Should interBiz Mean Intelligence And Prediction Beyond ERP? - Part 2: Challenges and Market Impact

Event Summary

In October and November, interBiz, the eBusiness applications division of Computer Associates International, Inc. (NYSE: CA), expanded its back-office solutions with the announcement of product enhancements and a free benchmarking service. The announcements were:

* A free benchmarking service for businesses in durable goods industries

* General availability of MK Manufacturing version 8.4

* Premium Services Plans which provide maintenance for modifications and the migration of modifications to new versions of interBiz software applications

This, Part Two of a two-part note, discusses the Challenges faced by interBiz and makes User Recommendations. Part One discussed these announcements and their Market Impact.

Challenges

However, while espousing a prudent e-business strategy in line with post- ERP inter-enterprise realities and the need for interconnectivity, and while adding new functionality, interBiz has had an uphill battle to allay the perception of poor marketing owing to problems stemming from ongoing re-branding of the collection of older generation ERP products that includes MANMAN, PRMS, CAS, and MAXCIM.

While the BizWork initiative has breathed a fresh air into venerable but almost antiquated applications, interBiz must rebuild somewhat lagging momentum by attracting new users. Playing to its strengths by capitalizing on CA's huge investment in enterprise infrastructure management and business intelligence component, including predictive and pattern matching intelligent technologies makes sense. Additionally, BizWorks ability to integrate both interBiz and third-party applications across the supply-chain becomes a compelling extended-ERP tack. Unfortunately, the effort of tying these technologies back to a fragmented set of ERP applications has been colossal, likely marginalizing CA's ability to become a prominent market player.

Continuation of an unfocused, multi-product and multi-technology strategy in the markets with diverse dynamics typically multiplies and overstretches sales, R&D, and service & support resources jeopardizing the chances its products could stand a chance of long-term success in their respective niches. Geac, Epicor, Ross Systems are examples of companies where this strategy has failed: all have had to resort to divestiture and to a focus on core competencies.

While the announced premium service plans certainly give customers peace of mind and raise the bar for competitors' service & support value propositions, interBiz should consider making some bold decisions on the level of integration of the applications, possibly with a plan for developing a cross-application backbone (foundation set of common components). The market typically prefers a total solution to a "sum of the parts".

On the Postive Side

Nevertheless, InterBiz remains one of the most widely used of the upper-mid-range ERP vendors. Although it could have leveraged much better its infrastructure customer base to promote its enterprise applications (like Oracle or IBM have done in their respective database, server and middleware strongholds), interBiz has done much more to rejuvenate its acquired enterprise applications arsenal than, e.g., Geac has done to its. The job of disseminating a clear message which market the combined set of products has been targeting, as well as of delivering a strong CRM and private trade exchange (PTX) offering remains notwithstanding.


SOURCE:
http://www.technologyevaluation.com/research/articles/should-interbiz-mean-intelligence-and-prediction-beyond-erp-part-2-challenges-and-market-impact-16535/

Service Level Agreements for Manufacturers and Software Vendors in the Supply Chain

Globalization and lean manufacturing are realities for today's manufacturers. As the manufacturing network increases and extends across borders, so do the complexities of moving components and tracking these goods, as well as difficulties in delivering the products on time, both to manufacturers and to final customers. This new reality of manufacturing is now facilitated through supply chain management (SCM).

SCM enables today's discrete manufacturers to produce and move goods or components more efficiently, thus arming them with a competitive edge. However, managing compliance, tax laws, internal policies, and contracts between multiple parties can be overwhelming for any manufacturer.

This article focuses specifically on contracts—better known as service level agreements (SLAs)—between multiple parties in the supply chain. It describes what an SLA entails and explains how a discrete manufacturer should negotiate an SLA with the numerous organizations in its supply chain.

Service Level Agreements Defined

An SLA is a contract between two parties that stipulates how one party will provide certain services and support within a given time frame to the other party.

A manufacturer can have multiple SLAs with two types of organizations: 1) suppliers and distributors that provide products to its location(s), and 2) the software provider.

Because supply chains and SCM software are very complex due to the nature of the discrete manufacturing business, SLAs are equally complex. Not only can SLAs be complicated, but a manufacturer might be dealing with multiple SLAs as well. For a manufacturer to not become overwhelmed by all these SLAs, terms must be clearly written out so that all parties involved know what is to be delivered and how. For more in-depth information on supply chains, please see Supply Chain 101: The Basics You Need to Know.

Many software SLAs include a service element in addition to information on how the software will perform, on upgrades, etc. The second element covers the terms of technical support and problem resolution. With this aspect of the SLA, software firms providing the technical support can be heavily fined if they do not respond within the time periods specified in the SLA (known as severity levels). This can bring large financial consequences to individuals involved, and disrupt the flow of business for all parties within the supply chain.

From a business standpoint, SLAs between companies, whether they are suppliers, manufacturers, or distributors, also stipulate the financial repercussions if components are (i) not delivered on time, (ii) defective, or (iii) not delivered at all.

Today, all SLAs must have a basic, fundamental format so that all parties involved know what is expected of them. Table 1 describes these elements.

Foundational Elements of the SLA

To clarify how to negotiate SLAs and minimize the risk of financial loss, Table 1 offers a basic breakdown of an SLA's main components. Subcomponents are identified and explained afterward.

Item


Explanation
1. Establish the names of all parties involved. This can be multiple partners together, OR the software vendor and the name of the manufacturer. This establishes who all parties involved are, and sets the foundation for the rest of the contract.
2a. Establish service levels from the provider or supplier, and the expectation from the manufacturer's side. This makes clear to suppliers what is to be delivered, where, and when, OR this will stipulate all the technical deliverables provided by the vendor, and what the manufacturer expects the vendor to provide in terms of features and functionality.
2b. Establish of how the vendor will deliver each level of service, and what the repercussions are to not providing these elements to the manufacturer. Often, financial repercussions will occur either when products are not delivered on time, OR if technical support is not delivered when critical downtime occurs.
3. Establish all exceptions. If an exception occurs, all parties will be notified, and roles and responsibilities will be defined.
4. Stipulate any and all changes to the business or the software. As the business changes, or as more functionality to the software is modified, technical aspects in the SLA will change. This change will have to be followed by what is stipulated in this section.

Table 1. Main components of SLAs.

Subcomponents of SLAs include service availability, mission-critical definitions, and response time—elements that have a direct impact on a manufacturer's bottom line. If the SLA's guidelines for these are not adhered to, not only does the manufacturer lose money, but customers can be affected as well, depending on the industry.

Other items to factor into an SLA include training, outsourcing, implementation, and consulting. These elements can have a large cost associated with them, and negotiating them into the SLA is a crucial aspect executives should keep in mind. In addition, the SLA could include industry stipulations that need to be adhered to, either by conjunction of industry standards, safety regulations, or international laws.

Considerations

Due to the complexities outlined above, many problems can occur within each component of the SLA. Whether the relationship is between manufacturer and supplier or manufacturer and software vendor, difficulties can come about with how components will be delivered, how an implementation will be conducted, or a myriad of other unforeseen situations. The following section outlines some of these issues and tries to "clear the air" in order to ease negotiating and navigating through an SLA.

Three main elements should be addressed even before negotiating each technical element (as described in Table 1): compliance, internal and external policy, and channels of communication.

1.

The legal issues of compliance need to be spelled out in an outline format so that when the SLA is being developed, each legal point is addressed, and both parties know that they are complying with both business and governmental law when conducting business.
2.

Internal and external policies need to be addressed in the same flavor as is done with compliance issues (point 1 above), in that when negotiations are taking place, both parties know what is expected of them so that business practices will not be compromised.
3.

How will communication between all parties take place? Channels of communication need to be established at the beginning of negotiations in order for all elements to fall into place. With regards to a software vendor-manufacturer relationship specifically, if this aspect is not established from the beginning, communication breakdowns will prolong implementation time.

Other challenges that need to be addressed in the beginning stages of negotiating an SLA include the following:

*

What capabilities can the software vendor or supplier provide? The capabilities of the software solution or supplier need to be outlined to ensure they match with the manufacturer's business processes, as well as to make certain these capabilities will address the manufacturer's business needs.
*

Particular to the software vendor-manufacturer relationship, the scope of the implementation, an overall definition of what is to be done, and who is to be assigned to each task should be addressed in order to clarify each aspect of the implementation and to create a road map. Each member of the implementation team (on each side) will then know exactly what they are responsible for and with whom they will be working.

Consideration Analysis

If both the manufacturer and the vendor follow these basic steps and outline their processes before negotiations begin, many unfortunate events will be happily averted, and a framework will be set in place: if anything goes wrong, processes and the people responsible will have been clearly defined, and the risk of more complications occurring will be minimized.

To be clear, a properly defined and negotiated SLA between both parties should either avert or help to resolve potential problems.

Implications for Both Vendors and Manufacturers

The bottom line is that SLAs help to reduce costs on both sides as well as to minimize the amount of technology used throughout the manufacturing supply chain. Both parties want an efficient and successful implementation or business partnership in order to 1) have the manufacturer's system up and running in as little time as possible, or to have the supplier deliver the necessary goods so that production can continue, and 2) not have the vendor lose time and money by fixing mistakes that could have been avoided if processes had been properly defined.

