Operations Support System

Decision Support System : A Snap Shot

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The concept of a decision support system (DSS) is extremely broad and its definitions vary depending upon the author's point of view. A DSS can take many different forms and the term can be used in many different ways.

In a more precise way, it can be defined as:

"An interactive, flexible, and adaptable computer-based information system, especially developed for supporting the solution of a non-structured management problem for improved decision making. It utilizes data, provides an easy-to-use interface, and allows for the decision maker's own insights."

DSS are computer-based support for management decision makers who are dealing with semi-structured problems. With respect to computer terminology it can be defined as:

"Interactive computer-based systems that help decision makers utilize data and models to solve unstructured problems."

Though, it is impossible to give a precise definition including all the facets of the DSS. Nevertheless, the term decision support system remains a useful and inclusive term for many types of information systems that support decision making. Every time a computerized system is not an on-line transaction processing system (OLTP), someone will be tempted to call it a DSS. As it can be see that there is no universally accepted definition of DSS.

Additionally, the specifics of it is what makes it less generalized and more detailed. In addition, a DSS also is a specific Software application that helps to analyze data contained with a customer database. This approach to customers is used when deciding on target markets as well as customer habits.

History of DSS

The concept of decision support has evolved from two main areas of research: the theoretical studies of organizational decision making done at the Carnegie Institute of Technology during the late 1950s and early 1960s, and the technical work on interactive computer systems, mainly carried out at the Massachusetts Institute of Technology in the 1960s. It is considered that the concept of DSS became an area of research of its own in the middle of the 1970s, before gaining in intensity during the 1980s. In the middle and late 1980s, executive information systems (EIS), group decision support systems (GDSS), and organizational decision support systems (ODSS) evolved from the single user and model-oriented DSS. Beginning in about 1990, data warehousing and on-line analytical processing (OLAP) began broadening the realm of DSS. As the turn of the millennium approached, new Web-based analytical applications were introduced.

It is clear that DSS belong to an environment with multidisciplinary foundations, including (but not exclusively) database research, artificial intelligence, human-computer interaction, simulation methods, software engineering, and telecommunications.

Historical development

The role of business information systems has changed and expanded over the last four decades.
In the incipient decade (1950s and '60s), "electronic data processing systems" could be afforded by only the largest organizations. They were used to record and store bookkeeping data such as journal entries, specialized journals, and ledger accounts. This was strictly an operations support role. By the 1960s "management information systems" were used to generate a limited range of predefined reports, including income statements (they were called P & L's back then), balance sheets and sales reports. They were trying to perform a decision making support role, but they were not up to the task.

By the 1970s "decision support systems" were introduced. They were interactive in the sense that they allowed the user to choose between numerous options and configurations. Not only was the user allowed to customize outputs, they also could configure the programs to their specific needs.

The main development in the 1980s was the introduction of decentralized computing. Instead of having one large mainframe computer for the entire enterprise, numerous PC's were spread around the organization. This meant that instead of submitting a job to the computer department for batch processing and waiting for the experts to perform the procedure, each user had their own computer that they could customize for their own purposes. Many poor souls fought with the vagaries of DOS protocols, BIOS functions, and DOS batch programming.

As people became comfortable with their new skills, they discovered all the things their system was capable of. Computers, instead of creating a paperless society, as was expected, produced mountains of paper, most of it valueless. This information overload was mitigated somewhat in the 1980s with the introduction of "executive information systems". They streamlined the process, giving the executive exactly what they wanted, and only what they wanted.

The 1980s also saw the first commercial application of artificial intelligence techniques in the form of "expert systems". These programs could give advice within a very limited subject area. The promise of decision making support, first attempted in management information systems back in the 1960s, had step-by-step, come to fruition.

The 1990s saw the introduction of "strategic information systems". This was largely because of developments in the subject of strategic management by scholars like M. Porter, T Peters, J. Reise, C. Markides, and J. Barney in the 1980s. Competitive advantage became a hot management topic and software developers were happy to provide the tools.

Applications

There are theoretical possibilities of building such systems in any knowledge domain.

One of the examples is Clinical decision support system for medical diagnosis. Other examples include a bank loan officer verifying the credit of a loan applicant or an engineering firm that has bids on several projects and wants to know if they can be competitive with their costs.

A specific example concerns the Canadian National Railway system, which tests its equipment on a regular basis using a Decision Support System. A problem faced by any railroad is worn-out or defective rails, which can result in hundreds of derailments per year. Under a DSS, CN managed to decrease the incidence of derailments at the same time other companies were experiencing an increase.

DSS has many applications that have already been spoken about. However, it can be used in any field where organization is necessary. Additionally, a DSS can be designed to help make decisions on the stock market, or deciding which area or segment to market a product toward. DSS has endless possibilities that can be used anywhere and anytime, for its decision making needs.

Help Desk Support Service

2011-01-19T20:43:00.003-08:00

Any organization that truly wants to go digital and global in its operations needs to incorporate effective help desk support service as part and parcel of its organizational structure. Such a service is capable of integrating both the customers and every other member of the organization towards greater results that will take the company to higher levels.

Why help desk Support?

Help desk is simply a unique application that provides basic assistance especially when it comes to effective customer satisfaction. It is also used in troubleshooting network problems through various avenues. Every serious company that wants to expand its customer base needs to outsource help desk in order to achieve better results.

Kinds of Help Desk

Help desk support could be in two major forms namely, the in-house type and the external version. The in-house help desk is tailored to provide adequate support to employees working in the company. This support system ensures effective communication between the company management and all the employees working in the company. On the other hand, the external help desk is meant to offer quality support to customers and other external clients that have businesses to do with the company. Proper customer/client satisfaction is usually guaranteed through such means.

The Help desk supports software

Help desk comes in form of a software application which is usually outsourced from a provider company. It is simply a web based customer support system which comes with diverse tools and solutions. The support software may also come with website solutions, email packages and toll free numbers. All these are meant to help the company in running its operations well especially when it comes to proper customer satisfaction.

Functions of the Help Desk Support

A good help desk support provides the following functions in a company

* It ensures that customers are properly attended to especially when they call through the phone lines.
* It ensures proper connectivity between company management and the employees.
* It handles all kinds of network problems.
* It provides single contact point for all the users especially when it comes to receiving proper assistance on various computer and network problems.
* It manages all kinds of requests through various applications. For instance, it has an issue tracking system that helps a lot in tracking 'requests with definite numbers.
* It monitors users' environment and helps a lot in with all kinds of technical problems that may arise.

Outsourcing Help Desk

A company needs to outsource help desk before the system can work effectively within its operation. There are various companies online that provide such help services. When you locate the best of such companies, you're sure of having the best help desk support installed in your organization. Take time to read reviews written about various provider companies in order to select the right company that can provide the needed help desk support for your organization.

In conclusion, help desk support is very vital for the smooth running of your organization. Its benefits are indeed enormous.

AAMCO Transmission Inc Franchise Review

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AAMCO transmission Inc. is a recognized leader in transmission business and a leader in complete car care services. Apart from transmission work, AAMCO stores provide automotive cooling and electrical system repairs and other general maintenance service. It is not only the most recognizable name in transmission business, it appears as one of the most familiar names in the whole business world. The company's record of achievement and resilience is notable especially compared to the three quarters of franchisee system. So, owning an AAMCO can offer the financial freedom, security and lifestyle that come from being your own boss.

Name Is Their Success Story

When people think of AAMCO, they think of guaranteed work, quality service and trust. These characteristic traits and qualities have spelled success for hundreds of AAMCO franchise owners and well-wishers. Their cutting edge transmission repair technology ensures that their centers are always the most qualified place to take cars in need of transmission work. Frankly speaking with brand recognitions and a volley of most highly skilled technicians in the industry, AAMCO is well positioned to become the market leader in brakes, tune-ups, and other aftermarket services.

Buying an AAMCO franchise unleashes the true power of your own individual business. They are providing more services to gain more customer support with the intention of increasing the opportunities for more revenues and profits. By delivering commendable one-stop shopping for complete car care, AAMCO franchise centers taking their share of the much larger market. There are lots of business minded professionals and entrepreneurs who have shown their interest to be a part of AAMCO Franchise success story.

Good Training & Support System

AAMCO provides complete 21 days training at National Headquarters. Their comprehensive training program serves beneficial to the majority of franchise owners who lack absolutely no automotive and mechanical experience. The continual operational, sales, management and technical support are provided along with outstanding advertising support. Their operation team spends 5 weeks with you directly in your store ensuring a truly flawless transition from classroom to fully functional store. Besides it provides operational support, Technical support including In-field coaching and training, Webinar based training, etc. The marketing support focused on locally and nationally based marketing support marks the difference.

Time To Make Your Move

The capital investment requires to open an AAMCO transmission franchise is $ 200,000- $ 260,000. Well, its initial franchise fee required is $39,500 alongside a Royalty fee of 7%. It provides financing for bit qualified buyers with minimum $65k liquid capital. By the way, those seeking for a franchise opportunity require to go through an application form that will essentially invite you for a contract. The moment you fill the form a franchise development specialist will be in touch with you within a day or so. The moment you sign a contract you will be notified that you are entering 15-year terms of franchise agreement.

An Introduction to Decision Support System (DSS)

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A decision support system (DSS) is defined as the method used to represent data in a different perception as to ease making decisions based on it. It is not that simple to make the right judgment in the business world. It needs to be based on the quality of the data and proceed with a scan through the data and analyzing it to find ways for business solutions and strategies. DSS is available now in a computer software form together with a human component that can execute a large size of data and select among the many choices.

Although many people think that the decision support system is just an extra tool for the business, most of the companies have actually started to implement this system as part of their daily operation activities. These companies often download and analyze large sales data, sales forecasts and budget sheets and go ahead to update their strategy once the current results have been analyzed and evaluated in full detail.

The main goal of the decision support system is to collect the data, then analyze and shape the collected data to try to make the right decisions or plan for strategies based on the result of the analysis. It does not really matter whether people, databases or even computers are involved in the decisions making as it is just a simple procedure of gathering raw unstructured data to aid in the process of decision making.

One should be reminded that the computers and artificial intelligence is the one behind the screen that is assisting to program all these data. Even so this is happening; it is yet dependable on us humans to execute the operations. We have to pick and choose the correct data, analyze and comprehend the data to come up with a usable hypothesis.

The Use Of BSS/OSS To Manage A Complex Business

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It is imperative for business to stay in touch with their customer base and with the developments in the industry in which they compete. The methodology used to do this is referred to as BSS/OSS, a two pronged approach to the business of telecommunications. Business support systems deal with the way the industry works with its customers, the operations support systems deal with the physical infrastructure and controlling tools.

The evolution of the telephone has been a rapid and profound technological roller coaster, sweeping the globe in a short time and changing in shape, size and capability many times over. With the advent of satellite phones, there is virtually nowhere on earth that the industry has not reached. Sadly for the industry, the world now takes it for granted, and is fickle enough that if a provider can not keep up with competitors, they move to another provider.

It is important that they pay attention to both elements, as do most businesses, but in the telecommunications field, both customers and capabilities continue to evolve at an incredible speed. Consumers demand faster and more diverse applications to run their devices, which have evolved to the point that resemble computers more than phones. To comply with these increasing demands, the hardware that supports the service has to keep up.

It comes as no surprise that the industry focuses so intensely on their customers, because they have a serious tendency to change providers for even small difficulties. The number of providers is steadily increasing as technology is mined for ever greater options such as voice over internet protocol. Companies have to invest in new transmission methodologies, equipment and transmission towers to stay ahead of the competition.

One method of using the technical side of the industry to bolster the people side is to guide the discourse into how the technical provides service to the customer. Successful campaigns have employed the Herculean task of providing coverage to the entire nation as a foil to demonstrate the care taken to provide service to customers. The complex customer base that the telecommunication industry courts demands they filter their data for trends and stay ahead of the curve.

Dealing with the overwhelming mass of information and attempting to determine what it is the consumer really wants is a Herculean task. Considering the telecommunications consumer population diversity and the extreme penetration each provider is attempting to attain, it is important to evaluate data in multiple levels. Having a dual path system that tracks, analyzes and selectively reports data to management allows maximum flexibility.

Technology springs to the rescue in the form of programs that control programs. While this may dredge up images from problems experienced in the matrix movie trilogy, this kind of multilevel computer programming has been around for some time. The idea is to allow senior leaders to indicate what data they need to collect and have a program drive root programs in a wide area to collect and collate the data and then create information in the form the leader selected.

Help Desk Support - An Important Part of Business Infrastructure

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Every company has various resources and sections taking care of its many operations. Whether it is to deal with the many queries that come in or to fix a bug in the system there must be a support system in place that will clear all hitches. It is this support system that keeps the company running smoothly with no hitches or hiccups in its operations. Help desk support thus is a huge part of any and every company. Every time a phone does not work, the mail system malfunctions or there is some problem in the work tools, we call the help desk which sorts out the issue. Thus help desk support is an important asset to work happening efficiently and with no errors. Efficiency and productivity are maintained by using these help desk support systems.

Whether you work in an office that has 50 people or 5000 people, help desk support and maintenance is an integral part of the company. Many times help desk support is accomplished through personnel who work in the firm and are direct employees. Sometimes in case of complex operations and procedures the help desk support function may be outsourced to an external vendor. These personnel will be paid by the company but will not be direct employees. Whether a firm needs a direct help desk or an indirect one depends on how critical its operations are and how often help may be required to sort out some issues at hand. Some firms which are smaller may not have a help desk support but one or two individuals who manage all problems and fix them as required.

Help desk outsourcing is a very popular concept. In this the help desk is handled by people in a different geographic location. Today with VOIP communication networks and much other technological advancement, the global workplace is popular. Thus a person in India may receive this support from the UK or USA or vice versa. These people will be trained to handle all queries with regard to the customer and guide them in a step by step troubleshooting process to fix the problem. With people working in different time zones and labor being cheaper help desk outsourcing is a popular option. Sometimes one company may handle multiple clients in different time zones. There would be different sets of employees to work with the client base which may be based in various parts of the world.

Help desk support can be an asset in many cases irrespective of the work environment and the background of the person. Often very high qualification is not sought. With a basic academic degree and proper training people will be able to come on board the project in no time and handle queries easily. This popularity has resulted in its widespread application not only for goods but also services. Even Human resource help desks are available for handling customer and client issues round the clock.

Information System and its Trends

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Information System and technologies have become a vital component of successful businesses and organizations.

Information System means an interconnected set of information resources under the same direct management control that shares common functionality. A system normally includes hardware, software, information, data, applications, communications and people, while an information system is the arrangement of people, data, processes, presentation of data and information technology that supports our everyday needs. It is actually technologically implemented medium for recording, storing, and disseminating linguistic expressions, as well as for drawing conclusions from such expressions. The computer technology is used for implementing information systems.

TYPES OF AN INFORMATION SYSTEM

Information System can be divided in two basic forms

1. OPERATIONS SUPPORT

SYSTEMS

It is further subdivided into
the following

o Transaction Processing System (TPS)

o Enterprise Collaboration System

o Process Control System

2. MANAGEMENT SUPPORT

SYSTEM

It is further subdivided into the following

o Management Information System (MIS)

o Decision Support System (DSS)

o Executive Support System (ESS)

TOOLS FOR THE DEVELOPMENT OF AN INFORMATION SYSTEM

The steps which are involved in the development of an Information System are:

Analysis, Feasibility Study, System Design, Testing, Implementation, Documentation.

TRENDS IN INFORMATION SYSTEM:

It is generally accepted that information is a vital commodity for the successful operation of today's organizations. Nowadays modern business organizations are using computerized information systems in order to obtain desired information. However, as the technology advances rapidly the main issue is how can an organization should effectively use such an information system which its management sometimes can be unpredictable in order to effectively help the whole organization structure to improve and take the most out of it.

It seems fairly obvious that Information systems have played an important linking role even before the advent of the Internet. Thus, for example, the possibilities offered by Information systems have strongly influenced the way managers were able to exercise control and therefore constituted an important factor in the organization of large-scale enterprise and their geographic extension. The same is true for governments and their statistical apparatus. The recent integration of computer networks and electronic data exchange facilitated the creation of common databases and policies among governments, speeding up developments, which had started earlier. It also created new possibilities for business, for example enabling companies to develop new organizational practices (e.g. just-in-time).

However, the role of Information systems in the organization is shifting to support business processes rather than individual functions. The focus is outwards to customers, rather than inwards to procedures. Businesses are changing more and more rapidly.

This poses a challenge to existing Information systems, which are often inappropriately structured to meet these needs. It also poses a challenge to the people who design, work and use these systems, since they may hold outdated assumptions.

To ensure the services provided by Information systems whenever needed and their failure will not cause catastrophic disaster their reliability and efficiency become extremely important. Imagine what would happen when a banking system malfunctions due to some critical faults in the system or when a healthcare information system provides wrong advice for patients.
It is even not over-saying that our lives are already under control of computer systems but their reliability and efficiency has become extremely important

APPLICATIONS OF INFORMATION SYSTEM:

There is a wide range of applications of information system that are implemented in today's world. To name a few such as

1. Sales analysis, production performance and cost trend
reporting system

2. Product Pricing, profitability forecasting and risk
analysis system

3. Sales and inventory processing and accounting System

4. Geographic Information systems

5. Health Care Information Systems

6. Banking Information System

7. Petroleum Refining System

8. Power Generation System

9. Steel Production System

Role of Decision Support System For Decision-Making Process in Global Business Environment

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Decision Support System:

A Decision Support System is an integrated set of computer tools allowing a decision maker to interact directly with computer to retrieve information useful in making semi structured and unstructured decisions. Example of this decisions include such things as merger and acquisition decisions, plant expansion, new product decisions portfolio management and marketing decisions.

Decision making is a fundamental managerial activity. It may be conceptualized as consisting of four stages: intelligence, design, choice and implementation.

Important aspects of the Decision Support System:

1) The most important consideration is the Decision Support System's ease of use - its ability to allow non -technical people to deal with it directly. The single greatest and most enduring problem with computers has been their inflexibility, their inability to let the person who actually needs the data to deal directly with the computer.

2) The ability to access information should not be restricted to only the part of an organization or to only certain managerial or professional groups. Instead the resource should be distributed to all of the people and part of an organization needing it without widespread access; the power of advanced Distributed Processing System will go untapped as they typically have in the past.

3) The ideal Decision Support System in sharp contrast to previous method of designing applications should not be a 'system' at all in the strict sense of the term. Rather, it should be a highly adaptive decision support generator that can easily be used by professionals to quickly design data support prototypes suited to each specific decision-making task. This adaptive tool must allow quick design changes if the original design does not closely match a person's information gathering style or needs.

4) To adequately support the human element, this highly adaptive support capability must be able to provide access to operational data and as well as to summary data that already has been processed by application programs designed for other specific operational tasks. Equally important this tool must provide the professional with access to an organization's raw data and it must allow the access to be accomplished in one step using a single uncomplicated procedure or command and without having to re-key non summary data.

5) The organizations need to access original data sometimes because efficiency is related to how well the original data is organized in the system; the Decision Support Generator should be able to interface with a true DBMS. It should also be able to access standard 'flat' files indirectly using the power of the host computer to facilitate both the user interface and data access without changing existing files.

6) The Decision Support Generator should let the user decide whether information should be displayed on the CRT screen for immediate use or whether it should be printed for later use. The best way to accomplish such flexible data presentation is through a work station. The management or professional information workstation would incorporate a keyboard, display screen and an interface to a printer which could print everything from straight text to graphics like pie charts, bar charts and line charts.

7) The support tool must interface with several different systems and capabilities, it must be compatible with all of them, the tool must provide users with a single easily used language to access manipulate and present data in a way that will best support the end-user.
8) To facilitate formatting and manipulating displayed data, the decision support generator should ideally be able to interface with word processing software. With this capability, the DSS becomes the critical link between data processing and office automation, integrating both functions in an easily-used, straight forward, extremely powerful system.
Decision making characteristics in the Global Business Environment:

Business Strategy/Decision Making Characteristics
Multinational: (decentralized federation) Decision making decentralized to subsidiaries, informal relationships between head quarters and subsidiaries
International: (coordinated federation) More vital decision and knowledge in general developed at head quarters and transferred to subsidiaries
Global: (centralized federation) Decisions made at the center knowledge developed and retained at the center
Transnational: (integrated network) Decision making and knowledge generation distributed among units

Managers and Decision Support System:

The daily work of a manager, as hundreds of brief activities of great variety, requiring rapid shifts of attention from one issue to another, very often initiated by emerging problems. A manager maintains a complex web of contacts outside and inside of the organization. A successful manager is not swamped by onslaught of these activities: he or she maintains a personal agenda. Effective manager carve out as it were, their own informal structure within the corporate structure and they use this network to keep themselves informed and influence others. It has been absorbed that proactive manager make special efforts to develop a long-term view and long-term agenda.

The need for types of information produced by decision support system has always been present. Decision support systems have become popular primarily because of their capability to fill this need. Nowadays availability of the computer hardware, the advent of the Database Management System in the 1970's provided means for storage and management of large amount of data, large increase in number of software packages incorporating the functions of a decision support system. Finally many MBAs who were trained analytic techniques are now reaching the middle and upper levels of corporations .These individuals know how to use the tools that decision support system provide. So in most of the organization, managers used the computer based Data processing applications. This leads to develop the decision support system in business world.

A widely held notion is that modern decision -making is a highly structured process. According to this view, management makes decisions by gathering and analyzing all the relevant information, reviewing all possible alternatives and then calmly and rationally choosing the course of action that provides maximum benefits at minimal risk.

Managers play three types of roles in carrying out their functions. Interpersonal roles are mainly based on face-to-face interactions; through in some cases computerized communications media may be employed. Informational and decision roles are supported by variety of information system, which make information available, assist in decision making and serve as means of communication.

All the managerial roles have an element of decision making: the decision roles are the ones where this is the crucial aspect. The manager brings together resources in a novel way. Decision support system assists an entrepreneur in considering options, selecting one and planning for its implementation. Handling disturbances is a part of managerial control. Resource allocation is the essence of planning and decision support systems have become indispensable in many organizations for their purpose.

The manager is a problem solver, and the fundamental activity in problem solving is decision making. Decision making is the process of identifying a problem, developing alternative solution and choosing and implementing one of them. An experienced manager recognizes a problem as similar to one he or she has already encountered. The intuitive grasp of a problem most often relies on such an ability to establish an analogy. The systems approach to problem solving helps to manage complexity.

Decision support system in the organizational environment:

Organizations that have been the most successful in the implementing DSS have much in common. They have well established, well controlled and well structured data processing system which provides transaction processing data necessary for DSS. Such organizations have spent extra money and personnel necessary to maintain a research and development focus. All the departments in the organization have communicated with central groups of computer. The entire departments have sufficient confidence to initiate and manage systems projects. The central computer groups have several people on its staff that either came from all other departments'. Education and training programs are used by the organizations to build mutual understanding between departments and the computer group.

Capabilities offered by DSS:

1) Support decision making in ill-structured situations- in which ,precisely owing to the lack of structure, problem do not lend themselves to full computerization, and yet require computer assistance for access to and processing of voluminous amount of data.

2) Help to rapidly obtain quantities results needed to reach the decision.
3) Operate the ad hoc mode to suit the current needs of the user, as opposed to operating in a generally scheduled fashion as management reporting system do.

4) Support various stages of the decision making process.

5) Foster high-quality decision making by encouraging decisions based on the integration of available information and human judgment.

6) Offer flexibility as opposed to a preordained pattern of use - making it easy to accommodate the particular decision making style of an individuals.

7) Facilitate the implementation of the decisions which frequently cut across department boundaries.

8) Support group decision making particularly through group DSS (GDSS).

9) Give managers the opportunity to gain a better understanding for their business by developing and working with models.

Conclusion:

With in the past several years, `computers have been used increasingly in areas of financial management, production analysis, short-term planning and geographical analysis.Today's business worlds, Computers are used for decision making process as a Decision support system. Decision Support System is types of management information system whose principal objective is to support a human decision maker during the process of arriving at decision. The strength of DSS lies in supporting decision making in situations where both human judgment and the power of the computer are required. DSS primarily support for strategic, tactical and operational planning.

Properly designed and integrated, the DSS becomes a very powerful support tool that enhances the productivity of professionals' at all organizational levels in all departments. It can effectively extend the organization's present staff by reducing its workload, thereby increasing productivity. And with today's technology and state of the art software tools, it can bring us even closer to bridging the chasms and operations reach worlds. These features can offer today's organizations pressed more than ever before to maximize efficiency while reducing costs unprecedented benefits in the utilization and management of both their human and computer resources.

Reference:
1) "Management Information System" by Viladimir Zwass
2) "The nature of Organizational Decision Making and the Design of Decision Support System" by George .P Huber.
3) "Introduction to Business Data Processing" by Lawrence S. Orillia
4) "Management Information System" by James O. Hicks JR

How Telecom OSS Systems Evolved

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The telecommunications market space has seen a lot of changes from the simple telephone days to the present day triple play solutions. While the initial phase of telecom landscape was defined by getting in more bandwidth in the network, followed by providing bigger pipes to consumer, the present day challenge is being more agile and quicker to react to market needs and demands. Telecom OSS systems are key in these new rules of the land.

Operational Support Systems, or OSS as they are called for short, are not necessary for the service to work, but are critical to ensure that service can be delivered, is delivered, and will continue to be delivered. They are the support systems that make the service delivery happen. Over the years, the telecom operators have expanded their operations into many domains and that has led to a lot of network built up. Keeping track of and managing these networks is where OSS solutions help.

One of the earlier OSS solutions to hit the market was EMS solutions or Element Management Systems. These were management solutions provided by a single network equipment vendor to manage their network elements in the ISP network. However, with growing business and competition among vendors, ISPs have diversified their networks to have elements from different vendors. This way they can de-risk dependence on a single source. This led to the NMS, or Network Management System, evolution that could manage elements in such a heterogeneous environment.

The NMS/EMS solutions provide several management functions that are vital for any ISP. These range from configuration solutions to alarm reporting and other control features. What these NMS/EMS systems have done is that they have allowed ISPs to start monitoring and troubleshooting the network problems remotely from a central location rather than from field. This gives a lot of cost savings and reduced troubleshooting cycles.

With the growing market demands and changing equations, the scope of OSS solutions increased from network element management to customer and business management and more importantly to inventory management solutions. These new solutions are vital for the ISP to maintain its edge over the competition. Without good management systems, in today's complex networks losing track of things is not tough.

Inventory management is probably the most important addition to OSS functions in recent times. With lot of planning and upgrading going on, keeping track of inventory is absolutely essential. The inventory needs to be maintained to ensure that existing customer do not get cut off mistakenly or new customers are left without service due to insufficient resources. OSS can help address both these problems.

The next phase of OSS solutions would be becoming versatile to handle any technology, any solution and any network deployment situation. This is critical as all ISPs are now pushing for triple play solutions to attract customers and retain them. In such an environment, the OSS systems need to be equally strong to allow the ISP to deliver these services in a timely fashion.

The Use Of BSS/OSS In Information Technology Advances

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The management of business support operations and operations support systems known as BSS/OSS, defines the efficiency with which an information technology process runs. As one might expect from the names, BSS deals with all the portions of an information technology process that is internal to the delivery of service. The OSS portion is all the processes that deal with the customer or client.

Running an IT operation is truly like running two different businesses at the same time. Telecommunications is a global entity and when satellite technology is included, there is literally nowhere on earth that can not be reached. We even have cables stretched across the ocean floors and receivers underwater for detection and analysis. The physical infrastructure and technical development side of this business is enormous all on its own. After all that work, there is the ever present and all important customer base to deal with.

As with any business, both the product and the customers are important, and depending on the crisis of the day, each is as important as the other. It is easy to see how a company can get bogged down in either sector to the detriment of the other, resulting in a loss of capability or success. To assist in maintaining the proper balance between these often competing parts of the business, the OSS/BSS approach gives leadership the tools necessary to make timely decisions that do not conflict.

For most managers, the immediate and primary concern for the business will automatically focus on the people side. Taking care of the customer has long been the hallmark of good businesses. While the advent of new technologies has not changed that venerable maxim, it has complicated it quite a bit.

The problem is that in the telecommunications industry, the costs of infrastructure and product development are extreme, and the attention needed to keep that portion of business under control can not be underestimated. A clever technique that has been used is to highlight the complicated physical layout of infrastructure in a way that keeps the consumer aware all this work is done on their behalf.

In addition, with the rapidity with which the physical devices the consumer wields is changing, the needs of an infrastructure to keep up are complex and require forward looking strategies and knowledge in order to keep up. The answer is the notion of having computer programs controlling other computer programs, the next level of information technology application.

Writing programs that allow managers to control the myriad subprograms in an efficient manner timely enough to meet customer needs is not quite artificial intelligence but it is close. It allows parameters to be set by leadership that can be promulgated across the wide range of the network over massive numbers of systems in an electronic second. The key is to also have the systems monitor that promulgation to troubleshoot and even make corrections where necessary.

Hubspan is in Suppliers’ Corner

2011-01-02T21:34:00.001-08:00

Hubspan Inc. offers a hosted solution for mid market suppliers who want to participate in marketplace initiatives that are operated by or for their buyers. Hubspan CEO Rick Luebbe believes that the vast majority of today's marketplace solutions neglect the specific needs of suppliers. Suppliers are usually "enlisted" by large companies to join a new exchange or trading hub but are offered no assistance in connecting to it beyond the specification for an interface they must scramble to build. Many suppliers consider participating in B2B marketplaces as a requirement for survival in an extremely competitive environment, but find that joining even one marketplace, let alone many, to be a difficult and expensive process.

