ACCOUNTING STOCK

How to Setup an Online Stock Trading Account

2010-07-04T00:40:00.001-07:00

The advent of the internet gave greater opportunity for stock trading. Traders could trade stock at their PCs in their own home and trade stock globally all through the day and night. Traders from rural areas can not only trade stock online but get real time news and stock quotes instantly on the internet. Comparing online discount brokers is helpful and suggested.

The first step before setting up a stock trading account is to get all the equipment required for effective stock trading. A good computer and large size monitor or three monitors will do the job for a beginner. Good trading software will help easy trading once the account is set up. A high speed internet broadband connection is required to get instant stock quotes, to communicate instantly with the stockbroker and to make quick decisions based on the inflow of stock information. A good UPS will ensure constant power supply.

The second step is to find a reliable trading platform. Online reviews, articles in the newspaper, the past experience of friends and relatives and the Better Business Bureau are good resources to find the background of broker firms. The Federal Trade Commission has a list of violations by broker firms on their website. FINRA the Financial Industry Regulatory Authority has a Broker Check tool on their website to help potential traders evaluate brokers.

Before setting up the account the trader should test the support provided, and the customer service of the broker by asking questions to the broker. The trader should check if the portfolio of the broker has all the trade groups that the trader is interested in. Statements and transactions should be instantly viewed online to help traders mitigate losses if any. Many brokers have demo trade facilities. Traders can check them out before signing up to see if the trading style is suitable to their unique needs. Traders must shop among brokers to find the most affordable broker who offers a spectrum of facilities and tools for easy trading. Brokers should also help traders by doing the required research about the stock, arrange bank deposits and withdrawals and give advice on tax implications to traders.

Once a good trading platform and broker is chosen, traders can sign up. A form will be presented on the website. Traders will need to enter their personal details like their name, address and telephone number. Generally potential traders need to be adults. If children are attempting to trade, the parent or guardian should act as custodian. The potential trader will need a bank account where profits can be deposited or payments for stock purchases can be withdrawn. A minimum balance may be stipulated by the broker.

For security purposes a password and a password question will be required. In these days when there is an imminent danger of an identity thief misusing the identity of the trader, maximum safety is required. The broker's website may require entry of a security code before traders log in on the website.

Choose a Stock Broker - Key Points to Remember

2010-07-04T00:39:00.002-07:00

How to choose a stock broker

To invest in the stock market, you need to have a DP (depository participant) account and a trading account. These services are offered by a stock broker (SB). Basically a stock broker is an entity through which investors buy and sell shares. There are many stock brokers in the market. Each SB has its own unique offerings of services. Before you choose a stock broker, few points you should consider -

1) Know your stock broker - Gather information about the SB - When the brokerage business started, background of the owner/promoters, how strong is the brand of the SB, was the SB involved in any controversies.

2) Account Opening Charges - What is the account opening charges? Check the account opening charges by other brokers also.

3) Stock Broker Charges - A SB charges can be broadly divided into two main categories - a) Stock trading charges and b) Maintenance charges

a) Stock trading charges - There are two types of charges for trading in shares. a) Delivery Charges and 2) Intra day Charges. Delivery means if an investor takes delivery of the shares, it is called as delivery of shares. Intra day means if the investor buy/sell shares on the same day. Delivery and Intra day charges are different and vary from broker to broker. Check the delivery and intra day charges with the SB and also found out how much other SB charge.

b) Maintenance charges - Every year, the SB charges maintenance charges in order to maintain your account. Do check the maintenance charges and compare with other brokers maintenance charges.

This is the most important criteria for choosing a SB as the account opening charges is a one time expense whereas stock trading charges and maintenance charges are recurring. It is always advisable to select a broker whose trading charges are competitive vis-à-vis the other brokers in the market.

4) Stock broker services - Broadly the SB services can be divided into two categories - Online and Offline services. You can buy/sell shares by calling up your broker (offline) or through online. Online trading means you can buy/sell shares through the internet. Check with your broker if they provide both the services or not. It is always advisable to choose a broker which offers both the services.

5) Investment research and stock information - Brokers also provide updates and information on stocks. Check the past record of the broker in providing excellent tips and information on stocks. Based on their past success stories, you can zero in on the broker.

How to Buy Penny Stocks - Information for the New Investor

2010-07-04T00:39:00.001-07:00

Are you an investment newbie who is intrigued by the idea of penny stocks? If so, you may be wondering exactly how to buy penny stocks. What do you do first?

Well, first you must locate a broker who will be a middleman between you and the market, or the other investor/buyer/sellers. You tell the broker what you want to buy, how many shares of what company, and the broker tries to fulfill your order. Brokers can be full-service or discount. Brokers charge a commission fee for each fulfilled trade, but with a discount broker, you can place your trades yourself through a computer interface so the commission fees are much less.

There are pros and cons associated with each type of broker, and you may be more comfortable at first with the hand-holding you can get from a full-service broker. Maybe you want to consider the higher fees as a sort of educational expense. However, once you feel a bit less lost, you will probably want to switch to a discount broker for trading penny stocks. Some well known discount brokers include TDAmeritrade, E*Trade, and Scottrade.

Follow your broker's instructions about opening an account and make sure your account has enough money to cover the cost of your trade plus the commission fee. When you want to acquire shares of a stock, you give your broker a buy order. Your buy order should state the ticker symbol of the stock, the market the stock is trading on, the number of shares you want to buy, the price you are willing to pay for the shares, and how long your order should be considered active.

Where do you get the information needed for a buy order? That's where the research part of investing comes in. You can read and review several of the many penny stock newsletters available, join and ask questions in an on-line forum, or subscribe to a good recommendation service. Remember, though, that if you want to be a real penny stock investor, at some point you must take the leap and back your research with your money. That's where the exciting part of investing comes in.

Penny Stock Information - Read This Before You Buy Your First Share

2010-07-04T00:38:00.000-07:00

It's obvious that more traders are becoming interested in trading penny stocks. They like the idea of being able to invest in the stock market without having to be rich. Hopefully with this penny stock information that I will provide, you will be able to invest safely and securely without risking much capital.

First and foremost, you need to do the proper research. I understand that the low price of penny stocks is tempting to the "knee-jerk" trader. These are the kind of traders that just jump into a trade without analyzing the pros and cons of the company. Remember, chances are you are going to be investing lesser known, less established companies. You've got to do your homework.

Also, find yourself a reliable website that provides information on the kind of penny stocks to trade. There are A LOT of websites that provide FREE stock tips. I've discovered that with most of these kind of websites, you are getting exactly what you are paying for. So, if you are getting free tips, then don't expect to become a millionaire.

But I think the biggest mistake that many traders make is that they are trading with money that they cannot afford to lose. This can destroy your account. Irregardless of what kind of trading it is you are doing, trading with scared money is a recipe for disaster. Scared money is usually considered money that you would normally be using to pay the bills, mortgage, car payments, etc...

Follow these tips, and I don't see any reason why you can't succeed.

A First Foray Into Making Money in the Stock Market

2010-06-01T07:10:00.002-07:00

It all began 3 years or so ago when my insurance and finance company offered me 16 free trades with their brokerage.

It sounded like fun, although I knew absolutely nothing about the stock market, didn't even really know what a stock market was. So I took the bait, sent them $500, and I was a "trader". And I made sure everyone knew it, too. I researched companies to death, requested info packages in the mail, called public relation departments, all to purchase 5 or 10 shares of their stock. Great fun. Then I began reading books about investors. Warren Buffet, Peter Lynch etc. etc. and I was hooked. The 16 trades lasted me about 2 months and when it was over, I was almost $100 richer. Sweet. Just playing around, easy money! So they write me an e-mail telling me my free trades are up and from now and forward, that will be $20 a trade please. I'm not a genius mind you, but even that math didn't add up to me. That next $100 will cost me $320 leaving me with a $220 deficit. Nope, I'll have none of that. Way too smart to fall for their scheme. Now I'm looking around the Internet about stocks and trading. Good God, there is a whole universe out there. A whole other world. Brokers and blogs and services and...well, a lot of stuff. And it all looks so FUN! Then, and then I see the "free 2 hour stock market class in your city". Well, if it's free, what have I got to lose?

I guess the proper word, the one they used anyway, was seminar. The "seminar" was hosted at the best hotel in town, here that's the Hilton, and was actually very professionally done.

I arrived, not knowing what to expect, but absolutely knowing what I wanted. Them to teach me, in two hours mind you, how I could get rich fast and easy. And to my surprise, they did! Well, almost. I had to come back for a weekend course, and it was there that I was to be enlightened on how easily I could make tons of money, just like all these guys had, by just clicking the mouse when the arrows turned green.

I was dizzy, intoxicated by visions of wealth. Quit my IBD subscription (I didn't), I won't need it anymore, they told me. Hell, I was thinking, I can even quit my job.

But why then..isn't everyone doing it? How exactly did it all work? Remember "if it sounds to good to be true..". Come back for a whole two day seminar, and we'll show ya. By the end of that two, really two and a half days, I had so much time invested, I may as well give them the $2000 they asked for to get me to subscribe to the web site. So I did. They showed me a whole lot of stuff I already knew from all the books I'd read. So I gave them another five, to teach me about options. They gave me a book, (an online book, and let me watch some guys trade stocks live for a month) that explained what an option was. But...for another $5000 I could learn how to use option strategies. But I'd had enough. Fool me once (fool that I am), fool me twice, but three times. Not you guys, I'll go somewhere else for that. And I did. (To be fair, the website this particular company offered was actually a very useful and valuable tool. I used it for 2 years and once I figured out that the green arrows weren't the fountain of wealth, I made some use of it. Just not $7000 worth)

I went to services, guys that told me what to buy, when to, different methods, etc. etc. All to no avail. I just couldn't make any money. I didn't really lose money, except the money I spent on services, but stayed pretty even in the markets for a year or so. The people at the services were making money, but not me. Why, Why, Why.

Secret of Writing Successful Online Stock Trading Newsletter

2010-06-01T07:10:00.001-07:00

Creating an online stock trading newsletter can be a great way to advertise your services and build your trading business. However, in order to make your efforts a raving success, there are a couple of things that you have to keep in mind. Following is a step-by-step guide on how to go about it.

Set Your Goals
First, you must set some specific goals. Before you start your efforts in writing newsletters and distributing the same to your target audience, you must ask certain questions to yourself. For example, which type of format is the most suitable for your newsletters? What subjects or topics you want to discuss in its content? What are your strategies and methods to deliver these newsletters? How frequently do you want to write and send newsletters to your readers? Answering all these questions genuinely will let you know how to succeed and achieve your goals through online stock trading newsletter.

Do Thorough Research
Depending upon whether you have planned to send newsletters out on a daily, weekly or monthly basis, you can decide about the length of the content. For example, if it is a daily or weekly newsletter, you should try to keep it short and sweet. Use the writing policy of "less is more", which means writing short articles in a way where every sentence counts, and despite its small content, it must have value for the readers. On the other hand, you can write longer articles for monthly newsletters, but it must be packed with good volume of information. But in either case, make sure that you do a thorough research of the data and information that you want to include in your online stock trading newsletter.

Get Subscribers
A newsletter that has great content, making it an excellent resource for stock traders is not worth the efforts and time you invested in creating it if you don't have subscribers for that. You are definitely not writing it for yourself. Therefore, the next step is to advertise the newsletters aggressively. For example, if you have a website with good traffic, you must know how to encourage the visitors to sign up for the newsletters. Offering free gifts can be a good idea on every sign up. The free gift may include a free ebook. The more subscribers you have, the better are your chances of success.

The most important thing is that you must know how to monetize your online stock trading newsletter. For example, once you get good volume of subscribers, you can encourage the readers to purchase your products (if you have any). If you don't have your own products to sell, you should focus on attracting advertisers to generate revenue from your newsletters.

Earn Money With Stock Photography

2010-06-01T07:09:00.001-07:00

Do you love taking pictures? Do you carry your camera with you wherever you go? These hobbies can help you have extra money. There are many ways through which you can earn extra income with the use of photographs. One example is Stock Photography. It is a method of uploading pictures online with no upfront payments or fees. You can earn a certain amount each time a user views or downloads your photos. You can have the pleasure of uploading as many photos as you desire. This means having greater chances of earning more!

There are several websites that offer stock photography, like iStock, Shutterstock, and many more. How does a website like this work? These sites take photos from you and vend them online. The most common way that you can earn through these sites is by selling copyrights or by royalties. These stock photography websites have a wide range of clients and buyers. Examples of buyers are magazine owners, publishers, and many more clients who constantly seek quality photos. They pay you in exchange of their privilege to use your photo, but the photo can still remain on your account and others can still view and use it. You can also get royalties every time one downloads your photo and whenever someone views it. Each of these websites has its own methods of creating an income. If you are interested to join any website on stock photography, make sure that you read their terms and conditions beforehand.

People can sell photo the old and traditional way, like meet ups and personal arrangements. However, this online stock photography offers you wider coverage and bigger access to buyers and clients from all over the world. With these websites, you can still go on with your passion and hobby while continuing to be a photographer. If you love taking pictures and carrying your camera with you, now should not be the time to stop that hobby. You can take brilliant pictures from anywhere, at any time and upload them to your stock photography account. Instead of keeping it stocked in the memory or your computer, you can surely make good use of your photos and grab the chance to earn more.