If the software vendor must continually fix problems and bugs, or if there is a loss of integration between software components and other items, its future projects may be affected in either of the following two ways: 1) the vendor will have less time to dedicate to new projects, having focused so much of its time on the present implementation, or 2) the vendor will receive a negative recommendation from the manufacturer because the vendor took too much time to complete the implementation, thus not winning future bids for software implementation projects.

Suppliers are also subject to the above repercussions. Suppliers within the supply chain that are negligent in providing products on time and within budget can receive poor recommendations from the manufacturers, thus losing bids to supply components to other discrete manufacturing companies.

Such issues can be avoided if every component of the SLA is clearly defined during the negotiation process and closely followed during the implementation—an approach that is in both party's interests. To not do so can result in higher costs for all parties involved.


SOURCE:
http://www.technologyevaluation.com/research/articles/service-level-agreements-for-manufacturers-and-software-vendors-in-the-supply-chain-19373/

The Complexities of Quote-to-order and Possible Solutions

The Complexities of Quote-to-order and Possible Solutions

Sales channels struggle to understand their products well enough to sell them effectively. Getting sales representatives and channel partners up to speed (informed) on new and existing products is expensive and time-consuming. Furthermore, as product complexity increases, so does demand for customized products and services. For more background, please see The Basics of Quote-to-order Systems.

Even More Complexity beyond the Direct Sales Force

Although the traditional call center is not often used to sell and handle customer inquiries (or complaints) about very complex products, there will still be times when information needs to be given or received by phone. Some manufacturers of configured consumer products, such as personal computers (PCs), or Internet service providers may use telephone sales and support quite extensively, in addition to the web chat and self-service options of late. Internal sales and support staff share many of the same frustrations as their colleagues in the field, and need similar solutions. However, there are some specific issues that need to be addressed if complex or customized products are to be dealt with in a satisfactory manner via the telephone.

While communication may be bidirectional, one must realize the limitations of a solely verbal interaction with the customer, where the agent generally has the benefit of detailed systems information. Therefore, a support system for telephone or Web users must be simple to use and clear in its presentation, even for complex products. This will allow orders to be taken correctly every time, and up-selling and cross-selling opportunities to be promoted while the support system is closely integrated with order fulfillment and other downstream systems.

To help customers leverage the highly profitable, but often untapped, post-sale aftermarket and drive-increased revenue, Webcom Inc. (www.webcominc.com), an up-and-coming provider of quote-to-order (Q2O) solutions, has recently launched the WebSource CPQ Assets capability. Webcom's goal is to enable organizations to improve customer satisfaction and increase productivity of the sales force, channel partners, and back-office personnel by addressing the needs of aftermarket, field service, entitlements, and assets. The new module allows users to easily quote, propose, and sell additional products and services that are pertinent to a specific asset previously created (configured) via the WebSource CPQ (configure, price, and quote) product suite.

The need for this after-sales product came from customers frequently quoting renewals, upgrades, aftermarket service, add-ons, and so on. In industries that sell capital equipment, such as medical devices, telecommunications, instrumentation, IT hardware, and other complex equipment, companies are starting to significantly increase their focus on services revenue. For some companies, this is a strategic move to increase the top line, while other companies are looking to replace revenue from slower, new product sales in the current economic conditions.

Thus, by selecting an asset, the user will now automatically be able to see the product and commercial characteristics associated with the asset, and based upon those attributes, will be guided to offer, select, or restrict relevant services and product offerings.

The WebSource CPQ Assets module includes a number of key features:

* Asset properties convey product, installation, and commercial characteristics, including customer information.

* Asset attributes affect the behavior of a product via product rules, dependencies, and triggers, thus guiding the user.

* Workflow and permission mechanisms govern who can make changes and the timing of such changes.

* Assets can be searched and sorted via a number of fields, including “key” attributes.

* Assets can be updated manually or through the quotation process via revision control.

* A side-by-side asset comparison is available.

* Automation of repetitive processes, including annual, quarterly, and monthly services (such as warranties, service contracts), and maintenance are available.

* Automated processes linked to output document templates, such as quotes or invoices to assets, are included.

* User-defined groupings for quotation and invoicing purposes are provided.

* User-defined selection parameters for automated processing, such as all assets with warranties expiring in 60 days, are provided.

* An optional linkage to customer relationship management (CRM) systems for opportunity creation is included.

* Users can forecast revenue from automated processes.

* Batch import of existing assets eases module implementation and creates greater value.

Last but not least, while the indirect channel or the network of dealers, agents, resellers, distributors, and remote sales offices enables more effective, low-cost, and rapid expansion into new and unfamiliar markets, the above issues faced by the direct sales force are magnified for this external force. Separated from the parent organization by distance and by time zones, indirect sales channels present terrible communication and management challenges for any organization. These challenges are much more demanding when remote partners handle products that require considerable sales knowledge.

Some concerns that are very specific to this arena include the following:

* Sales cycles are lengthier because of the need to consult the master vendor over many details.

* Security and geographic concerns can make it very difficult to distribute information and keep the information current.

* Because of product complexity, agents may choose (or may only be allowed) to sell a limited range of products. For instance, companies may simplify dealer products to make them easier to sell, which, on the downside, almost always hampers competitiveness and profitability.

* Reseller quotes may be even more error prone and lack the most current information.

* Indirect training is difficult and costly, while generating forecasts for indirect business is much more difficult.

One should also not forget about the challenges that organizations selling complex products face when having to assimilate product lines and sales teams from mergers and acquisitions (M&As). For all the above reasons, the notion of a “perfect order” (an order with absolutely no errors, from order entry, to shipping, to collection—please see The Perfect Order—Inside-out or Outside-in?) might remain an unattainable goal when selling complex products.

In many traditional complex manufacturing environments, a number of factors and situations can drain order profit margins: the costs per build-to-order fulfillment are often unknown or difficult to pinpoint; the engineering department needs to keep a dedicated headcount for checking proposals and completing schematics; the “swivel-chair” integration (multiple departments entering the same data) makes errors more likely between disparate enterprise systems; proposals for complex products take weeks, making 20 percent of total sales, on average, lost orders (according to Cincom Systems); the close rate on leads for customized products are unknown or very low; and the customer satisfaction is low because of escalating lead times and an invisible “cost of sale.” Although a bid preparation is a costly exercise (which, according to Cincom, amounts to an average of up to 15 percent of the total contract revenue), specialist knowledge is needed to create the bid. This requires high levels of “expert” hours, with teams often having a dozen or more key members that spend over a thousand hours on high-complexity bids.

However, attaining a perfect order in such environments is certainly not impossible (if seamless integration and visibility is achieved within the entire supply chain), and it can result in a much more satisfied customer than in the case of mass produced products' sales. The real key to successfully selling complex products and services lies in addressing the underlying issue—the need to capture knowledge (intellectual property) from wherever it is held in the organization, and to make that knowledge available to those who need it, whenever and wherever they might be.

So What's the Possible Solution Then?

These complexities lead us to an interesting group of providers, which develop, market, sell, and support software suites that help companies with multiple product lines and channels of distribution to effectively configure, price, and quote their products and services. The Internet, by nature, is a global marketplace, and it is increasingly viewed as the major enabler that allows both central control of information and potentially unlimited low-cost access through browsers. Visionary companies are leveraging the Internet as the means to make new sales channels effective more quickly, thus significantly reducing training and information transfer costs throughout their sales networks. As indicated earlier, the global marketplace and the pervasiveness of the Internet have taken longer to penetrate and impact the world of complex product selling than other sectors. But even companies in the most protected market spaces can no longer ignore the changes brought about by these and other factors.

Over the past few years, a number of companies, such as IBM, Cisco Systems, Siemens Energy and Automation, Dell, Rockwell, American Power Conversion (APC), and GE Healthcare have implemented quote-to-order (Q2O) or opportunity-to-order (O2O) solutions. Such solutions have reportedly enabled these manufacturers to mobilize their mass customization initiatives. From reducing traditionally time-consuming quoting and ordering processes from weeks to hours, to driving down unit costs, to lowering the costs of sales, astute Q2O suites can help enterprises increase sales effectiveness across all channels. These solutions help companies that sell complex products and services by moving their focus to front-office issues (customer-facing sales and service).

In addition to the inevitable factor of cost containment, the need for this shift has been driven by trends such as

* increased competition (where technological or manufacturing excellence no longer guarantees competitive advantage), since innovative, fast-paced competitors that are more responsive to customer needs are challenging market leaders; and

* expanding market opportunity, where most companies are responding to these demands by extending product ranges and offering more variation and options within their products and services.

Such products enable customers to increase revenue and profit margins and to reduce costs through seamless, Web-enabled automation of the quote-to-contract business processes. These processes reside between existing front-office CRM systems and back-office enterprise resource planning (ERP) and supply chain management (SCM) systems. Q2O software suites can offer sophisticated methods to navigate product content and knowledge to drive education and qualification of potential customers, and can be used by both business-to-business (B2B) and business-to-consumer (B2C) companies.