Based in Seattle, Washington, Hubspan thinks it has found the answer to suppliers' problems. Its marketplace connectivity software offers access to any e-procurement system via real-time interfaces that support the gamut of protocols including cXML, EDI, and RosettaNet. Hubspan provides a secure, scalable and reliable service through its ASP partner Exodus. Suppliers also benefit from a platform that allows them to deliver product catalogs, price and availability, invoices, and advanced shipping notification to buyers on an exchange. The hosting model should be especially attractive to mid market suppliers as it allows them to participate in exchanges without costly and time-consuming hardware and software installations.

Market Impact

Vendors of platforms that enable B2B marketplaces seem to proliferate as rapidly as the marketplaces themselves. It is unclear how many vendors will survive the shrinking B2B market intact and avoid either bankruptcy or consolidation. Hubspan may well be one of those that survive the shakeout. Although it is keeping a low profile prior to an official launch in January, it has secured early stage funding from high profile backers Andersen Consulting Ventures and Seapoint Ventures. In addition to providing financial support, Andersen can be a lucrative indirect channel for Hubspan, which can supply next generation marketplace connectivity for Andersen's B2B engagements.

Apart from the implied vote of confidence and potential revenues represented by its backers, Hubspan also boasts a sound value proposition for an underserved market - those mid market companies that face extinction unless they can quickly transform their business processes and technical infrastructure to connect to B2B marketplaces. Hubspan supplies the infrastructure for partners like Andersen Consulting and other smaller systems integration firms that can perform the business process reengineering for mid market clients.

The combination of Hubspan's technology and Andersen's consulting power has huge potential, but much work remains. The company is concluding the beta phase of its solutions and plans to make them generally available by the end of January 2001. The novelty of the solution and company, not to mention the security issues surrounding the ASP delivery model, may initially give suppliers pause. With a hand from Andersen and its hassle-free subscription model, Hubspan should get beyond this barrier and start growing significantly by the end of 2Q01. Hubspan plans to use direct sales for signing initial customers and then rely more heavily on indirect channels like Andersen and future alliances with third party software vendors.

User Recommendations

Mid market suppliers in any industry segment would need to look hard to find another company with a stronger value proposition than Hubspan. Hubspan plans to cast a wide net in its initial marketing push and will go after those vertical markets that respond with the most enthusiasm. Consumer goods, electronics and retail industries are promising candidates, and suppliers who have been asked to participate in buyer marketplaces should place Hubspan at the top of their list of candidates in selections.

The Complexities of Quote-to-order and Possible Solutions

2010-10-01T03:49:00.000-07:00

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.

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

Your Guide to Enterprise Software Selection: Part One

2010-10-01T03:48:00.000-07:00

IT acquisition and purchasing decisions are often conducted in an atmosphere of unmet expectations, internal political agendas, vendor promises, and brand name hype. Decisions are driven by executive mandate, rule-of-thumb, or insufficient analyses based on rudimentary spreadsheet comparisons.

This is a sure recipe for failure, as demonstrated by the horror stories published continually in trade magazines and the press. We'll describe a best-practice approach to the assessment, evaluation, and selection of software—and show you how you can reduce the time and cost involved in objectively choosing the right solution.

There are three main phases within Technology Evaluation Centers' (TEC's) software assessment, evaluation, and selection methodology:

Phase 1: Defining Business and Technical Requirements
Phase 2: Software Evaluation and Analysis
Phase 3: Negotiation and Final Selection

Overview

Phase 1
TEC's methodology establishes the foundation for the ultimate success of the selection project. Successful evaluation and analysis of a system—and negotiation with a vendor—are irrelevant if the initial definition of business and technical requirements are incomplete or inaccurate. In many software selection projects, there is not enough emphasis on the importance of this phase, which causes many failures, and can even result in disaster for companies during and after implementation.

TEC's decision support system facilitates fast and accurate compilation of business processes, and maps them to the features and functions of a software solution. By closely following the steps outlined within this phase, an organization can produce a complete and understandable specification of all the needs that are to be addressed by the new solution, and is able to keep the assembled data in one easily accessible repository.

Phase 2
The evaluation and analysis of vendor solutions should proceed from finding the right vendors through to selecting a shortlist of two or three finalists. The sheer mass of data collected during this phase can be overwhelming for any organization, and the manipulation of the data even more daunting.

There may be as many as 20 or 30 qualified vendors, and each may have a list of thousands of criteria, all of which have to be evaluated one against the other. Using traditional methods can lead to serious errors—and may lead to choosing the wrong vendor solution. We'll show you how TEC's decision support system alleviates this process and seriously reduces the time required to reach a more informed and accurate choice of the right vendors to include in the shortlist.

Phase 3
The final phase covers the steps within the negotiation and the final selection process with the short-listed vendors. This includes live vendor demonstrations at the client site, where each solution can be rated by the business and selection team to verify ease-of-use, coverage of critical business processes, and functionality.

During this phase, we suggest that your selection team seek out client references from each vendor to verify their implementation, service, support, and training experiences. We'll explain how TEC's decision support system facilitates and shortens this process by loading vendor information into TEC's comparison tool to produce reports and graphs, which will support your selection team's final recommendations.

Phase 1: How to Define Your Business and Technical Requirements

Typical enterprise application selections begin with little mention of technology, since the first consideration is modeling the desired business processes that the new technology will enable, and then matching them to the functional requirements within any given software solution. TEC uses a standardized methodology to model and match these processes. The following steps are critical to ensuring overall success within this phase.

Step 1: Form a Cross-functional Project Team

A cross-functional team ensures that both the business and technical needs of your organization are addressed, and that each group affected by the changes understands the impact of the decision. The ideal team consists of members of the following groups: management; finance or business operations; users; consultants; and members of the IT operations and infrastructure groups.

Champions and subject matter experts (SMEs) should be chosen from each business area to work with the project team. This will ensure complete buy-in from the business side and help promote the new solution within the rest of the organization, as well as provide expert knowledge within the project team on existing processes and day-to-day operations.

Step 2: Model Business Processes Hierarchy through an Internal Needs Assessment

The project team, with the help of the champions and the SMEs, is responsible for defining and modeling business processes. The first goal is to determine the main process groups, which correspond to the individual business areas of the organization.

Within these groups, processes correspond to the high-level divisions of your business areas (see figures 1 and 2 below). Within these processes, subprocesses detail the main departments of the high-level divisions. Subprocesses include the day-to-day tasks within each department. For each activity, there may be business-based rules describing how these day-to-day tasks are to be performed and controlled.

This large volume of data is difficult to track, organize, and manipulate using traditional methods, such as spreadsheets, word documents, and flow charts. But if this critical information is not properly stored, organized, or made easily accessible, it can cause huge time delays—which in turn can substantially increase the cost of the software selection project.

SOURCE:
http://www.technologyevaluation.com/research/articles/your-guide-to-enterprise-software-selection-part-one-19204/

Who’s Got the Better Windows Office Suite? Corel or Microsoft?

2010-10-01T03:47:00.002-07:00

The subject of this note is the never-ending question within desktop office suites, " What's better, Corel's or Microsoft's?" Generally, this question is answered from an emotional perspective, based entirely on the specific administrator's and/or end users comfort level. There is no one correct answer, both desktop office suites excel in specific areas and pale in others. The contents of this note will pit the two systems against each other in four specific areas:

* Product Functionality: Feature functions contained within the product

* Product Technology: Protocols, databases, and platforms

* Product Cost: Initial cost of training, implementation, and support

* Service and Support: Vendor support following purchase and implementation

Product Strategy and Trajectory:

TEC analysts began assessing the pros and cons of both office suites through the construction of a detailed information repository with over 300 detail-level criteria, arranged hierarchically in our proprietary software-modeling tool, TESS. Each hierarchical category within the model is assigned a value, which represents its priority relative to other categories, or "weight". Figure 1 shows weights for the top-level categories in the Desktop 2000 Office Suite Model.

Figure I Top Level Rating

Figure II represents Product Functionality
versus Product Technology

In functionality and product technology Microsoft's Office 2000 takes a slight lead. This is primarily due to the advanced web based integration features and integration with the standard Microsoft Windows desktop. In addition, Microsoft Office 2000 includes an e-mail client (Outlook 2000), which is lacking from Corel's offering. Corel excels in ease of use and reduced training costs. Overall, both suites offer a plethora of features from advanced desktop publishing to robust databases.

Corel WordPerfect Office 2000 takes the edge in enhanced accessibility through the inclusion of Dragon Software's Naturally Speaking application, which allows a user to "talk" to the application rather than type. In addition, the Corel 2000 Suite includes a hardware component headset/microphone combo intended for speech recognition.

Figure III represents Product Functionality
versus Product Cost

Corel's WordPerfect 2000 Office Suite Standard is competitively priced at $299.95 (MSRP-USD) as opposed to Microsoft Office 2000 Small Business edition priced at $349.95 (MSRP-USD). However, both Microsoft and Corel's top of the line Office Suites are both $449.95 (MSRP-USD), eliminating any price edge Corel may have had at the Professional Office Level. As can be seen from the above graph, both suites perform well given their relative cost.

Figure IV represents Product Cost
versus Service and Support

Corel maintains a slight edge in cost, while maintaining a very respectable support rating. Microsoft's Office support takes the lead with its robust web support, including an office software update page, a heavily production-tested and experienced support system via telephone (albeit 80% outsourced) and onsite support when entirely necessary. Corel offers web support but it pales in comparison to Microsoft's site in terms of content and navigability. Corel's telephone and onsite support offers trained professionals for both on and off site support, none of which is outsourced.

SOURCE:
http://www.technologyevaluation.com/research/articles/who-s-got-the-better-windows-office-suite-corel-or-microsoft-15750/

The Path to ERP for Small Businesses, Part 3: Selection of ERP Software

2010-10-01T03:47:00.001-07:00

Parts 1 and 2 of this series described the processes of research and evaluation of enterprise resource planning (ERP) software. At the end of these two stages, you should have a pretty good idea which type of software might fit the needs of your organization and which vendors might provide this solution. Part 3 will describe the final stage—selecting the software that best fits your specific needs.

You started by defining the main activities and workflows in your company, then you created more detailed criteria lists, compared different products, and probably used a decision support system (DSS) to create a shortlist (list of vendors that are the best fit for your organization). Even when using the most complex DSS, some aspects of your business might still be overlooked; thus it's important to supplement your comparison by seeing the products demonstrated, performing reference checks, and reviewing other related information.

Major Steps in the ERP Selection Process
You benefit from enterprise software only when you make the right selection. By using accurate and relevant criteria on enterprise software functionality, you are better informed of your options. Using a suitable analysis process, your selection team can make accurate assessments about how well a vendor can meet your needs, which should ensure that you select the most appropriate enterprise software.

The most important steps in the selection phase are activities related to creating scripted scenarios based on your most important business requirements:
• issuing a request for proposal (RFP) (including costing information),
• inviting vendors for a site visit,
• conducting vendor demos and proof of concept,
• evaluating vendors’ implementation strategies,
• conducting a total cost of ownership (TCO) analysis,
• identifying the best-fit solution,
• developing an audit report of the selection process,
• obtaining executive approval,
• notifying winning and losing vendors,
• performing reference checks, and
• negotiating the contract.

1. Vendor Product Demos

The most important thing to do during the vendor product demonstration is to take control of the process. In order to do that, you should create a demo script for the vendor that allows them to show you how the system handles your main requirements, step-by-step. This will give you control over the demo and the vendor will have to demonstrate how it covers the functionality that is the most important for you. Depending on the complexity of your business, be ready to spend a significant amount of time viewing vendor demonstrations.

Of course, the demo script should cover the most important processes. You should only request details when the functionality demonstrated is essential for you and your company. The demonstration is also an opportunity to evaluate each product on its qualitative aspects, such as ease-of-use. Also, don’t forget to rate the product—ideally for each functionality demonstrated—so you can compare products afterwards. Here’s what a typical demonstration script might look like for order entry:

Please demonstrate the following:
Criterion
Supported

(Y/N)
Sales
1.1.1 Quickly create a sales order (SO) from scratch
1.1.2 Quickly create a SO from a quote
1.1.3 Quickly create a SO from an existing sales order (duplicate)
1.2 Picking
1.2.1 Check available-to-promise before picking
1.2.2 Convert a SO to a picking list
1.2.3 Convert a picking list to an invoice
1.3 Invoicing
1.3.1 Modify discount and prices on the invoice
1.3.2 Warn users when there are credit issues
1.3.3 Option to print packing list when the invoice is generated
1.1.3 Quickly create a SO from an existing sales order (duplicate)
4 Qualitative Assessment
4.1 Ease-of-use
4.2 Process fit
4.3 Degree of process improvement

Once this is done, remember that a demo can only cover functionality, therefore you should also consider technical factors for the solution, such as operating system, database support, delivery model (on premise, on demand, software as a service (SaaS), integration with other systems (e.g., accounting, customer relationship management [CRM], etc.), multisite management, security, device interface management, and application tools (programs which can be used to manage or develop the software).

2. The Shortlist
Before reviewing the product demonstration you probably had a list of ten or more vendors who claimed that they can do most of the things you need for your company. If conducted in a proper manner, the demo and the technical criteria mentioned above should bring the list down to no more than three or five vendors.

There are other factors that can make your list even shorter, and some of them are related to the vendor’s capability to deliver:
• Implementation: The product may be great, but if it can be implemented in a year and you need it up and running in six months, the vendor will be disqualified. Also, if you’re not happy with the implementation methodology your vendor has or if the references are really bad, you may want to think twice before working with them.
• Post-implementation training and support: If you’re in North America and your vendor only has offices in Europe and Asia, they will probably have a hard time responding to your requests and they may not deliver quality training and support.
• Competitive pricing: This can make a huge difference when selecting the vendors for your shortlist. The best solution in the world will not be enough to justify an exorbitant price, but you should also be careful when the price a vendor offers is extremely low and make sure you understand how much you’re going to pay after the promotional period is over.
• Consulting services: Change management, business processes development, post- implementation auditing, can be done by the vendor or third-party providers having partnerships with the vendor. Depending on how much you need consulting, this can be an important factor when selecting among several vendors offering similar functionality.

3. The Winner
After taking into account the different types of criteria (functional, technical, financial, etc.), you should find one vendor that can not only provide you with the best software for your needs, but will also implement it on time, will be able to fix bugs, answer questions promptly, and can also help you redefine your business processes.

If at the end of the process you are still hesitating between several vendors, you should review some of the steps or go into more detail on what’s really important for you and hasn’t been covered thoroughly (e.g., you need to import data from another system every week, you do backups every 12 hours, your partners need access to a portal to exchange information with you, etc.).
But even when you think you found the best solution, there are a few things you should do to make sure:
• Install a demo version of the product that people can use before going live and avoid going live with the new system while still using the old one.
• Get feedback from users on what’s missing and what could be improved in the new system and communicate it to the vendor.
• Keep track of the steps required during the implementation and take corrective actions when important actions are not done on time.
• Make sure the entire data you need to function properly gets imported before even considering going live—sometimes, it is better to delay the live date than to fix problems later.

Conclusion
There are no good or bad ERP solutions, but only very few of them will work for you. This is why all three stages described in this series of articles are extremely important for you to research, evaluate, and select the best product for your company’s needs.

Often times, selecting an ERP solution is a compromise, but you should make sure that you do not compromise on functionality or characteristics of the solution that can have a great impact on your company in the future and make you lose money if the investment in the software does not bring the expected result.

And finally, remember that these three stages of a software selection and evaluation process can only give very good results when used together. If you treat any of them lightly, it may affect the entire process and the end result (e.g., the software you selected) may not be what you were looking for.

SOURCE:
http://www.technologyevaluation.com/research/articles/the-path-to-erp-for-small-businesses-part-3-selection-of-erp-software-21237/

A Case Study and Tutorial in Using IT Knowledge Based Tools Part 1: Decision Support Discussion

2010-10-01T03:46:00.000-07:00

Most business managers, whether vendors, vendor clients or implementers, are unaware of the fundamental capabilities that knowledge based decision support can provide to minimize project risk for all sides of technology utilization. Given that over 90% of IT projects fail on first attempt, according to the Standish Group, more thought and research on the evaluation and selection process is needed. Many of these failures - some 30% - are the direct result of poor selections, and represent upward of $30 billion in wasted investment annually.

On the vendor side, the challenge of educating the potential client of their offerings results in long sales cycles, meticulous and numerous RFI responses, and potential for a mismatch, resulting in projects that can go awry. These failed projects do not bode well for the vendor, since the sales cycle costs can only rise, and their reputation can suffer. Consequences can be more severe for the client where it can, in extreme cases, lead to business failure. For implementers, the issue is similar: having inadequate information for the implementation phase means an inability to properly plan and execute the implementation, or for a consultant to assist the end client in making proper technology decisions. Implementers (which can be internal IT departments as well as consultants) can also find that decision-maker indecision leads to lengthened sales cycles, missed opportunities, and risk of competitive intrusion. The root cause of this indecision is an inability of the implementer to give confidence to the stakeholders of their choice of solution.

All sides need thought and research to build data and process information in a meaningful context, which takes time and costs money for all participants going through the selection process. But without spending time, thought, research and money there is increased business risk to all.

To cut away from this devil-and-the-deep-blue-sea conundrum means looking under the hood of evaluation and selection practices, to determine if there are better ways of moving through them. There is certainly room to ask the fundamental question of whether the current practice of RFI / RFP processes, among other internal organizational procedures, are adequate to the task of selecting complex systems. The record indicates there is much room for improvement.

In essence, for complex selections, the human-machine combination has to work together to drive the solution. Both have to be understood and complement each other in the process. It is easy for the human to be overwhelmed, or simply run out of time, and the machine interface and engine to be inadequate to the task. However, the results must benefit the process if human and machine can function effectively together to process information and avoid the pitfalls of past selection processes.

In the second part of this article, we shall follow a simplified process as an illustration. This method was used by the author to conduct the selection on a personal device assistant (PDA). Though a PDA is far less complex than an ERP system, processes and procedures enabling narrowing down of solutions, and avoiding dissatisfaction, while taking on assessed risks, are part of the process embedded in Knowledge Based Selection methods.

About This Note: This is a two part note with Part 1 containing a discussion of the use of an IT Knowledge Based selection tool as part of a Decision Support System selection process. Part 2 is a tutorial which illustrates using such a system to select the personal device assistant (PDA).

Overview of Decision Support System

Traditionally, DSSs (Decision Support Systems) have largely been used for internal corporate support. However, there is a growing trend to combine DSS and knowledge bases for product and project evaluation that can benefit all sides, leading to a methodology called Knowledge Based Selection. Getting the methods and the technology right is important. This is the main focus of TECs value proposition through its research and tools development programs.

Maximizing the benefits from using knowledge driven selection processes requires two key components: accurate data and a clear process enabling stakeholders to navigate through the data to get to a solution. If the system provides these capabilities, the benefits can include:

1. Narrowing products down to a shortlist. Vendors benefit from not pursuing unfruitful clients, and clients benefit because the short list is usually reduced to a manageable size

2. Entering the end client business scenario early on enables a better fit and more rapid narrowing of product match

3. Identification of issues and negotiation perspectives are brought to the front, enabling more efficient and productive negotiations

4. Enabling the construction of scenarios and measuring scenario performance to reach the final decision

5. Building confidence in the decision among the client team

6. Building buy-in to a decision at the client site, easing political obstacles to the selection

7. Enabling the solution implementers to be better aware of the challenges

8. Enabling vendors to be aware of product gaps with client needs

9. Enabling expectations of the implementation results to be realistic

10. Enable better implementation planning

11. Creating a more reliable and realistic outcome

12. Enable future project discussions between the vendor and client to be processed more effectively, since past data is intact and in a form that is reusable and can be updated easily.

The result of the exercise is a decision in which the business risk is minimized and stakeholders have reached consensus, and mutual understanding in the minimum time. Implementers are more thoroughly aware of the issues they face, and the vendor has a better customer relationship as a result, leading to potentially more future business.

Knowledge Based Selection is a Tool

The last thing a knowledge based selection method does is to make the decision for you. It is a tool that is part of a process, not the complete process. However, it can be a very revealing component essential in the overall quality of the result. The method consists of ways to rationally input information, and then to evaluate the information according to the value requirements of the stakeholders. Hence a component in the mix is a knowledge base to store information, and an evaluation engine then enables the stakeholders to navigate through it and estimate each solution's value and risk in the context of stakeholder requirements.

Intrinsic processes within the evaluation engine must enable at least five things:

1. Enable the inclusion of the value proposition to the end user

2. Enable a narrowing down to a few solutions with high probability of delivering core technology

3. Highlight the differences among the lead solutions to better understand the business tradeoffs that may have to be made

4. Enable a better and deeper understanding of the selected solution

5. Give confidence that the selected solution will meet at least minimum needs

Over the past few years, many decision support tools and systems (DSSs) have appeared on the Internet. In IT, most of these are based on 'value trees'. Value trees are intended to accurately measure the degree of worth of a solution to a business case, and if done correctly, will reflect the value proposition of a solution to the required solution. From the science perspective, most online DSS systems are simple and rarely provide the insight needed in making major decisions, suffering from at least one of five major flaws in IT solutions selection:

1. Methodologies do not adequately represent the value propositions that need to be met for each business case.

2. The depth of information (content) is inadequate.

3. The processing is done from a features and functions level, not a business objectives and required capabilities level

4. The processes to uncover and make sense of content are inadequate.

5. Vendor client match methods lacks appropriate internal processes. This often leaves many good niche players swamped by larger organizations who can claim they 'do everything': niche players do some things very well, and generally should be considered in particular business scenarios.

SOURCE:
http://www.technologyevaluation.com/research/articles/a-case-study-and-tutorial-in-using-it-knowledge-based-tools-part-1-decision-support-discussion-16387/

Analysis of Adobe’s Integration of IslandData’s Automated E-mail

2010-10-01T03:45:00.001-07:00

CARLSBAD, Calif.--(BUSINESS WIRE)--IslandData, a leading provider of automated response technology for the online customer service market, announced that it has signed Adobe Systems Inc. (Nasdaq: ADBE - news), the fourth largest desktop software company in the world, as a customer of IslandData's ExpressResponse, a commercial service that automates the process of quickly reading and responding to end user e-mail and web support requests.

Market Impact

Adobe is a well-known software manufacturer who produces common desktop utilities and applications such as Adobe Acrobat, Adobe Illustrator, Page Maker Plus and Adobe PhotoShop. Adobe's support site receives approximately 1.3 million client inquiries per month and has been in need of an automated response system to decrease escalating support costs. To alleviate the burden of manual responses to end users needs and concerns, Adobe has selected IslandData's e-mail automated response system.

IslandData's response system has met Adobe's needs through automated response systems, which takes less than 10 seconds to address a user's inquiry in addition to a dramatic decrease in cost. However, if a question requires support beyond the automated response system it is forwarded directly to the web support personnel. The system has reduced the web support team's manual responses by over 50% and has improved advanced support turn around time to less than 24 hours, where in the past it would take up to 14 days.

Cisco introduced a similar e-mail consumer management system called the Cisco eMail Manager. The Cisco product has a leg up on IslandData due to name recognition and corporate viability. However, Cisco's product is not inexpensive at $1500 (USD) per seat, which should give IslandData some breathing space to grow.

The e-mail response market is growing rapidly to accommodate the response needs of both online shoppers and individuals seeking a quick resolution to their question. The following chart indicates the growth of e-mail impacting the Internet on a yearly basis. The net result is that demand for automated client-communication technology is strong and growing. (Chart Source: IDC)

SOURCE:
http://www.technologyevaluation.com/research/articles/analysis-of-adobe-s-integration-of-islanddata-s-automated-e-mail-15628/

Evaluating the Total Cost of Network Ownership

2010-10-01T03:41:00.000-07:00

A bank devotes extensive resources to its computer network-both in human wherewithal and hard cash. The upfront costs can be high, and veiled costs compound the burden. Ultimately, an invisible price tag hangs from a computer network. Total cost of ownership (TCO) is a model that helps systems managers understand and handle the budgeted and unbudgeted costs of an IT component throughout its lifecycle.

The lifecycle of a network occurs in five stages:

* Design. The IT department evaluates needs, industry standards, and current technology.

* Acquire. This phase involves acquisition, configuration, and distribution services, as well as asset management.

* Integrate. The system is installed, and the project continually managed. Training and support plans are established.

* Support. Help desk services, maintenance support, and disaster recovery plans are arranged.

* Upgrade. At some point (often too soon), hardware and software becomes outdated, and needs upgrades.

The upfront expenses of a network comprise only 19% of the total cost. The remaining 81% can sneak up on bank management, often unaware of some subtle TCO factors.

Direct, Budgeted Costs

Budgeted costs are usually two-fold. They primarily consist of expenditures directly related to computing, like hardware and software. The second component of direct costs is labor, including Help Desk and technical personnel.

Bank management should budget for costs of all IS professionals directly managing and supporting the network, in addition to outsourced management and maintenance fees. On the support end, costs can be broken into Operations labor, Operations fees, and Help Desk. Operations labor includes management and administrative assistance needed for support. Casual learning and formal training of technical staff are factors, in addition to end-user training performed by the IS staff. There are also cost factors associated with travel and purchasing time.

Networks create and require extensive communications capabilities. These include remote access server fees, WAN costs allocated to the client/server systems, communication lines and device fees, and Internet service provider charges. All of these fees are included in budgeted costs.

Indirect, Unbudgeted Costs

The more elusive figures fall under the unbudgeted category. These include non-productive end-user time, troubleshooting, other IT tasks, and system downtime. Support and training make the system work for users, and the price of those services must be factored into the TCO. Management must calculate peer and self-support from the IS department. There are also costs related to casual learning, CBT, manuals, and online help. End user training can cause downtime and lost productivity.

Unbudgeted expenses often add enormously to the TCO. And, without understanding precisely what the costs arise from, bank management cannot control them. Fortunately, there is a way for Management to keep expenses in check. Knowledge establishes control. Awareness of the root causes for network expenditures gives Management and IT personnel the power to evaluate unacceptable conditions and change them.

10 Ways to Control the TCO

1. Standardize hardware and software purchases. Fewer technology platforms mean lower costs. Defining standards takes only upfront time, with periodic evaluations. As components wear out and become outdated, replace them uniformly across the organization. Upholding policies becomes the test. In the end, the strongest policy will fail without actions to enforce it. Defined standards will help the bank establish training requirements and reduce the costs of hardware upgrades.

2. Inventory all hardware and software. The network administrator needs to know the bank's computing environment for efficient decision-making. The information should be readily available to key people, and easily accessible in each department. The bank can improve its resource management practices by keeping a current catalog of hardware and software.

3. Reduce opportunities for trouble. Implementing explicit policies and profiles helps prevent users from delving into areas better left unexplored, and protects the integrity of the system. High security levels can:

* Prevent users from accidentally deleting critical files

* Keep users out of the Control Panel and the registry

* Keep virus protection software updated

* Keep users from installing unapproved software

* Monitor system activities

4. Implement an efficient Help Desk support system. Users will always need some technical support. Insufficient support is a leading complaint among computer users in banks and elsewhere. An efficient Help Desk will reduce the TCO and frustration at the same time. Some ways to facilitate efficiency are to:

* Implement a single phone number for all end users.

* Have lower-level technicians or a call coordinator answer the Help Desk calls.

* Install Help Desk software. (The benefits of a well-run Help Desk will spread throughout the operation.)

* Track all calls and solutions using specialized software.

* Take action on trouble PCs or end users. o Set minimum SLA levels for technicians.

5. Implement system management technologies. Banks can use technology to help manage technology. Implementing specialized products can help manage a network structure, including remote troubleshooting, application software distribution, and hardware and software inventories (asset management and software version control). Protocol analyzers can be employed to find chatty NICs and busy LAN segments. These watchdog products can isolate problems and inefficiencies early-long before the situation becomes detectable to the bank. This can save the bank enormous costs over the long term.

6. Minimize upgrades. Hardware and software upgrades are expensive. The bank can more cheaply purchase the power it needs upfront. Surprisingly, upgrading hardware and software often costs more than the initial purchase. Another tactic for controlling costs is to maintain software version control, and run only one version of software at a time.

7. Maintain a dependable infrastructure. A strong infrastructure is the foundation for a successful network. A weak structure causes problems that can affect large groups of people-not only individual users. The system should maintain ample bandwidth to key resources for high availability. Software is available to continually update network administrators of strains on the system.

8. Achieve total management support. TCO affects the entire operation, making bank management's support of network decisions critical. Departmental managers need ownership of a piece of TCO. The bank benefits by everyone feeling invested in the system, and taking responsibility for making it work. Since users are an integral part of a network, their buy-in is crucial. Users' enthusiasm about the benefits of network improvements can actually lower the TCO, through less downtime, faster learning, and more peer support.

9. Spread knowledge. The efficiency of the system increases proportionately with the training level of the staff. Users need education to learn how to make the most of the hardware and software that forms the network. Users should be encouraged to understand the network environment, directory structures, printing options, etc. The bank can maintain books, CBTs, and videos for reference and training.