If you have the talent in taking excellent photos, make an investment out of it. Stock photography is a convenient way to have extra money with your photos. Keep on taking those snaps and keep on uploading them online. You need a lot of quality shots to make sure you earn a considerable amount of income. You can make your photos outstanding and marvelous to attract more buyers and viewers. With stock photography, you are not only earning money, but you also continue to do what you love best. It is a fun way to make money.

Development of an Internet Payment Processing System

2010-03-27T06:01:00.001-07:00

E-Commerce Applications

Before we proceed any further, we have to distinguish two types of transactions on the Internet:

Transactions of the first type are not performed in real-time. When a card holder submits payment and gets a response, payment is only posted for further processing. Actual authorization of the transaction is performed (manually) at a later time and consequently at a higher operating cost. This is acceptable when delivery of goods and services is slow, e.g., via regular mail. As an example, when the author purchased a book from Amazon.com in August 2000, the order was approved after an hour or so.

The other type of transaction is performed in real-time. When a card holder submits payment and gets a response, payment is completed. Money on the card holder's bank account is earmarked and transfer of money to the merchant's bank account is guaranteed. This type of transaction is required when delivery of goods and services is imminent (e.g., download of software or MP3 files). Despite this requirement, some e-commerce sites use the first type, and deliver goods and services based on an assumed success of authorization in the future. This approach risks losses due unauthorized transactions.

The system described in this article can configurably work in either mode. When it works in the second, fully automated mode, the system interfaces with the BankWorks system in order to authorize transactions. This interface is simple and should be easy to adapt to other systems for authorization.

Business Model

In order to offer the best options (e-commerce application cost vs. sophistication tradeoff) to merchants and card holders, based on the above discussion, a business model of transaction processing has been developed. It divides merchants on the Internet in three groups, depending on their e-commerce application:

Those interested in collecting payments
Those requiring pre-processing and authorization
Those requiring preprocessing, authorization, and post-processing

Merchants in the first group are only interested in collecting (often periodic) payments on their goods and services. The best examples are utility companies and subscription services. Such payments are identical to payments made at some ATMs. A card holder logs on an ATM, selects a merchant (e.g. a phone company), and enters the amount and the payment reference ID (e.g., his/her phone number). Similarly, on the Internet, a card holder can log on the portal of the Internet payment processing company and pay bills. In order to further facilitate the payment process, merchants can, for a fee, keep account balances of their customers in the Internet payment processing system. In such a way, card holders may review their account balances, get a pre-filled payment form, and simply confirm payment.

Note that, merchants do not even need their own web site. Mobtel (http://www.mobtel.co.yu), a post-paid mobile phone company, operated in such a way for a brief period of time, when it was redesigned to a more sophisticated e-commerce application (also developed by the author) that includes calculation of promotional discounts and payment pre-processing.

Microsoft Axapta

2010-03-27T05:59:00.000-07:00

The standardized functionality in an ERP system shapes its usage. Efforts to use the system should be guided by (rather than run counter to) its fundamental underlying design. This section reviews the major design factors affecting system usage in manufacturing environments.

Manufacturing environments transform purchased materials into saleable items. In addition to the above-mentioned factors for distribution environments, the major factors shaping system usage include the definition of product structure for standard and custom products, variations in production strategy, and lean manufacturing practices.

Definition of Product Structure for Standard Products. Master bills and master routings define product and process design, and are assigned to relevant manufactured items. A manufactured item can have multiple bill and/or routing versions. Each master bill and routing, and each assigned version, requires an approval to support subsequent use in planning, costing, and orders.

Bill of Material Information. Each component defines an item, a required quantity, a component type, and other information such as the source warehouse, scrap factors, effectivity dates and the corresponding operation number. The component type indicates whether a manufactured component is make-to-stock, make-to-order, or a phantom, and whether a purchased component is buy-to-stock or buy-to-order. The BOM Designer provides a graphical tool for bill maintenance. The component item's auto-deduction policy determines whether consumption is auto-deducted or manually issued. A negative component quantity indicates a by-product component. The component's required quantity can also be based on a calculation formula that employs measurement information about the component and its parent item. A manufactured component can optionally specify a bill version and/or routing version that should be used to produce the component.

Routing Information. Each routing operation defines the operation number, the work center (or work center group), the time requirements and other information such as a scrap percentage and operation description. Each operation also specifies a master operation identifier that can optionally provide default values. The routing operation inherits some information from the designated work center—such as the cost categories, auto-deduction policies, and alternate work center information—that can be overridden. Separate cost categories and auto-deduction policies apply to setup time, run time, and output units.

Each work center belongs to a work center group, and has a calendar of working times. It can be designated as having finite or infinite capacity for scheduling purposes. For block scheduling purposes, a work center's calendar can indicate blocks of working time with a related property.

Order-Dependent Bill and Routing. A production order has a separate order-dependent bill and routing that initially reflect the assigned master bill and routing, and the user can manually maintain this information.

The Potential of Visa's XML Standard

2010-03-27T05:58:00.002-07:00

Visa International has introduced a new specification to automate business-to-business (B2B) purchasing functions and monitor travel and entertainment (T&E) expenses worldwide - both on the Internet and in the physical world.

The new Visa Global Invoice Specification uses Extensible Markup Language (XML) to exchange invoice and payment data across industries and technical processing platforms. Implementation of the specification enables corporations to negotiate prices and control costs, as well as increase productivity by eliminating manual processes. It is being introduced as an open standard in the global commercial marketplace.

The new Visa Global XML Invoice Specification was developed with Visa technology partners Commerce One, IBM, Sun Microsystems, Inc. and ValiCert, Inc. These partners provided Visa with an extensive review, validating Visa's efforts to use XML technology and supporting Visa's contribution to the buyer/supplier value chain of enhanced data.

Visa is promoting the specification to software and system developers. With its use, corporate clients will have a standard way to process detailed information on procurement transactions, as well as T&E spending on airline travel, hotels and car rental. Visa plans to expand the specification to support other merchant sectors including healthcare, maintenance, repair & operations (MRO), and fleet services.

The specification may also be used by any system developer seeking a standard and interoperable definition for processing invoice data using XML. It provides a cross-industry, interoperable message format that enables processing of enhanced data across regions and industry sectors.

Market Impact

As the growth of e-commerce has exploded, Visa has been involved with both the consumer and commercial B2B markets to establish common standards and platforms. Examples of these efforts include: Open Platform; Common Electronic Purse Specification (CEPS); EMV (Europay, Mastercard, Visa) standard for chip, credit and debit cards; SET (Secure Electronic Transaction), and the new Visa Global Invoice Specification based on XML.

Visa used the Commerce One Common Business Library (xCBL) as the foundation for the Visa Global XML Invoice Specification and is working with several international XML governing bodies, including ebXML, for its official adoption as a standard. Other international standards organizations include Oasis/XML.org, and Microsoft BizTalk.

Visa's announcement has significant potential. Today, nomenclature, languages, and the terminology used to "describe" goods and services inhibit computers from openly sharing information.

Organizations such as Commerce One, Ariba, Oracle and SAP are creating partnerships with industry leaders. The consortia listed above are working to develop e-business standards. Should Visa, or any of industry leaders, require their business partners and supply chain to embrace a particular standard the "acceptance" would be exponential.

As these industry leaders and consortia continue their efforts, we expect to see multiple standards serving a breadth of industries. If accepted, Visa's standard could represent a piece of a larger whole; serving multiple markets and companies.

Standard & Poor's Exposes Customers' Security

2010-03-27T05:58:00.001-07:00

Standard & Poor's (S&P), a division of McGraw-Hill, knowingly exposed their customers to information security vulnerabilities through their SPComstock analyst service. The security vulnerabilities, originally discovered in January, allowed customers to break into any other customer networks via their MultiCSP turnkey Linux box.

The stock quote service, which is provided to customers through a leased line, provides stock quotes and news on dedicated circuits.

Market Impact

Standard & Poor's was notified of this problem in January, and did little to reconcile the many security holes. The problem was first reported to S&P by customer Kevin Kadow, Network Security Analyst for MSG.net, and has been further verified and researched by Stephen Friedl. According to inside sources, as of March, S&P was still shipping out insecure boxes that had been changed only by cosmetic differences.

Once bad guys get into the box by using one of the many security holes, there exists the possibility to:

* Illegally alter published interest rates

* Illegally alter equity fund data

* Illegally alter earnings and balance sheet information

* Illegally print phony news stories

* Illegally change published dividend rates

Figure 1. S&P, a division of McGraw-Hill lags their own index.

The egregious security holes allow you to break into other customer networks so that you can alter the information on their sites, and access their networks. There exists the possibility to change all the data that an investor or analyst might bank daily transactions and investments on.

Lotus Announces Upcoming Release of ASP Solution Pack

2010-03-27T05:57:00.001-07:00

SAN JOSE, Calif., Oct. 26, 1999 -- At ISPCON'99, IBM's Lotus Development Corp. today announced the ASP Solution Pack, a hosted applications offering that provides a Lotus Domino- and IBM WebSphere-powered platform and a ready-to-rent solution set directly targeted at the needs of Application Service Providers (ASPs) and their small and mid-sized business customers. The ASP Solution Pack combines Web application servers with differing core competencies and manages them via a common Hosting Management System. This enables ASPs to easily host, manage and deliver three categories of business applications: collaborative, transactive and real-time. (Source: Lotus Press)

Market Impact

The Lotus ASP Solution Pack contains four core "ready to rent" applications, which provide secure on-line groupware and application configuration based upon a user's network profile. The applications include Lotus QuickPlace, Domino Web Mail with calendaring and scheduling, Lotus Sametime and Instant Messaging. The ASP Solution Pack will provide support for Microsoft Windows NT, Sun Solaris and AIX, support for Linux and AS/400 will be added after the initial release. The product is expected for release to manufacturing in the 2nd Quarter of 2000 (probability 70%).

The product is targeted at small and mid-sized businesses, which make up the primary user base in the ASP arena. Lotus is the first of the big three to offer a lightweight, all-in-one groupware system designed specifically for ASPs. The ASP market is still in relative infancy, however it is raising quite a few eyebrows within the technology sector due to its remarkable growth rate. Lotus is stepping in to the application rental market in order to enhance its Internet viability with the ASP Solution Pack, and they are stepping in at the right time. Expect to see Lotus' ASP Solution Pack offering to take off in the 3rd quarter of 2000 (probability 65%).

Two Origins, One Destination

2010-03-27T05:56:00.000-07:00

As time went on, people realized that having a consistent information source across departmental boundaries—and later on, throughout the extended enterprise environment—would be extremely beneficial in speeding up product development processes, serving customer needs better, and aiding faster and less expensive production. With the idea of facilitating collaboration between the producers and users of product definition information, as well as the entire life cycle of a product, PLM has taken shape and become an exemplary management methodology, not only for discrete manufacturing, but also for other industries such as process manufacturing, high-tech, consumer packaged goods (CPG), and even services.

Two Genres of PLM Vendors

Before going further, it is worthwhile examining what PLM represents in terms of solution offerings. Although multiple PLM definitions exist and the industry has not reached a consensus about what a PLM system is, people tend to consider PLM as consisting of two major categories.

1.

The first category is sometimes called "PLM tools," which includes various computer-aided technologies for manufacturing such as CAD, computer-aided manufacturing (CAM), and computer-aided engineering (CAE).
2.

The second category is known as collaborative Product Definition management (cPDm), which manages the documents and data generated by PLM tools and provides a collaborative platform for different parties within the product life cycle.

Due to PLM's origin in engineering and the heavy requirements of CAD integration in core cPDm functionality for discrete manufacturing, major PLM vendors (such as Dassault Systèmes, Siemens PLM, and PTC) have significant presence in CAD and related areas. These three vendors now provide both PLM tools and cPDm solutions, and hold almost a half of the total PLM market revenue (data source: AMR)[1]. The reason for the strength of these CAD-PLM vendors is obvious—they all started from CAD and developed cPDm solutions along the way by responding to their CAD users' demands for managing product definition information.

Meanwhile, another group of vendors provides cPDm solutions without CAD/CAM/CAE functionalities. There might be various reasons for non-CAD vendors to go to cPDm even though they don't provide PLM tools; and after a series of acquisitions (e.g. Infor's acquisition of Formation Systems, Oracle's acquisition of Agile, and more recently, Lawson's acquisition of FreeBorders PLM), it is becoming clear that enterprise resource planning (ERP) vendors are establishing themselves in the PLM market. These ERP-PLM vendors don't have a CAD advantage, but their extensive install bases in enterprise management systems may increase sales opportunities for their PLM offerings. After all, to many users, PLM is just another management system.

There are also other cPDm vendors who provide neither CAD nor ERP systems, but the CAD-PLM and ERP-PLM vendors are the two mainstreams in the PLM marketplace. Is there any difference between these two genres? Yes; and an easy way to understand one of the major differences is to examine the two gaps PLM needs to bridge in the enterprise environment.

Two Gaps between Product Definition Information and the Enterprise Environment

Ideally, there shouldn't be any gaps. Although major product definition information is generated by the design department of an organization, this information should be accessible instantly—not only by the design process, but also by consequent processes such as production, marketing, sales, and other services. Meanwhile, data from production, marketing, sales, and other services are valuable inputs for decision making during the design and development phases. However, due to the fact that during the early days of development, CAD and enterprise systems were developed in significant ignorance of each other, the gap became an obstacle when people started to realize the benefit of having an integrated environment that would cover almost every activity associated with a product's life cycle.