The solutions typically help customers improve profitability by reducing process costs, optimizing pricing, and eliminating (or substantially reducing) rework and concessions. Businesses that deploy Q2O products have reportedly been able to empower business managers to more quickly and easily modify product, service, and price information enterprise-wide, ensuring proper margins and the ability to stay ahead of changing market conditions. Needless to say, Q2O product architecture has to be designed specifically for the Internet and has to provide scalability, reliability, flexibility, and ease of use. Additionally, such products have to be developed with an open architecture that leverages data in existing applications, such as ERP systems, which must allow for an easy-to-install application and reduced deployment time.

Companies seeking to improve their processes for selling products and services have typically implemented CRM and sales force automation (SFA) software, and have sought to improve provisioning of their products and services by implementing ERP software. Historically, a significant gap has existed between the core functionality of CRM software and ERP software. CRM software typically manages accounts (including sales service) and sales campaigns; tracks collections and qualification of prospective customers; and monitors the pipeline of existing sales opportunities. ERP software, however, typically fulfills orders (in some instances automatically interacting with the upstream and downstream supply chain), invoices customers, and tracks accounts receivables and payments. For more detailed information, see Enterprise Applications—The Genesis and Future, Revisited.

In between the functionality of the necessary CRM and ERP enterprise packages is a variety of back-office business functions and processes that occur from the time a sales opportunity has been defined in the CRM and SFA software, to the time when an order is placed into the ERP system. Currently, most enterprises do not have an effective method of connecting a customer identified through its CRM system to a product the enterprise can deliver through its ERP system. Although there has been much activity in the development and deployment of CRM systems, the focus has almost exclusively been on the needs of companies that sell standardized products (with a few simple options to choose from at best).

Therefore, the traditional CRM functionality has targeted areas of sales efficiency rather than effectiveness. CRM systems tend to look at the processes around the sale, but do not necessarily address the intricate (low efficiency due to complexity) issues highlighted above, often resulting in an unwanted outcome—an increase in non-selling time. A primary reason for this mismatch between expectations and results is that most SFA software packages are first and foremost sales administration systems (revolving around contact management), and they do little to improve selling effectiveness. In addition, most software packages are designed to accommodate a direct sales organization model, but cannot accommodate a complex sales channel consisting of both direct and indirect channels.

The continued growth of outsourced manufacturing, the increased focus on low-cost international materials procurement, and the heavy market reliance on vendor- or supplier-managed inventory programs to control costs all require a solid infrastructure for coordinating the extended supply network (see What Does the Future Hold for PRM?).

Also, while many ERP and CRM vendors might offer a configurator as a module of an overall product suite, many of the configurator modules embedded in ERP software suites—being mainly aimed at engineering and production (as opposed to commercial sales)—are innately inadequate in supporting the sales and service functions. Similarly, many of the CRM-based configurator modules offer effective guided selling and configuration of low-level complexity products, but with an inherent inability to handle more complex product specification or fulfillment requirements. All of the above is referred to as the O2O gap, which consists of the processes required to efficiently and accurately configure, price, and quote a product or service for a potential customer, and correctly deliver the order specifications for fulfillment and billing.

Without a comprehensive Q2O and O2O solution that operates in multiple languages, currencies, and cultures, and that caters to sales representatives, agents, remote sales offices, and customers alike, companies resort to methods for building and pricing customer quotes through a combination of spreadsheets, teams of sales representatives, and engineers searching (literally flipping pages) through product catalogs. Depending on the complexity of the products and variables, this can result in a significant error rate in customer quotes. These errors are typically the result of invalid or outdated configuration, pricing, or quotation information, and often require expensive and time-consuming customer service intervention before the order can be processed.

The ability to accurately quote product and service offerings requires enterprises to enforce such business rules as maximum discounts and margin requirements, and to ensure that items quoted are available in the required time period. An ineffective system for matching customer needs to available products and services slows the sales cycle and may lead to poor customer experience. In addition, an inefficient system makes it difficult for a company to enforce its pricing rules for selling products or services in order to optimize the solutions offered to its customers.

Some businesses have attempted to address the challenges of complexity in the selling process by building in-house solutions, which often require significant, up-front development costs and lengthy deployment periods (see Build versus Buy—A Long-term Decision). Furthermore, due to the rapid pace of change in products and business processes, companies often find it difficult and expensive to maintain these systems and to integrate new functionality and technologies. As a result, many businesses have sought to implement packaged enterprise applications, and many CRM and ERP providers have also attempted to either extend the functionality of their products, or to offer complementary modules that fill portions of the functional Q2O gap.

The current commercially available software is designed to help companies address some challenges of complexity in the selling process. CRM vendors, ERP vendors, and niche companies with point solutions may still have one or more of the following limitations. In general, many applications have not been engineered for the Internet platform and, as a result, are not easily deployed across a broad range of Internet-enabled channels or devices. Further, these applications might require significant custom programming for deployment and maintenance. These applications may also provide a limited interactive experience, or they may employ application architectures that limit their scalability and reliability. Consequently, there might be a significant opportunity for software that leverages the Internet platform to enable companies to efficiently sell complex products and services, and to bridge the Q2O gap that exists between current CRM and ERP solutions.



SOURCE:
http://www.technologyevaluation.com/research/articles/the-complexities-of-quote-to-order-and-possible-solutions-19150/

E-Procurement Is Not Electronic Purchasing - Part II

Introduction

This second part of an extended note on e-procurement examines the necessary steps after a business decision to go with e-procurement has been made based on the information and criteria covered in Part I.

E-procurement is an integrated system of services and technologies that provides a seamless bridge between buying and selling businesses. The e-procurement process begins at the planning stages within the buying company and extends through to the delivery and collections services of the selling company and the receipt and payment services of the buying company. E-procurement shatters walls, enhances controls, and eliminates time delays in the requisition to receipt process.

About This Note

This Technology Note covering the e-procurement is presented in two parts. The first part covers:

1. The Promise of E-Procurement

2. E-Procurement Myths and Reality

3. Preparing for an E-Procurement Initiative

The second part covers:

4. E-Procurement Architecture

5. Selecting an E-Procurement Partner(s)

6. Implementing E-Procurement

E-Procurement Architecture

Procurement automation begins with budgeting and ends with the retirement of capital assets or consumption of raw materials. Failure (or choosing) not to include any of the following dimensions of the process de-optimizes the investment at best and opens the process for subversion at worst. Following are features found in product offerings and customer requests with examples of what each function addresses.

1.

Budgeting - is the basis for Automated Expenditure Authorization for Cost Center-based controls and accounting. When a Requisition is either initiated by an authorized individual or authorized by one, the Procurement Engine should compare the Requisition against Budget Levels and other Authorization Rules then forward it to the supplier for fulfillment.

Budgeting services include:

* Expense items

* Capital items

*

Cost Allocation Rules

2.

Project Structure - is the source of Automated Expenditure Authorization project-related controls and accounting. It establishes approval and authorization routings that override or clarify normal budgeting processes. Where Project Accounting is employed, it also establishes the hierarchy of accounts that will be used to capture project costs.

Project Structure services include:
*

Expense items
*

Capital items
*

Cost Allocation Rules

3.

Purchase Contracting - establishes commitments and agreements between suppliers and buyers. Requisitions, Receipts, and Payments leverage Purchase Contract data to set up Purchase Orders and Validate Billing. Goods Receipt and Payments post attainment of purchase commitments and consumption of sale commitments.

Purchase Contracting deals with:
*

Quantity minimums
*

Commitment levels
*

Expiration dates

4.

Bid Management - involves a series of steps from Request for Information to Purchase and Post-Acquisition activities. These steps leading up to a Purchase Order are time consuming and highly prone to contention. Bid Management is concerned with:

* Request for Bid posting (Open and Directed)

* Supplier response posting

* Standard Terms & Conditions

5.

Approval & Automated Authorization - are two distinct process steps. Approval is a statement of concurrence that no known conditions exist to prevent authorization. Authorization empowers action. A combination of automated and manual intervention steps leads to commitment of a purchase order.

Approval services include:
*

Budget comparison rules
*

Authorization Rules
*

Approval Rules
*

Workflow
*

Escalation Rules
*

Bypass Rules
*

Exception Handling Rules

6.

Requisitioning - initiates the procurement process. The more simple and comprehensive this process is, the more useable and less subverted the entire process will be.

Requisitioning services include:
*

Catalog of standard goods, services and information
*

Standard kits
*

Alternative product selection assistance
*

Order amendment
*

Custom routing
*

Shipping, handling and delivery instructions
*

Price variance allowance
*

Delivery variance allowance
*

Cost allocation
*

Order consolidation and contingency


7.

Purchasing - establishes procurement sources and coordinates standard product selection, supplier qualification and financial controls. There is a tendency to automate the traditional Purchasing function rather than re-defining it with an e-procurement system. E-procurement systems are designed to eliminate most of the traditional Purchasing department work and enhance the value of the rest.

Purchasing services include:
*

Catalog management
*

Purchase contract management
*

Service contracts
*

Order release
*

Communication of specifications, terms and conditions
*

Expediting
*

Supplier interaction
*

Request for Information, Request for Proposal and Proposal Analysis

8.

