- ment, sales, and customer and partner relationships. And all these parts must work together. Today Jeeves has a strong team of em- ployees who together deliver attractive ERP system solutions to our customers. Jeeves’ success attracts employees from our industry peers when they seek new challenges. 2009 will be a challenging year for the entire market, and we will work hard to achieve our ob- jectives. with Jeeves’ strong team and market offering, i feel we can accept that challenge with self-confidence.
Bengt-Åke Älgevik
CEO Jeeves information systems
JEEvEs ANNUAL REPORT 2008
6 BUsiNEss CONCEPT, visiON, gOALs ANd sTRATEgiEs
Business Concept, Vision, Goals, and Strategies
Business concept
Our customers share a need for ERP systems that can be adapted to their operations rather than having to adapt their operations to the systems. Through the years, Jeeves’ partner strategy has proved successful and will be decisive in our future expansion.
vision
in sweden, Jeeves commands a strong position in the sME segment in wholesale/retail, manufacturing, and services. in Europe, we have room to strengthen our position, though not at the expense of profit.
goals
Jeeves’ long-term goal is to become one of the leading ERP system suppliers in Europe.
The overall financial goals are:
• annual growth of 15%–20%
• an operating margin of at least 10%
goal achievement
in the past five years, Jeeves has achieved growth averaging 26% a year. during the same period, the operating margin has averaged 12%.
strategies
since its inception in 1992, Jeeves has consistently operated in line with five key strategies.
growth
Jeeves will grow organically by growing sales in existing and new mar- kets and through acquisitions to further secure its market position. in the future, international expansion will play a larger role for growth.
Profitable growth
Jeeves aims to achieve an operating margin of at least 10% while investing aggressively in products and market expansion.
Market development via partners
Market development, sales, and delivery are conducted exclusively via skilled and experienced partners. To Jeeves, it is vital that both partners and end-customers see Jeeves as their first choice for ERP systems.
Jeeves’ partner model is one of its most important success factors.
Up-to-date products
Jeeves offers flexible solutions with broad functionality designed for simple adaptation to customers’ operations. To this end, Jeeves focuses consistently on creating products with a very high degree of technical innovation as well as broad and mature functionality.
Jeeves’ ERP systems are based on smart technology architecture that makes for simple upgrades to new versions. They are also open and integration-friendly.
Motivated employees and partners
Motivated, creative, and skilled employees and partners are the foundation of Jeeves as a business and partner. Jeeves’ business model relies on the ability to develop strong business relationships with the Company’s different partners.
Commitment and enthusiasm among Jeeves’ employees are cru- cial to success. Jeeves offers user-friendly, high-tech products. This also demands employees with profound expertise, creativity, and extensive experience.
“Jeeves develops flexible, innovative, and cost-effective ERP systems for companies that
want to grow continuously.”
“Jeeves will be one of Europe’s leading ERP system suppliers in
the SME segment.”
JEEvEs ANNUAL REPORT 2008
7
JEEvEs ÅRsREdOvisNiNg 2007
“Jeeves will be one of Europe’s leading ERP system suppliers in
the SME segment.”
JEEvEs ANNUAL REPORT 2008
8
Medium-sized enterprises a) companies and small groups need to optimize their business flow.
b) large subsidiaries need to optimize their own operations and integrate with their group.
Flexibility is key in a demanding market
Jeeves focuses on the sME segment
Large
enterprises
> 1,000 employees> 500 users
small enterprises need packaged solutions that can be implemented rapidly.
Large enterprises need different ERP systems for different business processes as well as subsystems demanding integration, flexibility, adaptation, and rapid deployment.
small enterprises
Medium-sized enterprises
5-50 employees 5-25 users
51-1,000employees 25-500 users
MARkET
Every company needs an ERP system
ERP systems are the information technologies that enterprises and organizations use to operate, manage, and follow up on their busi- ness. The systems often contain modules such as inventory man- agement, purchasing, production, sales, financial management, and human resources. The ERP systems market comprises:
• sales of licenses and software maintenance
• consulting and training services
• Software as a Service
• hardware
Customers are drawn from just about all kinds of enterprises, from different sectors, and with needs that vary in complexity. The market is generally divided into three segments: small enterprises (5–50 em- ployees), medium-sized enterprises, groups and large subsidiaries (50–1,000 employees), and large enterprises (>1,000 employees).
Jeeves’ sales focus on companies in the sME (small and medium- sized enterprise) segment but include subsystems for major corpo- rations. Jeeves’ market offering caters to customers in wholesale/
retail, manufacturing, and services.
The economy slows demand
for several years, growth in ERP systems has remained steady and at a high level. Europe, Jeeves’ most important market, has grown the most in terms of value, delivering growth of about 7.7% a year since 2004, according to gartner (2008). during 2009, growth is
expected to slow because of the prevailing recession. in a survey of iT managers’ priorities, gartner (2009) concluded that increases in iT budgets in Europe will be at a low level, around 0.5%. how- ever, ERP systems together with Business intelligence are deemed to have top priority among these investments. ERP systems are re- garded as playing a key role as enterprises seek efficiency gains prior to future expansion.