10. Treat TCO as an ongoing issue. Reducing the TCO is not the goal in itself, but rather a catalyst for environmental improvements. As technology develops, the bank must adjust TCO methods to maximize cost reduction. Management can delegate part of the job of continually addressing TCO issues to someone in the bank with the knowledge and resources to curtail problems before they cost the bank money.

What Tools Can Help?

There are many tools that network managers can use to control and manage the TCO. Some specific products are:

# Microsoft Systems Management Server

# Novell Managewise or Z.E.N. Works

# NT Terminal Server/Citrix Metaframe

# Protocol analyzers like Microsoft Network Monitor, Novell Lanalyzer, and Network Associates Sniffer Pro (same product new name)

# Properly updated virus protection software

Evaluating A Bank's Current TCO

Networks around the country run the gamut from virtually worthless to very cost-efficient systems. IT components are continually being purchased and replaced. There is no single panacea for developing a successful network. A bank must evaluate its current standing before it can improve its TCO. Measuring TCO is a critical step in understanding the business value of IT projects. Bank management can ask some questions to help determine the current TCO status.

* Will purchasing new technology affect the TCO?

* Which best practices will lower the TCO?

* Are there hidden costs involved?

* Are staffing levels appropriate?

* Is the bank making the right investments?

Improving the TCO

Each bank will take a unique approach to improving its TCO. Management can start by setting TCO target goals, and then determining the activities that will produce the greatest results. A TCO project thrives best under the leadership of someone with a technological background who is unafraid of change and innovation. The bank's technology steering committee can become involved, and assist in developing a strong project plan. The networking environment is sure to change during such a project, and everyone in the bank should be prepared for some level of evolution.

SOURCE:
http://www.technologyevaluation.com/research/articles/evaluating-the-total-cost-of-network-ownership-15978/

Straight Up on Leads Management

2010-06-01T06:33:00.000-07:00

Lead generation is a process that uses information to create interest in an enterprise’s products or services. It’s end objective is to generate sales.

Several steps are involved in this marketing process. Before a company begins, it needs to define the market that its product or service caters too, segment that market, and then identify its most profitable areas. Once this is done, the leads generation process begins. The leads generation process involves prospecting, preapproach, approach, and close. As a prospect moves through the leads cycle, information is being created and filtered. Sensibly, a business should use this information to follow up with its customers to see if they were satisfied with the service or product, and then generate leads metrics which will be used to further refine the leads generation and sales process.

The leads generation process gathers a lot of information and involves a lot of tracking, and it should generate dialogue not only between the company and customers, but within the company between sales and marketing in particular. A leads management solution uses different methodologies and practices to govern this information and distribute it to the appropriate people within an organization.

There are a couple of factors that are spurring the need for effective leads management tools. The biggest factor is that consumers are becoming more savvy, and are not easily compelled by traditional marketing. Companies are seeking to effectively target their core market by catering to their target’s specific needs.

The following white paper by BLUEROADS (original caps), outlines a some of rules that vendors should adhere to when managing leads distribution. Some recommendations include

Inventory Reduction: Effectively Turning Excess Into Cash

2010-06-01T06:32:00.000-07:00

In virtually all manufacturing companies, there is a direct correlation between inventory levels and overall business performance. According to Harold Geneen, the legendary financial genius and former chairman of ITT, "all the problems of business end up in inventory." Most knowledgeable executives would agree with Geneen. In fact, CEO's and CFO's believe that their companies consistently carry 25 to 40 percent or more inventory than is needed.

Assess Your Capabilities

Ask your material planning and operations team to answer the following four questions.
YES NO
1. Do you have effective, fact-based decision-support for identifying and prioritizing actions to stop unnecessary material inflow to inventory by dollar impact?
2. Does your decision-support system pinpoint undesirable inventory dollar movement by item?
3. Do you have decision-support capability that continuously assess specific items inventory reduction potential?
4. Does your decision-support system help you establish a baseline, set clear targets and provide on-going performance measurement for every item in your inventory?

What is likely to happen is that many individuals will skip over key words and, at first, answer the questions with a 'Yes'. However, when the key words are pointed out, the answers are almost always 'No' for not just some of the questions, but all four of them.

Finding out that your inventory planning and control system, even one based on modern ERP systems, does not have the depth and breadth of decision support capability needed to identify and prioritize preventative actions based upon their dollar impact can be a real eye-opener for senior management. A common misconception is that effective decision-support to reduce and prevent excess inventories from accumulating is part of the company's current system. To some extent, logic does exist in material planning systems to prevent inventory excesses. However, good prioritized separation of the vital few from the trivial many, especially by their dollar impact on inventory investment, is rarely part of the functionality in most ERP systems. The good news is that the functionality can be added quickly, at a modest cost. This can create an ROI like no other investment you can make.

Considering how much money may be unnecessarily flowing into inventory every year mandates that adding the capability to quickly answer the four assessment questions on page one is an absolute necessity.

Excess Inventory Is a Problem in Good Times, and Bad

Companies hit by a sharp decline in sales all too often experience a significant rise in inventories because of the considerable and unnecessary time that's usually needed to get incoming supply rebalanced with customer demand. When sales are declining, making the right adjustments in inventory levels becomes an exceedingly more important and difficult task. For some companies declining sales combined with a suddenly out of balance incoming supply of inventory have caused a massive cash outflow.

Coping with a rapid sales decline can easily cause companies to wait too long to make supply adjustments. The result is rapidly accumulating excess inventory. It's extremely important to have the capability to promptly take the right actions that are needed to prevent and reverse the accumulation of excess inventory. A healthy balance sheet depends on having a quick, precise inventory avoidance and reduction methodology. Most companies rely on their ERP systems for inventory accumulation avoidance and reduction only to be disappointed by the poor results.

ASP Infrastructure: The Party Has Started

2010-06-01T06:31:00.000-07:00

On June 14th, Nortel Networks introduced an application service management and integration solution that will enable service providers to offer hosted eBusiness applications to businesses and deliver end-to-end applications management to the desktop.

Called the Nortel Networks Preside Managed Application Services Platform, the solution is designed to enable service providers to deliver a portfolio of secure, managed and integrated ASP offerings. It will include technology from BEA Systems, Inc., Tarantella, and iPlanet E-Commerce Solutions (a Sun-Netscape Alliance) and will be compatible with client-server technology from CiTRiX. The platform will enable management and interoperability with a number of eBusiness applications including Nortel Networks (through its Clarify eBusiness applications), mySAP.com solutions, i2 Technologies, Inc., and desktop productivity applications from iPlanet as well as Portal Software's Infranet billing application. Technology from EPiCON, Inc. will be integrated into the Preside Managed Application Services Platform in conjunction with Nortel Networks' acquisition of EPiCON.

The first customer release of the platform solution is expected in the next 30 to 45 days and is being tested through Innovatia. Innovatia is part of Aliant, a telecommunications and IT company.

Nortel Networks Preside Managed Application Services Platform will provide a common platform integrated with their operations support system (OSS) developed for the ASP and hosting markets. The platform will support provisioning of multiple applications, application-to-application communication to automate manual processes, and access via thin, fit and fat clients and wireless devices. This will give service providers time-to-market differentiation, the ability to streamline and scale operations with automatic and customized billing, secure provisioning of applications and performance management. Later this year, service providers will have the additional benefit of Service Level Agreement (SLA) management.

Nortel Networks has entered into strategic technology and OEM alliances with enabling software and middleware vendors including BEA Systems, Tarantella and iPlanet. Nortel Networks has integrated these technologies with its Preside directory, policy services and SLA management technology, Clarify customer relationship management software and Access Policy Manager security software.

Services which embeds iPlanet's Directory Services. BEA Systems provides a suite of products for enterprise application integration, transaction processing software and business process management capabilities. The strategic relationship with BEA Systems will enable the development of an ASP provisioning environment.

Dell Unveils Internet-Enabled Customer Support Strategy

2010-05-01T06:22:00.000-07:00

On August 25th, Dell Computer Corporation said it will provide, over the Internet, advanced customer support capabilities that will eventually help all Dell systems detect, diagnose and resolve most of their own problems automatically without human interaction.

Market Impact

Dell is getting in early on the overall electronic support marketplace, predicted to grow from $1.9B in 1998 to $10.4B in 2002, a growth rate of >45% per year (Source: IDC). Dell is trying to become the pacesetter in yet another area, which should eventually yield it significant payback in terms of sales and market share. (The other area is, of course, the direct-sales model.) This also appears to be a shot at Compaq, whose 1998 purchase of Digital Equipment Corporation, (ostensibly for its service/support division) has yet to yield the anticipated benefit.

User Recommendations

We expect Dell to do a good job in this area, as it has in implementing its direct sales vision and model, and so we expect customers will see significant benefits. However, as with any new model, customers should exercise a little caution in the early stages, and should make sure there are fallback processes in place before committing to this completely.

Minimizing the Total Cost of Technical Support for Enterprise Applications

2010-05-01T06:20:00.000-07:00

Enterprise software selection is a big decision for any organization. Licensing fees are costly, and choosing the software that matches the companyâ€™s business model can be a daunting decision. If the enterprise decides to go with a particular vendor, and the vendor does not deliver, the company will incur a large financial loss. Thus, when selecting an enterprise software solution, there are many factors that need to be considered in the decision. These include the quality of the product or solution; customer service; the purchasing price of the software or license; and other cost factors involved in the process of procurement.

In purchasing an enterprise software solution, there are three types of costs:

* direct costs (related to purchase, implementation, and other immediate costs arising from purchase);
* opportunity costs (the costs arising from forgoing the benefits of an alternative solution); and
* indirect costs (the costs that are not directly calculable, but that impact the business once the solution is implemented).

To curb the dilemma of unwanted costs of any kind, one way an enterprise can evaluate vendors is by examining their technical support plans. This article will examine the implicit costs behind the support plans, and help users avoid losing revenue due to inefficient or unresponsive technical support.

Cost Analysis

The following sections deal with the three different types of costs. To make an educated decision on the software solution and support plan, enterprises should consider these costs as a way of minimizing the risk of having poor technical support response times from vendors. The consideration of these costs can be used as criteria for an informed decision.

Anatomy of Direct Costs

In order to give a basis for the analysis of costs relating to enterprise software, the general formula should be noted:

Web Services and EAM Integration

2010-03-27T23:53:00.001-07:00

The potential opportunities for Web services in asset management are very evident. The plant floor contains a myriad of applications and technologies from numerous vendors that often function stand-alone to address specific business issues. Unfortunately, these application silos on the plant floor are hindering many key business processes that are designed to ensure optimum asset reliability and availability.

The work management business process usually involves a number of disparate applications and requires the movement of data through each step of the process. A typical work management process might involve a condition monitoring system that identifies a problem and generates an alarm. This alarm would be entered into the EAM system so that a work order could be created. The planning process would then identify labor and material requirements. If material was unavailable, the material requirements would be entered into an ERP system so that the materials could be ordered. The EAM system would have to know whether the items were ordered and expected delivery information. The EAM system would also have to be alerted once the items were actually received so that the work could be scheduled. Once the work was completed, time card information would be entered back into the ERP system for payroll. The number of nodes and manual steps in this process makes it inefficient and time-consuming and also increases the likelihood of a breakdown in communication.

SOA, on the other hand, simplifies the process by eliminating many of these nodes. Web services handle the movement of data from one system to the next in a secure and timely fashion. As business processes change or new applications are introduced, Web services ensures that they can be easily plugged in to support the business process.

Conclusion

SOA and Web services are poised to fundamentally change asset management. Pressured by today's reality of a retiring maintenance workforce and demand for increased productivity improvements, organizations must begin to fully utilize their EAM applications. SOA promises to advance an organization's business processes by making the EAM an integral part of a comprehensive asset management strategy. Integration is the key to this success and SOA is the enabler.

Serving up EAM Integration

2010-03-27T23:52:00.000-07:00

Integration is a word that strikes fear in many information technology (IT) organizations. There is no question that integrating systems has created major havoc within enterprises, and gluing together disparate mission-critical business systems from multiple vendors that were never designed to work together is definitely a cause for IT concern.

For many organizations, the solution has been to avoid integrations altogether by selecting a single vendor's complete suite of enterprise applications. Although the intent is not to disparage enterprise applications, the reality is that while they offer application breadth, they may not offer sufficient application depth (depending on your specific needs). The result is a compromise in application functionality in order to satisfy the needs of the broadest number of users.

However, in asset-intensive organizations, this compromise may have dire consequences. All too often, the maintenance department is forgotten and left to use whatever functionality comes along with the rest of the enterprise suite and usually has little input into the selection process. This often results in resistance by the maintenance staff and ineffective use of the enterprise suite. In some situations, the maintenance department may even revert to using inefficient paper-based systems. Thus, these asset-intensive organizations should not ignore the needs of the maintenance department—especially when they're the ones responsible for maintaining the assets that produce the revenue stream.

Fortunately, technology has finally caught up with the needs of the enterprise, and integration is now becoming a business enabler instead of an obstruction. For asset-intensive organizations, this means that a functionally robust best-of-breed enterprise asset management (EAM) system can play a viable and strategic role within the maintenance department by helping to streamline critical business processes. It also means that IT departments do not have to spend 50 percent of their budget supporting complex application integrations, finance gets the information they need, and management has complete visibility across the enterprise.

ASP Traffic Analysis! What Next – ASP Odometers

2010-03-27T23:51:00.000-07:00

WebTrends Corporation (NASDAQ: WEBT) is creating a business unit to provide web log analysis on an ASP basis. The new unit will offer its services through a platform called WebTrends Live. A user embeds a small piece of JavaScript code, provided by WebTrends, on every page to be tracked. When a surfer loads such a page the JavaScript sends data back to a WebTrends server farm. Traffic analysis information that includes the page view is available within seconds.

WebTrends Live offers three products. The high-end product is the eCommerce Edition, which can track information from a commerce-enabled site, including revenue by product and the differing behaviors of browsers, first-time buyers, and repeat buyers. The Enterprise Edition offers a full range of traffic analysis capabilities. The Personal Edition is offered free to small web sites that place WebTrends advertising on all pages that are tracked.

Market Impact

We don't foresee any major changes in the marketplace. WebTrends has a well-entrenched leadership position, and will attract customers to this service. But its two major competitors are Microsoft Site Analyst, a part of its Site Server product suite, and various freeware and shareware products. Some Site Analyst customers who would otherwise need a separate server for log analysis might choose WebTrends Live in preference to SiteAnalyst, but not many, we think. As far as freeware and shareware (including home-grown solutions), users who are prone to those solutions make their choices on the basis of features (or philosophy) rather than cost, and are unlikely to move to a commercial product.

WebTrends should capture additional customers through WebTrends Live and will see an increase in market share, but not so much to change the landscape. Microsoft may choose to offer some of the components of SiteServer on an ASP basis if its customers indicate that that would be convenient for them, but we certainly don't believe that such an offering would increase Microsoft's market share against WebTrends.

WebTrends also competes to a small extent with products from companies like Accrue, NetGenesis and SAS. But, again, these products tend to be more specialized, and the companies that use them are unlikely to be fazed by the purchase of an additional server, so there won't be much growth for WebTrends against those products on the basis of an ASP offering.

ERP System Constraints in the Process Industry

2010-01-28T04:11:00.002-08:00

For lack of an available solution designed for their needs, some process manufacturers have attempted to implement an ERP system for discrete manufacturing. As there are several fundamental differences between the operations and practices of process and discrete manufacturing, opting for such a stop-gap measure is not always effective. Process manufacturers have no doubt noted the constraints that are placed on their operations as a result of using a system that was not designed for their needs.

The nature of the process manufacturing business is such that it is difficult to manage inventories and profits. Process manufacturers experience large quantities of finished product in transit and of raw inventory. The products often have low yields with substantial scrap (fine chemicals, pharmaceuticals, or plastics).

Business dynamics is putting demands on ERP systems to help with

* maintaining a lead over competition
* simplifying the product lines
* responding to shorter product life cycles
* providing mass customizations (car options, computer system accessories, etc.)
* complying with regulations compliances

In an attempt to meet these demands, many manufacturers have looked at ways to improve supply chain optimization by re-examining manufacturing processes, relocating closer to markets, and looking at cheaper energy, transportation, and labor. The businesses' needs are such that an ERP system must be powerful enough and diverse enough in functionality to do more than simple process manufacturing.
With ingenuity, many of the raw material manufacturers have turned to vertical market integration, moving from pure process manufacturing to mixed mode. Their factories now produce raw product for industry and sell finished goods by the item (counting). An example is toothpaste, where the finished good is sold by the pallet, case, or individual package. The ERP system must allow manufacturing processes to batch products in order to achieve product consistency (two examples are textiles, with "dye lots and finishing," and bakeries, with oven scheduling, and aerospace, with electroplating, etc.).

That some factors are out of the control of process manufacturing vendors is exemplified by the retail industry. In this industry, the vendor has a many-stop supply chain, and plays a role almost like that of the caboose at the end of a long train.

For example, chain stores track sales at the cash register, and use that information to replenish inventory from branch warehouses. The warehouses get their product from distributors. In the case of multilevel distribution networks, this explosion process percolates upward through the various levels from the retail store to regional warehouses (master warehouse, factory warehouse, etc.). The demand is input to the master production schedule at the level of the manufacturer. The process is not always real-time, meaning that a lot of product is out in the supply chain. This process of upward percolation is most common in the pharmaceutical and retail grocery industries. Since everyone in the supply chain strives to minimize and frequently turn inventory, any ERP system has to manage with these constraints.

As a side note, some manufacturers are trying to use real-time reporting to determine product consumption and demand. The information is more accurate and allows total reduction in the field, increased inventory turns, tailoring production to market preferences and better cash management.

Specific Requirements of an ERP System for the Process Industry

2010-01-28T04:11:00.001-08:00

Here's an overview of how some of the functionalities of an ERP system for process industries help manufacturers better perform the activities listed above.

1. Conversion process capability
In the process industry, the bill of materials (BOM) used in discrete manufacturing is replaced by the master product formula, or simply the formula. The formula requires a conversion table for measures, such as weights from grams to pounds, and must have the ability to record liquid units of measure, in both metric and US-standard. The formula must also record specific information related to product characteristics that can affect manufacturing processes. For example, in the blending process, the system can record product information such as percentage calculations of raw materials, and the effective specific gravity, potency, density, and number of reactives of those raw materials.

2. Interface to other modules
The master formula can also be linked to submodules like quality assurance (QA), procurement, inventory, and accounts payable (A/P) for government compliance and safety issues. Also, the manufacturer must be able to trace products in order to manage dating of inventory lot control and the amount of inventory available at the distribution level. Furthermore, there are government and regulatory concerns that deal with the nature of the materials, as there may be a controlled substance with specific shipping, handling, and storage regulations. Or, the manufacturing process may emit hazardous by-products. Or, there may be logistical concerns within the manufacturing process itself.
A process industry ERP system must also have a formulation-balancing operation based on the premise that the QA group tests random samplings of production batches. The system needs the ability to adjust, through a program logic control (PLC) interface, any variations in materials used and external factors such as humidity, temperature, cool-down speeds, etc. Also, the material flow and consumption is recorded back into the ERP system. The system's routing functionalities reflect those capabilities as a requirement or not, depending on the user's specifications.

An Analyst's View of Process Industry SMB Challenges

2010-01-28T04:07:00.000-08:00

The process industry provides many of the products we use in our daily lives for food, shelter, and health. Such products are created as materials and transformed through the use of energy resources and chemical products. In addition, the process industry manufactures products that are essential to advanced industries such as computing, biotechnology, telecommunications, automotive, scientific, and space exploration.

These industries are facing major pressures not only to meet the present needs of our global economy, but also to do so without compromising future generations by ensuring that processes

* meet environmental guidelines
* optimize energy resources efficiently
* result in products that are safer, more reliable, and more functional
* provide features that meet both industry and consumers needs

This article focuses on how enterprise resource planning (ERP) vendors are helping the process industry meet both the needs of today and deliver on anticipated functional requirements that will help meet the needs of tomorrow.

Defining The Five-Step Review Process

2009-12-04T05:22:00.003-08:00

A five-step review process is an integral part of the best S&OP because it structures the flow of collaboration and information sharing. It starts at the highest practical level of management business review, which is then reconciled with the lower-level product management, supply, and demand reviews. Brown-Forman, for example, implements both strategic and tactical supply chain planning processes because of the long time frames associated with wine and spirit production. The company's S&OP process creates an 18-month consensus forecast (most companies now create a 24-month plan) for demand planning, near-term inventory planning, and production planning and scheduling The following outlines in detail each of the steps in the process.
1. New Product Review

In analyzing the feasibility of a new product, the company uses inputs from management and statistical analysis to align new product development and introduction with corporate financial and strategic goals. The analysis takes into account product life cycles, seasonal influences, promotions, and rebates and creates a multiperiod business plan. The best new product review process rationalizes the information about customer needs with channel potential and ideas for new product offerings. But the process does not stop there. It analyzes the structure of supply chain costs and determines the need for facilities or capacity, facility consolidation or outsourcing, and the right set of key performance indicators.
2. Demand Review

The purpose of each of the demand reviews is to lend an aspect of integration to a process that typically takes place in isolation. The demand review does not simply rely on quantitative forecasting, for example, but instead balances orders and demand through what-if analysis, achieving consensus among the various stakeholders all along the supply chain.

The best demand reviews not only ensure that the statistical forecast is based on the best data and model, including marketing assumptions, but also compare and incorporate sales and customer forecasts and include input from operations. The demand review also incorporates the results of the new product review, proposed promotions, and their demand impact. It incorporates real-time demand signals to monitor the plan assumptions and planning cycle so that demand can be adjusted accordingly.
3. Supply Review

The supply review includes manufacturing capacity, inventory, procurement, and logistics planning. The supply review considers potential material shortages in the supply chain as well as the capacity for the company to develop excess inventory.
4. Financial Reconciliation Review

At this point, the strategic S&OP process diverges from current business practice by creating a forward financial forecast of the previous three reviews. The supply and demand reviews are balanced by taking a close look at the product mix, conducting what-if analysis, filtering it through constraint management, and allocating supply to demand. Most important, all stakeholders in the process must reach consensus on the business and financial impact of the assumptions that have gone into the financial reconciliation.

The best financial reconciliation optimizes the supply chain to avoid problems down the line, and then compares the optimized supply chain plan to the demand plan. While the financial reconciliation makes certain that the S&OP plan hits targets for revenue and margin, it also considers whether the company's budgets remain consistent with the assumptions. The process validates potential demand spikes and supply disruptions, adds in forecasts for future financial profit and loss statements, and identifies gaps between the current S&OP and the company's future business plan.
5. Management Evaluation And Analysis

At this point, management reviews the S&OP results and plans and compares assumptions, identifying any problems and their root causes.

The best management evaluation processes use a number of leading practices such as waterfall analyses of forecasts and supply plans and the precise measurement of actual demand to the demand plan. The analyses include profitability by customer, channel, product, and supplier, as well as backlog and lead-time trends. The management review also addresses any high-impact exceptions to the plan, such as perfect order, cash-to-cash, and asset performance.
Taking S&Op To The Next Level

Brown-Forman, ExxonMobil Chemical, and Procter & Gamble have all changed their approach to S&OP with world-class results. Perhaps the greatest testimony to the need for more sophisticated S&OP is a comment by Randy Isdahl of Brown-Forman: "We will extend [this new approach to] S&OP wherever business value can be enhanced by leveraging S&OP to maximize our supply chain effectiveness."

David Sharp of ExxonMobil Chemical maintains, "[S&OP] provides us with a multidimensional view of how the business is doing on a global basis."And Dick Clark of Procter & Gamble adds, "S&OP is the key process for information sharing within the business. It's helping us meet our goal of better business decisions through an improved mutual understanding of demand, supply, and financial information."

When more companies follow the lead of these three best-practice corporations, they will take their S&OP process to the next level " aligning their supply and demand, creating better internal coordination, and maximizing their global effectiveness.

Learning From The Best S&Op Practices

2009-12-04T05:22:00.001-08:00

Companies like Brown-Forman, ExxonMobil Chemical, and Procter & Gamble are taking sales and operations planning to a new level where it harnesses the most effective technology, enables communication, and creates comprehensive business plans based on both experience and expectations. The best S&OP focuses on demand as much as supply, differentiates between what is viable and what is not, fosters real communication between all parts of the value chain, and as a result, anticipates and avoids unwelcome surprises.

SAP research has found that the best S&OP process creates an unrestrained demand forecast by accomplishing the following:

* Accounting for internal factors " The process should consider elements such as price changes, lead times, sales plans, product promotions, and new product launches
* Accounting for external factors " The process should consider elements such as customer input, the competition's activities, the trajectory of the economy, regulatory considerations, and market trends.
* Considering a product's complete life cycle" This begins with introduction and ramp-up and continues through final phase-out.

The supply side of leading S&OP processes emphasizes out-of-the-box thinking, and the analysis incorporates the availability of finished product inventory. More important, the entire manufacturing process also becomes an integral part of the supply review process from procurement through production, and including data on imports, outside purchases, and inputs from contract manufacturers.
Creating Communication Between Departments

A growing understanding of the importance of S&OP has led to efforts to ensure that the process enables communication between different departments of the company. Randy Isdahl, supply planning manager for Brown-Forman, puts it this way: "One of the biggest benefits is the fact that the process has resulted in an open, unfettered conversation across all our Brown-Forman functional groups … the results are astonishing."

As a result of this inclusive conversation, finance members share their perspective in terms of revenues, margins, and working capital; marketing members talk in terms of channels and brands; and the manufacturing and logistics members bring their thinking on products, sources, capacity, and destinations.

David Sharp, supply chain process leader at ExxonMobil Chemical, remarks, "Because we're working with a single [information] systems platform, the same information is available to everyone, allowing us to better align our supply plans with ExxonMobil Chemical's worldwide business strategy. Also, the common systems platform makes it easier to transfer supply chain best practices around the world."

The architects of these superior S&OP processes recognize that higher-quality decisions in less time require intelligent leveraging of today's best information technology. Today, companies want decision support for scenario planning in addition to industry-specific capabilities and the capacity to include global market and supply chain requirements.
Looking To The Past And Envisioning The Future

These types of capabilities also allow a company to compare plan assumptions with actual results, so that future plans can be revised to be more effective. Procter & Gamble, for example, uses the results of the S&OP process to create more effective plans by looking backward and forward. First, a team evaluates a past plan: where the business went right, where it went wrong, and what needs to change. The teams compare current plans with historical trends and other data such as market size and consumption to determine if the assumptions of the new plan make sense.
Avoiding Risk And Uncertainty

Companies often experience difficulties in foreseeing uncertainties in their supply chains. This can be disastrous in the long run. Figure 1 demonstrated how the process can easily get out of control at the end " creating a real traffic jam that could have been avoided through an effective S&OP process.

Increasingly, the best S&OP processes rely on software that allows all stakeholders to see the same data, at the same time, but each in their own terms. Software that supports S&OP integrates the data and information flow of the parts of the organization that will be relevant to the company's need to manage risk and uncertainty. The company has access to the right data and insights to make smarter decisions across all participating functions (sales, marketing, procurement, manufacturing, distribution, and finance).

The most sophisticated software applications encompass scenario capabilities that allow a company's senior executives to test their various assumptions about demand and supply in a virtual environment. They can also examine the impact of untried strategic and operational ideas for change. This type of process provides a global view of the business that allows supply, sales, marketing, and manufacturing to collaborate on a consistent basis to maximize customer satisfaction.

Most important, the right information technology can provide the contextual information necessary to maximize the impact of decisions on business value creation " to help increase profitability and achieve strategic goals. The company can adapt its actions to changing conditions without decreasing performance.

Dick Clark, the demand planning global process owner for Procter & Gamble, concurs that the company's S&OP process has helped maximize resources to achieve better financial results. As he put it, "Our monthly S&OP meetings allocate and align company resources to a single set of sales and supply plans. Our goal is to optimize resources to support the company's business objectives. This includes assessing the financial implications of the plan as well as its impact on supply and demand."

The Trouble With Planning When Information Is Not Shared

2009-12-04T05:21:00.000-08:00

Most companies have implemented some form of sales and operations planning for quite some time, but few are satisfied with the current process. As a result, they are encountering more and more problems, particularly as their supply chains become more complex " and can suffer from the "four stages of planning grief" In stage one the status quo seems fine, but symptoms of future problems begin to show up " such as mounting back orders. In stage two, the symptoms intensify as the company institutes planned price increases while introducing new products, effectively cannibalizing its own market. In stage three, demand increases, but manufacturing capacity can't keep up " and competitors begin to capture the unmet market demand and increase their market share. Finally, in stage four, the competitive trickle becomes a flood of competing products, ultimately depleting working capital and affecting financial performance.

In addition, many S&OP processes are incapable of reconciling the perspectives of sales, marketing, manufacturing, and logistics or extending the supply-chain decision process to include customers and suppliers. When each part of a company is operating separately and lacking effective communications that share updated data, stakeholders make decisions independently without recognizing the broader impact. Instead, stakeholders need aggregated data presented according to different dimensions that are meaningful to them: time, organization, product, geography, unit of measure, and so forth, Thus, the company's S&OP process can link decisions at the strategic level, align tactics with strategy and goals, and allow decision makers to adapt to changing circumstances as they develop.
Inadequate Technology Spells Doom

Some companies approach the S&OP process using spreadsheets and simple tools for rudimentary collaboration. The spreadsheet technique, while a low-cost option in the short term, presents several challenges, including different versions of the same data and an inability to integrate and reconcile S&OP with underlying business processes. Data becomes outdated very quickly, hampering collaboration, while team members get frustrated trying to piece together the picture of the company from faxed or e-mailed spreadsheets.