Receiving - must match packages and other modes of product receipt to the Purchase Orders that authorized their delivery. Delays occur in this process when goods received cannot be matched to expected deliveries. Often this is caused by differences in product identifiers between the purchasing and sales systems.

Receiving support services include:
*

Under-shipment and over-shipment
*

Substitute products
*

Returns
*

Recipient locator
*

Forward view of expected deliveries

9.

Inventory Management - establishes replenishment rules for stocked goods as well as for supplier-held inventory such as forms and personalized promotional materials.

Inventory Management features include:
*

Maximum / Minimum and Economic Order Quantity rules
*

Associated goods relationships
*

ECO cut-in for manufacturing and engineering materials
*

Phase-in and Phase-out rules for non-manufacturing / engineering materials
*

Alternate products
*

Stocking location identification
*

Drop-ship

10.

Accounts Payable - must match receipts to purchase orders and process payments. Accounts Payable delays can bring the process to a halt when a supplier places a Credit-Hold on the account.

Accounts Payable services include:
*

Automated invoice / receipt matching
*

Batch vouching of payments by time-period and / or payment amount
*

Automated invoice exception authorization

11.

Interfaces - provide links to other operational and planning systems. Robust interfaces assure audibility of financial and inventory systems. They also assure that notification and workflow systems keep procurement-related transaction flowing.

Interface services include:
*

Reference links between functions allow one function to collect data from another.
*

Requisitioning copies price and delivery data from a catalog.
*

Workflow selects 'next step' from Approval and Automated Authorization.
*

Update links between functions map progress.
*

Payment posts Actual Cost to Project Control
*

Receipt posts order fulfillment to Purchasing and Accounts Payable
*

Application System links connect e-procurement to other systems.
*

Procurement obtains engineering drawings from Product Data Management
*

Workflow sends messages through e-mail
*

External System links connect e-procurement to trading partners.
*

Local e-procurement and external Marketplace
*

Workflow to logistics companies

12.

Exception Processing - is essential to the efficiency and value of an e-procurement system. The vast majority of transactions should flow through the system without human interaction. When an exception (workflow delay, budget exceeded, approval declined, shipment error, invoice error) is detected, notification must take place promptly and resolution must be automatically expedited.

13.

Analytical Processing - is essential to process improvement and supplier management. Process measures and reporting that identify the source of delays and exceptions will allow processes to be improved either by adjusting rules or through training. Reporting that focuses on product purchase patterns, product delivery, and supplier factors to support price negotiation and vendor selection.

Selecting an E-Procurement Partner(s)

The marketplace for e-procurement systems is quite broad and complex. Products range from complete application suites to highly configurable tool kits. Similarly, suppliers range from capable technologists to experienced business automation professionals. To make things more confusing, there are often multiple suppliers involved in the process, each providing product components or integration services. Finally, there is great volatility in the technology used to deploy e-procurement. Suppliers, products, and processes change rapidly making the selection process quite difficult.

SOURCE:
http://www.technologyevaluation.com/research/articles/e-procurement-is-not-electronic-purchasing-part-ii-16214/

Accounting for SMBs: A Solution Beyond Entry-level Systems Red Wing Software

Introduction

The market for middle-market accounting software spans a large range based on price, functionality, and the size of the target organization. Most people are familiar with entry level products such as QuickBooks, Peachtree, and Simply Accounting and they are equally familiar with higher-end products such as Microsoft Great Plains Edition, MAS 90, ACCPAC Advantage Series, and Navision. Unfortunately there is a significant gap between these two classes of products and that's precisely where products from companies such as Red Wing Software compete.

Company History

Founded in 1979 with offices in Red Wing, Minnesota (US), Red Wing Software (http://c.technologyevaluation.com/?u=/cp/TEC_article_20050121_al.asp&cl=1&i=712&c=205&l=1) offers a strong middle market accounting system, as well as industry specific products that are leaders in their respective fields. In 2001, three companies (Red Wing Business Systems, Champion Business Systems, and FMS/Harvest) merged to create Red Wing Software, Inc. (1-800-732-9464 begin_of_the_skype_highlighting 1-800-732-9464 end_of_the_skype_highlighting). The merger was strategic and consolidated two of the leading agricultural products (AgCHEK by Red Wing Business Systems and Perception Accounting by FMS/Harvest) under one corporate umbrella. Additionally the merger allowed Champion Business Systems to offer a mid-range, Windows-based accounting product (TurningPoint) to its large DOS customer base. Red Wing Business Systems developed TurningPoint from the ground up with their DOS users in mind. Consolidating resources further provided each company the ability to enhance quality support services for their product lines, something on which each company prides themselves.

Agricultural Products

Agriculture (Ag) has always been a strong niche market for Red Wing. Focusing on financial management tools for producers (farmers and ranchers) and agribusinesses, AgCHEK and Perception Accounting are Ag-specific and recommended over general purpose, small business products. Cow/Calf is a complete herd management tool with analytical reports that track individual animal information, veterinary history, weaning, yearling, etc. for bulls, cows and their calves. Crop/Chemical and Livestock Management are comprehensive production management applications that integrate with AgCHEK accounting.

TurningPoint

TurningPoint is Red Wing's premier business product. First introduced in 2001, TurningPoint targets companies with revenues of $1 to $25 million (USD). Written in Visual FoxPro, Red Wing does not provide source code, but does provide COM object technology to integrate third party applications. Five user-defined fields are provided for each master record and Crystal Reports is used as the reporting engine. User-defined reports can be created, if Crystal is purchased separately.

TurningPoint 3.0 was released in July 2004. Development of TurningPoint is based largely on the company's knowledgebase of customer requests and suggestions. In addition, Red Wing strives to develop relationships with alliance companies to form integrations, such as point of pale and dispatching services, to provide a broad suite of capabilities for customers and to drive new market development.

TurningPoint consistently receives high accolades from industry experts and publications. Standard pricing is $895 (USD) per module. A bundled core accounting system costs $2,495 (USD) while a bundled inventory suite costs $4,495 (USD). TurningPoint provides value for wholesale distributors with an expansive list of capabilities, including multiple-location inventory, drop shipments, and up to twenty pricing levels per item for customers with complex distribution methods.

It is also a prime choice for agribusinesses, due to 1099-Patronage export to payroll. The 1099-Patronage export to payroll is designed for US agricultural cooperatives that use the 1099-Patronage form, which deals with the allocation of dividends. The feature allows unlimited and customizable units of measure and customized labeling, and integration to a payroll product (Red Wing Payroll) that includes piece rate, multiple language pay stubs, and government reporting specific to migrant workers.

TurningPoint is easy-to-use with a design that follows the Microsoft Explorer hierarchy of folders. Due to TurningPoint's modular nature, users can customize their solution by purchasing only the pieces that are necessary and then grow into a more advanced solution as needed.

Currently TurningPoint supports the following applications:

* System Manager
* General Ledger
* Accounts Receivable
* Accounts Payable
* Purchase Orders
* Inventory
* Order Entry
* Red Wing Payroll (integrated or as a stand-alone option)

TurningPoint - What's Interesting

TurningPoint has been designed to serve the needs of companies with 5 to 100 employees in the $1 to $25 million (USD) revenue range looking for software that costs $5,000 (USD) or less. As such one, would not expect to find sophisticated functionality. However that's not necessarily the case here. The product is very well designed with menus and screens that are crisp and easy to understand for even a novice user. Although some training will be required, users should be able to move quickly to full utilization of the system.

Other features include pop-up reminders that can be created to alert users to meetings, tasks, and exceptions that require their attention. While these alerts are not that sophisticated, they certainly will be sufficient for most middle market companies. Also, the Document Manager can be used to link files to master records and Microsoft Office can be launched from within the system and merge documents created for announcements or even to remind customers about overdue accounts. TurningPoint can also integrate with GoldMine as its contact manager.

Menus can be also be customized or user-defined as an alternate to the main menu for specific, user functions. These personal task lists can then display only those functions to which a user has been assigned rights. Entries can also be customized by changing field labels and skipping fields.

Also, reports created in TurningPoint can be saved or e-mailed in multiple formats, printed for any time frame, and information can be exported in various formats including Excel. Also, the Order Entry screens are very well designed and allow users to move from section to section quite easily. Users can even accept deposits from an Order Entry screen.

TurningPoint also has light manufacturing and production planning features that are superior to other products in its price range. For example, while most products support assemblies, TurningPoint takes this concept one step further. It allows users to create production plans that list the sequence of events that need to be followed. This is particularly useful when an order calls for the creation of a set such as a table and matching chairs. Users can also create a production plan that combines assembly operations to create a single plan. Finally, TurningPoint allows users to include labor costs in an assembly, thus reflecting the true cost of each assembly (parts and labor). This is the only example in this price range of which I am aware that allows users to control production without having to move to what may be an overly complex MRP application.

Moreover, TurningPoint has features that are not supported by lower-end products. For example, it allows multiple substitutes for each inventory item and it tracks vendor item IDs, and will print the vendor part number on a purchase order.