PLM was the choice for filling in the gap. In fact, the PLM approach actually fills in two gaps. The first is between PLM tools and cPDm. This gap is mainly handled by CAD integration. The second is the one between cPDm and ERP, which is usually handled by enterprise/ERP integration.

Would it be better to connect product definition data directly with an ERP system? No—not very likely. First of all, ERP is good at handling transactional data, but not necessarily good at handling the richness of product definition information. Second, ERP only needs certain parts of all the available data from a product definition. Third, due to the fact that "PLM tool" and ERP industries were formed separately, cPDm is the best solution bridging these two systems. Nowadays, both PLM-tool vendors and ERP vendors recognize that offering cPDm is a strategic direction to take.

Who Is Good at What?

So far, we have discussed the two main genres of PLM (or more precisely, of cPDm) players. Because of the different development histories, knowledge, and technologies of these two types of PLM, there seem to be differences in the capabilities that fill in the two gaps. To visually illustrate the differences, I randomly selected from the Technology Evaluation Centers (TEC) PLM Evaluation Center two PLM solutions from vendors who do not offer CAD products and another two from vendors that are significantly involved in CAD. Comparing the four solutions' scores for CAD integration and enterprise/ERP integration, we can deduce that a solution that scores higher on CAD integration gets a lower rating on enterprise/ERP integration, and vice versa (see figure 1).

Figure 1. Four solutions' scores for CAD integration and enterprise/ERP integration (data source: TEC).

Although four solutions do not represent the whole PLM industry, it is reasonable to think that CAD integration and enterprise/ERP integration require different technologies and knowledge, and that these differences are a reflection of the vendors' areas of expertise.

Which One Is Good for You?

Recognizing the origin of a PLM solution is meaningful when you need to identify the best-fit PLM solution for your organization. The following three factors may help you clarify your integration needs and affect your selection result.

*

Use of CAD/CAM/CAE in your organization: In general, the more complicated the CAD/CAM/CAE landscape, the more likely the need for CAD-PLM. A CAD-PLM vendor has the unbeatable ability to integrate its own CAD products. Due to long-time practice in PLM tools, CAD-PLM vendors are also making advances in regard to integration with other CAD products. However, this doesn't mean that ERP-PLM solutions won't get contracts from CAD users. Some mainstream CAD products are now supported by third-party integration tools that may be able to meet satisfactory integration requirements. In the meantime, major ERP-PLM vendors are working hard with CAD vendors to increase connectivity.
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Industry and product features: If you are a discrete manufacturer and you have a complicated product structure, CAD-PLM is probably the one that you need. If your products do not have a complicated structure or have no structure at all, the vendor's industry focus might be a more important criterion in the software selection process than the vendor's origin (i.e. CAD or ERP).
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Level of integration: You should also evaluate your expectation of the integration level. Seamless, real-time, and bidirectional integration is the ideal of every IT manager, but achieving this could be very costly or even impossible. A better approach might be to set reasonable and prioritized integration requirements for both CAD and enterprise/ERP integration, and to use the prioritization to help determine the genre of your PLM solution.

Pull-to-order Environment

2010-01-25T06:26:00.000-08:00

This first case study illustrates usage of various types of kanban tickets described in the previous part of this series. In this case, the replenishment policies for the end item reflect a pull-to-order (PTO) manufactured kanban, whereas replenishing kanbans are used for the components. PTO represents a special case of make-to-order (MTO) manufacturing environments, with kanban tickets providing linkage to sales orders and acting as the primary coordination tool.

The case study involves a two-level product structure to build the end item, identified as Product #1 in figure 1. The left side of figure 1 depicts the product structure in terms of the bill of material (BOM) and routing. A final assembly cell produces Product #1 to sales order demand, and completed items are placed in a shipment staging area for subsequent shipment. Production of Product #1 requires Subassembly #1, Part #1A, and other purchased components. These purchased components are stocked next to the final assembly cell, with receipts direct to the location. An inventory location on the factory floor is commonly called a floor stock location or a supermarket location. The right side of figure 1 depicts the factory layout in terms of cells and inventory locations.

is produced to stock in the subassembly cell, using Part #1B and other purchased components. These purchased components are first received in a stockroom, and then transferred to the floor stock location next to the subassembly cell. Completions of Subassembly #1 are placed in the final assembly floor stock location.

Purchased kanbans provide the basis for replenishing purchased material stocked in the stockroom and the final assembly floor stock inventory locations. A purchased kanban acts as a signal to the vendor, and the kanban receipt transaction updates the item's inventory balance. Transfer kanbans replenish the floor stock inventory for the subassembly cell with material transferred from the stockroom. A transfer kanban acts as a signal to the stockroom, and the kanban receipt transaction transfers inventory between the two locations. The left side of figure 2 depicts these kanban signals and the associated kanban receipts.

Back to Apama (not Panama or Obama, Bozo!)

2010-01-25T06:25:00.003-08:00

Progress Apama became part of Progress Software via the acquisition of the former Apama LTD in April of 2005. Apama is the core technology foundation for Progress’ initiatives in CEP and the company’s go-to-market initiatives that leverage that CEP platform in capital markets for the following “daily bread” actions: algorithmic trading, market aggregation, real-time pricing, smart order routing, and market surveillance.

Prior to its acquisition by Progress Software, Apama had a few dozen customers in London, New York, and Boston. Today, however, after leveraging the global parent’s infrastructure, Apama is marketed and sold in all the major financial centers in the world.

Apama was founded in 1999 in Cambridge (UK), by John Bates and Giles Nelson. Fellow Cantabrigians and CEP visionaries Bates and Nelson are co-holders of the patents on Apama’s core technology, which is a commercially-productized expression of their efforts to create a platform for the unique characteristics of “event-based” applications.

Originally, Apama had set out to try and resolve a number of telecommunications-based real-time mobility issues, but had then realized that there were additional commercial opportunities in a wide range of environments. As a result, the company has historically focused on financial markets and specifically financial trading systems where real-time event-based trading systems are in high demand.

The capital markets segment has indeed proven to be an early proof point for the Apama CEP platform. Apama’s design philosophy and architecture were intended to provide a platform that allows traders to quickly develop and deploy distinctive proprietary strategies that exploit these opportunities and mitigate risks.

In addition to the above-mentioned CEP applications in capital markets, other current (or future) uses in the segment are the following: commodities trading, bonds trading and pricing, foreign exchange (Forex) aggregation and algorithms, futures exchange and options algorithms, equities trading, cross-asset trading, real-time risk management, broker algorithms, news-driven algorithms, and so on.

Principles of CEP-based Systems

2010-01-25T06:25:00.001-08:00

In plain English, CEP lands itself well to any environment that treats any business update as an “event.” Such organizations want to enable users to rapidly define event-based business rules to identify patterns indicating opportunities and threats to the business. These encapsulated rules (either as “if-then” statements or structural query language [SQL] statements) are loaded into a real-time computing (RTC) CEP engine.

The correlating engine is permanently connected to multiple event sources and destinations (with volumes of events and related data points) and offers analysis and response within an extremely low latency period. Events can be captured and preserved in time-order for a historical pattern analysis and root-cause analysis (RCA).

Given that algorithmic trading in capital markets was one of the first real-life applications of CEP, let’s translate the above general CEP principles into trading terms. The continuing digitization of financial market data and the advancement of electronic market access has created a market environment in which competitive differentiation amongst financial service firms rests with split-second algorithmic execution that can exploit minuscule and momentary advantages in price, time, and available liquidity.

To that end, a trading company will treat any market update as an “event” and will enable users to rapidly build quantitative algorithms (based on their vast experience and know-how) to identify trading opportunities and risk breaches. Germane trading rules are then loaded into a trading system that offers real-time analysis and response with a latency measured in milliseconds.

The trading system is permanently connected to a number of relevant market data sources, news-feeds, and trading venues (exchanges). Finally, events can be captured and preserved in time-order for backtesting and digital forensics analysis.

In summary, the drivers for CEP adoption are the following:

* Applications with high throughput and latency requirements. Such requirements from market trends such as higher velocity business event flows, more voluminous (and yet shorter-lived) transactions, and rapidly changing market conditions. These trends in turn pose the challenges onto customers in terms of how to detect opportunities and threats in real-time, and how to show the health of their business; and
* The need for rapid software development and customization, and increasing application complexity (temporal and/or spatial logic, real-time analytics, etc.). The customers’ challenge in this regard is how to accelerate the deployment of new capabilities.

Processing Complex Events (During these, oh well, Complex Times) – Part I

2010-01-25T06:21:00.000-08:00

The worn-out saying about how we learn new things every day applies to this blog topic too. Namely, my interest in Progress Software Corporation has long been due to its renowned OpenEdge development platform. Indeed, many enterprise resource planning (ERP) and other applications providers leverage (embed) OpenEdge as Progress Software partners. Sure, I also follow and have recently written about the company’s forays in the service-oriented architecture (SOA) space with its two respective offerings: Actional for web services management and Sonic for enterprise service bus (ESB) and messaging.

But in late 2007, out of mere courtesy, I accepted a briefing about Progress Apama, the company’s platform for complex event processing (CEP), algorithmic trading, and whatnot. Given the overwhelming nature (“rocket science” of a sort) of the offering’s concept, I now admit that I could not wait for the briefing to end.

Actually, I felt bamboozled like those ordinary mortal FBI agents in CBS’ primetime hit show “Numb3rs.” In that show, time and again the whiz kid math genius (the brother of the FBI team leader) tries to explain to these action-rather-than-theory agents how some complex and arcane math theory can be applied to make sense out of seemingly chaotic and unrelated events. Eventually, complex math solves some important crimes, often by detecting patterns that are not obvious to the naked eye.

Well, fast forward to early 2009, where at Progress’ Analyst Summit (a traditional Boston winter fixture event) we could all find out that Progress Apama is possibly the best performing and growing part of the company. OpenEdge, while still contributing to over 60 percent to Progress’ total revenues, is a mature business that is now sold mostly to independent software vendors (ISVs). In addition, the recent financial markets (and consequently the overall economic) crisis and related cases of high-profile frauds (”white-collar crimes”) have made me conduct my own study of Apama and become familiar with its underlying concept.

Frankly, I no longer grapple as much with the concept of CEP per se (Progress Software refers to CEP as “The Brains of the High Velocity Business”). Where I still get lost though is when it comes to CEP’s relationships with other like technologies and concepts “du jour.”

ERP Systems and the ETO Manufacturing Market

2009-12-05T02:22:00.001-08:00

One of the myriad of appalling consequences that result from fitting an engineer-to-order (ETO) environment with a repetitive-oriented ERP system, which does not have, in the very least, a product configurator facility with generic items (encapsulating options, variants, and constraints), generic bill of materials (BOM), generic routings, or pricing functionality, is that the sales order capturing clerk has to contact the engineering department for a product code or for the price or cost of a product, sometimes waiting days for a response. Needless to say the standard master data becomes bloated because each product variant has to have a separate stock item code, BOM, and routing as if it was a standard stock item and not a once-off made customized product (for example, a special color or gauge thickness). As a result, the ill-fated user company would have to literally close down operations so that the entire place can participate in a dreaded stock-taking exercise with an item master printout as thick as encyclopedia and with less than 10 percent of listed items expected to be really stocked. This is without considering the likelihood of identical products having a number of different item codes as different people created new codes unbeknownst to each other.

As for the production planning aspect, the differences do not come only from days- or weeks-long lead times for repetitive items versus months- or years-long lead times for an individual project. Further, as mentioned earlier, a simple count and addition of the purchasing and manufacturing lead times will not determine the overall lead-time or time-to-deliver a project, since projects often have numerous product definition activities and commissioning and installation to arrange before and after manufacturing respectively. Also, it is not a mere scope of the planning that differs in repetitive and project manufacturing, since there are other major differences in the way that these environments approach planning.

First, project manufacturers tend not think in elapsed time, given they calculate effort. For example, if a project is estimated to have one hundred hours worth of installation, it could mean one person deployed for one hundred hours, or that it could be deployed much quicker with a larger crew. Establishing and managing a critical path is the "motherhood and apple pie" of project management. Critical path is that set of activities that defines the duration of a project, and these activities have very little float or slack, usually zero, and thus a delay in any critical path activity will delay an entire project. Still, losses in one area may be made up in another. For example, if design is budgeted to take a team of five people, and one falls ill and cannot be replaced, the design time overrun will be inevitable. However a project organization may decide to make up the time by increasing the applied effort in downstream manufacturing /or installation activities in order to hit the overall deadline.

Secondly, project manufacturers know that they cannot always be in control of the lead-time even if this project is nearly a repetition of the previous one. All sorts of issues can impact the plan to deliver even a simple project. Customer late with the design approval? Subcontractor late with the delivery due to a strike in its plant? Cannot get access to the site on the day we need it? Wide load needs a police escort? Welding can't be inspected on time? All of these have an impact on delivering the plan. Although some may not be controlled, all must be accounted for since they can profoundly affect the overall plan.

Thirdly, traditional MRP based systems work without priorities, but rather with time-phased, back-loaded scheduling and with the "oldest order first" principle. Advanced planning and scheduling (APS) and some other job dispatching techniques may use more advanced algorithms (e.g., critical ratio), but they do not really recognize a "rush job" logic (see Advanced Planning and Scheduling: A Critical Part of Customer Fulfillment). In other words, it is often difficult to see why any one job on the factory floor is needed or where it is going to go. Since their business is often more cyclic, project manufacturers want clarity and simplicity to be able to juggle priorities within the network of remaining activities. They demand that everyone knows what the critical path is within the plan today.