The consequences of this approach can be costly and far-reaching, for some of the following reasons.

* Product supply and the market are not reconciled. Repeated stock-outs cause distributors to switch to other manufacturers for the same product. Distributors show little mercy in making up for any slowdown in getting stock through their pipeline.
* Excess inventory dilutes prices. Excess inventory is the mirror image of the stock-out. For example, when an electronics manufacturer bet on the wrong style of MP3 player, production capacity and demand were out of sync for more than six months. The company wound up with excess capacity that it had to dump on an unsuspecting market, taking a big financial loss.
* New product introductions fall flat. The successful commercialization of new products mandates close coordination between research and development, marketing, sales, production, supply, and logistics. An information or communications failure between any of these links can result in lost market share because of a tardy or ineffective commercial launch of a new product.
* Supply mix does not meet market demand. Many large companies must support a complex supply web and balance their multifaceted supply mix with the requirements of diverse customers, channels, and regions. Without sufficient information, these same companies may have difficulty adapting their supply chains to meet the constantly shifting demands of their best customers, opening more productive channels, or negotiating for access into new geographic regions.

Sales and Operations Planning : The Key to Continuous Demand Satisfaction

2009-12-04T05:19:00.002-08:00

All companies do some form of sales and operations planning (S&OP) to synchronize market data with production output. But most practice a planning process based more on logistics than strategy. Demand is forecast based on last month's numbers, and historical performance leads the analysis. Companies rarely solicit a cross section of perspectives from different functional areas or supply chain partners. The practice is static and insular, disconnected from the reality of today's complex supply chains. As a consequence, sales and operations planning becomes almost dysfunctional, lacking the communication and the insight into market demands required to carry out business plans and achieve strategic goals.

Taking a more strategic approach, however, the sales and operations planning process can be designed to bring a company's marketing, finance, sales, and operations departments together to continuously monitor and meet customer demand. As the separate departments collaborate, they create business plans with the latest and most accurate data and begin to develop and measure a common set of metrics. With integrated S&OP processes, companies are better able to synchronize supply and demand, improve revenue, decrease costs, and increase customer satisfaction.

The following examples illustrate how three global companies are putting this strategic process into practice.

* Brown-Forman Corporation believes its approach to S&OP is a better way to align supply and demand with the company's business requirements, build better internal communications, and plan activities to meet customers' needs.
* ExxonMobil Chemical leverages sales and operations planning to improve customer service while controlling costs.
* Procter & Gamble credits its own version of S&OP with creating a single set of sales and supply plans to optimize resources to support the company's business objectives " assessing the financial implications of the plan as well as its impact on both supply and demand.

While companies like these are reaping the benefits of effective S&OP, many others continue to take a more static approach. By using a five-step review process, however, companies can review and evaluate new products in development and future plans in the context of demand, supply, financial reconciliation, and management analysis. The result is an S&OP process that begins to follow the model of the companies that are leaders in this process.

With integrated S&OP processes, companies are better able to synchronize supply and demand, improve revenue, decrease costs, and increase customer satisfaction

The best sales and operations planning process creates the framework for five integrated and interdependent business reviews to ensure that tactical plans align and support the company's strategy. This framework helps develop the consensus among stakeholders necessary to continue the planning process, allows for management understanding and analysis, and forms the basis for the tactical plans necessary to satisfy demand with an integrated and responsive supply chain. Companies perform specific activities within each process as outlined below:

* New product review. Analyze the potential for new products to impact the market, considering elements such as rationalization with channels, pricing and margin implications, ramp-up projections, and both incremental and cannibalized demand.
* Demand review. Anticipate total market requirements for all offerings from all perspectives, using sources such as quantitative forecasts, input from sales and marketing, and what-if analysis " balancing orders and demand and achieving consensus on various demand scenarios.
* Supply review. Review the supply chain capacity, including inventory requirements, procurement policy, and logistics, to make certain that there is sufficient manufacturing and distribution capacity. In this step you can identify any potential decision points such as the need to outsource for additional capacity
* Financial reconciliation review. Translate the supply and demand plan into financial terms of revenue, margin, and working capital requirements. Then balance supply and demand, making decisions with regard to potential supply issues and contingencies for the range of possible demand scenarios.
* Management evaluation and analysis. Evaluate the results of your activities to decide how to run the business moving forward. This includes an evaluation of planned versus actual results, an analysis of profitability by customer, channel, and product, and a look at perfect order, cash-to-cash, and asset performance.

While this approach to S&OP creates an invaluable foundation for clear-sighted decision making, the process adds the most value when integrated with other core business processes including inquiry to order, procure to pay, order to cash, and new product introduction and development. With a full-fledged S&OP program in place and integrated throughout operations, a company can expect to do the following:

* Speed up the commercialization of new products and improve time to value
* Make budgeting less complex and more accurate
* Enhance sales organization effectiveness
* Create greater supplier effectiveness, reducing cycle time and procurement costs
* Concentrate more thoroughly on building customer loyalty and greater satisfaction
* Improve collaboration between the company and its external partners
* Lower operating costs and reduce order fulfillment times
* Increase inventory turns and reduce cash-to cash cycle times
* Improve return on net assets

This SAP Insight discusses the problems faced by most S&OP programs, how some companies succeed, and the key to the five-step review process.

Using Demand to Drive Supply Networks

2009-11-24T04:23:00.002-08:00

Until recently, CPG companies have adopted ad hoc initiatives to control costs and improve service levels, and over time many of these initiatives have been exhausted. Now is the right time to look beyond traditional practices and transform existing supply chains into illuminated and informed supply networks. Companies must start focusing on all forms of demand inputs from retailers, distributors, channel partners, and even end consumers, and use these as a guiding light to steer supply in the right direction and to enlighten its entire supply network with timely information.

In any dynamic system like a supply chain, variability is inherent. Sensing the variability in time and formulating strategies, innovative processes (and the technology to respond quickly to these variations) sets progressive companies apart from the competition. Using demand to regularly modulate the supply process is the new generation of SCM that integrates demand, supply, and product processes across the network of customers and suppliers to balance revenue against cost. It is a system of tightly linked processes and technologies, which not only responds to demand, but which can also reshape demand through solid collaboration with value chain partners in the market place.

Business Challenges in the CPG Vertical

2009-11-24T04:22:00.000-08:00

With pressure coming from diverse sources, the limitations in existing CPG supply chains can lead to severe challenges that highlight certain fundamental areas for improvement. But those are not the only difficulties. CPG companies also face specific challenges inherent to the industry.

Decreasing profitability and market share
The one-strategy-fits-all approach within linear supply chains has not been adaptable enough to meet rapid operations that switch between requirements for low-cost/high-volume commodity products and low-volume/high-cost premium products. Typical asset- and cost-focused arrangements have diverted attention from anticipating and responding to unique and niche market requirements, leading to reduced growth and profitability. Also contributing to lost market shares is the intense competition from private label products. Furthermore, some low-growth local brands became targets for acquisition by stronger regional (as well as national) brands, leading to extended supply chains and hence added complexities and cost.

Effective management of promotions and new product introductions
Lack of communication or wider collaboration with retailers and distributors (as well as with internal teams) are significant factors in the less-than-stellar performance of CPG companies with respect to promotions and new product introductions. A number of CPG companies do not have formalized internal stage-gate processes to justify and effectively drive new product demand. Also, companies tend to focus more on initial new product sales (for example, for the first two quarters) and ignore subsequent demand, which then provides only partial insights into product failure or success factors.

Added costs due to regulatory compliance requirements
Regulatory bodies, including the United States Department of Agriculture (USDA), tightly regulate the packaged food and beverage sectors on the following mandates:

* Hazard Analysis of Critical Control Points (HAACP) regulations—quality control records and manufacturing data access
* Occupational Safety and Health (OSHA) requirements—material safety data sheets (MSDS) maintenance, good manufacturing practices (GMP), and safety programs
* country of origin labeling requirements

It’s the Time to Master Your Master Data

2009-11-24T04:18:00.000-08:00

A recent blog post CRM for the Finance and Banking Industry – Part 1 by Gabriel Gheorghiu touched on a pain point of many of today’s enterprise IT environments. Due to the inconsistency of customer data amongst different systems in use, the bank employee “asked three or four of her co-workers for help, and took about 15 minutes” to simply change the address of one customer. As a matter of fact, the bank that Gabriel mentioned is not the only one in this situation. Recently at the Gartner Master Data Management Summit 2009, I learned from a case study that prior to the master data management (MDM) initiative, a large Canadian retailer had over 45 million domestic customers recorded in its various systems, even though the entire country has a population of less than 34 million.

Nowadays, many companies are able to automate transactional activities thanks to solutions such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM). However, due to the barriers among various software systems that companies have implemented along the way, and multiple operation locations that require complicated data storage mechanisms, inconsistent master data becomes a critical issue that hampers effective and efficient business operations.

For customer-facing operations, when a customer receives two phone calls from a company–a delivery notification made by a shipment clerk working with a SCM system, and a service follow-up handled by a customer care representative using a CRM system, the customer wants to be addressed as the same person. More importantly, as a company, you don’t want the two departments to contact the same customer as if they were talking with two individuals. What you want is the single version of the truth with respect to your customers.

Besides managing customer master data, product master data is another major area of MDM. The accuracy of product master data needs to be maintained consistently across various departments and branches. This way, when different people refer to a product, they talk about the same thing, with the same information. Without the consistency of product master data, a salesperson may sell a product with a feature that is no longer available due to a design change. This situation is not only embarrassing but also revenue-losing.

The management of product master data is also called product information management (PIM). If you are looking for a PIM solution, you may find Technology Evaluation Centers’ PIM Request for Proposal (RFP) Template helpful (click here to download a free sample).

Miscellaneous Processes

2009-11-16T06:45:00.000-08:00

Miscellaneous processes consist of those activities needed to ensure that the warehouse inventory is accurate and that promote good warehouse practices and procedures. These processes include inventory control and management, stock consolidation, and stock locator. Inventory control and management includes physical and cycle counting and intra and inter-warehouse transfers.

It is a general rule of thumb that a software solution that focuses on one discipline is better at supporting the single discipline as opposed to software supporting multiple disciplines. This is why you look to a WMS to satisfy these miscellaneous processes. A prime benefit of a WMS is suggested inventory movements and consolidations to increase warehouse efficiencies. Inventory counting schemas in a WMS are typically more adaptable to your environment, thereby creating the least downtime and disruption to warehouse operations.

Obviously, inventory management functionality of both software solutions needs be evaluated objectively. However, any WMS worth its reputation and cost should be able to provide more effective tools to solve your existing warehouse problems. If not, you should question the purchase of a WMS in the first place.

Inbound Processes

2009-11-16T06:44:00.001-08:00

The inbound function consists of processes that deal with ordering, receiving and storing material used to manufacture products. As with the outbound discussion, there are certain processes for which there is no choice. These processes include purchasing and purchase order generation, vendor invoice processing, cash disbursement, and accounting activities as indicated in the inbound processes chart.
Disposing of these administrative tasks, the physical act of receiving and storing the inventory in the warehouse can best be accomplished in the WMS.

Even when not using ERP software, purchasing information needs to be ported to the WMS in order that receipts can be validated and approved. Since at some point information must be transferred and inputted into the WMS, receiving represents a clean demarcation. This being the case, the receiving process initiates the inbound processes resident in the WMS. A WMS will have putaway logic to suggest stock locations whereby ingredients and goods are more readily accessible, reduce warehouse travel time, and maximize the use of available space. Likewise, since this inventory will eventually be used to satisfy production and customer orders, it is logical to use the barcode and label functionality available in a WMS as materials are being placed into stocking locations. Again, inventory updating would need to be accomplished in both software systems.

ERP and WMS Co-Existence: When System Worlds Collide

2009-11-16T06:33:00.000-08:00

Typically, after the enterprise resource planning (ERP) software has settled in, you may start to investigate ways to improve your warehouse management and operations through the use of a warehouse management system (WMS). Unless you're faster than a speeding bullet and can leap tall buildings in a single bound, normally you do not install both ERP software and a WMS at the same time. Regardless of your approach, early on you will notice an overlap in warehouse functionality between the ERP software and a WMS. When comparing the warehouse functions and features embedded in ERP software against those in a WMS, the ERP software usually comes out on the short end of the measuring stick. So your path is obvious; use the WMS for inventory related functions. Not so fast big fellow.

Focusing on warehouse functionality that is typically contained in both software solutions, this article discusses the merits of using the features of one software solution over the other. This discussion will concentrate on outbound, inbound, and miscellaneous warehouse processes. Most importantly, it concludes with an identification of the critical interfaces, where a majority of the work is to be done. While there are no exactitudes and you may be left with more questions than answers, completing the thought process can help you gain an appreciation of the complexities of making these two software solutions work together effectively for your organization.

So Who Really Needs a DMS, Anyway

2009-11-09T05:17:00.000-08:00

Car manufacturers, that’s who; mainly for control purposes. In Europe, before the Block Exemption Regulation, automotive manufacturers used to force dealerships to use a DMS. This way, the car manufacturer could control the sales and purchases of the dealers, and decide to increase or decrease quotas for them. It also helped them determine the optimal quantities to produce, which could vary by season, by model, and even by region. Most major car manufacturers would not allow their dealers to sell other brands at the same site.

Another reason for using a DMS was so manufacturers could control the quality of the services provided by the dealers—making sure they only used genuine spare parts and that they followed the work procedures defined for specific processes. A unique system for all dealers would also provide them with the right tools to be efficient in their relationship with the car manufacturer (e.g., spare parts ordering tools, warranty management, vehicle repair history).

Dealers need a DMS to grow efficiently. Let’s say a dealer started a family business decades ago; if everything went well, it acquired five or six new dealerships in the region. Later it would expand even more. The problem: the six or seven dealerships were now using three or four different systems. This raised some very big problems. Their only options:

* Gather a team of programmers and build a completely customized solution that would make all systems talk to each other and exchange information in a seamless manner. This would mean a lot of work, and even with a huge budget, they might not be able to produce the end product—not to mention that any dealership they acquired in the future would force them to review their existing solution.

* To keep the best of all solutions they were currently using, which would mean that all other dealerships would have to implement that same system. This would mean new licenses to purchase, a possible new infrastructure to set up, training to be completed, change management, and more.

* If none of the existing solutions were good enough to make all dealerships work together, they would still have the option of implementing a new solution, which would replace all existing ones.

Dealership Management System: What Is It and Who Needs It

2009-11-09T05:16:00.000-08:00

When one talks about a DMS, people usually think about a document management system, a data management system, or even a destroyer mine sweeper. But very few people know that it’s also the acronym for “dealership management system,” which is a product or package of several products which is created specifically for the automotive industry.

The core of any DMS is a system similar to enterprise resource planning (ERP), with, however, specific characteristics for car manufacturing, distribution, spare parts inventory, and work order management. DMS packages often also include customer relationship management (CRM) and business intelligence (BI) solutions.

Two of the most important players in the DMS market started doing business toward the end of the nineteenth century: 1886 for Reynolds and Reynolds in the US and 1896 for Kalamazoo in the UK. Both started as printing companies and later turned to the automotive industry (Reynolds and Reynolds in 1927 and Kalamazoo in 1960).

In parallel, some dealerships tried to create their own management systems. I have exchanged e-mails with one such dealer, Tom Mautner. In the 70s, Mautner retained the services of a bright programmer, and created something that would help businesses overcome the disadvantages of existing solutions, which were often adaptations of existing software and not designed for the car retail industry. In addition, they only worked on very expensive and difficult-to-maintain computers.

After six months of hard work and testing, Mautner and his partner tried to sell the software to other dealers, without much success. Finally they decided to sell it to a company called VISitronic. Over the years, they continued developing the product as consultants, and in the 80s their product was one of the first PC-based DMSs available in Europe.

VISitronic was later acquired by Kalamazoo, which is now part of the Reynolds and Reynolds group—one of the biggest DMS providers in the world.

A major step in the evolution of DMS systems was the Block Exemption Regulation (BER), adopted by the European Union in 2002. Its main goal was to deregulate relationships between dealers and car manufacturers and to allow dealerships to freely market their services and reach customers in different geographic areas. As a result of the BER, the DMS market also became free, and therefore more competitive—diminishing the power of the few vendors that were controlling it.

Case Study: Kempe Group Success story with DynamicFit and Microsoft Dynamics AX

2009-11-09T05:15:00.000-08:00

Kempe is a leading global specialist provider of innovative engineering solutions and asset services for the aluminium smelting, major resource and other major industries.

Kempe's multi-level diverse range of engineering products and services are delivered across four business divisions:

* Technology, Engineering & Construction (equipment supply & turnkey projects).
* Manufacturing, Precision Spare Parts & Components.
* Maintenance & Asset Services including Sustaining Capital Works.
* Fluidpower, Industrial Products & Services.

Business and Technology Need

To manage the financial and operational aspects of the business, Kempe was using separate systems which proved to be unreliable and out of date and made timely, accurate financial reporting almost impossible. The existing software could no longer accommodate the company's continuing growth. They needed a business software solution that was customisable, secure and would take them into the future. After considering a range of enterprise systems including SAP, Great Plains, Sage, Pronto, M1, Mex and Greentree, the company decided to go with Microsoft Dynamics AX.

"Microsoft Dynamics AX has delivered everything we asked for. It's taken our business to the next level by significantly improving financial and operational management" Kempe- Kris Rendevski Operations Director
Benefits

Kempe now has one centralised, integrated solution that stores information in real time. Managers can access reliable data to help them better manage operations and support business growth. Administration is now consolidated into one location enabling better financial management and effectiveness.

* New sites and local functionality can be added easily. As a result, it supports the organisation's expansion strategy, helping it to cost-effectively open and acquire new business units.
* Significantly reduce cash collection cycles.
* Increased Inventory accuracy from 7% error rate to 0.6% at 2008 stocktake.
* Accurate data means managers have improved insight into supply and demand and can more easily identify areas for change or improvement.
* Productivity and sales gains achieved due to accuracy of reporting and reduction in administrative errors
* Reduction and identification of Inventory "dead stock" by 25%.
* On time accurate accounts across many business units.
* Ability to control larger, complicated, international project work.
* Security knowing business data is reliable and accurate.

Bridging the Reality Gap Between Planning and Execution Part Two: The Manufacturers' Perspective

2009-10-24T21:57:00.000-07:00

Despite the fact that many manufacturers have invested in enterprise resource planning (ERP) systems and supply chain management (SCM) systems, most continue to use inopportune batch reports and pesky spreadsheets to manage their operation's performance. These have proven to be inefficient and error-prone methods of supporting decision-making, resulting in a reliance on "educated guesswork" rather than on accurate dynamic analysis to align decisions with strategic objectives. For that reason, some innovative enterprise software vendors intend to do the same for manufacturing and operational decision-making as has already been done to financial decision-making by some business intelligence (BI) applications. (See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM).

Manufacturers today need to react quickly in order to remain efficient and competitive, given that the biggest problem they face is that change is the only constant in manufacturing. For those who are lucky, only minor changes will happen between the "as planned" and "as executed" worlds. These changes are the usual minor but endless variances that exist between planning and forecasting in the "ideal world" and manufacturing in the "real world." For all the investments spent on sophisticated supply chain planning (SCP) and manufacturing-planning tools, almost proverbially, the only sure thing about a forecast is that it will be wrong, by and large. Years ago, in business, many minor variations could be ignored as margins were sufficient to accommodate many suboptimal decisions or manufacturing processes, such as keeping increased safety stocks or frequently expediting. But in today's world of often razor thin margins, the variances between plans, real customer demand, and forecasts must all be spotted, and manufacturing success can be determined by the speed and effectiveness of the response to even minor changes.

Sometimes, however, the more serious changes, which disrupt routine tasks of planning and forecasting, manufacturing, delivering, and invoicing standard orders, result from significant unplanned events that occur either within the company or elsewhere throughout the extended supply chain (e.g., a supplier is late, supplies are wrong or of unacceptable quality, a manufacturing line is still unexpectedly busy or is down, there is a last-minute order change, etc.). The risks can be high, ranging from lost margins to loss of customers or erosion of competitive market positioning. Speed and effectiveness in response to these changes can determine the difference between profit and loss in manufacturing an order, or they can determine margin size in a manufacturing cycle or run.

In addition to the above minor and major changes, manufacturers face a third and typically more powerful change to the business itself. Namely, to remain viable and prosper in today's ruthlessly competitive global markets, manufacturers must continually reinvigorate themselves and even occasionally reinvent themselves. Fundamental business changes range from new product introductions and promotions to new corporate goals and objectives; to new target customers, continually changing customer demands and new supply chain partners; and even through to merger and acquisition (M&A) activities and structural changes to the business itself.

Some manufacturers try to cope with possibly the most difficult yet pervasive of all forces in business—never ending change—by trying to leverage the strategic information systems they have been using to control, manage, and optimize the "as executed" state of their business, such as ERP systems, or SCE systems available respectively from their ERP vendors and a broad array of pure play SCE players. However, it has been extremely difficult for them to deal with day-to-day events in real-time with a transaction-based ERP system that relies on batch processes to extract the data they need. It can be daunting for a manufacturer to get real-time notification of a supply chain event, understand its impact, and take the appropriate action given traditional ERP and or execution applications do not really provide this capability. Almost every enterprise has huge volumes of information flowing through their enterprise systems, but only few possess the tools to quickly exploit their wealth of data and thereby optimize their operational and corporate performance.
Most manufacturers will have gone a step further in addressing this problem by deploying some level of strategic planning or forecasting systems to help them forecast and model the "as planned" state, in solutions ranging from a variety of business intelligence tools, such as Cognos, Hyperion, SAS, or Business Objects, all the way through comprehensive SCM solutions, such as those from Manugistics or i2 Technologies, or again from their ERP providers. If one considers traditional business intelligence tools, they merely do a prodding analysis of historical data after the fact, but one cannot count on the future to look like the past, which has been the shortcoming of some forecasting methods as well. Therefore, more up-to-date information is a requirement.

On the other hand, best-of-breed SCP solutions may not be the answer, as they require a significant investment in both software and integration. Sometimes the solutions to improve manufacturing effectiveness are so complex and costly that they overwhelm any benefits that they might provide, such as when engaging consultants to, for example, scrutinize modeling revenue, cost, and supply chain capabilities, with breaking products into families and analyzing the channels they are sold through and the geographies they cover. Frequently, the exorbitantly high cost and complexity keeps companies from realizing the potential benefits that these systems promise.

Additionally, there are still significant barriers to an easy deployment of SCP systems, as they are based on cumbersome proprietary algorithms and heuristics that take a long time to master and harness to work, forcing companies to have full-time rocket-science' expert consultants on the premises to interpret the results and to keep the application in tune with the business processes it supports. Therefore, the use of a traditional APS method that is non memory-resident and latent in itself, as a basis for all decision-making, is becoming increasingly unsound. Due to the growing visibility of supply chain information, the necessity of SCM has also progressively become more the provision of real-time information. Still, early supply chain event management (SCEM) systems, while crucial to increase visibility and raise flags, have lacked the ability to figure out resolution processes in the applications and their subsequent impact on operations.

It’s About Process (or Ability to be Responsive) – Part I

2009-10-21T06:18:00.001-07:00

After several years (if not decades, even) of painstakingly corralling and setting up all their custom data, objects, tables and whatnot, and making sure that these static and/or dynamic transactional data are secure, many enterprise applications users have realized that the time is long overdue for them to start looking at ways to make their applications more process-savvy.

Companies are increasingly trying to adopt and implement standardized (and yet flexible and easily modifiable) business processes to help their operations run more consistently and smoothly. For example, the chief executive officer (CEO) might decide that as of, say, next month “All customer service cases must be resolved within 24 to 48 hours,” or, “We are going to institute a new sales process for all deals worth over US$100,000.”

However, these business processes often get communicated to employees in an ad hoc and unregulated manner. A process document with instructions may exist on a network file share, but people have not the foggiest idea that it’s there. And some employees might rely on word-of-mouth information from co-workers (so called “tribal knowledge”) to learn the processes for their jobs.

Consequently, standardizing and instituting new business processes can prove challenging for most companies, particularly larger organizations.

Indeed, until recently most enterprise applications have hardly been anything more than glorified databases — they could hold all of the information users may need and allow users to search for records based on various criteria, but they could not really help users to perform the functions of their daily jobs more effectively.

There’s still often no native automation and agility within the system that lets, e.g., a recruiter instantly know when the status of a candidate has changed or when a new position requisition has been entered into the system.

Indeed, when any changes are made somewhere in the organization, users have to remember to notify one another of the change or else rely on others finding the updates on their own. Neither solution is practical in the long term and invites the possibility that the software solution or best practice will not be adopted consistently by all employees at the company.

How can one then build processes into enterprise applications so that users won’t need to, time and again, rely on manual (pedestrian) methods of communication to inform others of changes, increasing the risk that many issues will fall through the cracks?

Introducing Workflow Automation

To that end, a built-in or an external standalone add-on tool (or capability) that can be used to solve the process automation problem is called workflow automation (or workflow management). Some will refer to it as business process management (BPM), and we will shortly try to point out the differences between the two – i.e., workflow and BPM.

Traditional enterprise applications typically feature some built-in functionality, such as a human resource management system (HRMS) or a procurement application, with some capability to tailor the base functionality through parametric configuration options (e.g., via “order types” that entail different mandatory and optional “order steps”) that users have to learn by heart.

To be fair, some enterprise applications have introduced workflow capability into their products to give users some ability to control the process behavior of documents such as an invoice or an engineering specification. But in most enterprise applications workflow is implemented through hard-coding, which means that programmers must develop and maintain the code.

In addition, workflow automation of the typical enterprise application is generally limited to a single document or task routing. This usually means that companies implementing an enterprise application must choose between accepting the vendor’s pre-built business process behavior or paying the vendor dearly to make expensive modifications to accommodate more complex processes, which will then make upgrades either costly or impossible.

In contrast, a specialized workflow tool enhances a single task and/or document routing by providing an integrated capability to include rich user interfaces (UIs), system integration, rule processing and event handling.

Rules are necessary to determine which path users should take next in a process that has multiple possible paths, e.g., an order worth less than US$1,000 does not need manager approval, but over that amount it does. On its part, an example of event handling would be a necessary step after a product recall: a “pull from shelves” notification must be sent throughout the distribution channels.

These capabilities can be pretty powerful, since in general, if users can come up with a standard rule that specifies when a particular event should happen, they can make it happen automatically with workflow. In other words, workflow becomes the magic ingredient that transforms many traditional transactions-capturing applications from a glorified database into fully functional tools that basically everyone in the company should find useful.

Workflow Components

The individual components that make up workflow are rules and associated actions — tasks, field updates, and alerts.

In general, a workflow rule is the main container for a set of workflow instructions. It includes the criteria for when the workflow should be activated, as well as the particular actions that should take place when the criteria for that rule are met. Every workflow rule must be based on a single object that users will choose when they define the rule, as this object then influences the fields that are available for setting workflow activation criteria.

For example, if a user defines a workflow rule for the “Job Application” object in an HR application, he/she will be able to set workflow activation criteria based on the values of fields like “Job Application Number” and “Status”. Users can also set workflow activation criteria based on standard fields, like “Record Owner” or “Created Date”, as well as fields based on the currently active user when a rule is evaluated, such as their “Role” or “Time Zone”.

When a workflow rule is triggered, there are many types of actions that can occur, starting with a workflow task (or step), which assigns a task to a user according to a particular template. Just as in Microsoft Outlook, tasks include information about something that needs to be done by a certain time, such as making a telephone call, creating an order, shipping goods, or paying an invoice. Typically, assigned tasks appear in a user’s “My Tasks” related list on their home tab (or page) and generate reminder messages that pop up when a user logs in.

When an administrator defines a workflow task, he/she provides default values for data fields like “Assignee”, “Subject”, “Status”, “Priority”, and “Due Date” for tasks that are generated by its associated workflow rule. Administrators can also make sure that a notification email is sent to the assignee when a task is automatically generated.

In additon, a workflow field update changes the value of a particular field on the record that initially triggered the workflow rule, while a workflow alert sends an email according to a specified email template. Unlike workflow tasks, which can only be assigned to users of the application, workflow alerts can be sent to any user or contact, as long as they have a valid email address.

A workflow rule can include any combination of these actions when the rule is triggered. For example, one rule might send out an alert and update two fields on a particular record. The action that one workflow rule takes can also trigger the execution of another workflow rule.

Workflow-enabled Applications

Many enterprise applications today come with built-in workflow management capabilities, such as the Salesforce.com Enterprise Edition on-demand customer relationship management (CRM) suite and its on-demand Force.com (formerly Apex) platform, Agresso Business World (ABW) or Exact E-Synergy, to name only some.

Microsoft Dynamics CRM too includes a workflow module that users can use to automate their business processes based on the rules, logic, and actions that they design. Microsoft has revamped the workflow functionality in Microsoft Dynamics CRM 4.0 so that it now uses the Microsoft Windows Workflow Foundation (WF), whereas previous versions of Microsoft Dynamics CRM used their own proprietary workflow engine.