The primary driving force for investment in ERP systems is de- mand for greater operational and staff efficiency, which is relatively immune to fluctuations in the economy over time. in 2008, demand in the market for ERP systems slowed slightly, but in most cases this resulted from decisions being delayed due to the current state of the economy. Thus Jeeves sees healthy underlying demand and ongoing growth.
general or niche competition
The global market for ERP systems is fragmented, featuring numer- ous players. some offer ERP systems covering the majority of an en- terprise’s functional areas. here we find sAP, Oracle, and Microsoft as well as Jeeves and Lawson. Other, niche-oriented players con- centrate on specific functional areas such as customer relationship management (CRM) or supply chain management (sCM).
Jeeves ranks among the 25 largest suppliers of ERP systems and
is one of the fastest-growing suppliers of full-range ERP systems in
Europe. in procurements in sweden, Jeeves competes primarily with
Microsoft, sAP, Lawson, and visma. Outside sweden, Microsoft,
sAP, and domestic players are Jeeves’ chief competitors.
JEEvEs ANNUAL REPORT 2008
9
MARkET
Continued consolidation
Today’s ERP system solutions are increasingly complex to satisfy the needs of customers. This boosts the cost of product development, marketing, and delivery. The high costs have led to consolidation of the market, and major players are acting in different ways to fortify their positions. The most common strategies for consolidation are:
• Take over and maintain an existing ERP system and its cus- tomer base.
• Take over an ERP system with an existing customer base. Main- tenance on the acquired solution is limited, and the customer base is offered a gradual switchover of ERP systems.
• Complement a tailored ERP system with a new module.
stronger market offering with partner cooperation
Another way for ERP system suppliers to cut costs and make in- roads to new markets is through various forms of partnership. Tra- ditionally, ERP system suppliers have had a direct relationship with their customers and control of the entire value chain. One alterna- tive is a channel strategy whereby partners sell, deliver, and partly maintain the ERP system. The ERP system supplier focuses on de- veloping and maintaining the system as well as transferring skills to their partners. This lays the groundwork for greater efficiency and a stronger customer offering, while costs and business risks are shared among multiple parties. Customers are also offered different enhanced value related to the ERP system by various partners. Over the years, Jeeves has refined this approach. Competitors such as iBs, ifs, and Lawson are increasingly moving in this direction, but it requires changes in the established delivery organization.
Experienced purchasers in a mature market
Trends like globalization, virtualization, service-based architectures, and rapidly changing markets will radically affect the entire market, according to analysts such as gartner and forrester. The market for ERP systems is mature, and most customers in western Europe today have considerable experience procuring ERP systems. Many customers are second- and third-generation purchasers. Customer demands on suppliers have increased, the sales process is often long, and purchasing decisions are being made at higher levels in organizations.
Many companies are using old ERP systems that do not satisfy their demands for improving business efficiency. To modify their opera- tions, these companies need to develop or replace their ERP sys- tems. Jeeves has identified several important factors that influence decision makers in their choice of ERP system.
Capacity for development
during change, when customer needs determine how enterprises al- ter their business processes, the capacity of the ERP system for ex- pansion and adaptation will become an increasingly important com- petitive factor. An ERP system must be capable of being developed simply, quickly, and at low cost to meet changes in an operation’s needs, when the business grows organically or through acquisitions.
Many older ERP systems often limit a company’s freedom to act, because the system tends to restrict the business processes rather than facilitate them.
standardization and customization
Modern ERP systems allow for standardization and customization.
To offer customers competitiveness and to enable differentiation, ERP systems must be adapted to the customer’s unique business processes, while the focus in less business-critical areas should be on standardization and simplification to keep costs down.
scope for integration
The ability to deliver the right information to the right person may be crucial to a company’s decision making ability. The ERP system’s capacity for integration with other systems is significant. To all play- ers in the ERP sector, it will become ever more important to offer users access to applications and functions via the internet, including software as a service (saas).
Measuring key performance indicators
The ability to use the ERP system to measure key performance indi-
cators (kPi), perform analyses, and plan is essential in enabling man-
agement to identify and capitalize on their company’s development
potential. The ERP system is a critical prerequisite for successful
growth in expanding businesses.
JEEvEs ANNUAL REPORT 2008
10
Scalable business model with partners
Breakdown of different tasks and revenues in the value chain
The illustration shows roughly the significance of different tasks and revenues by the participants in the value chain.
Partners Customers
Master Partners Jeeves
1. Maintenance
2. Licenses 3. service
1. Licenses
2. Maintenance 3. service
1. service
2. Licenses 3. Maintenance BUsiNEss MOdEL ANd PARTNER sTRATEgY
Jeeves works with partners
Jeeves’ business model has formed the basis of the Company’s market strategy since its inception in 1992. The model divides the tasks between Jeeves and a network of partners (resellers), in which each actor focuses on their part of the value chain: everyone does what they are best at. Thus enormous value is generated all along the chain, from product development, to sales, delivery, and support, benefiting customers, partners, and Jeeves.
• Jeeves focuses on development, packaging, and maintenance of software as well as marketing. Jeeves also ensures that part- ners have access to effective skills development and support for sales and delivery.
• Master Partners represent Jeeves in strategically important countries . A Master Partner builds a local brand by establishing its own network of resellers which it supports in sales, mainte- nance, and service of Jeeves’ ERP systems.