This is not to imply that in repetitive manufacturing planning and re-planning are simple activities, given one has to take the maximum or optimal utilization of plant, equipment and absorption of overheads into account. It is to say that project manufacturers have just as complex albeit an entirely different planning problem. As such they need a system that thinks in terms of applied effort, can plan for items and activities outside the bounds of the company, is clear to understand, and is flexible enough to cope with rapidly changing priorities and circumstances.
When it comes to accounting, project-based manufacturers are more concerned with the profitability and cash flow of the project than of the departmental or organizational accounts. These organizations are looking for systems to support the project manager, who is responsible for sharing and tracking the revenue, expense, and profitability of a project. Yet, most enterprise-wide business systems sold by software vendors are general purpose in design and, without significant tweaking, they do not address many of the unique requirements of businesses engaged primarily in providing products and services under project-specific contracts and engagements.

The key difference here is project cost accounting versus standard cost accounting. According to APICS Dictionary, project costing is "an accounting method of assigning valuations that is generally used in industries where services are performed on a project basis. Each assignment is unique and priced without regard to other assignments. Examples are shipbuilding, construction projects, and public accounting firms. Project costing is opposed to process costing, where products to be valued are homogeneous." Conversely, standard cost accounting" is a cost accounting system that uses cost units determined before production for estimating the cost of an order or product. For management control purposes, the standards are compared to actual costs, and variances are computed."

Project-oriented organizations have many project-specific business and accounting requirements including the need to track costs and profitability on a project-by-project basis; to provide timely project information to managers and customers; and to submit accurate and detailed bills and invoices, often in compliance with complex industry-specific and regulatory requirements. In fact, project managers tend to be obsessed with analyzing actual spend versus achievement. For each separate project, and at any point in time, they need to know exactly what they have committed in terms of purchases, WIP, billable hours, material etc. They want to be proactively alerted as soon as a job goes outside predefined parameters, so that the causes can be identified and the situation rectified. Equally important, they need to know how much work remains and "cost to complete", as well as what is left to spend in order to deliver the project, as an anticipation of profit or loss before the project is complete.

They have to be able to report revenues on the percentage-completed basis, which is more complicated than reporting on a basic completed product. Yet, traditional generic general ledger-oriented (GL) accounting systems have not been designed with project phases, work breakdowns or detailed time capturing in mind, and thus, they merely can report how much it has been spent or collected, but not why certain project is losing or winning money.

In project manufacturing, the received payments may be spread out over the life of the project—including retention for acceptance of the job a long time after its completion. These receipts, also known as "stage payments", may happen at any time in the project, and depending on the contract, may be based on committed purchases or major events in manufacturing. One should note that the effect of stage payments on cash flow may even drive the priorities in the production sequence. So once more, project manufacturers have subtly different needs which can make all the difference in the pursuit of "world class". At least, the ETO amenable ERP system should include project costing, which is kept separate from the ERP system's general ledger.

ERP Systems and the ETO Manufacturing Market Part Two: ETO versus Repetitive Differences

2009-12-05T02:21:00.001-08:00

Having outlined the above, it might be useful for us to recap the major differences between engineer-to-order (ETO) and repetitive/volume-base manufacturing environments throughout different phases of a product life cycle as well within various functional departments within a manufacturing organization. First of all, prior to any manufacturing, there is extensive work in the product definition phase (i.e. estimation, design, and engineering) before anything can be made, bought or delivered. However, the major difference is that within ETO companies the product design is an integral part of production (if not even afterwards, during the site installation and commissioning), whereas for repetitive, standard items the design is typically completed and handed "over the wall" to the manufacturing well before the production starts.

In volume manufacturing, product definition work is amortized (recovered) over the items' life cycles, which are often measured in thousands of items and over several years of commercial use. Whilst a possible time overrun here will effect the time-to-market of the product, (which is often the competitive advantage (strategy) in addition to lower costs for repetitive manufacturers), it has no effect on the overall lead-time of any particular sales, job, or project order, and is therefore not handled in the same way. Moreover, the extensive costs of product definition are absorbed into the company overhead or standard product costing, so that an overrun of costs can be managed in the context of a long term pricing strategy.

Project-based/ETO manufacturing is very different, as a majority of the total project lead-time and expenditure can come from engineering, which makes it crucial for the company to engineer correctly and maintain costs. Complex manufacturers produce products that are of high variation, have complex features and options, and vary in end user configuration. Each job is unique and the variables are based on client specifications rather than on the options from the stock. They consequently invest significant dollars in product design and have lengthy sales and manufacturing business processes, often requiring collaboration between the customer, sales representatives, and critical back-office experts.

ETO manufacturers focus on special jobs that have never been done before, or custom jobs that are similar to others but require extensive modification to accommodate customers' special requirements. Further, customer approval may stipulate many engineering changes and adequate information about these changes must be timely when released to manufacturing and purchasing, and sometimes even to the field service force. As a matter of fact, product design almost never stops, given customers' prerogative of changing their minds in the midstream, to a degree that they feel free to change specifications or add new requirements to the original orders, sometimes by directly instructing the supplier's manufacturing personnel and circumventing the proper channel of the sales and engineering department. Occasionally, the customer might attempt to play dumb and even refuse to pay for any changes to the original orders if the enterprise is unable to track all these change requests back to the initial order and prove him or her wrong.

Furthermore, since most projects have unique requirements, lead time of the product definition processes will directly impact on the delivery of the project, and will affect the contract. The company will go through it all over again on the next project, even if the product is similar to the previously delivered one. Thus, there is effectively little or nothing to amortize or recover the costs. For these reasons, far from being ignored, these "upfront" product definition processes need to be carefully planned and accounted for.

Moreover, sophisticated customer interactions (such as order/contract definition and management applications) are required, while customer service needs are also oriented toward hands-on contract management and cost reporting. Frequent changes force contract supplier engineers and subcontracted original equipment manufacturer (OEM) engineers to be in a constant collaborative communication throughout the design and production cycle of the unit. One of the most manual functions in a supplier organization have traditionally been the sell-side request for quote (RFQ) management (as opposed to standard price and discount lists in repetitive environments), which usually revolves around a few key expert individuals that have direct knowledge of the product or who can manually pull together the diverse information sources into a unified document, as contract proposals include quotations, pricing, detailed product information, data sheets, and computer-aided design (CAD) drawings. In complex ETO manufacturing, where the quality is a given, and while available capacities are on par, what makes the winner is the ability to set a competitive price. There is a huge difference between winning business and winning business that is profitable to accept and that is a win-win situation for both the customer and the provider.

On the other hand, in almost all industrial manufacturing segments, the pressure to reduce lead times has become a constant and ever-expanding concern. Depending on product complexity, some parts or sub-assemblies might be quoted immediately, while others have to be highly specified. Developing a contract proposal requires many levels of checking and re-checking customer process requirements and facilities capabilities, as well as preliminary design work and sourcing of specific components or materials. The process typically goes through much iteration every time the customer uncovers a new requirement or constraint. The labor-intensive nature of this process has often resulted in lengthy estimating cycles, which have in turn often translated to lost business opportunities.
By harnessing an enabling technology to make everybody work smarter rather than harder, complex manufacturers could, in some instances, reduce the time it takes to create contract estimates. To that end, modern product configurators have become the pivotal enabling technology for simplifying complex ETO operations in the direction of mass customization, providing the ability to more easily configure individualized products and services at the point of sale (POS) with integration to back-office systems. Providing customers with exactly what they want is not exactly a new concept, but the idea of giving the customer ever-expanding range of choices as early as possible has become the center of many various industries' customer-oriented activities, given that getting an accurate, customized product to the customer more quickly fosters competitiveness.

In general, product configurators are software tools that streamline order entry process by asking the customer to select from a set of predefined options associated with a generic product line, and then apply predefined rules with constraints to correctly configure the particular end product. The configurator then populates the attributes of the newly configured end item (called the variant product), tests for any conflicts, and generates the variant product with appropriate BOM, routing, and pricing based on preconceived rules and calculations. As product configurators have evolved to include even more sales, marketing, and financial functions tangential to the product per se (e.g., pricing, cost analysis, sales commissions, available-to-promise [ATP], order status, etc.), the term "sales configurator" has been used to increasingly to reflect their expanded role. It may more accurately describe their extended role as tools that assist salespeople with not only building viable products, but performing related tasks, such as proposal and quote generation. Still, configurators may have only limited usefulness for the most complex, unique "one off" project-based environments.

In any case, the ETO-oriented systems must facilitate the near real time transfer of information and complex product knowledge for collaboration across the extended enterprise, and should especially be suited to organizations that seek to maintain complex selling relationships, such as businesses whose procurement and sales functions rely on subcontractors, channel partnerships or a distributed sales force. To that end, a manual process that took anywhere from a day to several days should now be accomplished in about one minute with the appropriate use of technology.

In volume manufacturing, concurrent engineering means getting teams together. According to APICS Dictionary, it is "a concept that refers to the participation of all the functional areas of the firm in the product design activity. Suppliers and customers are often also included. The intent is to enhance the design with the inputs of all the key stakeholders. Such a process should ensure that the final design meets all the needs of the stakeholders and should ensure a product that can be quickly brought to the marketplace while maximizing quality and minimizing costs". Also called co-design, concurrent design, early manufacturing involvement, parallel engineering, simultaneous design/engineering, team design/engineering, integrated product development, participative design/engineering, quality circles or design for manufacture (DFM), concurrency is mostly about teamwork and the sharing of knowledge. In project manufacturing, however, concurrency goes a mile further by running design, manufacturing, and commissioning simultaneously, since it is often the only way to satisfy the customer's deadline.

ETO and project-oriented ERP buyers should therefore ask prodding questions about how the systems they are evaluating handle concurrency. For example, can the design department release a partial BOM for manufacturing to work on, and then add to it or modify it later when they are sure of all the facts? This capability is sometimes referred to as "progressive engineering", which is the ability to handle items that are part of the project but still undefined—they can nevertheless be included in the project work breakdown structure (WBS) and the application will plan around those items without losing the integrity of the structure.

ERP Systems and the ETO Manufacturing Market Part One: Event Summary

2009-12-05T02:20:00.000-08:00

n our relatively recent article about the still ongoing consolidation in the market, What Does Vendor Consolidation Mean To The End User? , we mentioned that the market will not stop short at the eventual "Big Five" or so of the largest leading vendors. Namely, we expect the market for application software to further segregate into two tiers.

The first group will be a limited number of very large vendors, while the second group will be a large number of small, highly focused vendors. The latter's business model will be focusing on a relatively small, tightly defined market with specific requirements that cannot be met with more generic products. Usually, these markets will be too small for the Big Five to want to compete, and will also have unique requirements that cannot easily be built into the more generic products offered by the Big Five. These specialists, boutique or niche vendors (whereby neither of these terms is meant in a derogatory manner) will compete by having in-depth product functions and intimate knowledge of their market place or by offering services (content or location wise) not available from the Big Five or large independent service providers. Example of these markets can be industrial (e.g., fresh meats, dentist offices, machine tools manufacturers, etc.) or regional (e.g., Chicago, New Orleans, Columbus, etc.) focus. i
While competitive costs (i.e., ever lower and more flexible software license pricing with shorter implementations) and outstanding global service (i.e., proven implementations' payback benefits and subsequent customer loyalty) will remain important requirements for success, particularly in the lower end of the market; vertical focus will still be the key factor for survival.

Vendors that weather the ongoing carnage will have focused their business and product on a few particular, manageable industries (possibly only a single one for the smallest vendors), preferably those with a current low penetration, instead of a more generic, horizontal approach. There is a general consensus in a number of diverse industries that generic solutions require longer implementation timeframes, more customizations (or, possibly even worse, workarounds, and related dreaded backdoor knowledge just to keep the system running), and the complication of add-on solutions. Winning enterprise resource planning (ERP) and other enterprise applications products will thus demonstrate deep industry functionality and tight integration with best-of-bread "bolt-on" products in a particular vertical, which also means adding sector-specific, fine-grained capabilities.

As a matter of fact, verticalization can be seen as part of a larger effort by most enterprise applications vendors to ease the implementation of their products. By now, almost everyone in the IT industry has heard horror stories of enterprise applications implementations that took two or three years and cost tens of millions of dollars, sometimes only to be eventually abandoned (see The 'Joy' Of Enterprise Systems Implementations). That happens, in part, because the larger, generic ERP packages usually arrive needing to be configured for the business and the industry entirely from scratch. At least by configuring parts of the package in advance for a given industry and circumventing functions not required in that industry, these vendors can shorten and ease the implementation process.

In fact, software implementation time reduction is a key element of success in any enterprise-wide technology project. Users have thus increasingly looked for an ERP system designed for a specific business, since software that combines industry-specific functionality with the flexibility to accommodate each company's unique processes goes a long way toward improving the functional fit and the speed of implementation.

Closely related to the above need for vertical focus would be the inherent adequacies that traditional ERP systems have commonly exhibited owing to their genesis (see Enterprise Applications—The Genesis and Future, Revisited), and which have left enterprises struggling with a system that does not mesh with their manufacturing operations. Although, as possible remedies of these shortcomings, the lean, flow and demand-pull manufacturing philosophies have lately been getting an increased interest. Namely, the ERP systems of the 1990s have been burdened with the liability of carrying on some well-known manufacturing resource planning (MRP) problems like unnecessarily complex multilevel bills of material (BOMs), infinite capacity assumption, inefficient workflows and unnecessary (i.e., no value-adding) transactions, activities and data collections, which have not been amenable to mass-customization but rather to traditional push-demand, mass production and inventory building trends. For more details, see Pull versus Push: a Discussion of Lean, JIT, Flow, and Traditional MRP.