The result of the revised workflow functionality is that users, administrators, and developers can design and create business processes using the workflow tools with new features and a new UI for creating and monitoring the workflow processes.

Windows WF provides a comprehensive programming model, run-time engine, and tools to manage workflow logic and applications. The Microsoft Dynamics CRM workflow UI relieves users and administrators from the need to interact with WF directly. Therefore, users do not necessarily have to understand the underlying workflow technology to create workflow logic in Microsoft Dynamics CRM.

As a recap, a built-in workflow provides a tool to help companies set up and define business process activities (including the proper sequencing) that involved employees can use when working with the enterprise system’s data. Conceptually, one should think of a workflow as an application or service that runs in the background, 24 hours a day, 7 days a week, constantly evaluating the data and the multiple workflow rules in the company’s deployment.

When the workflow service encounters a trigger event, it activates the appropriate workflow rules to run the workflow actions. Typical workflow actions include sending an e-mail message, creating a task, and updating a data field on a record.

By implementing workflow processes in the enterprise resource planning (ERP), supply chain management (SCM) or CRM systems deployments, users can enjoy many benefits, such as:

1. Ensuring that users track and manage their customer data and processes in a consistent fashion — instead of relying on users to remember the appropriate steps for processing data, managers or administrators can create workflow rules that will automatically determine the next required steps and assign activities as necessary;
2. Processing the customer data more quickly so that, for example, new sales leads or customer service requests are assigned and routed immediately upon record creation; and
3. Allowing users to focus on more value adding activities — instead of having to perform a large number of manual repetitive steps.

It’s About Process (or Ability to be Responsive) — Part II

2009-10-21T06:17:00.000-07:00

BPM Suite Components

Full-fledged BPM system components thus include visual process modeling: a graphical depiction of a process that becomes a part of the application and governs how the business process performs when companies run the application.

They also feature Web and systems integration (SI) technologies, which include displaying and retrieving data via a Web browser and which enable companies to orchestrate the necessary people and legacy applications into their processes.

Another important BPM component is what’s been termed business activity monitoring (BAM), which gives reports on exactly how (and how well) the business processes and flows are working (for more information, see TEC’s article entitled “Business Activity Monitoring - Watching The Store For You”).

Optimizing processes that involve people and dynamic change has been traditionally difficult, and one barrier to optimization has been the lack of visibility and ownership for processes that span functional departments or business units, let alone different enterprises. In addition, the industry often changes faster than information technology (IT) departments can update the applications set that the business relies on to do its work, thus stifling innovation, growth, performance and so on.

But today, the pervasiveness of Web browsers and the emergence of simpler application integration technologies such as Web sevices, simple object access protocol (SOAP), extensible markup language (XML), business process execution language (BPEL), etc. have enabled IT staff to deploy technology that supports the business process across functional, technical and organizational silos.

In the broadest sense, BPM components address the issues of the following: process modeling, documentation, certification, collaboration, compliance, optimization, and automation (i.e., via a workflow engine that is rule-based).

Again, highly functional, top-of-the-range BPM suites use graphical (visual) process modeling tools that enable business users and business analysts (i.e., those people that are most familiar with the process) to implement and manage the process definition. To complete any transaction, the BPM suite must also call on various siloed legacy applications that hold necessary information, for example, customer, inventory or logistics data.

But to the ordinary user the complex process that runs over many enterprises and various systems should appear seamless. End-users should be spared the effort of hunting down the scattered information themselves, since the underlying BPM platform provides tools for:

* Business analysts to model (and change) the business processes and define the business rules that control how those processes behave;
* IT departments to integrate the necessary legacy systems;
* Joint teams to build applications for the end user that enforce the processes and rules; and
* Management to review process performance (e.g., the required time to resolve client return exceptions) and even adjust process parameters in real-time (e.g., increasing the dollar value threshold during peak periods to trigger management review and approvals of client returns).

Therefore, the most vital BPM attributes would be the following: being event-driven, orchestrated, intended for both internal and external processes/customers, and leveraging human-centric workflow and business analytics.

With the leading BPM platforms/suites, everyone in the company will be working on the same shared data and process model, so changes to the process can be put into action very quickly. This is because these sophisticated platforms provide integrated process modeling, real-time process monitoring, and Web-based management reporting — all working in unison to support rapid process innovation.

BPM — Much More than Integration

BPM is often used to integrate multiple enterprise applications and various internal and external users into a new process, but it goes way beyond mere integration. Whereas traditional enterprise application integration (EAI) products help companies to move data between applications, BPM adds interaction with people and the ability to support processes, which then become as manageable as data.

BPM integrates existing applications, Web services and people in order for companies to quickly change, destruct or construct processes as required. Again, BPM enables a company to more cost-effectively and quickly model and change its business processes to meet the specific requirements of a particular business. Via BPM, people can be involved in two ways:

1. From a rank-and-file employee point of view — BPM represents units of work from the business process as tasks, whereby each task contains work instructions, status, priority, due date and other attributes. Workers use BPM to monitor and execute the tasks that are assigned to them or to the workgroup to which they belong; and
2. From a manager or executive point of view — Managers and executives use BPM to monitor process performance by viewing graphical reports that summarize task status and alert them to process bottlenecks. They also frequently get involved with tasks by participating in approval or escalation process steps.

Thus, many BPM products provide real-time monitoring and insight into the process operation. The process flow model of BPM allows management the ability to not only easily identify bottlenecks and inefficiencies in the process, but also to more easily modify the process to improve productivity.

For instance, with industrial (plant-level) BPM deployments, companies can digitize their work processes and close the loop on performance with actual execution data. By applying BPM in manufacturing plants, companies can manage and audit their production more effectively and consistently thus improving their conformance, compliance, throughput, and ability to deliver. They can also empower their workforce by integrating people and their roles and by customizing individuals’ work styles and decision-making processes.

Astute BPM suites that focus on manufacturing can enable companies to close the loop on production process improvement, digitize good manufacturing practice (GMP) tasks, standard operating procedures (SOPs) and work instructions. They can also enable corrective action/exception management, Hazard Analysis and Critical Control Point (HACCP) monitoring procedures, and also orchestrate high-level processes and manage data between various disparate systems and empower domain experts to solve production problems immediately on the shop floor.

For more information on BPM, see TEC’s earlier articles entitled “Business Process Management: How to Orchestrate Your Business” , “Giving a Business Process Management Edge to Enterprise Resource Planning” and “Business Process Analysis versus Business Process Management.”

Special credit also goes to CIO Magazine’s articles entitled “ABC: An Introduction to Business Process Management (BPM)” and “Making Workflow Work and Flow for You.” All of the above articles were quite leveraged for this blog series thus far.

What’s the User’s Choice Then?

As said in Part I, the BPM market remains quite stratified, whereby there seems to be a number of powerful and full fledged BPM software packages (e.g., from IDS Scheer, Appian, Tibco, Lombardi, Ultimus, Fujitsu, Oracle-BEA Systems, Metastorm, etc.), many of which can be found in TEC’s BPM Evaluation Center.

BPM is considered one of the most overlooked trends in enterprise applications today. In fact, it is increasingly becoming a native part of the IBM WebSphere (best shown by the recent acquisition of ILOG), SAP NetWeaver and Oracle Fusion Middleware platforms and applications, which could be a glimpse into the future of modeling, workflow, re-engineering, and continuous change, all around ERP.

For a typical implementation that leverages a comprehensive on-premise (which is still a dominant deployment model) BPM suite, companies should count on forking out up to US$500,000 to address a few meaningful processes in their organization. Moreover, potential hidden costs include (all on top of already hefty investments in existing enterprise applications):

* Having to license and deploy multiple development, test and/or production environments to support multiple BPM initiatives;
* Additional application and database server licenses;
* Additional staff to provide the care and feeding of these servers; and
* Internal cost of direct involvement from business users to participate in process modeling, business rule definition, user interface (UI) design, testing and rollout activities.

At the lower end of the market there are a slew of workflow-based software packages addressing specific processes, such as bug or issue tracking systems. While upper-range BPM packages address complex business processes and issue tracking systems typically deal with one simple workflow, a number of workflow (possibly BPM wannabe) vendors like FloWare, Skelta, Red Maple, Web and Flo, Quask, XALT Technologies, ZyLAB Technologies, etc. are addressing a space in between.

How About Workflow (and Eventually BPM) On-demand?

But again, not many of these solutions are delivered in true no-frills software as a service (SaaS) fashion, as they still require significant hardware, software and professional service resources to be deployed on the customer’s site. Also, some business processes, although mission-critical for the company, are not transactional in nature and do not necessarily need to be part of the back-office database.

In fact, trying to capture every step and status of every little case (e.g., a customer’s product complaint or improvement suggestion that needs to be investigated by several employees) would only unnecessarily encumber the ERP or customer relationship management (CRM) database.

Maybe mapping only some critical data between the case management process and ERP database (e.g., for inventory or invoice adjusting purposes), and doing application programming interface (API) exchanges only periodically in a batch fashion might make more sense there.

It’s About Process (or the Ability to be Responsive) — Part III

2009-10-21T06:15:00.000-07:00

The Ability to Respond, On-demand

In May 2008, Webcom announced the availability of ResponsAbility, its newest offering addressing the case management and workflow processing areas. ResponsAbility is designed to speed the “time-to-resolution” process, eliminate unnecessary time delays and improve overall value chain communications and productivity through improved transparency and collaboration.

The idea behind this case management and workflow solution was to help organizations keep their projects on track and their employees on the same page, thereby making the lives of internal and external team members much less complicated (and more productive and enjoyable).

This straightforward application provides a central location (repository) for managing the key aspects of many types of cases, including product and service defects, customer and supplier complaints, non-conformance issues, health and safety incidents, and RMAs. Separate tabs keep key information within easy reach, whereby team members can log issues as they arise, prioritize them, and update their status as appropriate.

Built-in reports let users see open issues by project, projects by stage, and many other categories. On a proactive side, the tool can be leveraged by companies to create and implement corrective and preventive actions (CAPA) and to support a plethora of regulatory and compliance requirements. All in all, users that have always had the responsibility now have the “ability to respond”, as required.

This case management software may not currently have all the bells-and-whistles associated with full-fledged BPM packages, such as programmatically driving a workflow engine, visual process modeling, process monitoring and optimization, or automatic task allocation based on workload. Still, it seems well suited for small and medium size companies, who can leverage such a software tool with an intuitive user interface (UI), for handling many, if not all of their processes, in an incremental manner.

The design and enforcement of processes is enabled because both administrators and end-users are able to design workflows, notifications, and data collection forms, as well as setting up permissions accordingly. The system manages cases by ushering each case through the resolution process, and by tracking the progress of each case throughout the entire process.

The multi-tenant software as a service (SaaS) delivery model ensures that a customer can be up and running quickly with all of the selected critical processes being modeled and functional. No onsite deployment is necessary and the software only requires a Web browser and some modest to minimal data and process setup to be up and running.

Brethren Software Vendors as Likely ResponsAbility Users?

For example, a software development company can deploy this tool within a day or two and allow its customers to report bugs. This information can then be internally routed according to a customized workflow to the support department, then to the engineering and testing staff, and then back to the customer for approval and case closure.

To elaborate, the Software Bug workflow logically starts with the customer reporting a software bug. Then a default assignee at the software vendor reviews it, and then either resolves it on the spot (hopefully) or assigns it to the software engineering staff by providing a test case. Then the software engineering team determines a cause for the bug and either provides a workaround, fully fixes the bug, or determines that the software behaves as designed after all.

At the same time, ResponsAbility can be used to allow customers to create new feature requests, which are then routed via a different customized workflow starting from project management, via development, release scheduling, back to development, quality assurance (QA), documentation (technical writers), product management, and finally to marketing teams.

Again, if the bug can be fixed, the case is assigned to the testing staff, back to the support team, and finally back to the customer for approval and case closure. But, if the issue turns out not to be the bug after all, the case is then converted to a new feature request and follows an entirely different workflow.

To that end, the New Product Feature Request process starts with customers, sales & service people, channels and/or product managers requesting a new feature. Often, the existing users (install base special interest groups [SIGs]) are allowed to vote on it, and based on the number of votes and other factors, some new features are assigned to the engineering department to estimate the effort entailed to implement the requested feature.

Based on the estimate and other criteria, some new features are then assigned to the engineering or research and development (R&D) departments for implementation. Upon implementation, the new feature is assigned to the QA department for testing and approvals. Finally, based on the QA results, a new feature is returned back to engineering for a rework or is scheduled for production (or general availability).

Apparently, various instances of a process (called cases) can be changed midstream. For example, something that was initially entered as a bug upon investigation may be classified as an expected behavior. The customer who did not expect such behavior from the software can then change a case type of this instance from a bug to a new feature request, without having to re-enter any information and this case will then follow the prescribed new feature workflow process.

Also, a built-in notification and permissions engine ensures that all communication and collaboration happens within ResponsAbility, so everybody is aware of anything that anybody ever stated about the case via comments, file attachments, etc.

Unlike some of the simple issue tracking software packages mentioned in Part II, ResponsAbility can be used not only for tracking things, but also for enforcing a process in order to ensure that things get done correctly. For example, a workflow engine can be set up to make sure that a process status cannot be changed from “bug fixed” to “in testing” until a concrete test case scenario is provided by a user via customizable online forms.

Webcom — “Eating Own Dog Food”

It might be interesting to note that Webcom, as a software developer itself, has since late 2006 been using ResponsAbility internally for its older sibling WebSource CPQ product’s bug tracking and new product features introduction.

The traditional model, whereby the dedicated product/project manager and support staff were the only bidirectional conduit between the client’s team (i.e., WebSource CPQ users and administrators, local project manager, application owners, stakeholders, etc.) and Webcom’s team (i.e., developers, modelers, QA, consultants, product managers, etc.), has over time been shown to have many disadvantages.

Namely, despite the dedicated project manager’s intimate knowledge of the individual client’s installation and the established relationship and hand-holding comfort level, the challenges have repeatedly been the bottleneck nature of the dedicated project management and support team, with no significant value being added by this additional layer of communication.

Other disadvantages would be the all too often “black hole” syndrome due to the lack of a single project/client/tasks/issues depository. Therefore, priorities are often managed on an inefficient (and often redundant or conflicting) one-to-one basis.

The advantages of the new support model, with ResponsAbility providing a single repository of all cases (in a hub-and-spoke manner), start with collaboration and the ability for all parties to both instantly contribute to the case/task/issue and have instant visibility into the case status. Also, new resources that include clients, Webcom employees and third-parties (partners) can all immediately participate and be notified, while the enabler for everyone is also an advanced searching capability within the system.

The Webcom Q2O clients’ adoption was initially somewhat tepid due to the ingrained human habit of emailing or calling directly the preferred contact or due to the clients having their own issue tracking systems. Of course, there is always the need for a human touch and chatting (as a “bonus”) with Webcom associates about the “critical” issues like a “lovely” winter weather in Wisconsin or about the Green Bay Packers’ revival.

Nonetheless, joking apart, from the end of 2007 ResponsAbility has been the sole vehicle for communication, tracking and managing tasks and cases at Webcom. Prior to that, Webcom had used the JIRA issue tracking system, which at the time allowed users to create a workflow based on a set of offered statuses.

However, at the time (the things might have meanwhile changed though) there was not the user’s ability to create statuses and workflows at will. For instance, the offered statuses were “open,” “in progress,” “closed,” etc., but the user could not create a custom status like “material returned”, “in engineering”, “being analyzed” or so.

Further, users could add custom fields, but they could not design forms in a drag-and-drop fashion. There was no way to specify forms and fields for each action (task) either, so that, e.g., when the process passes from the “bug fixed” into the “in testing” phase, the user could not create a mandatory field named “test case.” While administrators had ample controls, the end users had very little control over what fields they could see on the screen, and so on.

Key ResponsAbility Design Tenets

In contrast, ResponsAbility was built with several design concepts in mind, starting with scalability in terms of users’ ability to create an unlimited number of cases, processes, statuses, status transitions, custom fields, users, user types, departments, etc.

There is also flexibility in terms of creating permissions (e.g., by project, by process, by custom fields, etc.) and the assigning of rules and permissions is visible system-wide. As for data flexibility, there are custom fields and forms and process-related fields and forms, while at each process point (step) fields can be assigned as read-only (viewable), editable, and/or required (mandatory). There is also a flexible definition of assignments, notifications, and recipients, whereby conditional actions drive implicit and explicit notifications.

Furthermore, the ease-of-use concept translates into hardly any training required, whereby the idea for the tool is to be perceived by users as their enabler for getting things done instead of an enforced mandatory tracking tool by the “ivory tower.” Some examples of the ease-of-use features are:

* An intuitive drag-and-drop interface for administrators to design and preview online forms;
* An instant system feedback regarding the field size, informing users how many characters they still have left or by how many characters they have exceeded the maximum field size, and all of this happens dynamically while they are still typing;
* When looking at the list of cases, dragging a mouse over a case will bring additional fields in a hover (a so called “mouseover”), so that a user can find out more about each case while browsing a list, without having to open each case (thereby saving valuable time); and
* Each list of cases can be customized (personalized) by users in order to show fields as columns based on what that user is interested in or what a user considers to be important. If, e.g., a case type has 100 fields, it is impractical to put them all as columns in a list of cases on the screen. It is also impossible to select 10 most important fields universally because their importance depends on individual user needs. Therefore, each user can determine (select), in a drag-and-drop manner, which fields are truly important for them.

Last but not least, the ease-of-setup tenet starts with a pre-built library of processes, but companies can certainly create their own processes with an intuitive and flexible setup of forms, workflows, notifications and permissions. In addition to the abovementioned advanced search capability, users have a facility of unlimited comments and uploading of attachments.

Pronto Xi—The ERP from “Down Under” Becomes TEC Certified

2009-10-16T08:13:00.001-07:00

Introduction to Pronto Software
I’m pleased to say that the certification for the PRONTO-Xi enterprise resource planning (ERP) system has been completed by TEC’s analyst team. Here I’d like to share my impression and some conclusions regarding this system with you.

This past week we had the pleasure of receiving Pronto as guests at TEC’s offices. Both Terry Leister, VP North America, and Jayd Blunden, Senior Business Consultant at Pronto Software were here for the certification meeting. I really appreciate the fact that they made the long trip from Australia to Canada to meet the analysts and show us their impressive system.

Pronto Software is an integrated solution provider, known mostly in Australia (where they are based), as well as in the South Asia region. They are currently putting a lot of effort into becoming more recognized and successful in the North American market. The company has catered to the midsized ERP market for over 30 years and undoubtedly has a deep and clear understanding of their over 1,500 customers’ business needs and challenges. Pronto Software defines its major clients as manufacturing, importer distributors, integrated retailers, facilities and service companies, mining, and mining supply companies.

Product Strengths and Challenges
In order to define the solution’s features—in other words, its strong aspects as well as its weaker points—I used the information that I obtained during the demo meeting as well as the data from the request for information (RFI) that was completed by Pronto. I also used TEC’s eBestMatch™ decision support system (DSS), which can be used by anyone looking to do a similar exercise for any enterprise software selection project.

Among the functionality of the Pronto Xi ERP system, I would like to highlight the following:

* I personally liked the user interface logic that the system is based on, where the user has a variety of information readily available on the screen—in real time. In combination with online queries, screens, reports, and drill-down and screen customization capabilities, it gives users the ability to adjust and shape work spaces, concentrate on business tasks, and reduce the number of input errors. The screen customization allows you to change, modify, add, or hide screen prompts, fields, grids and buttons, and even create user-defined buttons.

* Pronto Software is a single-source supplier. This means that they provide a single code application, and no integration is required for the most typical business processes: the customer does not need to purchase and install additional third-party programs. The company offers additional partner applications—mostly for business intelligence (BI) using Panorama—and interfacing with other systems. All other modules are an inherent part of the system and can be easily turned on and off as needed.

* Another interesting aspect of Pronto’s Xi product is its scalability. The system can be successfully used by small businesses with very few workstations, as well as by relatively large corporations with thousands of users and an extended number of business processes and procedures. The system is scalable and stable enough to serve organizations with more than 2,000 users.

* Pronto Xi software can be delivered to the customer through traditional installation or through the software-as-a-service (SaaS) model. The vendor offers Pronto Hosted Services that provide multi-site hosting and management facility with data mirroring and replications.

* Pronto Xi ERP also contains a robust and powerful point-of-sale (POS) module for retailers and distributors. The rating scores for the functionalities of this module in our eBestMatch system were high; which most definitely shows that Pronto Xi has the ability to compete with the best POS systems on the market.

* Alert intelligence and task intelligence features are also provided with this system. These are tools that can be used for interactive communication with your ERP system. The system is smart enough to generate short message service (SMS) and pop-up messages, send a fax or e-mail, run a process, and launch an application based on particular events or important task milestones. It’s totally up to the user to define them. It can be used—for instance—to e-mail your customer when the order is ready to be shipped, or it can SMS the inventory manager to alert him/her that a particular item is out of stock and needs to be reordered.

* With standard auditing capability, the system allows users to track changes that have been made to any field or piece of information within the entire system. The “what,” “when,” “where,” and “by whom” types of questions can be easily answered.

That’s No Ordinary RFI—Why BPM and the TEC RFI Are So Important to Your Software Selection Project

2009-10-16T08:10:00.000-07:00

To start your software selection project off on the right foot, you must first define all of your current business processes—and then document them. This task alone can take months. However, with the right methodology and tools, the time spent doing this can be cut down significantly. If you are using your own methods for gathering requirements, your list of business processes must be structured in such a way that allows vendors to easily apply them to their products and determine whether they can support certain functionalities.

Again, no easy feat!

Many organizations often start a software selection by first choosing a vendor and then working in tandem with the vendor throughout the process of identifying and modeling their business processes on software capabilities. This is all fine and dandy—but who knows your business better than the people who perform these processes day in and day out? You, your department managers, and IT staff. Why put the onus on the vendor to perform this task and then risk not being certain that everything your new system may need has been identified? Not to mention the cost this type of vendor service could carry!

So what’s a software selection project manager to do?

Let’s take a look at how you can build a comprehensive request for information (RFI) by first reviewing the basics principles of business process modeling (BPM) and how it correlates to the RFI.

BPM Made Simple

Review Your Existing Systems and Business Processes

This process starts by documenting your business process workflows across all departments and functional areas. Knowing the capabilities of your current software is important in understanding where you need to add and improve functionality. It’s also important for you to review systems currently in place in order to gauge whether it’s worth upgrading your current software, as opposed to acquiring a new system. At the same time, reviewing your business processes can help you pinpoint areas where you can replace inefficient practices with best practices that will be supported by your new software.

List and Prioritize Your Functional and Technical Requirements1

Functional requirements are capabilities that you need the software to have. BPM ensures that all functional requirements are included in your RFI and eventual request for proposal (RFP). It helps you identify your customization requirements early on and make them part of your decision. It allows you to map your business processes to features and functions so that vendors can understand and accurately respond to them.

Technical requirements are things that the new software needs to support in order to integrate smoothly into your existing IT infrastructure. Assigning initial priorities to the functional and technical requirements will help you sort out what is important—and what is not.

Creating Your RFI

Now it’s time to map your processes onto a software feature-and-function model that will allow you to clearly communicate your needs to software vendors. Great! But how do you explain those processes to the software vendor in a language they can understand?

RFI, Anyone?

The process of building an RFI can be painstaking for an organization. A traditional RFI is primarily used to gather information to help make a decision on what steps to take next in your software selection project. In addition to gathering basic information, an RFI is often used as a solicitation sent to a broad base of potential vendors for the purpose of gathering information, developing a strategy, building a database, and preparing for a RFP or request for quotation (RFQ).

Why TEC’s RFIs Can Help You

TEC’s RFI and RFP templates do a lot of the tedious work for you. They are created in a manner that allows an organization to easily define which features and functions it would like from the software and how important each of those features and functions are to the business.

These industry-standard RFI and RFP templates also help ensure accurate responses from vendors. The RFI templates contain thousands of functional and technical criteria that have been vetted by TEC’s analysts. TEC’s RFIs on average cover about 75 to 80 percent of a business’s functional requirements. These RFI documents can also be customized to meet your company’s own unique requirements.

The RFI and RFP templates help you obtain accurate information from vendors that can then be compared with your business requirements.

Making Your Software Evaluation Easier

Once your RFI is complete (having added your custom functionality and prioritizing what features and functions are important to your business), it’s time to go after some vendors to see what they have to offer and how well they can support your business processes.

Sending your prioritized RFI to a long list of vendors and gathering their responses could take several months. Do you have that kind of time? Probably not.

TEC has developed a structured methodology that, within a complex selection project, narrows down the list of potential vendors to only those that match your business model, priorities, and special requirements. How? With TEC’s online decision support system (DSS), ebestmatch™. By taking advantage of our knowledge bases (KBs) to compare the vendors on your long list, you can quickly—and easily—see how well each vendor addresses your specific requirements. You can also use ebestmatch to create “what-if” scenarios that show you how well each vendor’s solution will scale as your business evolves.3

The Choice Is Yours

Time is of the essence when it comes to selecting software. The process can be long and drawn out, so why not arm yourself with some methods—and tools—that will help move it along more smoothly and quickly? The choice is yours. Good luck!

NOTE: The above information in no way is intended to cover an entire selection process (as you are aware, there is much more to it than just that). This blog is merely a glimpse at some of the important and crucial first steps of gathering or defining, prioritizing, and documenting your business processes and turning them into a feature-and-function set of capabilities that software vendors can understand.

Pronto Xi—The ERP from “Down Under” Becomes TEC Certified

2009-10-16T08:07:00.000-07:00

This past week we had the pleasure of receiving Pronto as guests at TEC’s offices. Both Terry Leister, VP North America, and Jayd Blunden, Senior Business Consultant at Pronto Software were here for the certification meeting. I really appreciate the fact that they made the long trip from Australia to Canada to meet the analysts and show us their impressive system.

Pronto Software is an integrated solution provider, known mostly in Australia (where they are based), as well as in the South Asia region. They are currently putting a lot of effort into becoming more recognized and successful in the North American market. The company has catered to the midsized ERP market for over 30 years and undoubtedly has a deep and clear understanding of their over 1,500 customers’ business needs and challenges. Pronto Software defines its major clients as manufacturing, importer distributors, integrated retailers, facilities and service companies, mining, and mining supply companies.

Product Strengths and Challenges
In order to define the solution’s features—in other words, its strong aspects as well as its weaker points—I used the information that I obtained during the demo meeting as well as the data from the request for information (RFI) that was completed by Pronto. I also used TEC’s eBestMatch™ decision support system (DSS), which can be used by anyone looking to do a similar exercise for any enterprise software selection project.

Among the functionality of the Pronto Xi ERP system, I would like to highlight the following:

* I personally liked the user interface logic that the system is based on, where the user has a variety of information readily available on the screen—in real time. In combination with online queries, screens, reports, and drill-down and screen customization capabilities, it gives users the ability to adjust and shape work spaces, concentrate on business tasks, and reduce the number of input errors. The screen customization allows you to change, modify, add, or hide screen prompts, fields, grids and buttons, and even create user-defined buttons.

* Pronto Software is a single-source supplier. This means that they provide a single code application, and no integration is required for the most typical business processes: the customer does not need to purchase and install additional third-party programs. The company offers additional partner applications—mostly for business intelligence (BI) using Panorama—and interfacing with other systems. All other modules are an inherent part of the system and can be easily turned on and off as needed.

* Another interesting aspect of Pronto’s Xi product is its scalability. The system can be successfully used by small businesses with very few workstations, as well as by relatively large corporations with thousands of users and an extended number of business processes and procedures. The system is scalable and stable enough to serve organizations with more than 2,000 users.

* Pronto Xi software can be delivered to the customer through traditional installation or through the software-as-a-service (SaaS) model. The vendor offers Pronto Hosted Services that provide multi-site hosting and management facility with data mirroring and replications.

* Pronto Xi ERP also contains a robust and powerful point-of-sale (POS) module for retailers and distributors. The rating scores for the functionalities of this module in our eBestMatch system were high; which most definitely shows that Pronto Xi has the ability to compete with the best POS systems on the market.

* Alert intelligence and task intelligence features are also provided with this system. These are tools that can be used for interactive communication with your ERP system. The system is smart enough to generate short message service (SMS) and pop-up messages, send a fax or e-mail, run a process, and launch an application based on particular events or important task milestones. It’s totally up to the user to define them. It can be used—for instance—to e-mail your customer when the order is ready to be shipped, or it can SMS the inventory manager to alert him/her that a particular item is out of stock and needs to be reordered.

* With standard auditing capability, the system allows users to track changes that have been made to any field or piece of information within the entire system. The “what,” “when,” “where,” and “by whom” types of questions can be easily answered.

In spite of all the software’s features and advantages, I found a few areas where Pronto Xi’s capabilities were not as robust as its competitors in this space.

* There are some weaknesses in the process manufacturing management module. It’s obvious that this ERP application has grown from discrete manufacturing (where I feel it is undoubtedly strong in functionality) and based on Pronto’s response to our RFI, some specific business processes particular to continuous type of process manufacturing are not supported by default, and might require customization, modification, or—in the case of by-products or co-products tracking for defined tasks—“workarounds.” In other words, the application can support these business processes, but it does not do so “natively,” i.e., some user manipulations within other sets of functionality may be required. A similar approach may be required for dynamic recipe adjustment based on the actual characteristics of ingredients, yield calculation, multiple process models for the same item, circular bill of materials (BOM). The good news for potential customers considering Pronto Xi ERP is that this hasn’t stopped other process manufacturers from using the product, and Pronto has experienced many successful system implementation examples in the pharmaceutical and chemical verticals, food processing, and other mixed-mode or process industries.