• A partner sells and delivers products and supports local cus- tomers in a clearly defined market segment, geographic market, or particular industry. Every partner can focus on its market seg- ment and adapt Jeeves’ ERP systems to its particular customer groups. in sweden and certain international markets, Jeeves operates directly via local partners.
Recurring maintenance income is crucial
when customers invest in Jeeves’ ERP systems, they purchase a number of user licenses and pay an annual fee for day-to-day main- tenance of the software, combined with the cost of services such as consulting and training. Jeeves’ principal revenues arise from fees for maintenance (one-year contracts for new versions and support) and licenses. License and service revenues are paramount for partners.
when a partner sells an ERP system, the total revenue is split by the partner, any Master Partner involved, and Jeeves. On average, Jeeves receives about 10% of each sale to an end-customer.
Miscellaneous 1 %
Licenses and maintenance 79 % Consulting and
training 20 %
Breakdown of Jeeves’ 2008 revenue
JEEvEs ANNUAL REPORT 2008
11
“Jeeves’ business model is scalable. The basic investments
made in product development and packaging of software can
be adapted to different geographic markets.”
BUsiNEss MOdEL ANd PARTNER sTRATEgY
scalable business model
Jeeves’ business model is scalable. The basic investments made in product development and packaging of software can be adapted to different geographic markets.
so as to continue its long-term expansion, Jeeves is now focusing on initiatives in the international market together with its Master Part- ners. This entails investments for Jeeves in the form of outlays for geographic and other adaptation of the software. in practical terms, the Master Partner receives the majority of revenues during the initial phases when opening a new market. Jeeves estimates that it usually takes 3–4 years before the Company can benefit from significant revenue. Once a Master Partner has successfully opened a market, Jeeves can scale up license sales with limited investments of its own in marketing and sales. in line with Jeeves’ objective to maintain con- tinuous profitability alongside strong growth, the company balances long-term investments with short-term revenue streams. sales made through established partners still account for the majority of Jeeves’
sales and growth.
More about partners
Jeeves has always worked with partners, steadily enhancing the partner model to adapt it to needs. Two primary models are cur- rently used in collaboration with partners: Jeeves Partner and Jeeves Master Partner. during the past few years, Jeeves has recruited new kinds of enterprise as partners.
Independent software vendors (ISVs) own, develop, and sell their own ERP systems. Many of these companies base their cur- rent offering on an outdated ERP system. Their existing customer base as well as new customers seek a more up-to-date solution, but that often requires substantial investment. with the customization options that Jeeves offers, Jeeves’ ERP systems are an excellent fit for an isv looking to develop a new generation of its own solution.
The recently acquired Logit gruppen is an example of an isv.
Value added resellers (VARs) are companies that choose to de-
velop their own packaged software based on or specially built for
Jeeves’ products. These products can then be sold by other part-
ners if a vAR desires.
JEEvEs ANNUAL REPORT 2008
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fACTs
ONGOING DEVELOPMENT OF PARTNERS
Jeeves’ training function, Jeeves Competence Center (JCC), conducted 130 partner training days in 2008. in addition, about 50 consultants at our swedish resellers were certified. The first Turning Jeeves was held in 2008. This skills de- velopment program helps experienced ERP consultants quickly and efficiently get up to speed as Jeeves consultants. during 2009, JCC will further assist Jeeves’
international expansion by training new partners around the world and boosting expertise among existing partners.
fACTs
JEEvEs PARTNERs – ThE REAL sPECiALisTs
Jeeves partners:
• form the network of dedicated resellers who actively sell, deliver, and service the Company’s ERP systems.
• number 50 resellers with about 550 committed employees
• are found in Sweden, the rest of Europe, North America, Australia, and parts of Asia.
Jeeves partners specialize in different industries and the needs of businesses in those indus- tries. This gives Jeeves customers access to highly adapted ERP systems, in association with partners who thoroughly understand the factors for success in those businesses.
BUsiNEss MOdEL ANd PARTNER sTRATEgY
Jeeves’ offering to partners
Jeeves’ attractive partner program provides the effective and profit- able tools for partners to take Jeeves’ products to the market. Part- ners receive support throughout the process of training, marketing, sales, and customer care.
• During the establishment phase, it is important for the partner to quickly learn how to sell and deliver Jeeves’ products efficiently and with a high standard of service. Jeeves offers training pro- grams for sales and consulting staff, together with an advanced product that is packaged for efficient sale and delivery.
• To efficiently make sales to new customers, Jeeves provides a strong and well-defined brand. Jeeves provides various ready- made campaigns and messages partners can use as well as a manual for communication of the Jeeves brand.
• Sales activities require a high level of skill and an effective dem- onstration platform. Jeeves offers various types of expertise as support in the sales process. Jeeves has ready-made platforms for conducting standardized demonstrations and helps partners with a program for efficient management of large customers.
Jeeves continuously develops its offering of services that support
partners’ customer solutions.
JEEvEs ANNUAL REPORT 2008
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JEEvEs ANNUAL REPORT 2008
Working with Jeeves gives freedom
“working with Jeeves gives freedom”, says Edwin Bruinenberg, responsible for Jeeves Business development at Jis Netherlands.