Still, while some tout that regardless of the industry, type of manufacturing environment, or product volumes, flow manufacturing principles can be implemented successfully, the concept has not been all things to all people so far. It is still challenging or even unsuitable to deploy in a jobbing shop that does highly configure-to-order (CTO) or unique engineer-to-order (ETO) products having high setup times and long lead times, although it has been occasionally deployed there with almost as much success as within high-volume, more repetitive make-to-demand environments. Namely, lean manufacturing and just-in-time (JIT) concepts, which emphasize continuous improvement of processes that lead to, for example reduced inventory throughout the supply chain, shorter lead times, and faster cycle times, all enabling improved response to customer demands, are indeed universal across the board and cannot be debated.
However, the fact is also that only a minority of all ERP vendors properly support the ETO environments, let alone with flow manufacturing concepts. Glovia would be one possible honorable exception. Although it originated in the US market, owing to its current parent Fujitsu's involvement since the 1990s, it has enjoyed its greatest success with Japanese companies. The support for the kanban (loosely translated means card, billboard, or sign, and is often used for the specific JIT scheduling system developed and used by the Toyota Corporation in Japan) and the seiban (an identifying number or label attached to all parts, materials, purchase orders, and manufacturing orders that identify them as belonging to a particular customer, job, product or product line, resulting in having separate MRPs within the overall materials requirement planning process) lean or JIT manufacturing approaches enable manufacturers to handle configured items even in batches of one. All these functions are aimed at inventory optimization and waste management, streamlined planning and control for specific products, models, and sequenced production.

Cincom Systems would be another honorable exception amongst vendors with strong ETO capabilities, given its Flow Manager product handles kanban replenishment and demand smoothing, but not line design and operation method sheets (OMS) since these features would not bring much benefit to ETO manufacturers. These customers often specify product families that include products that require one or two unique and expensive components with distinctly long lead times, in addition of the fair share of common parts (stocked items), which could benefit from flow methods of smoothing spikes in demand. Further, for any organization, that lean orientation feat will not happen overnight, since achieving it takes more than moving equipment around into product family production lines, creating flexible workstation teams, establishing quick changeovers, and introducing kanban signals. It also requires specific flow manufacturing training and continually maintained disciplines and process improvement mindsets (e.g., zero defects, zero setup, the use of standardized components, zero inventory, etc.). IFS and SSA Global Baan would be other tier 2 ERP products with solid ETO orientation and certain features of the support for lean manufacturing.

Syspro Hatches 'Encore' IMPACT On SME Manufacturers

2009-12-05T02:19:00.002-08:00

On September 7, the Syspro Group, a privately held Worldwide provider of enterprise software for small to medium enterprises (SMEs), with its US headquarters in Costa Mesa, CA (www.sysprousa.com), was named a recipient of the START Magazine Vision Technology & Business Award for 2001 in the Manufacturing ($50 million to $200 million) category. In naming Syspro Group as the winner of the START Vision Award, the judges expressed admiration for the company's recent development of the Material Yield System, a software solution that enables manufacturers and distributors to maximize the use of scraps.

This Part One of a two-part note on Syspro. This part details recent developments. Part Two discusses the Market Impact and makes User Recommendations.
On July 30, Syspro announced the general release of a new module designed to fill the specific needs of manufacturers and distributors that rely on the cutting of shapes and pieces from standard size materials, e.g., sheets, tubes and rods, as part of the manufacturing process. Specifically, the new Material Yield System is targeted at the Plastics, Steel, Rubber, Paper and Lumber industries that need to maximize yields, minimize waste and, where possible, return remnants to inventory.

The new Material Yield System reportedly accommodates a seamless integrated workflow to satisfy a series of common requirements that include customer specific dimensional requirements, automatic yield calculations from full sheets and stock remnants, and the return of scraps to inventory with the automatic creation of new part numbers and pricing. Moreover, the new module will attempt to fill custom orders from existing inventory, another branch's inventory, the purchasing of material from a vendor, or a combination of each.

These latest awards are the culmination of a year, which to date, has seen the Syspro Group honored by numerous publications and associations. This should be no surprise given the company's rather busy product enhancements' activity in recent times.
On August 21, Syspro announced a new release of its flagship IMPACT Encore Enterprise software. Version 5.1, which supersedes IMPACT Encore Version 5.0, offers expanded system functionality, new e-business-centric capabilities and added support for multi-site facilities with a new module and numerous enhancements to existing modules. The new module encompasses Engineering Change Control. Enhancements include Goods in Transit and Blanket Purchase Orders functionalities.

IMPACT Encore 5.1 also features other numerous module enhancements. For example, General Ledger financial reports can now be published as extensible markup language (XML) documents for viewing on the Internet or an intranet. The documents have drill down capability from the general ledger codes to the source documents as well as full report editing and journal posting capabilities. IMPACT Encore 5.1 stores archived sales orders and work orders as XML documents which can be recreated as HTML pages using a Web browser. The archived data is accessible using any XML-aware tool. Archiving in this manner allows the user to store files off-line for security or practical reasons. Archived data can also be easily retrieved for the purpose of creating new items, such as a new work order.

Business-to-business (B2B) trading has been enhanced with the optional use of XML documents with published schemas for transferring purchase orders and sales orders. IMPACT Encore Version 5.1, available since September 15, is being offered in two versions, the Microsoft SQL Version and a C-ISAM version.

SouthWare Excellence Series: Making Excellence Easier Part Five: Competitive Analysis

2009-12-05T02:19:00.001-08:00

SouthWare Excellence Series: Making Excellence Easier Part Four: Application Analysis & Development Environment

2009-12-05T02:18:00.001-08:00

SouthWare Excellence Series: Making Excellence Easier Part Three: Application Analysis

2009-12-05T02:17:00.002-08:00

The process of selecting mid-market accounting software usually starts with products that have achieved some name recognition and that's fine as long as the search does not end there. SouthWare Innovations (http://www.southware.com) has created in its Excellence Series� a worthy competitor serving a number of industries and offering users a surprising array of functionality, either directly as SouthWare applications or through one of their independent sales vendors (ISV).

Detailed Application Analysis

ExcelReport�

This unique application allows users to establish both subjective and objective—financial—goals, grade progress toward achieving these goals, measures progress over time, and thereby help people do their jobs better.

The system supports a completely user-defined set of critical success factors for each business, business unit, or even individual employee. These success factors can be financial values or ratios that are then associated with specific grades or subjective factors that will be evaluated and assigned a grade. In addition to calculating and displaying grades on a period basis—with up to five years history—, the system will display both trend lines as well as a grade point average (GPA), just like in an educational setting.

Although there is any number of success factors that can be established and tracked, here are some questions that can be asked and answered.

* Which areas of the business need attention?

* Are we making progress toward our goals?

* Are we able to fulfill customers' orders?

* Are we shipping orders on time?

* What's the average approval rating on sales orders?

* Which items are returned the most due to poor quality?

* How much are errors and complaints costing us?

* What do our customers think about us?

* Are we hitting our financial goals?

* Which vendors are giving us good service?

* What are the recent events involving this customer?

* Have we responded to all the ideas and suggestions we've received lately?

* How solid are our vendor relationships?

* Are our employees satisfied with their careers?

* How well are we preparing for the future?

TaskWise� is SouthWare's vision of a completely integrated business management system that includes task management, relationship management, exception management, and information sharing or collaboration. Users can manage their daily work through one convenient portal that gives them access to both information and functions, all wrapped around a central task manager.

* Task Management: Users can define individual or linked tasks that can be text oriented, such as reminders or descriptions of issues that need to be addressed but are not tied to specific accounting functions. Other tasks can be tied directly to accounting functions such as approving purchase orders, invoices, or hyperlinks to specific SouthWare functions, such as order entry for an order clerk. In essence, SouthWare has taken the concept of user-defined menus, which it supports, to the next logical level whereby the concept of a menu has been replaced by a completely integrated task management system that presents those tasks the user should address.

* Relationship Management: TaskWise can function as a complete relationship management system. Since this is a task manager and not a CRM system, TaskWise can handle vendor and employee relations just as easily as it can handle customer relations. TaskWise can also integrate with Microsoft Outlook via SouthWare's OfficeLink� application.

* Exception Management: TaskWise is tied into a robust Alert Driver application that identifies exceptions and assigns them to specific named individuals as one or more tasks. Standard tasks can be linked together to form a complete business process. User can also create new alert drivers as an integral part of their daily business functions. For example, they may be worried about the cost of specific items rising very quickly in the future. Rather than checking the prices every day, they can define a new alert driver and prompt the system to notify them if the price rises above a specified value or if the price is rising faster than a certain rate. Many products support alerts, but SouthWare is one of the very few products that provides users with a software-driven business management system that helps them address potential or actual problems. The key concept here is the notion of a system that incorporates what used to be manual control processes into a single software-driven and software-supported business methodology.

* Collaboration: By presenting a software-driven business management system, SouthWare by default supports collaboration. Alerts and tasks can be shared with anyone in the organization, together with supporting e-mails. While there will always be one person who is responsible for a particular exception as an example, that person can send that "file" to another person and ask that they handle it, but they can also ask that person to send them a confirmation that the task has been completed.

SouthWare Excellence Series: Making Excellence Easier Part Two: What Makes SouthWare Different?

2009-12-05T02:17:00.001-08:00

The process of selecting mid-market accounting software usually starts with products that have achieved some name recognition and that's fine as long as the search does not end there. SouthWare Innovations (www.southware.com) has created in its Excellence Series� a worthy competitor serving a number of industries and offering users a surprising array of functionality, either directly as SouthWare applications or through one of their independent sales vendors (ISV).

SouthWare is a senior player in the middle market, having been founded in 1984. While its roots are in the distribution industry, the Excellence Series is not just a distribution play. It serves a number of industries and supports a very large number of users.

While many products have moved to more "modern" development environments, SouthWare has stuck with Acucobol and this decision appears to have been wise. Revision ten of the Excellence Series runs in any operating environment and yet the product supports all of the leading graphical expectations.

The Excellence Series is in fact a superior product that provides users with a powerful business management framework that is in many aspects far ahead of other middle market products.

* Portability: The Excellence Series is compatible with Windows and LINUX/UNIX, as well as over 600 other platforms, allowing users to mix and match computers in a network as needed.

* Versatility: The Excellence Series offers users significant functionality, particularly in the area of distribution and service management, but has recognized that all companies do not require every application. This granular approach to product development allows users to select only what they need without having to cope with overly complex or costly functions they do not need.

* Development Environment: While the Excellence Series supports unlimited modification, it does so using tools that guarantee access to software updates.

* Responsibility: If a programming issue is identified, it receives priority until it has been resolved. People do not have to wait for bug fixes.

* Task and Exception Management: SouthWare has recognized that systems have to move away from accounting (data input and report generation) and toward a more proactive business management orientation whereby the system itself will help people do their jobs better. Many systems generate alerts (exception management), but few actually provide people with the tools (task management) required to resolve these issues.

* Job Assessment: The Excellence Series is the only product in the middle market that helps people "grade" their performance. ExcelReport� is the only application of which I am aware that helps users establish both objective—financial—and subjective—performance—goals, measure performance over time, and actually grade that performance.

* Maturity: SouthWare produces a mature business management system that has been thoroughly tested in the field.

* Internet and Intranet Functionality: SouthWare's NetLink� provides controlled access to business data via Internet and intranet browsers. It offers easy-to-use standard web pages as well as a development environment that allows users to easily create their own real-time data web pages without requiring a high-level of technical expertise.

* Extended Data: SouthWare has recognized that organizations may want to track data that is unique to either their industry or their business model. Additional fields can be added throughout the system, but unlike other products, these fields are recognized instantly by the system and are available for reporting or other uses.

SouthWare's Excellence Series utilizes a development methodology labeled "S.M.A.R.T." for Strengthening Mature Applications with Recent Technology. Specifically, SouthWare uses tools from Acucorp, Inc. (http://www.acucorp.com/) and has blended these mature tools into a development philosophy that combines product stability and processing speed with modern business programming methodologies to give users the "best of both worlds."

Acucobol-GT with graphical extensions, the newest version of Acucobol, provides many graphical user interface options to take advantage of graphical system capabilities. The current version of the Excellence Series fully utilizes these features. The latest release does have that graphical look and certainly acts a lot like a fully graphical system. SouthWare is improving the look and feel of the system and will continue to move in that direction as quickly as it can. This does not mean SouthWare is abandoning other platforms. In fact, the latest release can still be utilized by companies with text-based workstations. However, some new features are supported only by Windows workstations.

The use of a technology such as Acucobol-GT also allows the Excellence Series to run on virtually any client or server system, including Linux.

The Excellence Series uses Acucobol-GT's proprietary Vision file system out-of-the-box. For added flexibility users can replace or mix in other file systems including C-ISAM, Btrieve, MINISAM, and relational databases such as MS SQL and Oracle.

outhWare Excellence Series: Making Excellence Easier Part One: Company Background and Product Overview

2009-12-05T02:16:00.000-08:00

The process of selecting mid-market accounting software usually starts with products that have achieved some name recognition, and that's fine as long as the search does not end there. SouthWare Innovations (www.southware.com) has created in its Excellence Series� a worthy competitor serving a number of industries and offering users a surprising array of functionality, either directly as SouthWare applications or through one of their independent sales vendors (ISV).