Most notably, however, is that TurningPoint also has features that are not supported by many higher-end products such as multiple locations, including costing and pricing per location. It will also create a suggested purchase order based on either a forecast or the order point within inventory. In addition, users can create a purchase order from an Order Entry screen for non-stocked items or drop-ships.

Although TurningPoint does not support highly sophisticated pricing schemes, it does support product line pricing, unit of measure pricing (e.g. case and item) as well as location pricing. Users can set up twenty different prices for an item for any one quantity price point. This allows users to associate a customer to one of these price points and therefore build a fairly sophisticated matrix.

Third Party Applications

TurningPoint does not currently support a large number of third party products, but Red Wing will be adding strategic integrations over time. Currently the following products are supported:

* Contact Management: Goldmine (http://c.technologyevaluation.com/?u=/cp/TEC_article_20050121_al.asp&cl=1&i=712&c=205&l=3).

* Point of Sale: Acme Point of Sale (http://c.technologyevaluation.com/?u=/cp/TEC_article_20050121_al.asp&cl=1&i=712&c=205&l=4). Acme Point of Sale tightly integrates with TurningPoint's Accounts Receivable, Inventory Control, and General Ledger. Acme is advanced retail management software that includes barcode printing, credit card processing, and marketing features so you can do date-driven sale pricing, promotional mailing labels based on past purchases, receipt couponing, and more.

* Service Management: Dynamite Service System (http://c.technologyevaluation.com/?u=/cp/TEC_article_20050121_al.asp&cl=1&i=712&c=205&l=5). A full featured, computerized dispatching software system that tracks field service calls and installations, in-house repairs to customer equipment, service contracts, technician calendar, customer profitability, equipment rentals, and much more.

* Installation Tool: Applianz (http://www.applianz.com/turningpoint.htm). Applianz Data Vault allows TurningPoint users to get up and running immediately on any existing PC or laptop with enhanced system performance and at a lower cost of ownership than other hardware upgrade or replacement options. Plus, users have the ability to access TurningPoint from any PC anywhere in seconds. The Data Vault's plug-and-play technology enables this without any installation, compatibility, or maintenance hassles.

* Printing Tool: PDFBlaster (http://www.datafabrication.com/main_content.asp?pageid=45) PDFBlaster is a revolutionary new "smart" printer driver that bridges the gap between your customers and suppliers and the documents they need to make your business succeed. PDFBlaster streamlines the entire process of creating, printing and delivering mission critical business documents without the hardware hassles associated with analog modems.

Competitive Analysis

While it is relatively easy from an academic perspective to place TurningPoint in the competitive landscape (between entry level products such as QuickBooks and Peachtree and mid-priced products such as MAS 90, ACCPAC Pro Series and AccountMate), most users see one end of the spectrum or the other, but not products in between like TurningPoint.

The product itself is actually quite powerful for its price point, but Red Wing must continue to add functionality in order to offer users something other than just a price advantage. Name recognition may be Red Wing's single greatest challenge. Small companies like Red Wing have survived because they have been able to attract a loyal, albeit small number of resellers. Marketing is expensive, not to mention the relatively small number of middle market publications and other marketing outlets, which makes marketing harder. In short growth is difficult. The most effective growth strategy is through increased reseller recruitment as well as marketing to the CPA community that is very influential in this market.


SOURCE:

Descartes Systems Group Makes D&T Growth List

Event Summary

Deloitte & Touche ranked Toronto-based Descartes Systems Group, Inc. number 21 on their list of 50 fastest growing Canadian technology companies. Descartes obtained their position on the list because of their 1247% increase in revenues since 1994.

Market Impact

Descartes' growth has rocketed over the last five years, fueled largely by a buying spree that has resulted in five major acquisitions since 1997. At an average price of over $10 million USD, these purchases have enabled Descartes to expand its Supply Chain Execution (SCE) product suite, increase its overseas presence, and broaden its vertical product market focus.
Company Name Acquisition Cost Date Business
Michael Mead & Associates, Inc. $13.2 million 2/97 Distribution software for bakery and other food industries
Roadshow International, Inc. $29.9 million 11/97 Vehicle routing and scheduling software
Lightstone Group Inc. $11.4 million 6/98 Software for delivery of goods and services
Calixon BV $7.4 million 6/98 Trading partner collaboration, order tracking software
NRM $1.4 million 7/98 Warehouse optimization software and consulting

For instance, the acquisition of Dutch software maker Calixon helped quadruple Descartes' revenue in Europe from 1998 to 1999. Its largest acquisition, Virginia-based Roadshow International, in addition to bolstering Descartes' logistics scheduling capabilities, brought a large customer base (over 600) into the fold. The MMA and Lightstone Group acquisitions gave the company added expertise in two additional verticals: baked goods distribution and delivery of goods and services. Managed effectively, these acquisitions can propel Descartes into the lead position among SCE vendors, displacing larger players Industri-Matematik, Manhattan Associates, and EXE Technologies. However, rapid growth can place a significant strain on a company's management and operations. Evidence of this can be seen in Descartes' negative profits for the last ten quarters, a timeframe that coincides with the acquisitions. While it is not uncommon for company balance sheets to dip into the red during periods of growth, continued losses can erode Descartes' financial foundation, impairing its ability to serve its customers.


SOURCE:
http://www.technologyevaluation.com/research/articles/descartes-systems-group-makes-d-t-growth-list-15578/

One Vendor's Exploit of Marrying Infrastructure with Selling and Fulfillment Applications

Event Summary

Mergers and acquisitions (M&As) in the enterprise applications arena are certainly not uncommon. In fact, if a week goes by without an intra-market acquisition announcement, a market observer might even begin feeling out of sorts. Often, many acquisitions have meant outright bad news or at least anxiety for existing customers of the (usually beleaguered) acquired software provider. However, the market has also witnessed a number of mergers between relatively well-performing supply chain software companies that have joined forces to deliver even broader and deeper set of solution footprints and better value propositions to the market.

Such an example is Sterling Commerce, a $630 million (USD) subsidiary of AT&T Inc. (NYSE:T), which has long been a prominent provider of solutions that connect client enterprises' business communities, processes, people, and technology in a global economy. Over the last few years, the company has acquired a number of supply chain management (SCM) software companies that, at the time, were not perceived as companies in distress or in any pressing need of a "white knight" to help stave off a hostile takeover or abate financial woes. However, these relatively small vendors were apparently not loath to more liberal access to new funds for product development and international customer cross-selling opportunities within Sterling's huge traditional install base. This is particularly true in light of Sterling Commerce's operations in 24 countries, with regional headquarters in four geographies: 1) the Asia-Pacific region in Singapore, 2) the Europe, Middle East and Africa (EMEA) region in London, England, 3) Latin America in Sao Paolo, Brazil, and 4) the North American region in Dublin, Ohio, (US). Headquartered in Dublin, Ohio (US), Sterling Commerce has offices in 17 countries and most major cities around the world. The company also has engineering laboratories in 5 countries (France, Germany, India, Singapore, and US). Gradually, Sterling has become more of an enterprise applications vendor by diversifying its traditional focus on being a business-to-business (B2B) infrastructure provider. Namely, apart from core B2B communications and recent SCM applications, Sterling also offers application integration and network service; electronic data interchange (EDI) applications, and translation products.

Sterling Commerce's Genesis

To better judge the rationale behind the SCM acquisitions, it's helpful to explore Sterling Commerce a bit deeper. Stemming from an EDI and value- added network (VAN) communications and integration background, the company has been in business since 1976, and with decades of profitable growth and currently with over 2,500 employees around the globe. It has over 30,000 customers in virtually all industries, which constitute about $23 trillion (US) of the global economy. Amid that install base are many of the largest banks in the US. The vendor also serves the financial services, manufacturing, logistics, communications/media and retail markets.

Given its longevity, Sterling was involved in electronic commerce way back when transactions took place on closed, proprietary systems using the rigid EDI format. In its more than three decades of existence, the company has seen the emergence of the World Wide Web (WWW) and the Internet-based EDI protocols (see EDI versus. XML—Working in Tandem Rather Than Competing?); the dot-com bubble; and a share of its own corporate changes. Namely, Sterling Commerce became an independent entity in 1996 after being a division of former Sterling Software (which was subsequently acquired by Computer Associates [CA]). In early 2000, Sterling Commerce was acquired by SBC Communications Inc., which later became AT&T Inc. following the merger with Ma Bell. Then there were rumors in the early 2000s of SBC being uncertain what do with Sterling Commerce, SBC's $3.9 billion (USD) investment at the peak of the dot-com boom. For a while, Sterling was not considered core to SBC's business, so much so that at the end of 2002, SBC reportedly tried to divest it, with Sterling Commerce receiving strong interest from Bain Capital in late 2002.