Together with Jos Bruins, one of the two owners of Jis Netherlands, he tells the story of becoming a successful Jeeves partner in the dutch market.
“in 2003, we were six consultants who ran a business that sup- ported an As400 application. New business was drying up. we were looking for another solution to help us boost new business”, says Jos Bruins. “we evaluated several ERP systems, from well known international vendors to smaller domestic ERP systems. A couple of the other systems were very strong candidates, but after a thorough evaluation, Jeeves came out as the strongest one.”
Both Jos Bruins and Edwin Bruinenberg were impressed by Jeeves’ rich functionality and the way it was set up to be easily adjusted to clients’ specific needs. There was also good personal chemistry between the two companies. what mattered most, though, was the way Jeeves worked with its Partners. Many vendors limit the autonomy of their resellers by imposing strict rules on how and to whom software solutions can be sold.
“we chose Jeeves because they gave us more freedom to posi- tion ourselves in the marketplace”, Jos Bruins explains. “we wanted to develop our own business based on our knowledge of the dutch market”.
Building trust
An important advantage of being part of the Jeeves family is that Jeeves listens and responds.
“if we have important proposals, they team up with us and offer their support”, says Edwin Bruinenberg. “Together with Jeeves, we present a strong team with well-defined roles and clear communica- tion. That is important for building trust in clients.”
depending on the phase, Jeeves has provided different kinds of support to Jis Netherlands. initially, the company needed negotia- tion support and guarantees of stability over time. Jeeves remains an important speaking partner in marketing matters when required.
Tools for and training in how to sell and set up Jeeves also make a major difference for a partner like Jis Netherlands, making their work easier.
growing brand recognition
Competition in the Netherlands is tough, with many players, includ- ing all the large international ERP vendors. it is hard to bring a new ERP system to the market.
in 2003, Jeeves was unknown in the Netherlands. it takes time to build a reputation in a new market, and, starting out, Jis Nether-
lands only sold small installations. But reference installations are the key to success. Jis Netherlands worked hard, and in 2006, a major breakthrough came with an order from NNZ, a dutch multinational packaging specialist for the agricultural and industrial sectors.
increased awareness has led to Jis Netherlands receiving spon- taneous requests from several companies that have heard about Jeeves. in combination with the constant development of Jeeves products, this now makes Jis Netherlands a strong competitor with Oracle and Microsoft.
A great tool – good people
selling and implementing ERP systems is a people business. The organization that sells and implements the software is just as impor- tant as the software itself. Jos Bruins and Edwin Bruinenberg know that you constantly have to reassure the client that you are a reliable business partner with expert knowledge about their industry.
“we know our market and our clients”, says Jos Bruins. “Jeeves Universal is a great tool. By taking our own competence and Jeeves Universal to our clients, we will help them excel.”
fACTs
Jis NEThERLANds
Established in: 2003 Number of employees: 20
Annual sales: EUR 2.5 million
Target industries: whole sale/retail and manufacturing throughout the sME-segment Average client size: about 100 employees.
No. of Jeeves clients: 42
Jos Bruins, director Jis Netherlands, together with Edwin Bruinenberg, responsible for Jeeves Business development.
13
PARTNER CAsE
JEEvEs ANNUAL REPORT 2008
14
Advantages that tip the scale
fivE iMPORTANT REAsONs TO ChOOsE JEEvEs
Cost per upgrade and user
Source: Radar Group
Movex sAP R3 ifs iBs Asw Jeeves
50,000
25,000
0 sEk
27,000
45,000
30,000
35,000
2,000
COsT
The cost of upgrading Jeeves to new versions is extremely low.
ERP system strategy
Business processes Organization
key per- formance indicators
JEEvEs’ PhiLOsOPhY
“Jeeves’ philosophy is to sharpen companies’ com- petitive edge by offering ERP systems that support their operational development.”
successful companies constantly evolve and deal rapidly with change that occurs in their operating environment. winning demands coordination between strategy, business processes, organization, and key performance indicators. An ERP system is a prerequisite for holding these parts together and ensuring that they work and develop in parallel. The choice of ERP system plays a decisive role for enterprises that want to be competitive today and in the future.
Jeeves customers understand this.
1. wORLd CLAss fUNCTiONALiTY
good functionality is often the starting point for a company selecting an ERP system. fundamental to Jeeves’ standardized system is world class functionality with comprehensive and smoothly functioning fea- tures that satisfy the needs of small as well as large enterprises.
2. ExTREMELY UsER-fRiENdLY
Jeeves offers a complete set of predefined business processes, such as for sales, manufacturing, delivery, and financial control. The ERP systems provide ready-made interfaces for numerous user roles, such as salesperson or production manager. Each staff member is associated with a role in the system for which the functions, flows, and information required are defined and easily accessible. The roles can also be individually adapted. The system is user-friendly and thus enables the company’s staff to work efficiently all the time.
3. fLExiBiLiTY iN MULTiPLE diMENsiONs
An ERP system must be open to development as the needs of the company change. Jeeves handles this by offering great flexibility in several areas.
• Adaptation – Jeeves’ ERP systems are easily adaptable to each
company’s specific needs. Adaptation is done in a short time with a minimum of consulting hours or even by the customer on their own.