Founded in 1984 and based in Auburn, Alabama (US), SouthWare is a relatively small company of very dedicated people (80 percent of its employees have at least twelve years seniority), which has created what may be one of the best examples of a true business management system, not just an accounting system. What may be even more important to companies of all sizes is that the Excellence Series operates on many platforms and databases, giving users the option to select the environment that best suits their technology requirements rather than forcing them to accept a single option.
The Excellence Series supports a significant number of applications, most of which complement its historical strengths in the distribution industry. However, users should not eliminate the Excellence Series simply because they are not in this single industry. In fact, the Excellence Series supports accounting, distribution, e-business, service management, rental management, and job costing out-of-the-box. Together with its third-party developers the Excellence Series also supports manufacturing and a whole host of other industry verticals.

Currently, SouthWare supports 6,000 sites in the US—it has no plans to expand internationally. The largest site supports 500 users—a cellular telephone company—with the next largest site supporting 300 users—high-end photographic equipment.

While we will discuss some of SouthWare's applications in more depth a little later, let's start by summarizing what's available out-of-the-box. I have elected to segregate this list into four categories

* Business Management Functions
* Accounting Applications
* Productivity Tools
* Technology Features

The Excellence Series, and every other business management system for that matter, is not all-powerful, but it does offer advanced functionality in several areas and outstanding business management support.
* ExecuMate II� is a powerful executive information system that presents to executives and managers user-defined summary data (expressed numerically and graphically) that allows them to take the company's pulse. If more detailed information is required, extensive drill-down is available. The system even posts alarm warnings for key financial areas (Note: These same alarms could also generate a standard alert in TaskWise�, SouthWare's unified task, relationship management, and exception management system).

* ExcelReport�: This unique application helps users establish both subjective and financial goals and grades progress toward achieving them. We will discuss this in more detail later.

* TaskWise�: Combines into one application business processes such as task management, relationship management, exception management, and information sharing (collaboration). SouthWare has taken the concept of user-defined menus, which it supports, to the next logical level whereby the concept of a menu has been replaced by a completely integrated task management system that helps users carry out their jobs both more efficiently (do it cheaper) and effectively (do it better). This will be discussed in more detail later.

* Collections Adapter: Full-featured collections management application. This will be discussed in more detail later.

* AnswerReady� is a tool that lets users set up a searchable database of topics, instructions, company policies, documents (e.g., employee handbooks), as well as questions and answers. The system has but one purpose and that is to help people do their jobs better by giving them ready access to the information they need. Users can create a table of contents to form the basic framework of the information management system, and add or modify topics (with appropriate access controls) as required.

Food and Beverage Industry: Overview of Software Requirements The basic features and functions common to enterprise resource planning (ERP) and suppl

2009-12-05T02:14:00.000-08:00

The basic features and functions common to enterprise resource planning (ERP) and supply chain management (SCM) software will only be briefly discussed herein. It is assumed that the reader already has a good understanding of these capabilities relative to process manufacturing. However, if this is not the case and you want more information in this regard, please see my article entitled, Process Manufacturing Software: A Primer.

This article will concentrate on those features and functions that present considerable challenges to traditional software vendors trying to gain a foothold in the food and beverage industries.

Specifically, this article provides an overview of the requirements for software offerings catering to food and beverage by discussing the following aspects:

* ERP Functions and Features
* SCM Functions and Features
* Additional Considerations

ERP Functions and Features

The software should offer the standard functionality expected from ERP software to support manufacturing and back office activities. The modules to support these activities include financial management, specifically general ledger (GL), accounts payable (AP), accounts receivable (AR), and fixed assets; financial control, specifically budgeting, cash flow, and standard and actual cost accounting; human resource (HR), specifically payroll and time and attendance; production and manufacturing; order taking; and customer service.

However, there may be additional and integrated modules not normally found in ERP packages. These modules may be worth investigating to determine if a vendor can supply this functionality later, when and if needed. This functionality can encompass warehouse management systems (WMS), maintenance management and control (computer maintenance management system [CMMS], enterprise asset management [EAM]), performance management and reporting (enterprise performance management [EPM]), logistic management (third-party logistics [3PL]), financial reporting and consolidations, and material safety data sheet (MSDS) management. Having the flexibility to incorporate this added functionality from a single vendor can eliminate many of the interface issues when similar modules are purchased from third party vendors. Let's look at the maintenance function to illustrate this point.

When you purchase a third-party maintenance management system, you would most likely get only an interface with your inventory and purchasing systems so that you could procure needed but out-of-stock repair parts. With an effective and more encompassing software offering, additional interfaces to payroll (such as using hourly rates to calculate labor costs of repairs); human resource (such as matching an employee's skills with equipment being repaired); warehouse management (such as homogeneously slotting repair parts); and supply chain planning (SCP) (such as providing visibility to planned equipment downtime) now become available. Furthermore, this type of integration can facilitate the cost justification of acquiring and utilizing these optional modules.

As one would expect from software tailored generally to process manufacturing but specifically to food and beverage, an ERP package should ably support the subtleties needed by food and beverage producers. Formulas should be scalable so that production batches can be sized based on the minimum quantity of on-hand ingredients. For example, if you are making a car and you only have two of the required four tires, you cannot make half of a car. Conversely, in the beverage industry, what if you want to make 1,000 gallons of soda but you only have 500 gallons of the required 1,000 gallons of carbonated water? You have the option of making half of the 1,000 gallons of soda. You should expect the software not only provide this type of re-formulization but automatically suggest such alternatives to keep your customers, at least, partially satisfied.

By maintaining the formulas and packaging recipes separately, the software should be able to accommodate "brite" stock and make-to-order (MTO) production runs, typical requirements in the food and beverage industries.

The term, "brite" stock, is common for private label food processors. For example, large grocery chains sell products, such as soups, soda, and meats, under their own brand names, hence private labels. Don't think, however, that these chains have their own manufacturing plants. Chains contract for these products to be produced. In the case of soups, food processors create and warehouse non-descript, non-labeled aluminum cans of soup, hence the term, "brite" stock. Once a confirmed order is received, the private labels are then applied in a separate packaging run. A similar analogy can be made for a MTO scenario. Namely, you wait until the order is confirmed before you complete the manufacturing process.

As you would expect from packages serving the food industry, the software should offer "catch weight" functionality. By definition, catch weight is the recording of the actual weight of a product. For example, whereas a 50-pound case of meat lists for $100, in actuality the case is sold at $2 a pound based on the actual weight of the meat less the packaging material. Accordingly, capturing of this actual weight, which can be used for pricing, is known as the catch weight of the product. The software should take the process one step further by using catch weight to calculate the actual cost of manufacturing the product. Use of catch weight in costing is important because it provides a more accurate picture of the true production costs based on actual yields. The lack of incorporating catch weight in the costing calculation is tantamount to buying shoes without soles. They may look good but their lack of functionally will hurt your performance and ability to walk.

Integrating Customer Relationship Management and Service Resolution Management

2009-12-03T11:11:00.002-08:00

A customer relationship management (CRM) system that accommodates complex customer-facing processes requires four key factors to give the system a competitive advantage.

The first key factor lies in the application's ability to develop a complete customer profile that supports multiple business units and products. Service organizations need a wide range of customer data, including demographics, financial status, and current and anticipated lifestyle changes (for example, college-age children, retirement concerns, newborn kids, house or condo purchase, changing insurance requirements, etc). To gain a true understanding of customers' needs and wants, any interaction with them must be captured and analyzed.

For example, when a customer with a savings account inquires about a home loan, a full-service financial services company would want the customer-facing employee, whether in the branch or contact center (if not even an intelligent online software agent), to recognize that here lies an opportunity to cross-sell a home insurance policy to the client as well.

Having a complete customer profile enables users to quickly identify key attributes about a customer, such as whether the customer has multiple accounts with the bank, and therefore is a customer the bank would not want to lose. Naturally, customers are highly sensitive to how they are treated; they notice such things as whether their service institutions answer the phone quickly and recognize the customer when he or she calls, or whether the establishments answer questions astutely or resolve issues promptly. Also of importance is whether the institution provides rapid turnaround for specific offerings, such as new account origination, new loan origination, refinancing a home, and so on.

Most customer-serving institutions need software solutions that can deliver services that are personalized to the customer's needs. Take, for example, an insurance company that has many distinct lines of insurance products but no common customer database, leading to the disastrous result of several agents calling on the same accounts. Such disorganization is not only costly and inefficient, but it also creates a great deal of customer dissatisfaction, annoyance, and ultimately, defection. By implementing a unified solution to market more than one product to the right customers, the service company should be able to improve revenues while driving down the costs—and retaining customers.

The second key factor is that the CRM application should provide companies with the ability to customize their solution to address their unique business needs and evolving external requirements. In a dynamic business environment, the service enterprise must be able to sense and react, almost instantly, to changing market conditions. These conditions vary depending on whether they are caused by shifts in market structure, new competitive threats, micro- or macro-economic changes, or other factors. A company must also adapt to its users' needs, since not all users are alike; an adaptable system should provide a personalized interface for the user, based on his or her specific information needs. Ideally, the system should also be able to dynamically modify its behavior, depending on what the user is doing.

Financial industry enterprises—especially those competing with larger organizations—claim that they win and keep customers because they leverage their in-depth knowledge about the client to offer more personalized service. These clients do not want a cut-and-dried solution that looks and acts like the same CRM system that their next-door competitor uses. Rather, they want a flexible solution that they can tailor to their products, services, and business operations.
The third essential factor of a CRM system that accommodates customer-facing processes is that it should offer organizations the ability to adapt to customer and market changes, since most traditional enterprise CRM offerings require users to write lots of expensive, time-consuming custom code as part of their deployment. This often creates many problems, starting with most customers finding that by the time they have completed the development cycle and are ready to roll out the software, something in their business has yet again changed (such as a new, fierce competitor has entered the market; new legislation has been passed; the company is involved in a merger; management has decided to add or drop a new product line, etc.). Thus, these firms may find themselves stuck using their old model and needing to go through another long, expensive software development cycle to add the changes they need. On the other hand, customized environments can be very difficult to upgrade when the vendor comes out with a new release of its software.

The fourth factor is the CRM application's ability to integrate, in near real time, with other complex systems, and its adaptability to users' existing infrastructure. It is not at all uncommon to find dozens of systems in the service firm's back offices, all of which have data that needs to be integrated with the new CRM system. Some of these systems can even go back a decade or more. Many of these systems, although ancient in the IT timescale, still deliver mission-critical services reliably and effectively, day in and day out. Thus, a modern CRM solution must easily and seamlessly share data bi-directionally with these systems, using open industry standards.

As the first factor indicates, an adaptive service enterprise must be sensitive to ever changing customer requirements, and must foster an optimal customer experience by creating and delivering incremental services that customers want and are willing to pay for. This requires an IT infrastructure capable of seamlessly tracking and managing interactions across all customer touch points, such as the retail store, the Internet, e-mail, fax, the call center, etc.

Though CRM mega-vendors often want users to rip and replace their entire IT infrastructure with the mega-vendor's software stack, many clients view their legacy systems as mission-critical, and might prefer a CRM solution that will protect their investment by plugging into their existing infrastructure.

To be sure, services institutions live and die by the services and products they provide to fickle and demanding customers, and they need to be able to change direction quickly in order to meet competitive challenges or to take advantage of emerging opportunities. Only by deploying astute CRM technology will they be able to capture customer and market data, sense and understand how their customer segments want to be served, and be able to analyze and respond to changes in customer needs and wants.

Because CRM processes touch so many parts of a business, they can have a major impact on both cost and revenue. The improvement of sales and marketing processes can bring in new revenue, while call center productivity can drive down the costs of servicing customers, as well as present up-sell and cross-sell opportunities (and maintain customer satisfaction).

The business case for call center applications is becoming increasingly obvious, especially given the recently established National Do Not Call Registry in the US. The revenue driver will thus become inbound customer calls rather than companies trying to generate leads via outbound telemarketing efforts, which have too often proved to be annoying to customers, and ultimately counterproductive.

Best Practices for Transporters and 3PL Service Providers

2009-12-03T11:11:00.001-08:00

Transportation Management Systems: The Glue of the Supply Chain

2009-12-03T11:10:00.000-08:00

Supply chains are becoming increasingly complex, and as manufacturers create a “value chain” that spans many countries, transportation of final goods or raw materials is a critical component to their business. If goods do not arrive at their destination on time, the manufacturing process will come to a halt and links within the supply chain will break, causing problems for other entities down the chain.

Along with this, the import and export of products is increasing, leading to greater movement of goods through distribution centers (DCs) and to a higher volume of products that need to be moved.

And then there is the issue of how companies deal with ever-increasing fuel costs.

It’s hard to imagine how companies can deal with the difficulties described above, but transportation management systems (TMSs) can do plenty to help manage the complexities of manufacturing today.

A Solution for the Complexities of Manufacturing

Given the growing need to move products inland and the increase in fuel prices, TMS software is a vital tool for today’s logistics industry, and the need for this enterprise application will only increase in the next five years.

As manufacturers’ supply chains continue to expand, developing networks and using different modes of transportation (truck, rail, air, and boat) can be quite a challenge. Networks and the use of these transportation modes need to be optimized. Otherwise, the following basic questions will be exceedingly difficult to answer, leading to serious visibility problems for the manufacturer:

* Where are the goods now?
* When and where are the goods to be shipped?
* What mode(s) of transport should be used to ship the goods?

