Company: The Descartes Systems Group, Waterloo, Ontario

Company Description: The Descartes Systems Group Inc. is a leading provider of on-demand, software-as-a-service delivery management solutions for transportation, logistics, manufacturing, retail, distribution and service provider enterprises. Descartes solutions are used by more than 2,500 customers in over 60 countries.

Nomination Category: Company, Office & Product Awards Categories

Nomination Sub Category: Best Business Turnaround

Nomination Title: Unbridled focus on customer results brings company back from the brink

   1. Tell the story about what this nominated company achieved in the past year (up to 500 words). Focus on specific accomplishments, and relate these accomplishments to past performance or industry norms. Be sure to mention obstacles overcome, innovations or discoveries made, and outcomes:

With over $50 million in losses in 2004, Descartes entered 2005 running out of time and money. The company went six years without a profitable quarter, $28 million in debt and had been abandoned by its shareholders. With dwindling cash reserves, Descartes would not survive the year’s end without significant change. Under a new CEO and management team, the company adopted a core strategy (unbridled focus on customer results).

With “metrics-driven focused on customer results” as Descartes’ mantra, management revamped all facets of the company: how customers were sold and serviced, how products were produced and delivered, and how Descartes got paid for its work.  The company’s “Descartes does not get paid before its customers get value” philosophy transformed the company’s culture and performance. With happy customers paying faster and buying more, the new Descartes became one of the financial performance leaders in its market, achieving four consecutive quarters of improving profits and cash flow, and generating $6.8 million in EBITDA. By 2006, the “new Descartes” was no longer just surviving, it was

thriving.

Descartes’ turnaround resulted from three major changes implemented by the management team:

Adopt a new financial model and solution pricing strategy that focused on customers’ results versus software sales

Descartes shifted its financial model to a “try-before-you-buy” services model to allow customers to receive value before having to make a significant

commitment to Descartes. The company also adopted a recurring (transaction-oriented) pricing structure to eliminate the need for customers to make large capital investment and allow them to pay for the software-as-a-service through operating expenses. To raise awareness, the company targeted twelve industry leaders (the “Descartes Dozen,” including Eastman Kodak, Samsung, and CVS Pharmacy) to adopt the new business model.

Turn the selling model inside out

Prior to the turnaround, Descartes personnel who could insure that customers received value were instead internally focused on building software. A new strategy of “Leading with our IP forward” put these key resources in front of customers, ensuring that Descartes could deliver value in the form of expected customer results while allowing the company to reduce operating costs by eliminating much of the existing sales force.

Create a multi-channel, multi-product go-to-market strategy

Management recognized that selling one bundled product suite of broad and diverse applications by one single sales force was not the best way to drive

worldwide sales. The company unbundled its software into small components so they could be sold into vertical markets by its own sales force as well as by resellers and distributors worldwide.

The Results

By the of the 2006 fiscal year (ending January 2006) the following results were achieved:

- All the “Descartes Dozen” are live, successful and referenceable

- Net income of $3.0 million in FY06, versus a $55.3 million loss in FY05

- Net cash position increased to 54% to $33 million and $28 million in debt retired

- Days Sales Outstanding reduced to 41 days–an industry low

- Stock price increased  ~150%

- EBITDA of $6.8 million

   2. List hyperlinks to any online news stories, press releases, or other documents that support the claims made in the section above. IMPORTANT: Begin each link with http://, and enclose each link in square brackets; for example, http://www.youraddress.com:

Customer Testimonials

Eastman Kodak Successfully Deploys Descartes' Visibility & Event Management

Solution to Improve Delivery Productivity and Performance

http://www.descartes.com/events/press.html?releaseid=181747

Samsung Electronics Logitech Successfully Deploys Descartes

http://www.descartes.com/events/press.html?releaseid=165285

Canon Europe Deploys Descartes Visibility & Event Management

http://www.descartes.com/events/press.html?releaseid=189059

Routing Systems Informática

http://www.descartes.com/stevie_awards/r_alencar.html

Industry Analyst Testimonials

Episode II: The Future of Supply Chain Planning: Look to SaaS for innovation,

March 02, 2006, AMR Research:

http://www.descartes.com/stevie_awards/amr_0302.html

Supply Chain Notes for December 9, 2005, AMR Research:

http://www.descartes.com/stevie_awards/amr_1205.html

Selling Enterprise Software Stocks to Wall Street, January 05, 2006, AMR

Research:

http://www.descartes.com/stevie_awards/amr_0106.html

ARC Advisory Group, Director, Logistics Executive Council, Descartes Unveils

New Delivery Management Solutions, August 5, 2005:

http://www.descartes.com/stevie_awards/arc_0805.html

Newspaper & Magazine Articles

The Record, October 6, 2005: Software Gives Client More Room to Grow:

http://www.descartes.com/stevie_awards/20051006_W09.pdf

The Record, October 6, 2005: A New Philosophy Saves Descartes:

http://www.descartes.com/stevie_awards/20051006_W08.pdf  

http://www.descartes.com/stevie_awards/20051006_W09.pdf  

The Record, March 4, 2006: Open Text, Descartes Head in Right Direction:

http://www.descartes.com/stevie_awards/Mar4_2006_kwrecord.pdf

Managing Automation, Sept 5, 2005: Descartes Turnaround Gains Steam:

http://www.managingautomation.com/maonline/news/read/9656

Traffic World Magazine, February 28, 2006: Descartes Completes Year of

Recovery:

http://www.descartes.com/stevie_awards/ma_0306.html

Financial Analysts & Reports

GMP Report:

http://www.descartes.com/stevie_awards/gmp_1205.html

Descartes Press Releases

Descartes Named a Top Provider of Transportation Management Solutions:

http://www.descartes.com/events/press.html?releaseid=175427

   3. Provide a brief (up to 100 words) biography about the leader of this nominated company:

Arthur Mesher is CEO of Descartes and responsible for day-to-day operations and strategic direction. Mr. Mesher joined Descartes in 1998 as EVP Strategic Development and was responsible creating the first on-demand multi-modal logistics network (road, air and ocean) and application suite. Mr. Mesher helped implement success-based pricing and logistics innovation services, enabling the acceleration of value for Descartes’ customers. In May 2004, Mr. Mesher was appointed to Descartes' Office of the CEO and subsequently appointed CEO in November 2004.

Before joining Descartes, Mr. Mesher launched Gartner’s Integrated Logistics Strategies service, establishing it as a leading advisor to global