• Upgrades – Jeeves’ ERP systems are upgraded quickly and
easily. Upgrades do not affect previous customizations as these are ported into the new version. Thus Jeeves customers can easily have a customized and up-to-date version of the system with access to the latest functionality.
• simple integration – Jeeves’ ERP systems are open and designed
to easily integrate with all the most widely used products in the market and thus most other iT systems that customers use.
4. CLOsE PROxiMiTY TO sERviCE
Jeeves’ network of partners work close to end customers. Partners have profound expertise and experience deploying and working with Jeeves’ ERP systems but also maintain a sharp focus on their spe- cific customer groups and understand the special circumstances and challenges they face.
5. LOwEsT COsT Of OwNERshiP iN ThE MARkET
Jeeves offers the lowest total cost of ownership in the market. The total cost of ownership for an ERP system is the sum of all costs of adaptation, upgrading, and integration of the system during its serv- ice life. with Jeeves, all of this can be done quickly and efficiently.
And that keeps down the cost of ownership. Combined with a mod- ern ERP system that supports and keeps up with the company’s growth, this means that the value in business significantly exceeds the cost of ownership. Jeeves customers quickly achieve return on their ERP investment.
MARkET OffERiNg
JEEvEs ANNUAL REPORT 2008
15
Source: Radar Group
A fLExiBLE, sTANdARdiZEd sYsTEM
when a company invests in an ERP system, it is important to consider the initial investment as well as the total cost of ownership over time and compare them with the value generated by the system for the company. for several older ERP systems available in the market today, the costs of adapting, upgrading, and integrating the system can be as much as six times the initial investment.
The value Jeeves delivers tips the scales. Jeeves customers have a modern ERP system that efficiently tracks strategy, business processes, the organization, and key performance indicators. The key to this is that Jeeves is a flexible, standardized system that allows customers to choose the best of two worlds:
• A standardized system that offers smooth functionality rich with features under continuous development
• A flexibility that makes it simple to adapt the system to the customer’s specific needs and an upgradability that easily ports implemented
customization, making it possible always to have access to a modern ERP system with the latest functionality.
And all this at the lowest cost of ownership in the market.
vALUE
• Business processes/roles
• functionality
• flexibility & standards
• quick upgrades
COsTs
• software
• Upgrades
• Adaptation
• integration
“Jeeves – the ERP system
where value tips the scales”
JEEvEs ANNUAL REPORT 2008
16
Jeeves’ products with customer examples
viTROLifE - JEEvEs UNivERsAL
Magnus Nilsson, CEO, vitrolife.
Maria vestlund, CfO, djurås verkstad
Johan Larsson, vice President, wesC.
Vitrolife is an international biotechnology/medical-technology group that develops, manufactures, and sells ad- vanced products and systems for the preparation, cultivation, and preservation of human cells, tissues, and organs.
Jeeves Universal is aimed at medium-sized enterprises and subsidiaries (50–1,000 employees) that integrate with their parent group’s business as well as large enterprises with more than 500 employees. Customers have complex businesses based on multiple business processes, which affects their need for adaptation and integra- tion. Jeeves Universal is a modern ERP system with broad functionality. The customer’s operations and processes guide the way in which the system is structured, and the options for adaptation are extensive. The system offers a role-based user interface that integrates information and application support from the ERP and other systems with the specific role in the business. Users benefit from powerful support in performing their tasks.
Djurås Verkstad manufactures and sells slirej brand sand spreaders in sweden and abroad. healthy sales growth led to djurås verkstad outgrowing their old system, and in december 2008 Jeeves selected was in- stalled.
Jeeves Selected is aimed at small enterprises (5–50 employees) with the goal of growing and expanding their business. The system offers the centralized functionality a small enterprise needs. Jeeves selected uses the same basic technology and system architecture as Jeeves Universal, enabling the small but growing company to smoothly step up to the larger system with higher functionality at the pace required by the busi- ness. The customer “seamlessly” grows into the larger suit.
WeSC, an internationally leading brand in street fashion, has garp as its ERP system.
Garp is a complete ERP system for small and medium-sized rapid-growth companies with 5–50 employees, prima- rily in manufacturing and wholesale/retail. garp features numerous optimized business flows, from customer and supplier relationship management, to logistics, production, and annual accounts. Like Jeeves’ other systems, garp is easy to implement and achieves quick return on the investment. All adaptations are ported when upgrading.
“Jeeves Universal has streamlined our distribution more than 50%. We have achieved high quality in deliveries and full traceability of our products the entire way to our customers all over the world.”
“With Jeeves Selected, we have obtained complete operational support and an overview of the business, from purchasing and inventory, to sales and invoicing. Above all, we can continue to grow and develop.”