* The overall rating for the human resource (HR) module was lower due to a relatively weaker employee self-service functionality. This functionality ideally allows employees to view pay stubs and review and maintain own personal information, such as name, address, benefits related to a life event, tax filing status, number of exemptions, dependents and beneficiaries, etc. This is supposed to be offered in future releases but for now it may not be the best choice if self-service functionality is a critical priority for your company. Other than the self-service area of HR, Pronto demonstrated HR ratings that left the mixed-mode ERP average far behind.

* The company focuses mainly on the Australian, New Zealand, South-East Asia, and North American markets. As such, the system is translated into French and Spanish languages only. This might be an issue if you are planning to use your ERP system in countries where users speak other languages.

The contribution analysis graph below shows that in most business areas, Pronto’s Xi system rates higher than average by the industry benchmark. The only exceptions—as I mentioned earlier—are human resources and process manufacturing management areas—where the ratings are slightly lower than the industry benchmark.

Manufacturing Systems with an IQ: Beating the Odds, Mightily – Part 1

2009-10-16T08:06:00.002-07:00

Some time in mid-2005 TEC published a six part article on IQMS, a relatively small and obscure enterprise resource planning (ERP) vendor based in Paso Robles, California (US), with offices across North America (i.e., in Chicago, Canada, and Mexico), Europe (i.e., Sweden and with recently announced indirect presence in the UK) and Asia (i.e., China and Taiwan). Some readers were likely wondering why I “made so much mileage” out of a seemingly unimportant vendor of fewer than 70 employees and with only a few hundred customers at the time.

Well, I might have been somewhat vindicated in early 2009, when IQMS announced that it closed 2008 with double-digit profitability and a 10 percent increase in new customer accounts. Even as manufacturing markets have tightened and doom-and-gloom sentiments have pervaded the globe, IQMS has accumulated revenue gains for several years. Namely, in 2005 and 2006, the company grew by about 25 percent each year (which was a multiple of the industry’s average growth), demonstrating its value proposition to selected manufacturing industries worldwide, including medical devices, automotive, aerospace, plastics, and consumer packaged goods (e.g., appliances, electronics, computers/business machines).

IQMS (whose name alludes to “manufacturing systems with an intelligence quotient [IQ]”) was incorporated in 1989 and has been privately held ever since without any venture capital (VC) money involved. Having been based in California and founded (and still majority-owned) by a married couple, IQMS somewhat resembles its bigger fellow ERP peer, QAD. But the differences between the two vendors are also apparent starting with QAD being publicly held for over a decade. QAD is also a much larger vendor, with typically larger customers (although overlapping and possibly competing with IQMS in many similar industries and regions), and has an incomparably better global presence.

For its part, IQMS boasts a 98 percent customer retention rate and continuous profitability and growth, which traits have not always characterized QAD. Currently, IQMS has a total of over 500 corporate customers at over 1,000 locations in 4 continents and 11 countries. These user companies range from a single site with only 5 users to companies with 10 sites and an unlimited number of users.

IQMS focuses on small-to-medium enterprises (SMEs) in make-to-order (MTO) and make-to-stock (MTS) operations in the discrete manufacturing, repetitive manufacturing, and process manufacturing environments. These companies tend to embrace lean manufacturing (and overall “lean business”) principles and thus require low-maintenance and cost-effective (but fully functional) ERP systems. To that end, perpetual licensing provides the rights to all future upgrades and includes database licensing too.

Master of Its Own Destiny (and Its Own Domain)

Being privately held and not burdened with the stifling demands of private equity firms, venture funds, or public shareholders has proven to be a blessing for IQMS. Namely, not only has IQMS stayed away from the disturbance of the ongoing vendor consolidation bonanza, but it has also been able to control its own destiny and make independent decisions about product development. IQMS customers are also intimately involved in product development via annual user meetings, an online user group, and participation in focused development teams.

In keeping with growth and its commitment to delivering leading-edge solutions, IQMS added employees to every department in 2008 (with a total head count now well over 100), and created new work units including the Automation and Oracle Data Services groups. These groups are focused exclusively on system advancements, customer satisfaction, and bridging shop floor equipment directly into functional ERP applications.

For instance, IQMS’ Automation Group’s charter is to expand the interface capabilities of IQMS’ flagship EnterpriseIQ ERP [evaluate this product] system with manufacturing equipment on the shop floor. The newly formed group, comprised of engineers and programmers, has as its goal working with existing IQMS customers to create greater efficiency and automation between shop floor hardware and ERP software. This integration is expected to result in leaner manufacturing operations.

The IQMS Automation Group was launched with several custom programmable logic controller (PLC) interfacing projects developed with customers’ input at a number of customer beta sites. Implementations included capabilities such as:

* two-way communication with PLCs to control and initiate conveyor systems, vertical lifts, scanners, palletizers, photo-eye sensors, and other pieces of equipment;
* two-way communication with stretch wrap machines via relay/digital input boards to automate final packaging of customer product;
* automated first-in-first-out (FIFO) pick/store warehouse applications for forklifts; and
* directly interfacing with work centers to automatically report scrap and production.

“Not Invented Here” Attitude

One of the key tenets of IQMS’ success has been a laser-sharp vertical industry focus, of which I have always been a big proponent, in general. Namely, when the company started in 1989, it initially catered solely to injection molding manufacturers. This focus has allowed IQMS developers to focus deeply on the requirements of this esoteric market segment and really gain subject-matter expertise on the idiosyncratic problems and issues of those customers.

Namely, if a system doesn’t understand and support tricky requirements such as family molds or multiple cavitations running at the same time, it will cost the customer dearly in terms of system customizations, lowered efficiency, and heavy-lifting maintenance. Since 1989, IQMS has judiciously expanded its focus to SME companies in related industries such as automotive suppliers, packaging manufacturers, and medical device makers.

But other tenets of IQMS’ success have seemingly been at odds with conventional wisdom and the practices of vendors of IQMS’ size and means. Namely, IQMS’ niche focus has driven the company to try to address as many of the needs of its target customers as possible. As a result, the EnterpriseIQ suite has (surprisingly to a first-time observer) a pretty wide footprint of functionality (coming from such a small vendor with limited means).

To be concrete, the suite natively provides extended-ERP applications such as enterprise asset management (EAM), customer relationship management (CRM), electronic data interchange (EDI), and warehouse management system (WMS). As if these capabilities were not impressive enough, then how about adding the abovementioned intrinsic shop-floor equipment automation and monitoring, time-clock, and quality management system (QMS) functionalities?

These features mean that all these modules run on a single database and feature out-of-the-box integration with a consistent user interface (UI) or look-and-feel. Furthermore, we are talking about real-time transactions here, rather than delayed (and thus after the fact) batch processing (e.g. data transfers) and necessary interfaces when “alien” third-party applications are involved.

Many IQMS customers have indeed benefited from an EnterpriseIQ production management application called RealTime Machine Monitoring. This application connects each work center to the EnterpriseIQ database, allowing users to follow jobs as they move through production. Because production data feeds directly into the ERP database, job status is automatically updated down to the minute. The system also supports graphical scheduling screens and reports that can be used by stationary and remote users to assess job status, track downtime, and view quality data. Pager and public announcement (PA) system alerts are also available for the plant.

Single-source Strategy

Now, there is certainly nothing wrong with the “single source,” “one-stop-shop,” and “a single-throat-to-choke” strategy. Smaller manufacturing companies especially appreciate a strategic business application that integrates financial management, human resources management system (HRMS), manufacturing systems, and other corporate software functions into a single system.

However, such homogeneous offerings are yet to be offered even by vendors that are incomparably larger. Even the market leader SAP has recently given up on its traditional “not invented here” attitude (think of the Business Objects or Visiprise acquisitions), but not tiny IQMS.

In fact, IQMS’ management strongly believes that the company has not only survived but also thrived by serving a few targeted industries with a full-function system. The system has been developed organically (in-house and with no acquisitions) to fulfill most (if not even all) of customers’ needs, while also providing a hands-off system (in terms of minimal ongoing maintenance) but with a decent technical performance.

Believe it or not, IQMS professes a strategy of being the single source for virtually everything a customer might need beyond software development and programming. Namely, “single source” also refers to sales and implementation services, training, and customer service and technical support. With some minor exceptions in optional fringe functionality (i.e., embedded Crystal Reports, Global Software for financial reporting and spreadsheet automation, Actify CAD Viewer, or CLEO for EDI communications), IQMS touts no need for using third-party applications for core-competency modules, and no third-party implementation providers.

For example, in the automotive industry, EDI is a major component in a supplier’s ability to deliver exactly what customers want. To that end, the IQMS EDI Translator module is embedded within the EnterpriseIQ system, which operates entirely within a single database, so that customers have no need for pesky third-party hardware interfaces. Incoming EDI files are automatically translated into the ERP system, thus instantly updating all of the pertinent records, while outgoing files are automatically transferred back to customers and suppliers. Since there is no need for manual data entry, suppliers (IQMS customers) can be confident that they are disseminating accurate, timely information across their supply chains.

With third-party EDI systems, which transfer EDI data via dedicated modems, automotive suppliers not only face hefty costs, but also often have trouble finding and correcting any problems associated with orders. Some IQMS customers talk about their inability (even over 80 percent of the time) to respond fast enough to EDI errors because the data transfer was slow. This problem would ironically be magnified with some accounts that are geographically close to the plant. Namely, if the customer’s plant is only 40 minutes away or so, shipping errors will be arriving at the customer’s plant before the shipping department could catch them.

This native EDI module allows a much greater degree of integration for processes such as outsourcing (subcontractor) management, where products may move through multiple nodes in the supply chain. IQMS provides visibility to this material moving within the supply chain, relying on advanced shipment notices (ASN) in its EDI capabilities to track the movement.

I Mean, Single-source in Every Aspect

When it comes to sales and implementation services, IQMS Sales and Professional Services provides complete project management and implementation services in North America (and through resellers/partners in Europe and the Far East). The involved IQMS employees are APICS-certified, which helps to deliver a typical implementation in three to six months time. IQMS claims that 95 percent of its customers meet their target “go live” date, with implementations taking on average less than 40 percent of software spending.

Intelligent Manufacturing Systems: Beating the Odds, Mightily – Part 2

2009-10-16T08:06:00.001-07:00

EnterpriseIQ’s Architecture

The extended enterprise resource planning (ERP) product was originally written in the now almost esoteric Delphi environment (from the client-server era) on top of an Oracle Database. The suite features a two-tier architecture, with all business logic (i.e., rules and transaction processing) residing on the Oracle database server.

IQMS chose Oracle’s database technology (Internet-enabled via an Apache Web Server) for its reputed safety, security, and high performance. However, the vendor packages and abstracts the database in an embedded way (via a silent installation routine) that mitigates the traditionally high price and heavy administration downsides of Oracle.

Repeated IQMS user surveys confirm that the database is easy to administer and maintain this way, with no need for intensive Oracle programming. Following a silent installation routine, the server works like a refrigerator (or some other white appliance): all users have to worry about is the quality of what they put into the system and how to properly use its output.

The EnterpriseIQ product has meanwhile been largely rewritten in Microsoft Visual Studio.NET (VS.NET), which makes it compatible with Microsoft .NET Framework. ASP.NET is used for the client-side technology (except for Microsoft Windows CE in the warehousing module), while Oracle Database remains as the back end. This combination of Microsoft and Oracle technologies somewhat resembles IFS’ approach.

IQMS strongly believes that this unified “same DNA” suite (even if on a seemingly out-moded two-tier client-server architecture) results in online transaction processing (OLTP) that is very fast; much faster than if IQMS had adopted a service-oriented architecture (SOA) as other contemporary vendors do to stitch together disparate applications.

The OLTP and decision support systems (DSS) processing speed has reportedly been an important criterion for customers selecting IQMS. As Randy Flamm, IQMS’ president and founder, said during our recent exchanges:

“At IQMS we have always believed it is easier to develop and nurture a product rather than attempt to integrate to another company’s package. Essentially this is what SOA is about – integrating many packages for use across an enterprise. For the most part, our opinion is “SOA what!” We don’t need to build on this platform because we handle almost every function within our own database.

Is there a need for some partnering? Yes. We understand there are report writing and spreadsheet automation software packages out there (Crystal Reports and Global Software) that handle this better than an ERP system ever should or could do. We utilize these to tie into our package for extracting and presenting data, but that is where the need for SOA in our package starts and stops.”

For user friendliness and intuitive navigation (e.g., with jump-around and drill-down features), IQMS has chosen a Microsoft platform for the client side. In addition to transactional performance, other advantages of the two-tier architecture are data integrity and user interface (UI) independence. Namely, there is a whole host of UI choices: traditional graphical UI (GUI), .NET client (including the variant for mobile users), portals, and Telnet client for warehouse workers. IQMS uses Terminal Server and Citrix for wide area network (WAN) links to its UNIX or LINUX back-end servers.

My belief is that the reliance solely on Oracle’s database might, in the long term, limit IQMS’ market opportunity, especially within smaller companies that are standardizing on Microsoft SQL Server. The vendor claims that prospective customers are more focused on the solution than on the technology, and that the database system doesn’t matter.

Fine, but maybe also offering an on-demand and software as a service (SaaS) solution could help in that regard (think of Plex Systems, formerly Plexus)? At this stage, IQMS does not see the justifiable demand to take the SaaS plunge (i.e., the gut-wrenching product rewrite).

More of EntepriseIQ’s Traits

Despite being tightly woven and with an extensive footprint, EnterpriseIQ is a reasonably open system and is also modular. Users have to go for a basic core ERP package, and can decide on optional modules to extend the enterprise as business and demands grow. Therefore, of the more than 20,000 concurrent user licenses, below is the breakdown of licenses per modules:

* Over 10,000 concurrent core ERP system user licenses,
* Over 3,600 concurrent customer relationship management (CRM) user licenses,
* Over 3,300 concurrent shop floor system licenses,
* Over 3,000 concurrent wireless warehouse management system (WMS) licenses.

In addition, IQMS has also sold over 15,000 RealTime Machine Monitoring (mentioned in Part 1) licenses. While the system’s scalability comes inherently from Oracle database, after adding French language capabilities to EnterpriseIQ in late 2008, IQMS now supports the following eight languages: English, French, Spanish, German, Mandarin Chinese, Simplified Chinese, Dutch, and Swedish.

In addition to multiple languages, IQMS claims support for multiple enterprise entities/plants (on a single database instance) and multiple currencies. The double-byte character set (required to support Chinese), the ability to specify language by user in a single system, and other global requirements were also driven by customers, as even small manufacturers in this time and age need to operate as parts of a global supply chain.

Pre-empting the Dreaded “I” Word

IQMS claims that its single-source offering resonates well with the companies that are wary of any hidden and unneeded expenses, especially these days. These smaller manufacturers are particularly “allergic” to hearing about the need for any interface.

Indeed, multiple products and interfaces come with the burden of continuous management and upgrade coordination and an increase in IT support staff. Also, one has to deal with multiple software vendor maintenance contracts and worry about the financial stability of multiple software providers, each of whom will likely have different business strategies.

Moreover, when different applications require their own databases, it becomes quite problematic to write holistic reports over multiple databases. Complex SOA-based configurations also come with speed and performance issues. Last but not least, there are many ongoing support issues that come with multi-vendor solutions, starting with each vendor’s decision to provide offshore support rather than a more intimate local call center. When support and customizations come from value added resellers (VARs), whom should the customer call first in case of a problem?

But EnterpriseIQ is certainly not meant to be all things to all people. I concur with Frank Scavo’s recent post on IQMS on his Enterprise Spectator blog:

“…Now, having said that, I’m sure there are major gaps in IQMS functionality for some clients, especially once you get outside of its target niche. But that’s the beauty of a niche strategy. IQMS doesn’t have to be all things to all customers. It only needs to be all things (or most things) to a few customers…”

R&D Work Never Ends

IQMS’ management is aware of how much more capability the company needs to develop, and the idea is to particularly intensify research & development (R&D) these days. The intention is to further distance itself from (or leapfrog) competitors that seem more concerned with cost-cutting and survival tactics.

Accordingly, in mid-2008, IQMS delivered EnterpriseIQ version 7.4.1.20 with over 1,000 built-in reports and 400 enhancements to areas such as quality management, electronic data interchange (EDI), WMS, product lifecycle management (PLM), security, and forecasting. Earlier in 2008, IQMS announced its enhanced support for the process manufacturing industry with the release of the Master Batch manufacturing capability. Master Batch is aimed at companies such as compounding or formula-based manufacturers that are focused on heavy mixing and blending operations, and require the ability to handle multiple operations in a single routing.

To best support process manufacturing needs, ERP systems should give manufacturers the flexibility to enter process bills of material (BOMs) based on formulas where the components either total 100 percent or they can be added based on volume or weight quantities. Comprehensive BOM/formula functionality also has to provide co-product/by-product capability, flexible packaging alternatives, flexible batch sizes, yield/scrap calculation, grading and re-classification of products, alternative and substitute formulas (and routings), “what if” costing scenarios, and more.

On the other hand, the most recently released Assembly Manufacturing type is designed especially for manufacturers seeking consistent quality and greater traceability within assembly processes via enhanced tracking of complex routing structures. Potential benefits of this assembly structure include the ability to identify product availability and costs at each stage of production as well as the option to choose between either dispatch lists or finite scheduling.

Some companies might also benefit from the detailed lot traceability, operator certifications and training, and tool tracking functionalities. The Assembly functionality is IQMS’ response to an ongoing trend toward imposing more requirements for machine shops, metal fabricators, and process-related operations, especially in the medical device field, which has strict traceability concerns and constraints.

Offering an Entry-level Product

To attract the lower-end of the market, in 2007 IQMS delivered the EnterpriseIQ LE (Limited Edition) version to provide a lower-cost entry-point ERP solution. The product is packaged to meet the needs of single-site manufacturers and smaller supply chain environments (in terms of lower EDI volumes).

IQMS achieved the lower price benefit by packaging just the functionality most often used by manufacturers with single-plant operations. EnterpriseIQ LE version gives small manufacturers the same set of core ERP capabilities found in the full version.

Functionality such as manufacturing and inventory management, quality control, sales and distribution, and financial and accounting management are all included in a single database and at an affordable price. Certain features that are customarily used to support larger operations are not included, such as those used for multi-plant operations.

By choosing EnterpriseIQ LE, customers who operate only one plant and currently have no ERP system in place should gain an initial modular, single-source ERP solution that can be tailored to fit their business needs and designed to scale up with optional modules that work seamlessly within the core system. IQMS is also offering a migration path with this LE version for companies that might eventually grow into multiple locations.

Ingredients of a Comprehensive Retail Suite for SMBs

2009-10-16T07:59:00.001-07:00

To achieve success in today’s retail industry, retailers that are small to midsize businesses (SMBs) need to effectively meet their customers’ needs on time, with the right price, in the right quantity—and at the right place, with the right promotions. All of these things can be very overwhelming for a retailer. To get them, retailers require tools that support effective and precise operations. In this volatile global economy, every retailer is trying to beat the competition and win over the customer base. The winners in this race are the retailers that can provide customers the supreme (winning) combination of product, price, and customer service, and do it without affecting profitability. For a retailer to make gains over its competition, it should incorporate one of the best business solutions created by experts in the retail software industry. Retailers need solutions that have capabilities to help them serve their customers better than their competition, and that don’t cost them an arm and a leg to do it. As retail operations are becoming as complex as its supply chain, retailers are not only trying to stay competitive, but also face challenges of short product life cycles, sudden changes in product demand, and new evolutions in technology.

Retail operations consist of more than just one store, but large chains of stores with numerous amount of inventory and thousands of pricing decisions to be made with ease and flexibility. Retail management software needs to have numerous modules that can help retail operations be more efficient and lucrative. A comprehensive solution for the retailer’s specific industry—i.e., food, consumer goods, apparel, etc.—is beneficial for success.

Bringing all operations under one comprehensive system will facilitate retail organizations to make decisions based on actual information about the product’s position, price, and market trends. As well, retail organizations will be able to locate and move products in a leaner way, by which they will be reducing product cost and delays in delivery to the customer.

It’s all fine and dandy to think of having complete retail management software, but the question arises: what should this software include? TEC’s research analysts are currently developing a comprehensive new retail research Evaluation Center. Our main objective is to leave no stone unturned within the retail industry. But TEC analysts don’t want to create a monstrous and unwieldy number of solution requirements either for SMB retailers to deal with. In our retail research Evaluation Center, only the requirements needed by retail organizations will be included. TEC analysts will make sure not to exclude anything critical for retail operations and the achievement of their objectives. Within our research Evaluation Center, retail organizations and retail software providers will be able to match up with each other, just like an e-harmony dating service, in which individual needs are matched with potential qualified prospects meeting the predefined criteria.

So now the question is: what do retail organizations need to look at when buying a “reasonably” comprehensive retail software suite or package?

Here’s a list of the modules SMB retail organizations need in a retail software suite.

Merchandising System

A merchandising system is just like a gizmo or device with which a retailer can manage and analyze inventory by product, location, demand, price, etc., throughout the enterprise. The merchandising management system helps retail organizations with coordinating every retail process to give business maximum return on investment (ROI). The main features in a merchandising system are:

* product information management
* enterprise data management
* purchase order management
* price management
* inventory management
* merchandise planning
* warehouse management
* allocation and replenishment
* distribution and fulfillment
* merchandising reporting

Store Operations

SMB retail organizations require a system to connect internally and externally, to ensure lean operations and the best customer experience. Store management requires a variety of capabilities ranging from cash to inventory management—and everything that falls in between. The following is a list of features that are key for the store operations module:

* point of sale (POS)
* cash management and reporting
* inventory control / management
* multichannel / store services
* customer profile management
* catalog management
* back-office capability
* store planning
* marketing management
* a range of transaction scenarios
* multimode payment methods
* multimode gift registry
* loss prevention
* return process management

Supply Chain Management (SCM)

The main objective of the SCM module for retail organizations is to have enough product available in inventory at the right price to maintain the enterprise’s overall customer satisfaction, profitability, and delivery objectives. In any retail environment, it’s necessary to have the business strategy in line with business processes in order to design, develop, distribute, warehouse, and sell products (and deal with their return). There are a variety of supply chain models to choose from, depending on the needs of a particular retail enterprise. As the expression goes, “not all the figures in the hand are equal” (or, as parents know, not all children have the same personality and capabilities), and the same thing applies here: no supply chain model can exactly fit any other organization’s requirements. Some of the key modules in supply chain for retail are as follows.

* demand forecasting
* advance inventory planning
* replenishment management
* supplier management
* vendor managed inventory (VMI)
* warehouse management
* trade management
* supply chain network optimization
* supply chain collaboration

Workforce Management

Retail organizations that have the best talent matched with effective business strategies (and revenue) will move ahead of their competition. Getting the best talent is important to retail organizations, as they will be using their workforce or human capital to create customer satisfaction and customer-centricity –generating sales, profits, and repeat customer visits. Here are the main areas of focus in retail for workforce management:

* recruitment (store, field, or corporate)
* workforce performance measurement (store, corporate, distribution center, or call center)
* online training
* e-learning
* advanced employee scheduling
* workload coverage
* time and labor management

Customer Relationship Management (CRM)

A retailer’s main target market is consumers who, in the end, become their customers (given that success for a retailer is not just having the right mix of product and price, but also to retain customers). Retail organizations need to look at not only the product life cycle, but also at customer life cycles. The CRM module will help retailers keep up with the service demands of customers; also, it will be able to indentify customer’s needs. Key areas for retail in a CRM solution:

* sales pipeline forecasting
* contract management
* customer loyalty management
* lead management
* return material/product management
* call center reporting
* marking campaign reporting

Financial Management

As for any type of organization, the financial module will give retailers a picture of how the enterprise stands in terms of cash, debt, and on-hand inventory, etc. Retail organizations need a financial management system in place to understand revenue generated by store location, but also to measure profits. The financial system does not end here for a retailer; one of the major aspects of financial management is its payment system. Key areas of a financial management system for SMB retailers are:

* budgeting and financial planning
* purchasing management
* invoice matching
* margin reporting (sales, markup, gross, markdown, etc.)
* profit reporting
* inventory reporting (stock turns, shrinkage, etc.)
* labor (commission, sales per labor-hour, etc.)

These are the modules that TEC’s analysts are considering as they create the research Evaluation Center. Some apply to small to midsized retail organizations—but as we say, there is no such thing as one size fits all. Retailers may have a CRM, workforce management, or financial management system already in place, but would like to upgrade the functionality of merchandising and store operations. It will be very beneficial for these retailers to check out our new research Evaluation Center to discover the software providers for merchandising, store operations, or workforce management. Not only that, but retail organization can also run a side-by-side comparison of vendors like Celerant Technology, Epicor, Pronto, Retalix, etc.

The Steel Manufacturing Industry: What Use Is an ERP System, Anyway?

2009-10-16T07:59:00.000-07:00

An ERP system is typically considered to be a company’s IT data backbone application, and helps integrate business activities across multiple departments and sites (or across the entire enterprise). ERP modules range from product planning, parts purchasing, inventory control, and product distribution, to order tracking, and provides business application modules for finance, accounting, and human resources as well. Tier-one vendors such as SAP and Oracle provide full suites of ERP business applications.

ERP applications have evolved with new technological innovations such as client/server architecture and service oriented architecture (SOA), which provide more flexibility to configure a system for your particular requirements. With the help of SOA, for example, it’s easier to “break” an ERP application into small modular components which use industry-specific processes to communicate, interact, and operate. SOA has helped ERP vendors move away from the “one size fits all” methodology—as we all know, no two organizations have the same requirements.

In the steel manufacturing industry, the ERP application typically sits on the top levels of the business IT/manufacturing framework. See the diagram below for the different application layers within a steel manufacturing company; this diagram is very similar to a diagram contained in a document produced by IBM Global Business Services (see page 9), which I have modified slightly for the purposes of this blog post.

steel-manufacturing-framework2.png

[click thumbnail to enlarge image]

Integration of ERP with other business processes is key for the success of steel manufacturing organizations.

Here’s an example of a typical process flow in a steel manufacturing plant:

A customer order is entered in the ERP module, which communicates with the supply chain management (SCM) module to figure out which orders can be met by on-hand inventory or by creating a production plan. This information is fed back and forth between levels 4 and 5 on one hand, and levels 3, 2, and 1 on the other, so that a promise date can be sent back on customer orders.

The supply chain application provides a rough-cut planning from the demand planning module, which results in the creation of a production plan. Once the production plan is in hand, the work orders are created and marked against available stock on hand.

As the work orders are created, they are communicated to the MES application for load balancing and to make sure each production line is optimized according to the order sequencing. It’s crucial to convert the planned order from the SCM application right before the production starts, as that will feed into the ERP system, which will transfer all the requirements to the MES layer. The MES layer will define what quantities of orders will be converted into pieces of slabs, coils, etc.

The steel manufacturing framework described above helps organizations identify gaps among their different departments. Information must flow from level 1 to level 5 in for successful business operations. To find the “best ERP fit” in the steel industry, it is very important to understand the multiple layers of operations in steel manufacturing, as well as to understand which system needs to communicate with which layer, and at which point of the process.

ERP solutions satisfy a broad range of requirements, from financials to the supply chain, but when it comes to manufacturing execution, most ERP solutions have gaps in fulfilling the requirements. Areas such as financials, human resources (HR), customer relationship management (CRM), forecasting, planning, order management, inventory management, asset management, distribution, and transportation can be facilitated with an ERP system. However, detailed operations of scheduling, quality, production tracking, constraints planning, capacity planning, multi-dimension, grades, etc., can only be performed efficiently by industry-specific manufacturing execution system (MES)/advanced planning and scheduling (APS) applications.

The steel industry is so competitive in nature that it’s hard to imagine a steel manufacturer doing without an ERP application to manage day-to-day processes, ensure efficiency within the production plant, and provide real-time reporting visibility into the organization’s overall performance.

As there are many ERP software vendors for the steel manufacturing industry, it’s very difficult to say which one is the “best” ERP vendor. The most effective way of knowing which ERP software will fit your needs is to compare your business requirements against the functionality of the ERP software.

However, finding the best-suited ERP application for your organization can be an overwhelming process. So now the question is this: How to find the right ERP application for your particular needs? Unhelpfully enough, every vendor solution has its own strengths and weaknesses. It’s best to evaluate a solution based on how capable it is of providing features and functions that match your business needs and internal processes out of the box. Customization of any enterprise software is always expensive, usually risky, and probably not the best path to implementation success.

TurtleSpice ERP! (Week 4)

2009-10-14T07:46:00.000-07:00

The story so far: Mike Chelonia, TurtleSpice’s comptroller, has been tasked to select an ERP system by his CFO. Facing pressure from his VP Wade Sharkey to short-circuit the selection process and select Big Gun Software, Mike gets a reprieve when Wade Sharkey is over-ruled by the CEO.

Now Mike has to decide how to handle TurtleSpice’s business process documentation. When we asked you what you’d do in Mike’s shoes, you voted to hire external consultants to train the TurtleSpice project team.