So, what exactly is a TMS?

A TMS is designed to manage the different modes of transportation used to move products, whether finished or semi-finished. Transportation modes consist of ground, air, rail, and sea transport. A TMS determines the optimal path to transport products based on distance, location, and route.

The Anatomy of a TMS

A TMS’s basic functionality is comprised of the following:

Lane set-up: This has to do with multimode types of transportation. If moving a certain product requires three types of transportation methods (for example, rail, truck, then rail again), the system will be able to schedule all three of these means of transport.

Geographic set-up: This will link geographic locations together, as well as set up the service levels between different parties along the logistics chain.

Best Practices for Transporters and 3PL Service Providers

2009-12-03T11:09:00.001-08:00

Cash Management 101

2009-12-03T11:08:00.003-08:00

Cash management is a need common to both large and small businesses alike. In its simplest terms, cash management is the assurance that today's receivables plus today's account balances exceed today's payables. Failure to practice this business management process guarantees bankruptcy.

Every large organization has a cash management group, sometimes called the treasury. This group's function includes management of such items as investments and borrowing in addition to the organization's daily cash flow. In small to medium businesses (SMBs), usually the chief financial officer (CFO), president, or owner performs the task of cash management.

Regardless of a company's size, the important thing is that cash management is practiced on a regular basis—at least weekly—and with sufficient attention to details. In difficult times, when liquidity is "tight" (at a minimum), it should be performed daily.

Crucial to organizations' successful cash management are the deals they make with their financial institutions for short-term placements and for borrowing funds. Unlike in other countries, in the United States, a bank account that is credited with deposits does not begin to earn deposit interest until three business days have passed. Furthermore, an American business account specifically may not be overdrawn, which necessitates cash management to be the most important activity of a business's financial management.

For all companies—and in particular, public traded companies—major financial statements include the income statement, the balance sheet, and the statement of cash flows. An organization's CFO, accountant, or proprietor will likely share this snapshot of financial performance with lenders, equity investors, and the company directors and key stakeholders.

Surprisingly, most SMBs and large organizations find spreadsheets a useful tool for cash management. The cash management facilities serve as the basis for entries on the spreadsheet. The spreadsheet is easy to manipulate and allows for what-if scenarios and forecasting. Yet cash management for many companies is a mix of financial software and spreadsheets, with the majority of decisions based on spreadsheet manipulations.

Cash Management Operations

Effective cash management requires having a firm handle on the following two areas:

1. Cash inflows

Daily morning and afternoon deposits from the Automated Clearing House (ACH)—where morning deposits are received from local banks and afternoon deposits are received from banks located more than two time zones away—electronic data interchange (EDI) transfers, e-mail notifications, etc.
Forecasted deposits for the day, generated from cash management software. These are based on reliable deposits taken from sales invoice dates plus credit days allowed (e.g., net 30, 2 percent net 10, etc.).
Checks received in the mail.
Over-the-counter cash receipts.
Credit card receipts.
Forecasted deposits based on disputed invoices (i.e., invoices where credit notes may have to be issued) or the "poor payer" category of customers, generated from cash management software.
Investment income.

2. Cash outflows

"Must pay" accounts (e.g., payroll).
Commissions; local, state, and federal liabilities (e.g., taxes, social security, etc).
Payment to liability accounts (e.g., insurance, mortgages, leases, employee travel expenses).
Valuable suppliers that provide payment discounts for early payment.
Suppliers whose limits within agreements can be stretched (e.g., net 30 days).
All bank account balances.
Loan payments due.
Interest payments or term deposits due.

The Price of Cash Mismanagement

When cash flow is tight, cash management helps a company decide who must be paid and whose payment can be skipped for a given week. Mismanagement of cash inflows and outflows will cause a company to face a liquidity crunch. A liquidity crunch forces a company to borrow money at a disadvantage, meaning a company that is in dire need of short-term cash will pay more interest on a loan or line of credit than it would have had it used better cash management techniques.

Poor decisions and practices by a company's financial managers can have disastrous effects on the business too. Following are examples of poor decisions and practices:

Transferring too much of the business's liquid assets into the acquisition of fixed assets, such as machinery or real estate. Monthly commit¬ments must be properly managed by obtaining long-term financing for such large capital investments.
Failing to budget properly. To avoid this problem, construct a spreadsheet with columns that represent weeks or months, and with rows that represent inflows or outflows. Lay out, by month, the known inflows and outflows. Toward the bottom of the sheet, place the less-certain inflows and outflows. Each period's column total (closing balance) should be brought forward to the next column as an opening balance.
Failing to make use of a business line of credit (LOC), or exceeding the LOC limit, resulting in refinancing with factorers. Factorers are organizations that provide funds to a business, using the business's inventory as collateral. A factorer can be a vendor's representative as well, selling on commission. Factorers can also provide cash based on a business's future confirmed receivables. Their rates for lending money are usually higher than bank rates.

Business Performance Management Basics: An Overview of Business Performance Management and Its Benefits to the Organization

2009-12-03T11:08:00.001-08:00

The market uses the terms business performance management (BPM), corporate performance management (CPM), and enterprise performance management (EPM) interchangeably. Vendors and industry analysts use these terms to describe performance management, but essentially they all mean the same thing. BPM represents the next generation of business intelligence (BI), and is defined as the use of software to help organizations manage their processes and measure their key performance indicators (KPIs) in order to optimize performance and help drive corporate strategy.

This article will focus on the key aspects to take into account when considering implementation of performance management software:

*

the way KPIs are defined by an organization's focus
*

the meaning and importance of data mining
*

the importance of scorecards and dashboards in driving business decisions
*

the benefits and challenges of implementing a BPM solution

BPM versus BI: A Brief Overview

BPM applications allow organizations to implement an approach to data analysis. Data mining tools identify trends and enable organizations to plan intelligently for the future. Additionally, performance management software provides organizations with visualization features (such as dashboards), which give them the opportunity to view summarized data and to drill down to operational data stores for relevant details. This differs from traditional BI software, which identifies data patterns by using historical rolling data to drill down on dimensional data over time.

Traditionally, organizations developed month-end processes to generate financial reports or queried data at specific intervals in order to provide data to decision makers throughout the organization. Additionally, throughout the organization, reporting processes were implemented to provide users and decision makers with regular static reports over time. With increases in competition and potential client bases (due to globalization and technological advances), organizational needs have evolved, and require more powerful reporting tools to capture significantly higher amounts of data more often. Businesses are shifting to accommodate increased data demands, and are attempting to become proactive in their corporate planning. The realization that BI and data warehousing concepts can be leveraged to drive business decisions has helped drive the evolution of BI toward encompassing business performance functionality.

Key Performance Indicators and Data Mining

The terms KPI and data mining are often used to discuss the benefits of BPM and the ways in which BPM drives business decisions. Knowing what those terms mean, however, does not alone guarantee business success. Instead, organizations should identify appropriate ways to apply KPI and data mining in order to determine the metrics required for making the right strategic decisions.

KPIs are defined as the critical metrics set by an organization to reflect its financial or nonfinancial success. They help organizations identify and monitor factors that are quantifiable, measurable, and important to the organization's overall success. Although KPIs can help drive business decisions, they are only beneficial if they are set properly and reach the right people at the right time. For example, with traditional BI online analytical processing (OLAP) cubes, sales data can be reflected multidimensionally with rolling sales data over a three-year period. This, however, pales in comparison to dashboard functionality, which allows a sales manager to see up-to-date sales figures in real time, and to compare them against predefined metrics. The sales manager can then drill down on the data to access and analyze operational data in order to determine a plan of action.

Drug Pedigree Guidelines and How Software Can Help

2009-12-03T11:07:00.001-08:00

Counterfeit and adulterated drugs are an increasing problem, particularly in the United States. Not only do these activities strip profits from legitimate drug manufacturers, but they can also pose a health risk to the consumer. As a result, the US Food and Drug Administration (FDA) has issued guidelines covering "cradle-to-grave" tracking requirements that pharmaceutical companies must comply with for the drugs they produce. We'll look at a brief description of the pedigree guidelines, compliance options, and outstanding issues.

What Are Pedigree Guidelines?

Simply stated, the FDA's pedigree guidelines require data to be captured at each stage of the production and distribution process, until the drugs reach the customer or end user. The players principally affected by the guidelines are pharmaceutical manufacturers, drug distribution companies, drug wholesalers, and drug retailers.

From the manufacturer's perspective, the guidelines essentially require pharmaceutical companies to maintain data on each case of drugs leaving the shipping dock. This data starts with the drug manufacturer and includes, but is not limited to, such information clusters as the brand name and product identification (ID); manufacturing, shipping, and expiration dates; corporate and manufacturing addresses; quantity, weight, and lot number of the case; and the item description. The data collection gets considerably more complex if parts of the manufacturing process are contracted to third parties. Data must then be transmitted from the subcontractors, and consolidated into the primary manufacturer's pedigree database. As we will see later, there can be a heavy reliance on data residing in the existing enterprise resource planning (ERP) solution.

Once cases arrive at a distributor's warehouse, the pedigree is updated by adding warehousing data such as the address of the distribution center, the date of receipt, the warehouse location, and any additional product and lot information added to the case. Once cases leave the distribution center, the destination address is captured. The process can be continued up to the point where the consumers purchase drugs from their local pharmacy.

It would be wrong to think that there is a standard format by which the data is captured and transmitted to a drug manufacturer's customer. If it didn't work for electronic data interchange (EDI), why would it work for drug pedigrees? Major drug retailers can typically dictate the format and content of the pedigree data, so long as they comply with the local state's requirements.

The key to the pedigree data is twofold: (1) the eighteen-digit pedigree ID, and (2) knowing what you are receiving before you receive it. The first five digits designate the manufacturer, and are assigned by EPCGlobal, an industry-entrusted organization created to establish the global standard for real-time, automatic identification. The next twelve digits make up a sequential number, and the eighteenth digit is typically a check digit. In situations where both parties are using EDI, the ID can be included with the advance ship notice (ASN). Otherwise, an external file containing the same ID must be used to transmit the information. As the cases are received by the distributor, the label is scanned, and the unique pedigree ID is compared with the ID contained in the ASN. Mismatches may signify a counterfeit situation, or possible alteration. Included in the ASN or external file is the pedigree data collected to the point of receipt by the distribution center.

While some might like to include radio frequency identification (RFID) under the pedigree guideline umbrella, this would overcomplicate the process. Whether barcode labels or RFID tickets are used is a function of the technology and equipment used by the manufacturer (or required by the customer). From a software perspective, writing labels or tickets requires the same level of effort. In any case, few pharmaceutical companies have RFID technology fully deployed in their warehouses. Other manufacturers only have one or two customers demanding RFID compliance. Accordingly, manufacturers are using a "slap'n'ship" technique to implement RFID whereby RFID tickets are generated based on the ship-to customer, and at the end of the process. Hence the term "slap'n'ship," where the ticket is printed and slapped on the case just before being placed on the truck, is most appropriate.

Retailing Trends—Shopping Anyway and Everywhere

2009-12-03T11:06:00.002-08:00

It is certainly not news that the Internet has been a disruptive technology which has irreversibly changed many of our habits. One change comes from the convenience of leisurely web browsing and online shopping from our cozy places. However, this trend is sometimes unfortunately bundled with the inconvenience of late or incorrect deliveries, and lack of order visibility and status tracking, followed by annoying and costly returns. This is inevitably followed by unnecessary trips to the post office, which negates any of the convenience promised in the first place.

Still, the need for online purchasing, account management, electronic bill payments, and so on, is indeed not only here to stay, but will likely grow in the future: more users will pass the phase of disillusionment ("How do I reverse a wrongly clicked transaction?" or "Where on earth are my goods?"), and come to realize how beneficial, effective, and "cool" the technology can be once it has been put well in place. Many have also turned to the convenience of online holiday shopping in the wake of the horrific events of September 11, 2001 in New York (US) and July 7, 2005 in London (UK), as well as occasional terrorist threats to shopping malls and other places of mass gathering.

Moreover, many savvy retailers and merchants have realized that Internet has certainly not cannibalized "brick and mortar" store operations, but that quite to the contrary, the two can even supplement and complement each other. Consumers today shop almost everywhere—in stores, at home, via mail catalogs, over the phone (soon—if not already—over many mobile and wireless gadgets), via TV infomercials, and over the Internet. Most retailers obviously try to sell through as many of these channels as possible. According to the adage "different strokes for different folks," some research indicates that TV shopping is mainly attributable to impulse purchases (on the fly—either because of a good deal price, or because of the customer's conviction that the item is absolutely necessary now, on the spur of the moment), whereas Web shopping is usually attributable to considered purchases and preliminary research before the step of going to the store to see the "real life" product (except for when the web site flashes certain promotions, in which case some shoppers might be hooked for an impulse purchase there too).
Some savvy retailers have explored in depth such important aspects as what people like about shopping online (for example, the depth of detail and range of options, the convenience, the ease of comparison shopping, and other related research) and, conversely, what they do not like about shopping online (such as the cost of shipping, delays in shipping, the inability to see and touch the product before a final purchase decision, the consequent likelihood of returns and additional shipping inconvenience, and the inability to talk to or otherwise reach a sentient being). Also, they have researched what customers do like about the in-store shopping experience (such as the ability to touch and feel goods, the atmosphere, the fact of having a person to talk with, and the ability to get the product immediately) and, conversely again, what they do not like about in-store shopping (long lines and crowds, the parking cost and inconvenience, and the possibility of arriving only to discover that the product a clerk on the phone had said was there is no longer available).