“We have to be able to handle long combinations of colors, sizes, and patterns. Without our ERP system, we would be in trouble.”
dJURÅs vERksTAd - JEEvEs sELECTEd
wEsC - gARP
PROdUCTs ANd CUsTOMER ExAMPLEs
JEEvEs ANNUAL REPORT 2008
JEEvEs ANNUAL REPORT 2008
17
Customers
Examples of Jeeves customers
sCA Packaging Alfa Laval
sOs Alarm Anovo Nordic
Lundhags skomakarna we scandinavia
duobad Mjöbäckspannan
quality generics skaraborgs golv NetOnNet
Carl Lamm Tylö
fagersta stainless Calitel
Prenax inc.
wholesale/retail Manufacturing services
small Medium-sized Large Enterprises
kappAhl Lindex
CUsTOMERs
ERP systems for small and medium-sized enterprises
Jeeves’ ERP systems cater to customers across the sME segment.
More companies value working with solutions and projects that quickly reach completion with minimal consultancy input. Custom- ers appreciate the fast return on investment and the low overall cost of ownership when choosing a Jeeves ERP system.
To satisfy the needs of different customer categories, the offer has been divided to meet the needs of small versus medium-sized en- terprises.
Medium-sized and large enterprises select Jeeves Universal Jeeves Universal is supplied primarily to medium-sized enterprises, groups, and subsidiaries. These customers seek a solution with ex- cellent functionality and make tough demands on the system being flexible and simple to adapt to the company’s business processes, now and in the future. Larger corporate structures require that the system can be integrated easily with other systems in the group.
A low cost of ownership is extremely valuable when customers are looking for an ERP system with a long life-span. Jeeves Universal (formerly Jeeves Enterprise) has been around for 15 years and enjoys strong international growth, but most customers are still in sweden.
smaller enterprises select Jeeves selected or garp
during spring 2008, Jeeves launched Jeeves selected, targeting smaller rapid-growth companies. Jeeves selected offers a modern and flexible ERP system adapted to correspond to the principal needs of the small company. when the business expands, new func- tions can be added successively to the initial solution to handle the company’s new circumstances with demands from more users, sup- pliers, and customers. Jeeves selected is built on the same platform as Jeeves Universal, so that when the company is ready it can easily
move up to Jeeves Universal. The common platform also makes Jeeves selected an attractive option for groups with small subsidiar- ies where the parent company uses Jeeves Universal.
garp is a modern, standardized system with excellent functionality with a solid customer base among enterprises with 5–50 employees.
garp also features good flexibility and can be adapted to compa- nies’ special needs. Customers want short start-up times for their new installations, simple updates, and close proximity to support and service.
strengthened position at home
Jeeves enjoys its strongest position in the swedish market, where the Company successfully attracts growing companies with its ERP system concept. Together with its partners, Jeeves is a well known and established supplier of ERP systems in the wholesale/
retail, manufacturing, and services segments. during 2008, Jeeves strengthened its position in the swedish market. The number of new customers grew 20% from 2007.
in specific niches, such as apparel, Jeeves commands the position of market leader with garp based on the solution for version manage- ment. in many specific customer segments, such as food & Beverage and injection Molding, Jeeves Universal offers competitive industry solutions developed by Jeeves partners. Through Jeeves selected, Jeeves has reinforced its position as a supplier at the lower end of the sME segment. Jeeves selected’s adaptation to smaller growth com- panies’ needs is an important complement to Jeeves Universal for the medium-sized enterprises. small enterprises with 5–50 employees constitute about 75% of the number of firms in the sME segment (5–1,000 employees) and in the past few years have posted strong growth rates. The business and credit information agency UC AB re- ports that more than half of all small enterprises grew more than 25%
in the past year, in terms of sales. Many also were quite profitable.
JEEvEs ANNUAL REPORT 2008
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JEEvEs ANNUAL REPORT 2008
wholesaler Triade grows with Jeeves
TRiAdE
Triade is a European distributor of consumer electronics, mobility products, and information technology, providing retailers with products from more than 120 vendors, serving more than 5,000 sales outlets daily. The company is current- ly developing a joint ERP platform, based on Jeeves Univer- sal, for its operations. Today there are 250 Jeeves users in the company. In 2009, that number will grow to 400.
CUsTOMER CAsE
18
Triade is a leading European one-stop distributor specializing in con- sumer electronics, mobility products, and information technology. This fast-growing company has its head office in the Netherlands. with the implementation of an ERP solution based on Jeeves Universal, Triade has established a platform for growth and efficient operations.
Establishing a joint ERP solution
with operations in several European countries, Triade provides retailers with products from more than 120 vendors, serving more than 5,000 sales outlets daily. Triade’s objective is to become a significant pan- European player. The company’s strategy for achieving this is to buy or invest in distribution companies across Europe. in addition, part of the growth will be realized through their own organization. To integrate acquisitions into operations and to achieve internal growth, the choice of a common ERP system and its efficient utilization were crucial.
in 2007, after having acquired several companies, all with their own ERP system, Triade was looking to create synergies by establishing a joint ERP solution for the whole group. The company performed a comprehensive evaluation to find a system that would fit its re- quirements. it was important that the system be flexible and highly efficient at managing internal transactions. Two well-known ERP sys- tems had already been shortlisted.
“Then we acquired the company ECA, a wholesaler of iT products”, says wim Pols, CfO of Triade Netherlands. “ECA had successfully been running their own operations with Jeeves for many years. we saw a good fit between the ECA processes and our own require- ments, and we decided to add Jeeves to our shortlist. After another evaluation round, all the companies involved agreed that Jeeves Uni- versal was the system we were looking for.”