However, that the spin-off never took place and EDI/VAN provision became a limited growth business (albeit still quite lucrative). Nonetheless, since the early 2000s, Sterling Commerce and its VAN service providers offering EDI transport and translation services have been engaged in the most sweeping re-engineering of their businesses and value propositions since the advent of Internet-based EDI during the late 1990s. Namely, traditional document interchange and guaranteed message delivery services have recently been enhanced with a new series of integration and application services designed to enable inter-enterprise business process execution, collaboration, and management for SCM, and customer relationship management (CRM) strategies. While emerging as a new breed of inter-enterprise integrators, these providers' services have increasingly been including data cleansing and syndication, product information management (PIM), global data synchronization (GDS, see The Role of PIM and PLM in the Product Information Supply Chain: Where Is Your Link?), cross-platform and inter-enterprise transaction management, document reconciliation and analytics, trading partner business intelligence (BI) and analytics. They have also included an array of enterprise applications to assist businesses with collaborative processes, ranging from dispute and financial process management to demand planning, supply chain visibility (SCV), and vendor-managed inventory (VMI).

As a result, a couple years ago GXS introduced Trading Grid, an EDI services business, acquired from IBM, and announced a partnership with WebMethods (now part of Software AG). It also acquired HAHT Commerce, a former partner relationship management (PRM) vendor (see GXS Acquires HAHT Commerce for More Synchronized Retail B2B Data). On its hand, Inovis has acquired QRS (see Inovis Delves into PIM by Snatching QRS), while Perfect Commerce has acquired the Internet trading exchange Pantellos.

Realizing Opportunity from Trading Complexities

Somewhat resembling Click Commerce's approach (see Will a Tool Manufacturer and a Supply Chain Software Vendor "Click" in Matrimony?), Sterling Commerce's supply chain thinking and strategy also stems from the premise that collaborative commerce turns traditional linear value chains into multi-enterprise supply chain networks. The business challenge, which can thus be turned into opportunity, comes from the fact that selling and fulfillment across an extended supply chain have become quite complex. Namely, the word "multiple" and "cross-channel" has become part of the complicated game, starting with multiple enterprises involved in trade, whereby each enterprise will often have multiple locations with multiple brands, divisions, independent business units (IBUs), each with their own back-end systems, sales channels, etc. Most of these have come, in great part, due to frequent M&As in the market.

Consequently, multiple catalogs with products or services and multiple product choices that require configuration and guided selling have long become the matter of course (see The Basics of Quote-to-Order Systems). Further, globalization and more demanding customer expectations have resulted in the need for multiple fulfillment methods, whereby goods can be delivered from warehouses, stores, or directly from suppliers (via drop-shipping, see Drop-Shipping—Internet Retailers' "Little Helper"?), through third-party logistics (3PL) networks or the company's own fleet (in a full truckload [TL], less than a truckload [LTL], or parcel delivery), or through a service network, a third-party service network, etc.

As seen in Retailing Trends—Shopping Anyway and Everywhere, Internet-based technological advancements have caused consumers to expect interchangeable multi-channel (e.g., retail store, catalog, call center, commercial contractor, web site, kiosk, etc.) inquiry, shopping, goods return, etc. In fact nowadays, a consumer expects a true cross-channel experience, and rightfully so, where they are able to buy something online and return it to the closest retail store for a refund, without any questions asked. Last but not least, when one counts in multiple customer segments (such as consumer, distributor, or corporate customer), effective collaboration should provide visibility and transparency, optimize shared assets, and orchestrate common processes in the demand, supply, and service chains (consisting of sales force, key accounts, consumers, retailers, distributors, suppliers, manufacturers, field service, etc.).

Failing to execute well in such intricate environments typically results with lower revenue growth, declining profit margins, and declining brand equity, with the all-too-common symptoms of high operating costs, inaccurate orders, and poor on-time delivery (see The Perfect Order—Inside-out or Outside-in?). It can also result in high stock-outs (missed sales opportunities), lower customer satisfaction, or a myriad of other problems. Nowadays it's become cliché to call traditional phone, fax, and paper-based communications systems labor-intensive, inefficient, and prone to error. Yet, companies have historically dedicated significant resources and time to the manual entry (re-keying) of information from faxed or phoned-in purchase orders (PO), and on manually processing paper checks, invoices, and shipping notices. While spreadsheets and e-mail are also used to somewhat better manage partner relationships, these electronic systems can also be inefficient and difficult to integrate. The large volume of paper generated by these systems and the mass of information to be sorted and processed frequently produce hidden costs, such as errors and delays in information delivery. Moreover, timely changes can be difficult to implement in manually intensive processes and the cost related to such changes can also be significant. For example, a paper-based catalog cannot be quickly or inexpensively updated to inform customers of changes in product offerings, availability, or pricing (see Differences in Complexity between B2C and B2B E-commerce).

It is also important to integrate channel partners into the selling experience. Companies should to be able to allow their partners to not only have a web portal to purchase products and services, but they also need to allow them to be part of the quoting process and leverage quoting capabilities of a manufacturer or retailer, and allow partners to add their products along with the manufacturer's to the quotes that they send to prospects.

A manufacturer and the members of its distribution network often have limited capability to track orders, inventory, warranties, and other information (or to compile useful databases) using paper-based or semi-automated processes. These forms of communication do not permit manufacturers and their business partners to exchange information on a real-time basis, and thereby prevents easy access to key information needed to transact business. Manufacturers and trading partners may also suffer from differences in languages, cultures, and time zones, which are additional barriers that traditional methods cannot easily overcome. Yet, increasing market and supply chain complexity motivates companies to improve operations and communications with their trading partner community. The continued growth of outsourced manufacturing, an increased focus on low-cost international materials procurement, and heavy market reliance on vendor- or supplier-managed inventory programs to control costs all require a solid infrastructure for coordinating the extended supply network (see What Does the Future Hold for PRM?).

Furthermore, traditional enterprise resource planning (ERP) systems typically cannot handle these types of multi-enterprise complexities, and they tend not to provide the visibility and control required to efficiently manage and synchronize extended business processes – and were really never designed to be customer and partner-facing. Inefficient processes and poor customer service often result. Indeed, most ERP systems were not originally designed to coordinate business processes across a multi-enterprise supply chain, including outsourced manufacturing, 3PL deliveries, partner fulfillment, etc. and neither were they designed to be customer-facing. Subsequently, traditional systems often require multiple instances across an organization (see Standardizing on One ERP System in a Multi-division Enterprise). And, in many cases, this is based on entirely different processes across various divisions, sectors, business units, or regions of an organization. Yet, the ability to view complete and accurate orders, integrate data, and manage inventory and activities for effective fulfillment execution is necessary to effectively respond to challenging customer requirements and achieve a competitive advantage. Their absence typically results in orders that are stored in different systems; difficult and often manual interactions with external partners; and poor inventory visibility. Ultimately, business process changes are very expensive and time consuming. Likewise, it's not only smaller, lesser known enterprises that have fallen prey to this type of neglect. Even some of the big corporate names with automated web storefronts still have processes that require significant manual interaction. It is common, for example, for an enterprise to pass its fulfillment to a third-party transportation company with no direct electronic communication between the two.


SOURCE:
http://www.technologyevaluation.com/research/articles/one-vendor-s-exploit-of-marrying-infrastructure-with-selling-and-fulfillment-applications-19552/

QAD Pulling Through, Patiently But Passionately

Event Summary

In these days of gloom, when most of the news is about rapid mergers and acquisitions of distressed vendors or alternatively about headcount and/or cost reductions-based profits of those enterprise applications vendors that are lucky to even report profits amid dwindling revenues, it is refreshing to hear good news coming from a vendor that has (seemingly) forever eluded profits, particularly when the recent success is largely based on a new revenue stream.

On August 20, QAD Inc. (NASDAQ: QADI), a global provider of collaborative enterprise applications for manufacturing and distributing organizations, reported upbeat financial results for the fiscal 2004 second quarter and six-month period ended July 31, 2003. For Q2 2004, revenue increased 24% to $56.0 million from $45.3 million in the same period last year, while license revenue rose whopping 41% to $15.8 million, compared with $11.2 million in Q2 2003 (see Figure 1). Maintenance and other revenue increased 9% over a year ago to $28.9 million, reflecting the impact of new licenses in addition to strong maintenance renewals. The service revenue grew 48% over the comparable prior year period to $11.4 million, due primarily to the TRW ISCS acquisition completed in November 2002. Net income for Q2 2004 was $1.9 million, whereas in Q2 2003, the company's reported net loss was a hefty $4.0 million. QAD's cash and equivalents balance at July 31, 2003 was $43.5 million, while for Q2 2004, cash flow provided by operations was $1.2 million, continuing the momentum of positive annual operating cash flow.

Figure 1

The improved financial performance has not come without astute moves with regard to product functionality enhancements. These moves include:

* A partnership with Johnson Controls (NYSE:JCI) to develop a next-generation Just-In-Time (JIT) Sequencing software module for MFG/PRO

* Announcement of Kanban Visualization, which enhances QAD's existing Supply Visualization (SV) solution

* More than two dozen important new functions and enhancements to MFG/PRO eB2, specifically designed in collaboration with QAD's manufacturing customers to help address their specific needs

* Announcement of healthy sales momentum in Asia, with MFG/PRO suite becoming a platform of choice for automotive manufacturers in China to automate business operations and collaborate with partners worldwide

This is Part One of a six-part note.

Parts Two will present the Company Background.

Parts Three and Four will discuss the Market Impact.

Part Five will cover Challenges and

Part Six will make User Recommendations.