Don’t forget, you decide the fate of TurtleSpice’s ERP selection. Cast your vote at the bottom of this post!

turtlespice_logo.png

The three consultants from iRightPros Consulting storm into Mike’s office like a SWAT team. Offensive perimeter established: check. Evasive maneuvers neutralized: check.

They’re here to deliver their complimentary pre-proposal.

“Congrats, Mike, you’re making the right decision.”

“Haven’t made one yet. Still looking at a number of consulting firms.”

This isn’t true, really. The price is right, and they have an impressive client list in the manufacturing sector.

The consultants drag Mike through their approach to process documentation, and lay down a proposal for an action plan, which adds up to an intimidating number of workshops, meetings, reviews, and dispute resolution mechanisms.

“The beauty is, you can use this for anything you want. Do it once, use it for your software selection project, your org change management, your training processes, you name it.”

This is going to be a hell of a lot of work, thinks Mike. At least three months. He wonders if he can enlist his CFO’s help to steer this by the TurtleSpice selection team.

Unfortunately, lately the CFO has been stumbling around like he’s on the verge of a booze-fueled nervous breakdown. Not much help there.

Mike thanks the SWAT team for their invasion and promises to get back to them. They congratulate him again and move out with a little more swagger than he likes to see.

turtlespice_logo.png

Morale at TurtleSpice is on the up-tick. The sales team has just landed WalNut, a major retail chain they’ve been chasing for over a year. As far as production goes, sourcing the extra supply of ingredients doesn’t appear to be a problem.

turtlespice_logo.png

The CEO of TurtleSpice prefers candid talk to political niceties.

But he still hasn’t gotten around to why he’s asked Mike to his office. Ostensibly, he’s reassuring Mike with respect to executive support for the lengthy business process modeling process.

“The managers aren’t going to like it. Screw ‘em. I’ll back you up if I have to, but I want to see you handle it on your own.”

So that, Mike muses, is the sound of a CFO on the way out.

The CEO leans forward, all buddy-buddy. “I need a vacation, Mike. Coupla weeks or so, starting tomorrow. Some place nobody’s ever heard of sauce out of a bottle. Wade’ll back you up while I’m gone.”

Mike opens his mouth, shuts it again. The CEO stares at him.

“Something on your mind?”

“Nope, nothing” says Mike, “can’t think of anything.”

turtlespice_logo.png

Before phoning the iRightPros SWAT team to establish contract terms, Mike decides to try TEC’s online software selection tool by way of research, otherwise known as procrastination.

He plugs in TurtleSpice’s profile and basic requirements; 14 ERP vendors pop up on his screen. [See Mike’s results] [Try it yourself]

Curious, Mike phones the number at the top of the screen. The consultant at the other end of the line has a simple message: “That’s a working list only, you understand. We can train you in a streamlined business process modeling option geared toward defining business requirements for software selection.”

This wouldn’t have happened, of course, if TurtleSpice had already implemented an ERP system to coordinate receiving and production schedules.

With a bit of luck, TurtleSpice can finagle an extension from WalNut, and the contract can still be salvaged… But without an ERP system, who’s to say the same problem won’t happen again next month?

These are the arguments Wade Sharkey forcefully puts forward to Mike at 4:48 PM that same day. The message: TurtleSpice needs immediate rescue. Otherwise known as Big Gun ERP.

She takes the call. Lola Thomas has been at TurtleSpice for a few months now, long enough to start breaking the rule against personal calls on the job. Besides, some calls are really more important than others.

Enterprise Asset Management Systems: Your Manufacturing Organization’s Underrated Superstar

2009-10-14T07:44:00.001-07:00

For all you baseball fans living in the US and Canada, you can probably appreciate that we are quickly approaching what is referred to as “the dog days of August.” This is when the pennant races are close, and almost every game has added significance for a team’s chances of making it to the playoffs.

As I was enjoying one of those rare idyllic days lying in the backyard hammock and reading the sports page, it occurred to me how the good teams are not just about one or two great players. Rather, they are comprised largely of players whose natural athletic ability may not necessarily match that of the few superstars on the team, and who may not be found basking in the limelight, but who consistently work hard and practice on a daily basis. These are the players that, when given the opportunity, can deliver the key play or get the big hit when the game is on the line.

This made me think about how in a manufacturing environment, the most unlikely areas can contribute in a critical situation. In many organizations, it is the maintenance department that, much like the unsung heroes of the baseball team, manages to keep aging equipment running flawlessly. When a machine unexpectedly breaks down, it is this department that knows what is required to repair it. And just like the baseball season, summertime is a busy time for maintenance departments, as companies choose to use the summer holiday period to shut down in order to install, repair, or replace equipment in their production facility.

In this blog post, I thought it would be a good idea to take an inside look at the challenging world of enterprise asset management (EAM), and find out how this unheralded software can give your company the winning edge.

Factors Leading to Critical Failure of Assets

* poor maintenance practices
* undocumented maintenance logs
* poor budget planning
* inability to track known rates of failure for equipment

What Is EAM

Because competition within industries is fierce, any downtime in a facility can make the difference between profit and loss for the organization’s bottom line. In many organizations that are capital equipment-intensive (i.e., mining, oil and gas, utilities, aerospace manufacturing, etc.), the ability to plan maintenance or replacement of such physical assets as machinery is controlled through an EAM system.

An EAM system generates analytical data to optimize machine-operating efficiency, and calculates costs to support and maintain single pieces or a series of physical assets. EAM also works closely with the computerized maintenance management system (CMMS). CMMS provides predictive maintenance schedules and, by analyzing available inventory, assigns physical resources (inventory and labor) to a scheduled work order for equipment pieces. This generates replenishment purchasing requisitions for maintenance, repair, and overhaul (MRO) spare parts.

In the diagram below, you can see how EAM works as part of a three-pronged approach with EAM, CMMS, and production to gather data for analysis. This analysis helps managers to decide whether to repair equipment, schedule resources, or plan for new capital equipment purchase and installation.

image 1

Benefits of EAM

* Ensures compliance with government-legislated health and safety programs by demonstrating tool and machinery reliability through the tracking of all historical maintenance.
* Develops life cycle management systems to identify known or predictive mean time between failure (MTBF) and root cause analysis.
* Allows the ability to implement continuous process improvements in the areas of tools and identification, to properly calibrate tools and equipment as part of a predictive maintenance program. This is done with the help of radio frequency identification (RFID).
* Allows the ability to schedule maintenance and installation of new equipment and to manage repair budgets and schedules, through integration of EAM with CMMS.
* Enables streamlined procurement management policies for MRO spare parts.
* Enables trend analysis to determine when maintenance is cost-prohibitive and to plan for replacement of capital equipment.

EAM Products to Consider

At TEC’s web site, you can review different vendors’ products as well as obtain white papers and vendor comparison reports. In this section, I offer a brief overview of some EAM products worth consideration.

IFS EAM

IFS’s product offerings include over 30 modules of enterprise solutions, many of which that can be purchased as either an overall integrated solution or as a bolted-on best-of-class solution. IFS has a unique add-on available that includes both IFS EAM and IFS ERP called IFS OEE (with “OEE” standing for overall equipment effectiveness). This solution performs analytics while equipment assets are running (which avoids downtime), and it makes the necessary adjustments to maintain an optimum level of production. IFS EAM allows organizations to proactively manage assets and maintenance activites. It combines unique features to permit data modeling on equipment in order to determine whether equipment is near the end of its production life cycle. For further details, visit IFS’s vendor showcase.

Infor EAM Enterprise Edition

Infor EAM delivers a unified solution for monitoring and managing the performance, maintenance, and deployment of company assets. With Infor EAM, the maintenance and plant engineering practitioner is able to perform maintenance optimization, staff productivity analysis, budget forecasting, and strategic planning. There are five separate modules which, combined together, form a complete EAM solution.

* maintenance
* inventory/warranty
* uptime
* reliability risk management
* strategic planning

For further details, visit Infor’s vendor showcase.

TEC’s I&CM Evaluation Center (Slowly but Surely) Gaining Traction – Part I

2009-10-14T07:43:00.000-07:00

A number of earlier TEC articles and blog entries have analyzed the nascent sales performance management (SPM) or enterprise incentives management (EIM) software market, which has also been one of those areas with a significant uptake of on-demand deployments.

Indeed, companies of all size increasingly use software packages for sales compensation and other incentives management, to more accurately and strategically model and forecast commissions and other incentive-based costs and benefits, calculate commissions and bonus earnings, and gain more real-time visibility into employees’ performance metrics.

Broadly speaking, SPM is an area of performance management focused on incentive compensation calculation and management, quota planning, territory management and performance analytics. As “pay for performance” programs continue to grow in importance, incentive pay remains one of the largest variable expenses for organizations. To that end, SPM spans across many groups of individuals receiving variable compensation such as sales force, management, employees, distribution channel, etc.

Yet today most SPM processes and technologies remain used in a standalone manner. Namely, corporate performance management (CPM)/business performance management (BPM) solutions that are focused on profitability are administered by the finance department, whereas the human resource management system (HRMS) that focuses on employee information is administered by the HR department. Also, the customer relationship management (CRM) system that focuses on contacts and leads is administered by the marketing staff, while sales reporting and analytics tools that focus on revenue (top line) are administered by the sales and support departments.

EIM/SPM represents the next generation of software category and best practices for filling the wide gap between all these departments. Its advent has prompted TEC to publish the pertinent Incentive and Compensation Management (I&CM) Evaluation Center. As discussed in my earlier series of articles entitled “Thou Shalt Motivate and Reward Workforce Better,” current incentive compensation issues are largely based on use of inadequate spreadsheets and in-house systems.

The idea of incentive compensation may seem very simple: pay “X” for achieving “Y.” Yet in practice each company has its own specific approach to compensation plans, managing approvals, resolving disputes and paying out compensation earned. Spreadsheets, custom coding, and simple commission calculation engines automate these processes to some degree, but do not address the increasing sophistication and complexity of many of today’s incentive plans and processes.

That inadequacy then translates into incorrect payments (many analysts estimate that four to six percent of incentive compensation doled out by businesses is wrong, according to CFO.com), delayed plan development and payments, and increased ongoing administration and maintenance burdens (whereby direct costs can exceed $1,500 per commissioned employee, according to Aberdeen Group).

Other unfortunate consequences are the failure to keep up with business strategies, the lack of adequate financial controls, and insufficient modeling, reporting and analysis capabilities. In fact, according to PricewaterhouseCoopers (PwC), 30 to 90 percent of all spreadsheets suffer from at least one major user error.

In a nutshell, today’s manual and spreadsheet-based incentive compensation calculation processes are slow, rigid, error prone and thus plagued by overpayments and errors, whereby sales folks don’t trust the system and create their own “shadow accounting.” These recurring payment disputes consume significant time and effort (besides costing internal trust and goodwill).

Furthermore, in addition to too much time and effort being wasted to administer and maintain SPM processes, there are limited ad-hoc reporting and analysis capabilities. This means that managers cannot analyze the impact of proposed plans, cannot accurately forecast incentive pay and revenues, and cannot keep “tight” links between incentive pay, sales territories and quotas/business metrics.

Enter Varicent Software

This “green field” market opportunity has created a number of relatively “young” vendors and solutions. The latest entry in TEC’s I&CM Evaluation Center is Toronto, Ontario, Canada-based Varicent Software. Since its founding in 2003, the company has been offering its flagship product, Varicent SPM [evaluate this product].

The privately-held company has been on an ascending path since its inception, with four consecutive years of triple-digit revenue growth. In 2004 the company developed the first release of Varicent SPM and signed its very first customer.

In 2005, Varicent SPM 2.0 was launched with a new quota planning module, and the vendor recorded triple digit revenue growth. While this might not be a big deal for a weakling company at the time, Varicent currently has approximately 100 direct employees and a growing partner network of global consulting firms and technology partners.

To that end, 2006 seemed to be a banner year, marked with a consulting partnership with Watson Wyatt and business performance management (BPM) technology partnership with Applix (now part of IBM Cognos). In the same year, Varicent launched Varicent SPM 3.0 as the first complete SPM suite (in terms of its current functional footprint) and introduced on-demand offering. Additionally, the company signed the first Fortune 500 customer, Starwood Hotels and Resorts (NYSE: HOT), and the first Fortune 200 customer, Waste Management (NYSE: WMI).

2007 was not a quiet year either, given the launch of Varicent SPM 4.0, the launch of the first mobility solution for the SPM market (in a partnership with Vaultus), and integration with Salesforce.com CRM. The company then also contracted its first overseas reseller, Tridant Pty in Australia, expanded its management team, and landed the first Fortune 100 customer.

Today, Varicent has approximately 100 customers ranging from mid-size to Fortune 500 customers. Varicent SPM is a horizontal application, sold and marketed primarily to organizations with about US$200 million in annual revenues and up. Some smaller companies with complex incentive compensation programs, global needs and other unique business requirements might also be a good fit for Varicent. Customers’ payee numbers typically range from several hundred to tens of thousands.

While Varicent’s customers currently represent a variety of industries, there is a concentration of customers in high-tech, health care, insurance, financial services and a few other verticals. Some other high-profile customers that use Varicent SPM for managing their complex variable compensation programs across a variety of vertical industries would be: KLA-Tencor (NASDAQ: KLAC), Rogers (TSX: RCI), About.com (a New York Times company), AAA, Sonus Networks, Manpower, American Century Investments and Pacific Blue Cross.

Varicent SPM – Surprisingly (or not) a Comprehensive Solution

Due to the financial background and focus of its founders (and of many Varicent employees), the Varicent SPM suite aligns sales performance with strategic objectives through its pay-for-performance footprint that spans across sales, employees, managers and channels. The broad EIM solution natively encompasses the following modules:

* Territory Management;
* Quota Planning;
* Incentive Compensation Management; and
* Performance Analytics.

This footprint is rare in the EIM market. Namely, even the presumptive market leader (in terms of revenues and public trading visibility) Callidus Software had to recently partner for the territory management functionality.

In other words, Varicent SPM delivers technology that automates the assignment of territories, the collection and approval of quotas, the administration and calculation of incentive compensation plans, and then examines sales performance and evaluates the effectiveness of incentive programs.

TEC’s I&CM Evaluation Center (Slowly but Surely) Gaining Traction – Part II

2009-10-14T07:38:00.000-07:00

Varicent SPM Architecture Overview

The product suite’s architecture consists of several layers, starting with a number of source systems that can handle diverse structured data. Such data can come from customer relationship management (CRM) systems, and from the order entry, human resources (HR), payroll, accounts payable (A/P), and general ledger (G/L) modules of enterprise resource planning (ERP) systems. The source systems layer can also handle unstructured data coming from Microsoft Word, Excel, PowerPoint, and PDF documents.

At the data storage layer, there is support for the Microsoft SQL Server, Oracle and IBM DB2 databases, while at the presentation and analytics layer, there is support for the IBM Cognos TM1 (formerly Applix TM1), Microsoft Analysis Services, and Oracle Hyperion Essbase online analytic processing (OLAP) platforms.

Finally, the output destination layer presents several options from Microsoft Excel documents and hypertext markup language (HTML) Web pages, via mobile devices, to business intelligence (BI)/online analytical processing (OLAP) cubes, G/L and Payroll systems.

Out of the above layers, the Varicent Application Layer encompasses the data storage layer, Varicent SPM’s calculation engine (written mostly in the Microsoft .NET Framework) and the presentation & analytics layer. Such multi-layered architecture was designed with scalability, flexibility, and openness in mind.

Furthermore, based on the above-mentioned architectural blueprint, the system features advanced reporting & analytics, modeling & simulation, and dashboards & alerting capabilities. For example, users can use a plethora of dimensions for out-of-the-box reporting purposes such as: accounts, time period, customer, product, territory, payee, payee group, etc.

Broadening Reach

The recently released Varicent SPM 5.0 ’s user interface (UI) is backed by a calculation engine that leverages an Excel-based syntax, allowing business users to more easily replicate and manage their company-specific compensation models directly within Varicent SPM. This empowers end-users to control the application, including integration with source systems and scheduling routine tasks such as importing and exporting information to and from other enterprise systems.

Without relying on the IT department, business users (or end users) gain the ability to have a comprehensive review and approval wrapped around business processes while also managing compensation plans, creating and scheduling automated maintenance tasks, and configuring the system directly. In its quest to broaden the product’s reach to less IT-savvy users, the new UI features more workspace, and an improved layout and presentation based on customers’ feedback.

In July 2008, Varicent announced that its newly released Varicent SPM 5.0 features integration with Microsoft PerformancePoint Server 2007 and Microsoft Office SharePoint Server. The combined solution makes it possible for organizations to deliver a holistic solution for both SPM and corporate performance management (CPM). Specifically, Varicent SPM 5.0 now:

* Offers synchronization of SPM data – including details on territories, quotas, incentive compensation and related analytics – with Microsoft PerformancePoint Server;
* Includes Microsoft Office SharePoint Server dashboards, providing customers with a single, integrated source of corporate information; and
* Enables Varicent SPM 5.0’s Quota Planning module directly in the financial planning mode of Microsoft PerformancePoint Server, delivering a single application for both financial and quota planning.

Varicent, previously a Microsoft Certified Partner, has now achieved a Gold Certified Partner status in the Microsoft Partner Program. This distinction shows that Varicent has demonstrated proficiency with Microsoft-based technologies.

Varicent’s Current State of Affairs

Varicent SPM is a relatively new offering (started in 2003), so gaining visibility and getting in more competitive selections has been its primary challenge to this point. In some instances, providing a number of reference clients of a certain size and in a certain industry quickly can be somewhat problematic, in comparison to better established players like Callidus Software or Oracle Incentive Compensation (OIC).

Also, having thus far supported only English and being primarily present in North America have been additional limitations for the vendor. While this is true, Varicent has achieved significant traction in the marketplace, including triple digit revenue growth year-over-year for the last four years and is tracking to do the same in 2008.

2008 would mark the year of expansion in terms of management team, board members and rank-and-file employees, as well as international expansion into the Europe, Middle East and Africa (EMEA) region. In addition to the above-mentioned Microsoft Gold certification, Varicent has announced partnerships with Deloitte Consulting, Revelwood and Merador and signed its first Fortune 10 customer.

In late April 2008 Varicent announced the general availability of Varicent SPM 5.0, which introduced:

* a newly designed UI that allows organizations to more broadly deploy Web-based SPM reporting, analysis and dashboards throughout the enterprise;
* enhanced workflow, data collection, task management and audit capabilities to better manage and control complex variable pay plans and processes;
* improved dispute resolution functionality for faster, real-time management and tracking of field inquiries;
* a Web Form builder so business users have more flexibility in the design and rollout of Web-based input templates, performance scorecards and compensation reports (both with quantitative and qualitative metrics); and
* Varicent Composer, a new graphical management capability that gives business users visibility and control of sales performance management business processes.

Besides new UI, broader reach is hoped to be bolstered via the Web Form builder and input templates. These tools enable flexible design of reports, performance scorecards, wizard driven template creation, and data validation fields. The remaining new features (bullet points) from the list above will be fleshed out shortly.

Key Tenets of Varicent’s Success thus far

Varicent wins most often when prospective customers value the speed, flexibility, and visibility of their EIM/SPM processes. When it comes to “speed,” Varicent SPM is designed to be administered and maintained by business users (process owners) with minimal IT staff involvement.

Given the vendor’s financials management focus and heritage (rather than its focus coming from the HR management pedigree of many competitors), the product also has advanced dispute resolution, modeling, reporting, analytics and other capabilities that give organizations the ability to make quicker business decisions and speed in terms of performance management.

As indicated earlier, Varicent SPM 5.0 includes a new simplified UI designed for various business professionals across the enterprise: sales representatives, management, finance, HR personnel and executives. The new UI enhances the human interaction and usability of the solution, which makes the product accessible to more casual users who need to gain insight into sales productivity, profitability and performance.

Existing and New Flexibility and Visibility Enablers

As for “flexibility,” Varicent SPM was designed to meet the broad requirements of mid-size companies to large Fortune 500 enterprises. The product can scale from hundreds to tens of thousands of users, and has advanced workflow management capabilities out-of-the-box that can be tailored to organizations business specifics. It has other notable capabilities including the above-mentioned Varicent Composer, which is a graphical visual application manager that gives system users insight into incentive calculations, business rules and data flows.

Varicent SPM 5.0 includes built-in business rules, and supports the creation and maintenance of any type of unique or customized business process flow. Companies can also easily configure their own approach to payment approvals, retroactive period adjustments, exception alerts, performance scorecards, management by objectives (MBO) management, field inquiries, document sign-offs, data collection and reporting.

The new Workflow module can be based on groups and/or hierarchy trees. In a drag-and-drop manner, users can create workflows for managing plans, reports, Web forms, documents signoffs and inquiries. Workflow management can help with inquiry and dispute updates and with faster, real-time management and tracking of field inquiries.

For its part, Varicent Composer enables system administrators to create and edit dynamic graphical representations of calculations, business rules and data flows, thereby giving them greater visibility and control over incentive compensation rules, territory assignments, deal crediting, adjustments, overlays and exceptions which are usually buried deep in custom configuration or code. This new visual illustration tool, with the drag-and-drop and drill down ability (all the way to database tables) provides a visual representation of the entire process from source data through to final compensation payouts.

As a recap, Varicent SPM’s flexibility makes it easier for end users to learn, set up, manage and show complex calculations, business rules and data flows. Users and companies thereby gain more insight and control over incentive compensation rules, territory assignments, deal crediting, adjustments, overlays, exceptions, and so on.

Final Thoughts

Last but not least, in terms of “visibility,” Varicent gives business users greater visibility into plan and organizational changes with notable audit capabilities and the Varicent Mobile module (in a partnership with Vaultus, and currently the only SPM hand-held offering in the market, to my knowledge).

Meeting the increasing need for better visibility and compliance, Varicent SPM 5.0 introduced enhanced audit and security mechanisms for more system control, better audit trails and improved user activity tracking. Users can drill into summarized audit reports to get detailed transactional information. The solution’s audit reporting and analytics capabilities are designed to meet ever-changing compliance and audit requirements.

Curbing MESsy Shop Floor State of Affairs – Part I

2009-10-14T07:28:00.000-07:00

Those that follow manufacturing-oriented enterprise applications have likely noticed for some time an uptick of conversations about the need to better integrate high-speed manufacturing operations (the real-time world of the plant) with the planning and engineering departments (the transactional and design world of enterprise systems). The nirvana (or utopia) hoped for thus far has been to provide a single point of operation and control for manufacturers to: Plan, Define, Control, Execute, and Analyze Production.

Why do we need integrated manufacturing operations, or manufacturing execution systems (MES) linked to transactional enterprise resource planning (ERP) systems, likely via some plant-level integration hub and visualization & intelligence layer?

Well, it is not a major revelation to say that, for instance, in the discrete manufacturing sector, fabrication and assembly processes are being run and managed by isolated applications, such as “Post-it” notes, Microsoft Excel spreadsheet, Microsoft Access databases, and a plethora of niche vendor’s plant applications (point solutions like data historians). This creates an overwhelming number of individual silos (or islands) of manufacturing data and operations.

These silos are typically not connected to enterprise-level (“ivory tower”) systems like ERP, Computer-Aided Design (CAD), Product Lifecycle Management (PLM), and so on. This lack of integration and real-time connection then all too often results in huge operational inefficiencies, lost productivity, wasted time and materials, sub-par products, and so on.

Consequently, major decisions in the offices are based on theory and hunch rather than on actual and actionable data. But instead of traditionally managing operations “in the dark”, companies should rather strive to capitalize on all of the operational opportunities coming from the following sources: people, processes, and the plant equipment.

ERP Does It… Not!

Some might logically wonder whether ERP systems can take care of this (and why not, if that is the case). Well, at best, the core ERP systems’ functional scope only provides a financial and inventory snapshot of how a manufacturer is performing. Core ERP systems cannot tell users what is happening on the manufacturing floor right now (at this instant). Ironically however, what is happening at this moment impacts the financial performance later.

To be more illustrative, ERP is good at producing a forecasted demand plan by decision makers, and giving answers to sales, purchasing, and manufacturing orders’ inquiries like “What?”, “When?”, “For whom?”, and “At what cost?” Conversely, MES is good at providing the record of production that is supplied by plant operators (e.g., engineers, supervisors, machinists, etc.), who thereby inadvertently turn into mere data collectors.

The execution system is able to provide answers to the questions like “What are the schedule changes?”, “What is the product build history?”, “When will it be done?”, “How is the product quality?”, and “Where is the batch?”, but without any awareness of the customer (the particular order for that customer) or the particular order costs. In a nutshell, MES systems are devoid of any customer- and order-related information.

By inserting an informed schedule and manufacturing intelligence layer between the enterprise and the plant, enterprise planners can continue to make strategic decision-making, while the operations staff can transform from mere data collectors into tactical decision makers and action takers. But, that is not simple, as discussed in TEC’s earlier article entitled “The Challenges of Integrating Enterprise Resource Planning and Manufacturing Execution Systems.”

Let me try to be a bit more detailed and depict some necessary data and process flows between ERP and MES systems (and vice versa). Well, the production order release process would logically go from ERP to MES, with a raft of order master data to be passed, such as: Order Information, Serial Number, Material Master, Labor Charge Code, Routing Operation, and Bill of Material (BOM).

To be even more specific, in case of the high-tech/electronics sector, additional order information would include: Traceable Parts, Assembly Points, PRT Work Instructions (i.e. for wiring), and PRT Attachments. Any subsequent order changes in terms of quantity, order placing and delivery dates, splitting orders, engineering change number (ECN) cut-in dates, etc. would also pass from ERP into MES.

Conversely, MES would provide the order feedback for ERP in terms of Completions, Scrap, and Reporting individual operations. Getting even more granular, MES could provide the individual operation feedback for ERP in terms of: Completion, Scrap, Operation Start Times, Reporting Operations, Rework Quantity Reporting, First-time Completion or Operation Completion Reversal. Last but not least, detailed scrap data such as at the Unit Level or Component Level, or Reuse of scrap (i.e., “un-scrap”) would also go from MES to ERP.

Hooking ERP Up with MES: Good, But Not Sufficient Yet

Without such a tight and near real-time integration, there is much anxiety and frustration within any enterprise that is in search of a more competitive, profitable, safe, and agile factory. How can any manufacturing company reduce non value-adding administration and empower their workforce to take immediate remedial actions?

Namely, the typical current state of affairs from the perspective of a senior vice president (SVP) of operations could be summarized as follows:

1. On one hand, the ever more pressured manufacturing environment demands acceleration of the stock-keeping units (SKU) mix and shorter lead times, all due to ever more demanding and fickle customers; but
2. On the other hand, the real world situation is of little overall enterprise and/or SKU-level profit visibility, and the company has to rely on (suboptimal) average key performance indicators (KPIs), with emergency scheduling (constant firefighting) on paper or Excel documents.

In such “clueless” environments, there are “blind spots” everywhere in terms of determining yields and losses, hidden capacity opportunity, and masked process routing and constraints by reactive work practices. Also, there are increased risks of quality non-compliance leading to manual quality assurance (QA) processes, whereas continuous improvement efforts are floundering and remain unmeasured. In a nutshell, the hands-on plant people do not seem involved and are ironically not accountable for what they should be.

The future state should logically be the inverse of the above, and the usual “first remedial step conclusion” is to gather the glut of data from data historians and MES databases, and then decide what to do. But, without smart and intuitive plant applications that have visualization and contextual business intelligence (BI) capabilities (and that are thus accepted by the plant staff), this will all be yet another exercise in futility.

The reality check reveals an “inconvenient truth” that many MES investments fail to deliver hoped for performance management outcomes due to people issues. Namely, after 18 months or so, the embattled company in case might have an overall equipment effectiveness (OEE) dashboard that the plant engineers occasionally look at (and which might have cool colors on it), but without a pervasive effect (actionable info) and acceptance across the plant (and entire enterprise).

Ask the Experts: Data Purging and System Migration

2009-10-12T06:52:00.001-07:00

When migrating between systems, it is crucial to define the scope of implementation, as well as to outline each stage of the project and the resources that will be needed. A failed implementation will paralyze the operational capabilities of an organization, but the right methodology will help ensure a successful implementation.

In the issues related to the areas of ERP and PLM integration, we’ll highlight relevant areas of consideration. Furthermore, you’ll learn what steps can be taken to safeguard purging and data retention. This is a legal and mandatory business consideration.

We’ll assume for the purposes of this blog post that a new system exists, and that we are migrating data from an existing legacy system to a new ERP/PLM system. This can be viewed as an in-house system upgrade, or as migration of data from a purchased company.

Purging and Data Retention

When production databases become too large, they impact productivity by slowing access to information, and by extending the time required for system backups or for system restores.

Depending upon the industry (for example, medical, government, etc.), the need for data retention varies based on regulatory compliance. Some industries have long duration product guarantees, which results in the necessity to retain data.

Archiving has evolved into a discipline known as information lifecycle management (ILM). ILM helps organizations maximize the business management of storage from creation to disposal. Management is understandably reluctant to perform data purges due to the unknown operational risks, and it is therefore often done in stages.

Unstructured data populates file servers and typically includes e-mails, drawings, and user- and application-generated files in hundreds of unique formats. Purging can be by date, by type (internal or external), and by inbound or outbound status. Nevertheless, while many IT shops are only archiving e-mail to a less expensive tier of storage, they are still unwilling to permanently purge e-mail for legal or operational reasons.