By having ECA in the group, Triade could perform live demonstra- tions of Jeeves, asking many questions and getting honest answers.
“we were especially impressed by the functionality and flexibility of Jeeves’ system. it allows us to adapt quickly to the changing demands of our fast-moving industry – all at a very low cost of ownership.”
Easy to work with and to maintain
in the spring of 2008, Triade started the rollout of Jeeves together with Jis Netherlands, Jeeves’ dutch partner. Jeeves has been imple- mented as a wholesale solution, including financial, sales, and pur- chasing functionalities that integrate with Triade’s company-specific warehouse solution.
Triade has a high level of iT competence, and the company man- ages most of its day-to-day iT operations in-house. The company’s iT staff was intensely involved in the implementation phase. in this context, the company enjoyed the flexible environment that Jeeves offers. it is easy to work with and to maintain.
“Many of my employees have a genuine interest in working with iT.
with Jeeves Universal, we are able to do much more in-house”, says wim Pols. “But we maintain a close dialogue with Jis Netherlands for support on more complicated matters. i think there is a good fit between our personnel and Jis Netherlands.”
Jeeves provides us with a strong tool
Today, 250 users in two of Triade’s three companies are using Jeeves, and by spring 2009 all of its dutch companies will have a joint ERP platform. By then, 400 users will have access to the system.
Jeeves provides the tools needed to manage a great number of different transactions. Jeeves’ strengths in the areas of Edi invoicing and logistics information are important for Triade. Also, the system is open, which enables smooth interaction with all the different suppli- ers and retailers and their iT systems.
“As a wholesale organization, we should be a perfect link between
our manufacturers and retailers in terms of service, speed, reliabil-
ity, creativity, competence – but most of all in terms of quality. This
means that customers can always contact us with any questions
they might have. with Jeeves, we have a strong tool to manage this
challenge”, says wim Pols.
JEEvEs ANNUAL REPORT 2008
19
Accelerated international expansion
greater international presence is a prerequisite for Jeeves’ long-term growth. As customers have become ever larger, acquired more com- plex processes, and expanded globally, Jeeves Universal has been enhanced and localized for more international markets, chiefly in cen- tral Europe but also North America. hL display, which uses Jeeves in 20 or so countries, is one example of such globalization. Customers from the swedish market still dominate, but as new foreign operations yield results, the proportion of international customers will grow.
New additions to a loyal customer base
Jeeves’ flexibility, upgradability, and low cost of ownership have fos- tered strong customer loyalty. This is true of Jeeves Universal as well as of garp. since the Company was founded, only a few custom- ers have left Jeeves. Likewise, garp has many customers who have used the system from the beginning, the oldest having used garp for 25 years. when customers leave Jeeves Universal or garp, it is most often the result of changes in circumstances, because of an acquisi- tion, merger, or shutdown.
Though the current state of the economy has had a negative impact on the market for ERP systems, after the launch of Jeeves Universal and Jeeves selected, Jeeves boosted the number of new customers 20% in 2008.
Sales by geographic segment
Jeeves’ customer base 2008
CUsTOMER BAsE Jeeves Universal Jeeves selected garp
New customers 2008 129 17 82
installed customer base 1,885 17 2,156
Rest of world 6%
sweden 75%
Rest of Nordic region 19%
CUsTOMERs
JEEvEs ANNUAL REPORT 2008
20
JEEvEs ÅRsREdOvisNiNg 2008
Personnel
PERsONNEL
Employees by function
development 29%
services 41%
Products 12%
Marketing 11%
Management/
Administration 8%
The largest group of Jeeves em- ployees works with development and service.
Corporate culture and leadership
Jeeves is a knowledge-intensive company whose success is greatly owing to the many years’ experience and expertise of its employees.
Many employees have worked at Jeeves for a long time, and many have also brought key experience with other ERP systems from their previous jobs. since its inception, an entrepreneurial spirit has con- tributed greatly to the focus on goals and the commitment that drive Jeeves forward.
Leadership in the Company acts through a flat organization with open dialogue between managers and employees. having breathing space and being open to new ideas are crucial for retaining the crea- tivity that motivates employees and enables ongoing development of innovative systems.
Jeeves values the culture in the Company, and to nurture it for the future, several values have been formulated as guidance for employ- ees. Jeeves’ values are based on the importance of every individual contributing and being motivated to take advantage and run with new opportunities.
As Jeeves has grown, the structure of the Company has evolved without smothering creativity. Among other things, work processes have been reinforced through enhancement of the quality system.
Number of employees
during 2008, Jeeves had on average 113 (91) employees, 32 (30) of whom were women. fourteen people joined the Company during the year, and six resigned their positions at Jeeves. The acquisition of the Norwegian Logit gruppen added 24 employees. The majority of these work as consultants in services.
The majority of employees are university graduates. Today the ma- jority of Jeeves’ employees are in sweden, but the trend is toward a greater degree of internationalization, in terms of staff, customers, and the market offering.
incentive program
during 2007, Jeeves developed a bonus program with an explicit link to earnings. The Board of directors wanted to let employees benefit from healthy earnings. in general, the proportion of variable pay was greater in 2008 than in previous years. in 2007, Jeeves initiated a convertible debenture program aimed at all permanent employees in the Jeeves group. The program continues through 2010. The pro- gram entails a maximum dilution effect of 5%.