Partnership With Johnson Controls

Most recently, in July, QAD and Johnson Controls (NYSE: JCI), a global leader in automotive systems and facility management and control, announced at the European Automotive News Congress conference that they have entered into a partnership whereby the companies will collaborate to develop a next-generation Just-In-Time (JIT) Sequencing software module for MFG/PRO, QAD's flagship enterprise resource planning (ERP) software.

Through this partnership, QAD should gain software components developed by Johnson Controls that incorporate more than 10 years of Johnson Controls knowledge and expertise on JIT Sequencing, and this approach should allow QAD to take advantage of its strong partnership with Johnson Controls to reduce the time-to-market for this functionality and improve the software product design using best-of-breed knowledge and advice from Johnson Controls. The QAD Just-In-Time Sequencing module for MFG/PRO is planned to be available before the end of 2003.

On its hand, Johnson Controls has standardized its worldwide manufacturing operations on QAD MFG/PRO, and through this partnership will work with QAD to define and develop the requirements for JIT Sequencing. It plans to deploy this critical functionality in its plants throughout Europe and North America.

Over the last 18 years, Johnson Controls has focused its processes not only on providing high levels of customer delivery and quality, but also on developing highly collaborative OEM (original equipment manufacturers) supply relationships. To that end, Just-In-Time Sequencing is designed for automotive suppliers seeking to respond to the increased market pressures placed on them by the automotive original OEMs whose mission is to increase flexibility in the assembly and configuration of cars and trucks while reducing the overall lead time required to deliver a vehicle to the final customer. This "Build-to-Order" concept requires that key, custom-built vehicle components be produced and delivered in the exact sequence to vehicles moving down the OEM's assembly line.

Success for a supplier in Just-In-Time Sequencing lies in providing this configuration and delivery capability while at the same time maintaining control over production and inventory carrying costs. Consequently, using the QAD JIT Sequencing module, OEM demand requirements will be communicated via assembly broadcast signals directly to the supplier's production planning and scheduling system, which should permit the manufacture and delivery of "customized" products to be performed. Finally, the JIT Sequencing module should provide "extended" sequencing capabilities so that suppliers further down the supply chain can also provide their products using "Build-to-Order" concepts.

Kanban Visualization

As for new generally available products, in May, during its annual user conference Explore 2003, QAD announced Kanban Visualization, which enhances QAD's existing Supply Visualization (SV) solution with immediate insight into kanban status.

For manufacturers using kanban production methods and seeking greater supply chain efficiency, QAD Supply Visualization with Kanban Visualization should improve vendor-managed inventory (VMI) initiatives by providing streamlined kanban management. QAD Supply Visualization extracts inventory and procurement data from manufacturers' ERP systems and stores it securely on MFGx.net, QAD's hosted exchange where authorized suppliers can access the information and initiate the replenishment process. By providing secure, near real-time insight into this data, the application should enable automotive, consumer products, medical, industrial and electronics manufacturers to better synchronize inventory with demand.

Kanban Visualization enhances inventory management for companies that use the kanban production model, since it presents the status and quantity of kanbans graphically so that suppliers can see when stock needs replenishing, enabling them to print kanban cards immediately, instead of waiting for the customer to send a copy. Its open Application Programming Interface (API) supposedly integrates with manufacturers' existing enterprise systems. Kanban Visualization also will alert managers and suppliers to relevant inventory changes, for example, via e-mail, so that they can act quickly and ensure efficient replenishment.

As QAD delivers new features and functions that address real-world manufacturing needs, it also claims that customer adoption of QAD Supply Visualization has nearly tripled and customer sites deployed have increased six-fold, while the number of facilities slated for implementation has grown ten-fold in the past year. Concurrent with customer adoption, nearly 400 suppliers have embraced the software to monitor and act on changes in inventory levels, purchase orders, schedules and schedule releases.

MFG/PRO eB2 Functions and Enhancements

Earlier, in March, QAD announced that customer adoption of MFG/PRO eB2, the company's Web-enabled latest release of suite of enterprise applications, is occurring at a more rapid rate than any prior release of MFG/PRO. More than 230 customers have reportedly bought or upgraded to MFG/PRO eB2 in the first 150 days of its availability. Released September 2002, MFG/PRO eB2 incorporates more than two dozen important new functions and enhancements specifically designed in collaboration with QAD's manufacturing customers to help address their specific needs. New application functions address lean manufacturing for greater responsiveness to customers; efficient collaboration; service/support management (SSM) for more customized service contracts; streamlined international financials and profitability analysis; and a desktop interface that provides even greater ease of use and minimizes user training.

To maximize its interoperability with legacy systems and minimize cost of ownership, the MFG/PRO eB2 suite is built on an open, standards-based architecture including Open Applications Group Integration Specification (OAGIS) messaging conventions, Business Object Documents (BODs) and eXtensible Markup Language (XML). QAD industry user groups specified additional features to address manufacturers' real-world needs and various production environments in the automotive, food & beverage, consumer packaged goods (CPG), medical devices, industrial products, and electronics sectors. Customer participation in tailoring QAD products is one area the vendor takes very seriously, since it has a development group for each of its six verticals made out of 10 prominent QAD users, who prioritize future development for each vertical.

China Sales Momemtum

At about the same time, QAD announced its healthy sales momentum in Asia, with MFG/PRO suite becoming a platform of choice for automotive manufacturers in China to automate business operations and collaborate with partners worldwide. As a result, QAD believes it is well-positioned to capitalize on continued growth in the emerging regional market.

Since opening offices in Shanghai nearly a decade ago, QAD now reportedly serves 300 customers in China including leading automotive, electronics and consumer products manufacturers. Sixteen of the world's top 25 automotive manufacturers depend on QAD's advanced technology to manage their business and operations, and in China 53 automotive joint ventures and customers such as Ford, Daewoo, Lear, TRW, Delphi, Visteon, Hyundai and Eaton have chosen QAD's MFG/PRO suite. Global electronics producers such as Applica, Lucent, Mitsubishi and Philips, and consumer products manufacturers including Avon, Coca-Cola and Sara Lee rely on the QAD platform for manufacturing enterprise operations as well.

The automotive industry has witnessed explosive growth in China as foreign manufacturers seek to profit from favorable economic conditions and the lower cost of operating there. According to the China Association of Automobile Manufacturers, domestic output of motor vehicles between January and November 2002 jumped 36% from production in 2001. The association reported sales of China-made automobiles also rose by more than 36% in the same period, due in large part to the increase in new products launched by local manufacturers, especially Sino-foreign joint ventures. The surge in activity has jump-started competition, too, putting pressure on Chinese manufacturers to upgrade their ERP systems to function on par with their foreign partners and new entrants to the market. Many of these companies are choosing QAD applications to create a foundation for consistent operations and communication across multiple locations, new and old plants, and different manufacturing models.

To support customers and continued growth in the region, QAD has established alliances for technology and implementation. QAD is one of IBM's preferred software providers for Japanese customers with manufacturing operations in China, and has been selected by IBM as a key solution provider in the automotive vertical. QAD has partnered with hardware providers Hewlett-Packard (HP) and Sun Microsystems in the region as well. Distribution partners include Atos Origin, SCS, Softspeed, eSun, TSnT, and Dalian Hualu. QAD is also expanding its staffing as its customer base grows, to ensure a higher quality direct support for its software.





SOURCE:
http://www.technologyevaluation.com/research/articles/qad-pulling-through-patiently-but-passionately-17061/

Solomon Stands the Test of Time Despite Changing Masters

Microsoft Business Solutions Solomon, formerly Solomon IV and Microsoft Great Plains Solomon IV, a prominent business management and e-business suite of applications for small and mid-market companies, and the product that some had prematurely written off after being acquired first by one of its erstwhile greatest nemeses, former Great Plains Software in 2000 (see Will Solomon Finally Satisfy Great Plains' Insatiable Appetite?), and particularly after its new owner subsequently ended up under Microsoft's roof in 2001 (see Microsoft And Great Plains — A Friendship That Turned Into A Marriage), only soon after to share the fraternity home with yet another former nemesis, Navision in 2002 (see Microsoft 'The Great' Poised To Conquer Mid-Market, Once and Again), seems to be doing just fine, if not even much better than that. It appears that the product has several truly differentiating traits, which cannot be easily or quickly replicated by its seemingly more robust brethren products within Microsoft Business Solutions (MBS) division. Thus, Microsoft has reason to continue to bolster the product for Solomon's loyal customer base and resellers instead of promoting less popular options (e.g., stabilization and replacement).

Most recently, in summer 2003, Microsoft Business Solutions (MBS) announced the availability of Microsoft Business Solutions Solomon 5.5, which includes several new features and enhancements in the product's Foundation Series, Financial Series, Project Series, and Service Series of modules. Owing to the product's renowned sweet spot of project accounting, MBS has further developed Solomon 5.5 to meet the needs of small to midsize project-driven organizations, specifically in the industries of business services, management and engineering services, social services, special trades contracting, general contractors, and wholesale trade (durable goods). To that end, Solomon 5.5 includes Microsoft Business Solutions Professional Services Automation (MBS PSA) product features that combine the power of MBS Project Accounting Solomon and the new enterprise version of Microsoft Project 2002 to provide externally focused, project-driven organizations with an integrated financial, project and resource management, knowledge management, time and expense, project accounting, financials, and reporting and analytics solution, based on the Microsoft .NET platform. Additional enhancements to the project accounting capabilities include new indirect rate calculation and new audit trail tracking abilities for contractors of the US federal government, particularly those subject to Defense Contract Audit Agency (DCAA) audits.