The usual approach consists of transfer of data from active tables to online historical backups on a monthly basis. Since historical data is essentially invariant for long periods, it does not require being re-backed up if it had no changes. The backup facility may also make a second copy to non-rewritable storage. In the process of creating archives, an accompanying step is often taken to create summary data into a data-warehousing product for business intelligence studies. Summary data allows a look at a product’s sales figures for a given time period, by examining a single entry in a table rather then summing up individual sales order lines.

System Migration

Defining Your Needs
A migration project often starts with a feasibility study, which takes place before an implementation project gets off the ground. The approval process can include the board of directors or a high-ranking officer who sponsored the feasibility study for the project. Subsequently there is a lengthy process to build a cutover plan. This is necessary because errors or oversights at the beginning of an implementation project can be very costly to the organization down the line.

The feasibility study will address the following considerations:

System Upgrades
Upgrades are the migration from an older version of a product to a newer one. The vendor will usually provide a set of utilities (for example, to move from version X to X+1), but not always. A “not-always” situation would be in the migration from version X to version X+3 or X+4, where intervening versions must be jumped over.

Interfacing with a new system requires the maintenance of the old system along with major testing of the new system. Don’t neglect the importance of ensuring your web interfaces are also up-to-date. As I mentioned, the old system will have valid data for some time.

It may be that the switchover is done on a midnight when the decision taken is to remain on the live system, and not do a fall back. In this case, you will need to address the problem of what to do with your web site interfaces if something goes wrong. For this reason, you should only update these interfaces once you are sure the implementation is a success.

(Yes, some go-lives fail the first time. This happens mainly with large systems because they are of a more complex product design).

Historical Data Migration
Normally, ERP systems have a built-in provision for creating historical data. When is data transferred to historical archives? Some businesses archive data 24 months old, others do it at 36 months.

The move to historical tables is to reduce the number of records in “active tables” so that system response times are reasonable and system backups can be done in the window of time reserved for this operation.

Documentation and training
This is an important critical part of the migration or upgrade process. The usual practice is to make the key users responsible for guaranteeing the training of their respective groups. Any vendor-based courses deemed necessary are held a week or two before going live, sometimes on-site or at other times, off-site.

The last stage prior to “going live” is user acceptance testing (UAT) where the client tries out the system to ensure that everything is working properly and that the developer has fixed all the application bugs.

Once the cutover has been completed, the employees begin to work with the new system, performing their day-to-day tasks. If problems arise at this point, the key users/champions will be informed immediately. It is likely to take some time for the solution to work properly; in the meantime workarounds will be set in place until the problem is resolved.

Post-migration Review
After go-live, a post-project assessment is performed. This assessment is a checkpoint to determine if the system’s performance aligns with the project charter, as well as a way to audit the vendor. Did the vendor meet the requirements stated in the request for proposal (RFP)? If not, additional enhancements may be recommended as a secondary phase of the project. (Often it is not possible to deliver all software in the migration process.) The priority is given to completing migration rapidly and with essential software only, to mitigate the financial drain surrounding migration activities. In the post-implementation period, the applications or reports that are not mission-critical are evaluated, and coding can be scheduled for these deliverables.

The finance department examines the costs; if the migration is amortized over several years, implementation costs are accrued, and life starts. There may be a period of time when transactions such as sales order entry are “frozen” (i.e., orders are manually held for entry in the new system after the implementation).

Data Integration Considerations
Integrated system configuration is an area common to both ERP and PLM. Data compatibility with the combined PLM/ERP system requires common units of measure (UoM) and decimal precisions.

A UoM converter identifies how items are stored and how items are converted. Converters are introduced as pairs or words with multipliers (e.g., hammers are purchased by packages of 12, but sold individually). Sample UoM conversions are “dozen to each” and “gross to dozen,” “box24 to ea,” etc.

In the migration process, the source quantity is converted to the target quantity, with a corresponding change to costs and re-order amounts. If the target quantity is not defined, the item will be rejected and have to be reprocessed after corrections are made.

Other preparatory work is required before importing the source data. It includes part numbers, customer details, bills of materials, and finance mappings from source system values to the target system standards. The system has to be able to incorporate these changes as part of its functionality.

There are a number of departments affected by the system implementation. Co-ordination of open sales orders, as well as open purchase orders and open production orders, must be completed prior to go-live.

Open production orders are works in process, and existing open production orders are allowed to complete on the old system in order to maintain a level of operational control for the business. New material requirements planning (MRP) runs may be done in the new system, to insure inventory is correct, by taking into account the open production orders active in the shop floor.

A Final Thought
We have only touched the surface concerning the topics of data purging and system migration. With our overview we hope you’ll gain an idea of the complexity of the processes and considerations involved.

Pricing Management in a Down Economy — Part 1

2009-10-12T06:43:00.001-07:00

While I do not plan to cover the esoteric pricing solutions used by airlines or hospitality companies (e.g., Rapt or PROS), there is also a vibrant pricing market in the retail sector, as seen with SAP’s acquisition of former KhiMetrics and Oracle’s similar acquisition of ProfitLogic. In addition to TEC’s article entitled “The Retail Battleground for Pricing Management”, you can find more information about SAP’s perspective on the pricing market here, and Oracle’s pricing offering here.

But, the dates of all these articles will indicate that they were done during a still-solid economic milieu worldwide. It doesn’t take a genius to realize that we are now in quite a down economy. Given the dreaded “R” world hovering over us, are there any trends (or hunches) on how manufacturing, distribution and retail organizations use pricing solutions? Namely, do the enterprises have different pricing approaches in good vs. bad economic times?

On one hand, soaring gas prices force (or at least tempt) everyone to instinctively raise their prices too, but, on the other hand, the buying power of (soon to be) unemployed and/or disconcerted consumers and enterprises is quite limited. No one can just get carried away with increasing prices to compensate for costs given that folks have less and less buying power (plus the pervading belt-tightening psychosis).

This is certainly too complicated an issue to have a single correct answer. While luxury consumer goods like caviar or Rolex watches are not really impacted (i.e., their demand is inelastic, since rich folks always have money), for most consumer goods that are discretionary, price is a big deal and demand is elastic.

We can see even more discounting and promotions here, since the base price doesn’t do a lot, whereas promotional discounting lets consumers know that the price is lower and that it is a limited time offer. For necessities (food and over the counter [OTC] and generic drugs) we can see a change in buying patterns — people still need the product, but will likely switch to a lower price-point offering.

Thus, for example, the profitability pictures of large food manufacturing and distribution companies do not really suffer, since these giants sell fewer of the higher price-point items but will compensate with the higher volume of the lower price-point items in a downturn. If a food (or a specialty retail) company only has a premium brand (e.g., Ben & Jerry’s ice cream or Starbucks‘ coffee drinks), it will likely suffer, as seen in recently announced closures of 600 Starbucks stores in the United States –US (luckily, none of them in my neighborhood). Conversely, if companies mainly have low price-point brands, they might even gain sales these days, as is the case with many discounters.

Spare Parts Pricing

Spare parts are somewhat like food and drugs — in most cases, the customer must have the part but may want to buy a lower priced alternative. Yet the healthy margins on parts (usually around 25 percent) can absorb even some price reductions if necessary (or simply not raising the prices) as the suppliers’ prices go up. Hence, I suspect the spare parts’ prices will not go up as fast as some might expect.

Servigistics claims that while a down economy certainly curtails the purchase, and hence, the production of new products, the demand for service actually increases. That is because businesses want to save money and get more out of their initial investments. Consider the airline industry as an example. Many embattled airline companies are deferring the purchase of the newer, more expensive planes, which forces them to fly the cheaper and aging planes (and which might be a disconcerting thought to us flyers).

This means more service work is needed, hence more service parts are required. So it goes with the heavy industrial, high-tech, motor vehicle, medical equipment, and, especially, consumer durables sectors. Trying to sell new products in a down market is difficult, but selling service (and accompanying parts) is much easier.

At the same time, more and more companies are realizing that service has shifted from being a cost center to becoming a profit center. While products have become commoditized, service is difficult to replicate and can be a competitive differentiator. In fact, field service is quite a different business model story, with profit margins as high as 50-60 percent. Plus, while service providers can be more flexible towards absorbing suppliers’ price increases, it is also often harder for the customer to get a lower priced option for service in many cases.

So how can companies capture more of the service business? Well, one way is through optimizing business processes using well-attuned software packages, and the service parts pricing ones would be a great example. Maximizing profitability on every part is a strategic way to boost profit.

Many service parts have an elasticity curve: bring a part price down a bit and it should sell more, thereby increasing volume and profit. Or, maybe a business is leaving money on the table because a part is priced unnecessarily too low? So, logically, raise the price, and once again, capture more profit. In a nutshell, service parts pricing is all about intelligently pricing yourself in the market.

For example, one world leader in the agricultural and construction equipment businesses relied on the outdated and manual cost-plus method to determine the price for service parts on its construction equipment. The formula was simple: every quarter the company increased the service parts prices; however, over time, the managers noticed that demand began to drop considerably.

After a corporate mandate to increase service revenue, this original equipment manufacturer (OEM) conducted in-depth market research to discover the source of decreasing demand. The managers found that the vast majority of their service parts were priced well-above the market averages across all categories. This overpricing attracted competitors to the market. And the competitors were beating the OEM out because of the lower prices. Why buy an OEM part if there’s one that’s cheaper, while the quality goes without saying?

In order to increase demand for their parts, the OEM set up a program for market research to be conducted on a quarterly basis in order to bring prices back into the competitive zone. However, research was along the “set (prices) and forget” theme, since there was no tracking of competitive response over time. Therefore, the complex spreadsheets were left to collect dust after just one use.

With a new pricing software solution in place, the construction equipment manufacturer could now systematically measure and calculate price sensitivity on a regular basis. This is especially important when new product orders are down and service orders are up.

The pricing solution also enables differentiated market strategies, since without it, companies may end up competing against themselves. For example, some buyers might purchase parts in North America where the price is lower than in Europe. Since exchange rates change all the time (and the current weak US dollar doesn’t help either), buyers can then re-sell these parts in the European market for even less than what the OEM is charging.

Better Management of Contracts

Furthermore, whether it’s purchasing a new car or a new server, companies often encounter a disconnect between sales and operations, since much service business is now done on long term contracts. So, when the salesperson throws in a discounted service contract with that new office phone system, for instance, the company cannot determine if it is losing money or making money from that service contract, as it includes not only the price of the service parts, but also the cost of the field technician’s time and expertise.

Historically, companies have not tracked whether these contracts have been profitable or based on hard data. With a service parts pricing solution like Servigistics’, companies can track previous contracts and then forecast over the life of future contracts, including data on breakage rates, locations with higher usage, seasonality, and other customer requests to determine the profitability of the contract.

Finally, pricing also goes hand in hand with service parts management (planning and inventory optimization), since maximizing pricing profitability while reducing inventory is a significant boost to the bottom line. The business can not only save money, but also make money by optimizing the service parts. Servigistics is currently the only global provider that provides both capabilities. Well, to be fair, Syncron does both too, but currently mainly for small-to-medium companies and only in certain regions (e.g., Europe).

Pricing Management in a Down Economy — Part 2

2009-10-12T06:32:00.000-07:00

So, What’s in Store for Pricing Management Solutions?

Given that the way the manufacturing suppliers position their products and pricing changes with the economy, natural question is whether pricing solutions providers will suffer or blossom these days. Namely, during good times positioning is about increasing revenue, and that case has been proven by pricing optimization solutions. However, in bad times it is rather about lowering costs where pricing doesn’t seemingly help, but rather procurement-oriented applications.

In addition, people become more conservative when times are hard and pricing management & optimization is a category of software that is still not “proven” in the eyes of the conservative market. Still, many pricing vendors mentioned in Part 1 claim that business remains great for them (some continue to grow at over 60 percent year-over-year). One vendor recently (incognito) said that the economy hasn’t hurt its business yet, but it would be a stretch to say it’s helping.

A recent Business Week article entitled “Five Don’ts for Marketing in Tough Times” might also provide a ray of hope for pricing management solutions. The jury is still out on whether the recently announced Oracle Deal Management offering is perhaps a sign of the market’s validation, a threat to the pricing specialist vendors, or both.

Some of the pricing specialist vendors see no real consequence to Oracle’s forays, since price optimization is about science, software and expertise. The relatively simple scoring and analytics that Oracle offers will not qualify according to them. The likes of Zilliant and Vendavo have nearly 200 employees who “live and breathe” pricing for profits (many have been in pricing for 15 years or more). If one compares that with the dozen or so pricing people Oracle currently has, the difference in expertise might actually make the software giant the small upstart in this market.

Most of the pricing solutions are designed to solve very specific problems that come up in specific industries (mostly retail). Zilliant, for instance, is really a package for figuring out price elasticity within defined segments. Obviously, in a recession, price elasticity changes, so the solution might go berserk (or “kablooey” in nerdy terms) until it acquires enough data, then it goes on as before. DemandTec would go along similar lines, but since a lot of what it really does is to support retail merchandising, its system won’t necessarily “blow up” initially; in fact, it will probably be helpful.

What about Fast Moving Consumer Goods (FMCG) Retailers?

Revionics, Inc. is an upbeat provider of Software-as-a-Service (SaaS) subscription offering over the Internet for lifecycle price optimization, including base price, promotion, temporary price reductions (TPR), and markdown optimization technology for FMCG Retailers and distributors. The Revionics Advanced Pricing System (RAPS) generates increased sales and profits through sophisticated consumer demand intelligence and proprietary retail pricing science, which includes weekly price remodeling as well as scenario planning, forecasting, and category analytics.

In July 2008, Revionics announced the addition of key modules to its SaaS solution, so RAPS now includes the following:

* RAPS Optimization On-Demand offers retailers visualization of price elasticity, whereby retailers are able to see in advance how price changes will impact revenues, margins and item-level movement;
* RAPS Scenario Forecasting offers retailers the ability to model and evaluate alternative category, group or zone-level pricing strategies to ensure optimized retail performance. This module allows the retailer to see the anticipated benefits and consequences to strategy changes before actually committing to them;
* RAPS Markdown Optimization offers retailers a tool for pricing end-of-lifecycle (EOL) products such as clearing seasonal inventory, products with outdated packaging, products with overstock situations, and other related events. Markdown prices are optimized to control inventory reduction over a specified period of time, while maximizing margin contribution for the relevant items;
* RAPS Advanced Export offers retailers the ability to prioritize, limit and export the most effective price changes available to stores based on margin contribution, revenue or correlation to the retailer’s price strategy. This module also enables the retailer to designate minimum or maximize price change amounts and control price change frequency; and
* RAPS Shopper equips retailers with the ability to collect and import competitor retail prices via a Microsoft Windows Mobile Data Collection device such a mobile computer. With RAPS Shopper, users can automatically scan bar codes and enter competitor prices including base retails, TPRs, and promotional prices. This competitive data is then imported and analyzed by RAPS to align retail prices with designated competitors.

Revionics also announced another major release of the existing RAPS Promotion Planning and Optimization module. The vendor states that the accelerated pace of new functional modules is nowadays possible by leveraging its advanced retail pricing science for different applications/purposes. Revionics believes its approach to development and the SaaS model is helping it to leapfrog many of its competitors and win some great new customers.

Todd P. Michaud, Revionics’ President & Chief Executive Officer (CEO), with whom I’ve also dealt while he was an executive at Retalix, recently shared with me his views on the economy. To his mind, the economic environment is having an impact on a number of things:

1. Many retailers see a greater need now, more than ever, to have a clearer picture of consumer demand patterns. As a result, Revionics has reportedly seen a significant increase in interest in its technology of late. Interestingly, a bad economy is actually beneficial for many of Revionics customers. Many grocery store operators are seeing sales increases as families eat at home more frequently as they reduce eating out. On the other hand, retailers in non-food verticals are seeing more negative consequences as spending decreases in those segments (i.e. apparel, footwear, etc.);

2. Consumers are making spending adjustments within their market-baskets; for example, cheaper private label sales are on the rise at the expense of national brands as consumers try to extend their spending power; and

3. Gas prices are central to many changes in consumer behaviors, but one should keep in mind that certain commodities are seeing ridiculous wholesale cost increases. For example, corn, beef, chicken, dairy products, etc. are seeing cost increases as the ethanol production consumes corn and other commodities. These commodities are used for feed, which in turn drives up the price of livestock.

How the Mining Industry Benefits from ERP Systems

2009-09-17T02:05:00.000-07:00

Mining is a able business, one that in abounding means parallels a repetitive accomplishment business. The affinity is that analysis and business for a mining company, for example, is agnate to the business analysis performed by a manufacturer, although a acclaimed aberration amid the two is that a lot of mines are of sizes to abutment decades of operation, admitting a manufacturerвЂ™s assembly runs endure for abundant beneath durations.

Here in this article, a apart allegory is fatigued amid the mining industry and the accomplishment industry, and appropriate is a adjustment to chase in adjustment to accommodate banking advertisement so that auditors can verify results. It concludes with concepts that are appropriate to administer the absolute organization.

In a mining company, anniversary administration has its own way of barometer outputs, which generally is adverse with acknowledged or actor requirements. An action ability planning (ERP) arrangement allows anniversary administration to use its own advertisement measures. The ERP software transforms abstracts bidirectionally to the accepted (legal) business reporting. However, it is this use of disparate methods by departments that causes abashing aural the mining company.

The accomplishment industry has abstruse that chip scheduling, abstracts management, assembly manufacturing, and administration are the keys to profitability. Yet in a mining company, what is accepted in one business department, if managed by non-ERP software such as spreadsheets and tailored stand-alone software, is that banking affiliation is time-consuming and abounding with errors, and it does not acquiesce a articular appearance of the companyвЂ™s operations or a accurate admeasurement of anniversary profit.

Table 1 depicts similarities amid the basal authoritative anatomy of a mining aggregation and a manufacturer, but this commodity focuses accurately on one overview of the authoritative anatomy of mineral mining.

	Major Mining Company Departments	Major Manufacturer Departments

1.	exploration	market research and product development
2.	ore extraction and excavation	raw material acquisition
3.	transportation	transportation
4.	smelting	manufacturing
5.	sales and marketing	sales and marketing
6.	human resources	human resources

Table 1. The corresponding departments of mining companies and manufacturers.

The Departments of a Mining Company

1. Exploration

Geologists are the mining company above explorers. About the geologist plan is to chase the ore attitude at an absolute mine, added times it is fieldwork. The geologist collaborates with the mining architect in assay and in extending operations at an absolute site.

In the past, the acreage to be surveyed was walked; samples taken were labeled and put into knapsacks for afterwards analysis. Newer methods now use aircraft with chart to attending at anomalies to the earth alluring acreage as able-bodied as at clay colorations and frondescence as break of all-inclusive ore bodies lying below the earth surface. This primary advice is acclimated to absolute breadth the geologists activate the on-foot assay and the admeasurement of their survey. Already a abeyant ore-bearing breadth is targeted, the geologist arrives to crop samples.

After a abeyant ore physique is discovered, a secondary, all-embracing assay is performed to actuate the economics of architecture a mine. Added (chemical) assay determines the bulk of the ores accompanying minerals, such as sulfur, gold, uranium, and others. Assay costs cover salaries, camps, insurances, aircraft and electromagnetic equipment, and added accouterment and abstracts bare to appraisal the ore physique size.

Financial considerations that appear afterwards an able њore physique sizeќ has been accepted cover a lifetime appraisal of the abundance (based on a assigned bulk of depletion), labor, accession and acquittal of anchored assets; bulk of converting bill and royalties; and taxes. All things getting favorable, the basement planning for roadways, railways, and so alternating is done in affiliation with the ore abstraction department.

Exploration costs are based on overheads and on time and materials. Typically, this bulk is adapted to a per diem allegation (dollars per day, amortized over a year).

2. Ore Abstraction and Excavation

In a archetypal accomplishment company, a assembly adjustment is issued to acknowledge to a sales order, sales contract, or a business appeal to accomplish appurtenances to forecasted sales. The mining industry operates in a agnate way. The mining sales arrangement is added about a multiyear (10 years or more) deal. This accord marks the alpha of the adorning or admixture process. Assorted sales affairs accumulated admit the mining of the ore. Abstraction and busline of the ore is accountable to sales and to melancholia requirements, and these operations are managed by the geologist and the engineering groups. In the abstraction environment, assay is performed to actuate abatement (the bend of a adit or the bend of the walls) at an accessible pit. This advancing plan allows for maximizing assurance while ensuring the everyman bulk of blasting accessible as the dig expands. Too aciculate an bend increases accident of collapse, admitting too bank an bend cuts into the accessible breadth for excavation.

At a alive mine, consumables and additional accouterment locations are inventoried. Geologists now alive in the superior ascendancy (QC) role admeasurement the superior of the biconcave actual and its accompanying minerals. Abstraction may be performed by abounding means, including strip, pit, or in-situ mining (the closing of which uses solutions to deliquesce adapted metals). As abundant as possible, the ore is afar from the clay and added accompanying material.

New ecology laws crave mining companies to abbreviate the abuse they adeptness create, with dissipate getting a prime example. Dissipate is the exceptionable actual that is biconcave forth with the ore. Afterwards break from the ore, dissipate is advance over the beat breadth and covered with topsoil. Added pollutants are recyclable, allowing reclaim with a basal admission in blasting costs. Typically, the banking exercise at the abundance is to access a accepted bulk per metric ton of metal and to authorize a accepted abundance of ore that can be extracted to aftermath a metric ton of metal.

Consumables (e.g., design assignment bits, dynamite, chemicals, fuel, food, etc.) and anchored assets (e.g., buildings, abundant booty equipment, generators for electricity, air conditioning, etc.) are factored into the bulk equation.

Amortizations, depreciation, and the like augment into a set of banking ledgers, weighting factors, and a few transformation rules assigned to anniversary variable, if manipulated, and a bulk per metric ton of the ore is derived.

3. Transportation

In the busline administration of ample accomplishment organizations, administration (logistics) plays a above role in aspersing costs and optimizing supply routes. But companies in the mining industry accept a above requirement. These companies about charge to body their own routes as able-bodied as acquirement all their rolling stock, back mines are usually amid some ambit from the smelter or the accrue area. This accrue breadth could be at a wharf, at a smelter, or can even be the ore in transit. (In transit, ore and aesthetic metal are locations of the inventory, and they are added to the abstinent inventory).

Specific to the abundance operation are basic investments for roads, railways, and wharfs and barges bare to booty the ore to the smelter or the supply of work-in-process metal or accomplished goods. Actual busline of artefact requires accession adjustment of costing, based on weight and distance. Truck, rail, and baiter anniversary accept their weight-distance rates. Costs for anchored assets (overhead cranes or cars appropriate for ore alteration from one anatomy of carriage approach to another, based on destination) are apportioned out. The operational costs are about adapted and attenuated to board an bulk per ton“kilometer.

4. Smelting

In a accomplishment factory, inventoried actual is scheduled, and the plan in action passes assorted workstations, breadth at every abject amount is added. A abundance operation is somewhat similar. Admixture or adorning is the action of converting ore to metal. This is a connected operation, with ore alien at the end of the boiler breadth heating begins. As altered metals accept altered melting points, the ore, which contains these metals, will accept anniversary metal siphoned abroad already its melting point is reached. Amount is added as adored metals are extracted from the ore.

Sulfur, an aspect that accompanies about every ore, is allotment of the њraw ore material,ќ which is captivated in the boiler as allotment of the mineral abstraction process. Sulfur can be the ammunition amenable for added again bisected the calefaction appropriate to actualize aqueous metal. The aqueous metal is transferred to accessory bond furnaces. QC activities for aggregate alloying ingredients, ensuring the abstention of the product, and added processing again takes place.

Some centralized or alien chump affairs appeal that the aqueous metal be caked into molds and again artificial to a asperous accomplished product. Added barter crop batten confined for added algid processing. Costs abide of the abject smelting, the mixing, the purifying, and transportation. The busline bulk (ton-kilometer rates) is elevated, as the appurtenances alien crave bigger handling. The accession of alloys to accomplish a appropriate anatomy of metal increases the finishing or work-in-process costs.

5. Sales and Marketing

The sales and business operations for accomplishment and mining are similar. The sales aggregation for mining companies looks to administer affairs for deliveries based on melancholia demand. The metal is now advised make-to-order (MTO) to accommodated a arrangement and is shipped, or is advised made-for-stock for on-demand sale. Long-term arrangement sales for alloys accept anchored supply amounts per business period; added arrangement auction quantities alter according to the seasons. Sales prices reflect the operations costs and accumulation requirements.

Marketing job is to ensure that a chump does not carelessness the aggregation for a competitor, as able-bodied as to acquisition new barter or new uses for the company products. Again, from business and sales comes the burden to accept the everyman operating bulk accessible in adjustment to aerate profits.

6. Animal Resources (HR)

The HR administration in a mining aggregation is about the aforementioned as in the accomplishment industry. Back mining in absolute is a college animal basic accident business, this administration has the added action of either managing its own accumulation insurance, or aggregate the accumulation allowance in with that provided by the allowance industries. Most mining companies will about pay the insuring aggregation a advantage to admittance fair admission bulk allowances for all their employees. Some requirements that accomplish mining altered from accomplishment depend aloft the country it is amid in and government requirements. Acquiescence with government assurance requirements is mandatory. For example, an agent alive on assorted jobs will aftereffect in the aggregation paying assorted alternate ante to the government based on the accounted job risk.

The Recommended Solution? An ERP System

As mentioned before, for the purposes of this article, the mining action has been abstracted into six business areas. These audible departments try to board advice to anniversary other, with anniversary business breadth application its own best business practices and measures. If anniversary administration had its own business arrangement (as was the case afore economical computing), the problems would apparent themselves as such: assorted inconsistent artefact measures, abridgement of appropriate abstracts exchange, adversity amalgam spreadsheets with computer systems, adversity converting advice from one admeasurement to another, problems with analysis ability, and poor adeptness to acknowledge to business or government demands altogether.

To abstain these problems and to be able to accomplish a banking month-end aural days, there has to be some real-time arrangement that anniversary accumulation uses breadth the crop at anniversary abundance is adapted to a accepted measure. A avant-garde ERP arrangement meets these business needs, and provides added allowances as well.

When advancing to apparatus an ERP system, a mining aggregation should actuate key achievement indicators (KPIs) and the business intelligence (BI) functionality appropriate by anniversary department, as able-bodied as added assay or advertisement facilities.

The ERP arrangement needs to be tailored to anniversary revenue- and expense-producing article (mine site) by accouterment accustomed about-face rules for bearing accepted costs. The arrangement have to abutment measures for anchored assets, capricious costs, inventory, material-in-transit costs, and website cleanup. The ERP arrangement have to aswell board account forecasting capabilities, including such what-if scenarios as the adeptness to actuate appulse assessments for changes in ammunition cost, ore brand changes, application abundance changes, and more.

The capital advantage of any ERP arrangement is that it is a comprehensive, real-time system. Some business ambit are anchored constants, while others, such as bill conversions, are date stamped. An ERP arrangement has all the affairs programmed for real-time updates. An invoice, payment, ore shipment, or acquirement shows up anon on the antithesis sheet. Every administration can accomplish use of the company abreast data.

While abounding tend to anticipate of mining companies in agreement of single-site mining, in reality, mining companies about accomplish in added than one country and in added than one currency, and as such, they have to ensure acquiescence with a countless of government regulations.

Companies today access added businesses, sometimes in the vertical market, and added times, in added industries. The capital purpose abaft acquisitions is to board melancholia fluctuations in the amount business. These backing are usually congenital into the called ERP system.

Why should any aggregation apparatus an ERP system? Based on the responses of over 1,400 manufacturers to an August 2007 assay by the Aberdeen Accumulation on the affidavit for implementing an ERP system, the afterward statistics were found:

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availability of bargain options that abbreviate risk: 41%

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burden from barter or suppliers for abstracts and collaboration: 40%

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atomic growth: 33%

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advance above a predefined threshold: 29%

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authoritative acquiescence requirements: 25%

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a adverse accident that accepted an ERP is capital to accomplish effectively: 18%

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mandates from the ancestor company: 11%

The claiming for any ERP provider is to analyze a about-face action that considers all these factors.

A few ERP systems accurately advised for mining are accessible in the market, and these bequest ERP solutions are functionally actual rich. Vendors of these solutions action tailored bales to bout the needs of any aggregation in the mining industry (be it in iron, gold, diamonds, etc.) as apparent in table 2.

Company	ERP Product	ERP Product Description
SAP	SAP ERP	Major ERP software for multinational operations
Mincom	Mincom Eclipse	ERP geared to mining industry
Microsoft	Dynamics-GP	Finance emphasis (mining industry customizations)
Epicor	Vantage ERP	Business performance management; customer relationship management; customer service management; financial management; planning and scheduling; product data management; production management; sales management; supply chain management
SAMSSA	SAMSSA	ERP for small to medium enterprise (SME) mining companies
Oracle	Oracle E-Business ERP	Generalized ERP system for manufacturing and mining

Table 2. Vendors of ERP systems for mining companies.

Today, with the advent of low-cost hardware and competitive forces, ERP solutions for the mining industry are available within the five-digit dollar range. This cost includes hardware, software, licensing, and training.

Early adoption of an ERP system is recommended for mining companies, as its implementation will eliminate the business errors and reporting confusion that a smaller mining company start-up faces as it grows in profitability.