JEEvEs CULTURAL COdE G rowing Partnership E fficient Engagements O pen Respect
T rustworthy Professionals A daptive kaizen
sTATisTiCs – PERsONNEL 2008 2007
Average number of employees 113 91
Number of women 32 30
Number of men 81 61
Average age 41 39
value added per employee 952 ksEk 955 ksEk
JEEvEs ANNUAL REPORT 2008
21
JEEvEs ÅRsREdOvisNiNg 2007
“Since its inception, an entre- preneurial spirit has contributed
greatly to the focus on goals and the commitment that drive
Jeeves forward.”
JEEVES ANNUAL REPORT 2008
22 FÖRVALTNINGSBERÄTTELSE
ADMINISTRATION REPORT ACCOUNTS
ACCOUNTING POLICIES AND NOTES
BOARD OF DIRECTORS AND MANAGEMENT TEAM
JEEVES ANNUAL REPORT 2008
23
ADMINISTRATION REPORT
The Board of Directors and CEO of Jeeves Information Sys- tems AB (publ.), corporate identification number 556343- 4215, hereby present the Company’s annual accounts and consolidated financial statements for 2008.
Operations
Jeeves is a rapidly expanding Swedish supplier of ERP systems that has established itself in the European market. Jeeves develops and supplies three complete ERP systems: Jeeves Universal, Jeeves Se- lected, and Garp.
Sales and performance
For several years, the Company has reported a profit for all four quarters of every year. This has been achieved despite major invest- ment in product packaging, new functionality, and expansion into new markets.
Profit
2008 was another profitable year for Jeeves, as the fourth quarter marked the Company’s 27th consecutive quarter of profit. Profit after tax for the full year totaled SEK 13.1 million (14.8). Revenue reached SEK 160.3 thousand (130.3). The Norwegian acquisition Logit Grup- pen is consolidated in the accounts starting June 1.
Operating expenses
Expenses for 2008 increased in part owing to the acquisition of Logit Gruppen but also because of increased international initiatives.
Financial position
The year’s equity/assets ratio amounted to 32% (34). The current ra- tio was 97% (114). Cash flow after acquisitions totaled SEK 2.1 mil- lion (6.3) for the full year. Cash, cash equivalents, and other current investments in securities equaled SEK 38.2 million (36.3) at year- end.
Investment
The Group’s investment in property, plant, equipment, and intangible assets, including acquisitions, amounted to SEK 21.5 million (12.4).
Subsidiaries
At June 2, Jeeves acquired the Norwegian group of companies Logistikk-og-IT Partner A/S (Logit Gruppen), which owns, develops, and sells ERP systems targeting the Norwegian SME market. The group has sales of about SEK 35 million and employs 24 people.
The acquisition is important to Jeeves’ growth strategy which includes growth through acquisitions, and strengthens the Com- pany’s position in the Norwegian market.
The acquisition was made with a cash payment corresponding to about SEK 9.6 million, including legal fees, and an anticipated ad- ditional payment of SEK 9.3 million, depending on the achievement of profit targets. The acquisition’s effect on the consolidated balance sheet is shown in Note 17. The acquisition value of intangible assets acquired was recognized as SEK 4.6 million in acquired customer agreements and brands. Besides the acquisition costs attributed to customer contracts and trademarks, the acquisition brought assets in the form of market position, organization, internal processes, and the like. The complex nature of synergies makes recognition in sepa- rate line items impossible. Thus, Jeeves chose to recognize the ag- gregate value of these in goodwill. At December 31, 2008, goodwill attributable to Logit Gruppen equaled SEK 6.0 million.
The remaining 15% of the German subsidiary Jeeves GmbH was sold to the partner eQstend GmbH with no impact on earnings. In 2009, Jeeves formed a new wholly owned subsidiary in Germany.
Staff and the environment
The number of employees during the period averaged 113 (91), in- cluding 32 (30) women. Staff numbers increased during the year, chiefly because of the acquisition of Logit Gruppen. A few vacancies that had opened in 2007 were also filled. Jeeves makes systematic efforts using local work environment groups, employee surveys, and performance reviews, in which issues such as occupational health and safety, job satisfaction, and skills development are discussed.
These provide a foundation for developing action programs as need- ed. The work environment is considered fairly good, and most Group employees work in bright, new offices.
Jeeves supplies computer software, so the Company sells no products that have a substantial environmental impact. The Compa- ny has a restrictive policy for company cars and encourages staff to use public transit. To reduce total travel, videoconferencing is used as much as possible. In addition, there are routines for reducing en- vironmental impact, such as in paper usage.
Product development
During 2008 the internal product development has focused on:
- further development of the new product lines Jeeves Universal and Jeeves Selected
- localization and new functionality
- ongoing work to produce a platform-independent solution Of total product development for the year, SEK 11.8 million was cap- italized as attributable to future strategically key products expected to generate additional revenue, while SEK 25.1 million was expensed as day-to-day development costs.
ADMINISTRATION REPORT
JEEVES ANNUAL REPORT 2008