The MBS PSA vertical solution became generally available in North America at the end of 2002, following its quite vocal announcement during the Stampede 2002 partner conference (see Microsoft Lays Enforced-Concrete Foundation For Its Business Solutions).

This is Part One of a four-part note on the MBS Solomon product.

Part Two will discuss the market impact. Part Three will cover product differentiators.

Part Four will present the vendor challenges and make user recommendations.

Other Features

Solomon 5.5 is now also integrated with Microsoft Business Solutions Retail Management System (MBS RMS), a retail management and point-of-sale (POS) solution designed specifically for the independent merchant. The integration allows for the easy sharing of information between Microsoft RMS and the proven financial capabilities of Solomon. Built on the award-winning QuickSell line of products, it offers a solution that automates a retailer's operations from the cash register right through to the company headquarters. Also announced during Stampede 2002, the solution already featured integration with MBS Great Plains and MBS Small Business Manager financial applications, bringing a sophisticated (POS, inventory management, pricing and promotions, reports, and analysis) yet easy-to-use and cost-effective offering to small and medium-sized retail businesses.

Additionally, with Solomon 5.5, users of Microsoft Office XP will find the capabilities of Outlook, Word, and Excel expanded through .NET Smart Tag capabilities, which should allow users to easily incorporate structured and unstructured information, or information from multiple systems, into a single document. To that end, the Smart Tag Manager lets Office users drill down on customer, vendor, inventory, account, salesperson or employee detail information stored in the Solomon 5.5 database.

Last but not least, Solomon 5.5 includes several new features within the following series of modules:

* Financial Series — The suite exhibits enhanced time entry screens and the tools needed to print multiple checks per employee per pay period or payroll run, which should be particularly useful for construction companies.

* Project Series — New features include additional modules in the Solomon Standard edition, revenue allocation rules based on a maximum, Solomon Desktop Web time entry modifications, the ability to enter and adjust labor costs over the Web, automatic synchronization of new project IDs by using Solomon's next available project ID, and ease-of-use enhancements for data entry.

* Service Series — Additional modules are now available, including equipment maintenance and Service Contracts.

* Foundation Series — Features enhanced report management capabilities within the Solomon desktop, as well as online user manuals.

Hence, MBS Solomon 5.5 shows continued MBS investment in the advanced distribution, professional services automation (PSA) projects, service, and e-business capabilities of the product and its continued focus on vertically-oriented functionality while balancing strategic investments in broadening the functional footprint. The future should bring the delivery of Microsoft Business Portal (formerly shortly referred to as Microsoft Business Desk) as a replacement for the Solomon Desktop portal application, as well as the delivery of Microsoft Customer Relationship Management (MS CRM) integrated with Solomon, increased integration between Solomon and other Microsoft products, and accelerated development of business applications and the independent software vendors (ISV) platform using the Microsoft .NET platform.

Consequently, MBS Solomon 5.5 represents a natural progression from Microsoft Great Plains Solomon IV Release 5.0, which was delivered in summer 2002, and featured significant new capabilities and enhancements across its advanced distribution, financial, project, e-business, and service series. The release particularly built on the strengths of its advanced distribution capabilities with the addition of the following three new modules:

1. The Inventory Replenishment module is used to track inventory usage data and vendor performance, as well to plan future requirements in order to optimally set inventory stocking levels and automate generation of purchase orders. By replenishing inventory more accurately through historical use, vendor performance, and planned future demand, organizations should be able to deliver better customer service while improving cash flow and balance sheets.

2. The Order to Purchase module should benefit customer service and sales representatives through a one-step process of taking a customer order and then placing a purchase order with a vendor to fulfill stock needs when the company does not have inventory on hand to fill the order. A streamlined fulfillment process should provides salespeople with the tools they need to satisfy customer demand and deliver higher levels of customer service.

3. The Landed Cost module enables distributors and manufacturers to account for additional costs beyond the merchandise cost incurred in purchasing inventory items. This should allow these organizations to effectively manage profitability by rolling the shipping, handling and import fees into the total cost of goods.

Solomon IV 5.0 also delivered on continued investments in its Finance Series with payroll capabilities for construction and other businesses. These include union reciprocity (portability), service dispatch integration to advanced payroll, project time and expense integration to advanced payroll, and web-based advanced payroll time entry. In union reciprocity, a new screen has been added to automate the calculation of fringe benefit amounts based on a reciprocal agreement between an employee's home local union and work local union. Unlimited reciprocals can be set up and maintained, and are automatically calculated, saving time for payroll managers who previously had to manually calculate complex union reciprocal agreements each week.

In the Project Series, organizations performing projects or services for customers in other countries can use the new multicurrency project invoice enhancement to have customers' invoices presented in a foreign currency. Amounts from the foreign currency invoice are automatically translated into the system's base currency for postings.

In the e-Business Series, Solomon Desktop now has multi-company capabilities, enabling Web self-service applications and reports to interact with data in all established companies, either in a single database or in multiple application databases. Each Solomon Desktop user will have the opportunity to sign in to any company for which rights have been given, providing remote managers and salespeople with quick and easy access to the full multi-company capabilities of Solomon IV while simplifying administration for the information technology department.

In the Service Series, dispatch integration with Microsoft MapPoint has been added, allowing dispatchers to quickly and accurately locate the address of service calls, plan technicians' routes, and determine alternate routes if needed. The enhancement enables general and specialty trade contractors to better dispatch technicians for higher utilization and profits. However, to use this feature, customers must purchase a license for Microsoft MapPoint separately, and the product must be installed on the dispatcher's computer.

As a recap, MBS claimed at the time of the Solomon IV 5.0 release that the following parties would benefit from the new product's capabilities:

* Distributors or manufacturers who
— Require enhanced inventory replenishment capability
— Want to improve fulfillment by efficiently creating purchase orders from sales orders
— Require landed cost inventory valuation
— Manage production plans with material tracking and cost accounting

* Finance officers and controllers who want improved financial reporting, such as improved actual versus budget reports, and improved budgeting tools

* Construction companies who need a better payroll solution

* Customers who require advanced payroll processing such as union reciprocity (portability)

* Specialty contractors with mobile field service technicians who want an easy and effective means for directing their technicians to the correct location

* Organizations that require the ability to represent customers' project-driven invoices in foreign currencies

* Customers with large off-site work forces that need to report chargeable labor and expense activity.

* Organizations with multiple accounting companies that want to affordably provide remote managers and employees easy access to reports and applications via the Internet.

Customization Tools

Again, the Solomon IV 5.0 release was a progression from Microsoft Great Plains Solomon IV Release 4.50, which was launched in summer 2001 and which featured more tightly integrated financials, supply chain management (SCM), project management, and field service management applications. In addition, Solomon IV 4.50 introduced to customers the more powerful tools to customize the solution to meet their unique business needs.

Project Management Enhancements — Solomon IV Release 4.50 provided project managers in the construction, engineering and other service-related fields with the ability to more closely track project details for improved profitability, due to the available views into project profitability, analysis capabilities, and project workflow tracking and management. Several new project management modules were also made available, enhancing review and approval of time sheets and expenses as well as detailed analyses of employee utilization, which offers customers an enhanced interface between projects and chargeable-time employees, all via the Internet. With the addition of the Solomon IV advanced payroll module, general and specialty contractors with union payroll needs also will be able to utilize Solomon IV for project management.

Supply Chain Management — The Solomon IV Release 4.50 SCM Series added two new modules, bill of materials (BOM) and work order, which, combined with the enhancements to Solomon IV's order management, inventory and purchasing modules, further eased use and configuration flexibility. The work order module was also tightly integrated with the project management series.

Field Service Management — Enhancements to the Solomon IV field service management series offered companies with large field service staffs a comprehensive solution that automates all operations and accounting areas of a service business. The new graphical dispatch board allows organizations with mobile field technicians to easily dispatch technicians through a graphical user interface, with access to each technician's job schedule, locations and more, ensuring accurate scheduling and enhanced customer service.

Customization Tools — With Release 4.50, Solomon IV delivered a new Object Model, providing flexibility in automation and integration of third-party applications, as it makes any Solomon screen available for automation, including standard screens and new screens created by developers with the Solomon Tools for Visual Basic. It also will incorporate any customizations in the object without additional or duplicate work. In addition, Visual Basic for Applications (VBA) increases the familiarity and usability of Solomon Customization Manager, enabling developers to extend, integrate and personalize Solomon IV to meet businesses' unique needs.

Again as a recap, former Microsoft Great Plains division claimed at the time of the release that the enhancements were made with the idea to move Solomon IV up the value chain and that the following parties would benefit from the new product's capabilities:



SOURCE:
http://www.technologyevaluation.com/research/articles/solomon-stands-the-test-of-time-despite-changing-masters-17049/