Some research and surveys indicate that the online channel is expected to account for 7 percent of all retail sales by 2010, which is a potential increase of nearly $200 billion (USD). Key to this growth has been the realization by many companies that they do not necessarily need to restructure their entire operation to accommodate the electronic commerce (so-called "e-tail") channel. In fact, "brick and click" commerce modes are becoming more closely intertwined, owing to advances in the technology infrastructure that facilitates information flow between retailers and suppliers, and that overcomes the key shortcoming of early e-commerce systems, such as non-alignment with business demands, unwieldy integration with other retail processes, and customized and inflexible underlying software applications.

Even today, few retailers can effectively and seamlessly interact with customers across these channels. Such interactions might include selling accessories and installation services in-store when customers pick up goods they have bought online or via the phone, or even allowing them to redeem promotions they have come across through any other channel. Today's so-called multichannel retailer is still too often a brick-and-mortar store that also offers some supplemental merchandise on a web site, where the two operations likely function as separate entities—almost as if they came from and were run by two different companies. In any case, whether the merchandise is displayed on store shelves or on the Internet, the retailer usually sells only those goods that it can stock in its own network of warehouses, which limits the potential assortment and choice.

Still, despite differing profiles of customers for different channels, savvy merchants are increasingly trying to offer cross-channel promotions. An example is provided by QVC, a $4 billion (USD) company, and an e-commerce leader marketing a wide variety of brand name products in such categories as home furnishing, licensed products, fashion, beauty, electronics, and fine jewelry. QVC reaches over 80 million homes in the US, and claims that the TV customer who is attracted to the Internet side of the business will spend about 25 percent more than they normally would, while the Internet customer who crosses over to TV might spend up to twice as much. Although multichannel sales might look like cannibalization to some brick-and-mortar store executives, these fickle customers want first-class products configured just for them, backed by higher levels of information and service, and delivered through whatever channel suits their needs at the moment.

In other words, these are the most valuable customers one can attract—they have more to spend, and are willing to spend it. By capturing them, retailers should be able to improve sales transaction values, order-to-cash speed, customer retention, and marketing return on investment (ROI). There are other indications that "multichannel" customers spend up to 50 percent or more during the holiday season than their traditional single-channel counterparts. These multichannel customers are also typically well-informed, and often more profitable buyers for a retailer, since they are driven by deliberate choice, convenience, and selection. Furthermore, more and more former mainstream, single-channel (primarily in-store or mail catalog) shoppers are "going

Customer Relationship Management and the Next Generation Network

2009-12-03T11:06:00.001-08:00

A few months ago I was heading back to the office to receive a very important call from a prospect about a huge business opportunity. Unfortunately a serious family situation caused me to head across town instead. Thankfully, the family situation came to a happy conclusion, but the business situation didn't.

Like most everybody else, a great deal of my time is spent on the road. I'm meeting clients and prospects, running seminars and workshops, and doing a few speaking engagements. Even though I'm on the go, I operate out of my home office and work lots of hours there. My business partner and I collaborate on a number of opportunities and projects as we build the business. When he's not on the go for the business, he also operates out of an office in his home, about fifty miles away. In order for us to keep in close contact with customers, prospects, and each other, we both have office numbers, cell phones, multiple corporate e-mail accounts, BlackBerry devices, etc. On top of that, I'm on the board of the Customer Relationship Management Association and have an e-mail account for organization activities. While trying to remain in close contact with customers, it's just as important that family and friends are able to reach me, and so I have a few personal e-mail accounts, a personal instant message account, and even a second cell phone with a number I only give out to family.

Even though we have these technologies that help us stay connected, it's not as efficient and effective as we'd like, and things still fall through the cracks. I get terrible cell phone coverage in my house, so when people try to reach me on my cell phone while I'm at home, they don't get through and are forced to leave a voice mail or try my office. In some cases when I'm just not available, people will leave voice mails on both my mobile and office lines. If they are really trying to reach me they will also lob an e-mail to me, knowing I have a BlackBerry device. So at some point I will have to check three different systems to get the same message, except that there may be more emotion attached with each extra message. This is not good for me, in two important, interrelated ways. With each communication channel I open up, a new "database" is created that I will have to monitor, and more importantly, how will all this impact my relationships with customers and prospects?

Best Practices for Transporters and 3PL Service Providers

2009-12-03T11:04:00.002-08:00

The current state of the goods transport business is such that most transporters and third party logistics (3PL) service providers are forced to offer their services at lower rates while faced with the continual rise in costs for doing business (e.g., increasing fuel prices, employee salaries, and other operating expenses). This scenario calls for transporters and 3PL service providers to streamline business processes and provide value-added services to boost their top lines and improve their bottom lines.

Such results can be achieved by implementing software systems equipped with built-in best practices and with the ability to adapt for future growth, entry into new markets and market segments, and changes in business practices. It also makes sense for transporters to enter into new business lines (e.g., providing services to manage entire supply chains for clients, including managing inventory, warehousing, in-plant services, etc.).

Transportation is the crucial link among all partners in any supply chain. Goods move from suppliers to manufacturers, from manufacturers to distributors, and from distributors to retailers. In cases of rejections, repairs, and customer service, goods move in the reverse direction. Transportation of goods is the lifeblood of most businesses, and in an ever-increasing global market, its role is becoming increasingly vital.

In the agrarian societies of yore, transportation of goods was limited to taking farm produce to the central market of the village. Then came trading communities, which would ship and receive goods via sea routes. Slowly, after the dawn of industrial era, goods were being made on a mass scale, and they were shipped both nationally and internationally.

Now, in the era of global trade, some industries manufacture parts at different geographies, and these goods are then transported and assembled at locations close to end customers. In other industries, products are made at contract manufacturing sites that are located in faraway countries having low labor and materials costs, and are transported and consumed at other locations.

Transporters Have Distinct Needs

Because of the nature of global trade, goods are being transported to faraway places in larger quantities. Transporting goods over long distances both economically and with minimal transportation time requires special knowledge, resources, and expertise. Since the size of transport operations is becoming huge, transport organizations need reliable transportation management systems (TMSs) to communicate effectively with suppliers, distributors, retailers, and service providers. With the help of a capable TMS, transporters can plan and execute their shipments with more accuracy and with less effort. They can also lower their operations costs by means of optimized loading (to get better fill rates) and by reducing empty run miles and wasted time.

Best Practices for Transporters

The unique nature of the goods transport business calls for unique features in a TMS. Transporters deal with many organizations, so they need to have a system to which all of these organizations have access to perform everyday transactions.

Best practices related to goods transportation can be divided into six parts: 1) supply chain management (SCM), 2) billing management, 3) key performance areas measurement (KPAM) management, 4) key account management, 5) quotation management, and 6) fleet management.

1. Supply Chain Management

Transporters need to understand their clients’ requirements and to be an integral part of their clients’ supply chains. They should help their clients achieve the desired visibility level of inventory during transit, as well as reduce transit times, maintain service levels, and reduce transportation costs.
Transporters can devise innovative ways to achieve many of these goals. Technologies such as global positioning systems (GPSs) and general packet radio service (GPRS) can be used to track the location of a vehicle during transit. This will help in achieving better customer service and in making changes in planning at the receiving warehouse (such as appointment scheduling, unloading, put away, etc.) on the fly. Route and load optimization features will assist with route selection to reduce transit times and empty miles run, as well as optimize loading to lower transportation costs.

Providing 95 percent or more visibility during transit can help transporters’ clients reduce their overall inventory levels, and thus save in operations costs. Many times, a vehicle can be loaded at 100 percent volumetric capacity, but it could still be at less than 50 percent in terms of weight capacity. Similarly, sometimes a vehicle is 100 percent full in terms of weight capacity, but less than 50 percent full in terms of volumetric capacity. In these situations, the load planning features of a TMS can help achieve optimized capacity of use of the vehicle. Using load consolidation, which means using opportunities for loading vehicles during return trips, will help transporters’ clients reduce transportation costs.

2. Billing Management

Transporters need to ensure that there are no delays in the payment of their bills. Each bill for each activity they perform must be accurate, and they should ensure no opportunity is lost to bill every activity they carry out. They need to have checks and alerts so that bills are created and presented to clients on time, thereby minimizing payment delays. In addition, transporters need to have an activity-based accounting system so they can bill accurately for each and every activity. They can pass a percentage of the cost savings from reduced operation and transportation costs on to their clients, which will help to maintain a happy and loyal clientele.

3. KPAM Management

Each client of a 3PL service provider signs a service level agreement so that key performance areas can be defined and measured in order to rate the provider’s quality of the service. These agreements differ based on the needs of each client. A TMS with KPAM capabilities should be able to define and measure the agreed-upon key performance areas.

4. Key Account Management

Transporters and 3PL service providers have some major clients for whom they create dedicated customer service, marketing, operations, and accounting teams. In many cases, a team may be comprised of members from different divisions so that all the client’s needs are met through one channel, and the client does not have to deal with several people for a single area or issue.

Another aspect of key account management is that all the client’s needs related to logistics are met by one service provider. For this, the service provider may offer these services itself, or it may procure these services from other service providers to create a single window through which it provides all services to the client.

5. Quotation Management

By using seasonal or historic costs and by comparing rates, transporters can provide accurate quotations to clients. Quotations can take into account opportunities for consolidation, load optimization on equipment, and any other cost-saving measures so that the transporters can pass the cost savings on to their clients, potentially ensuring more business from these clients.

Bolstering the Call Center with Service Resolution Management Processes

2009-12-03T11:04:00.001-08:00

To accommodate increasing customer demand for company and product information and for quick issue resolution, companies are now considering the benefits of online self-service systems. Knowledge management (KM) software is the key to such systems, as well as to integrating customer relationship management (CRM) and service resolution management (SRM).

For more background, please see Integrating Customer Relationship Management and Service Resolution Management and Knowledge Management: The Core of Service Resolution Management.

Bolstering Call Center (and Other CRM) Processes

The trend of customer service enablement and the nurturing of customer relationships (which have traditionally been the forgotten stepchildren of CRM) may be overtaking customer acquisition as a main driver of recent CRM deployments. Customer service has historically been provided primarily in person or over the telephone, with limited reference materials available for the customer service representative (CSR). This emerging business model assumes that companies that provide customer service over the telephone will find value in aggregating company knowledge by using the appropriate software, and will be willing to access the content over other channels, especially the Internet. The business model also assumes that companies will find value in providing some of their customer service over the Internet instead of by telephone.

In the past, customers would show a preference for a certain channel of communication with a company, but this is no longer the case. Customers now use several different channels available to ask for support and service and about upgrade issues, or to inquire about or request new products and services. And they expect to receive accurate, consistent information, regardless of the channel they are using. Service that does not meet these expectations is considered a waste of time, and a reason for the customer to seek out competitive offerings elsewhere.

The use of multiple channels for customer service and support, as well as the importance of consistent, accurate, and swift answers, is expected to only increase in the future. Companies are thus realizing that what their customers are seeking is knowledge (which is likely stored somewhere in the company, but more likely, scattered all over the company), and that these customers want it regardless of the channel they choose, be it telephone, Web self-service, e-mail, retail kiosk, or chat.

The logical question a company should ask itself is how it can provide customers with direct access to the knowledge they are looking for when that data may be residing in a variety of places. For example, product specifications, technical support, billing questions, and pricing and policy information can all be found in any number of places, such as CRM databases; legacy KM systems; frequently asked questions (FAQ) lists; intranets; content management systems; billing systems; or an automated response system. The goal here is to analyze the customer's problem, retrieve the information needed to solve that problem, and to do so in whichever contact channel the customer chooses. This process should not only minimize customer frustration and lower the cost of the support transaction, but it should also leave the customer delighted.

Although computer-telephony integration (CTI) systems do a great job at automating call routing and case management, web sites have become ever glossier and animated, and CRM systems do a decent job of handling customer contacts (and possibly preferences) and product information, something is still missing to enable cohesive customer service. The plethora of new self-service technologies, such as natural language search engines, knowledge bases, guided navigation, user forums, collaboration, personalization, multichannel (e-mail, instant messenger [IM], integrated voice response [IVR], call centers), and so on, lead us to the emerging part of CRM software applications, specifically applications that enable customer service organizations to more effectively resolve service requests and answer questions.

Knowledge Management: The Core of Service Resolution Management

2009-12-03T11:03:00.000-08:00

Today's businesses are faced with the reality of customers expecting and demanding more multichannel information and better service from call centers than ever before. Integrating call center service resolution management (SRM) into customer relationship management (CRM) can help companies retain both their call center agents and their customers.

For more background, please see Integrating Customer Relationship Management and Service Resolution Management.

Knowledge management (KM) is at the core of integrating CRM and SRM. KM software aims at helping to unlock the power of a company's knowledge to improve efficiency, competency, and profitability. It does so by providing an environment in which companies can, more quickly and cost-effectively, create a company-wide knowledge base to store and index documents and to more accurately search for the answers to user questions.

Currently, the key trends in KM tools enable companies to perform the following: 1) target their online information to reflect what is most likely to interest customers, and 2) maintain online forums where customers can share amongst themselves what they know about the company's products.

Hence, KM products typically fulfill two functions. KM accommodates self-service, meaning a customer can access a pool of public information that a company accumulates about itself, without the need for live assistance, to have his or her questions answered. Second, KM software helps call center agents to retrieve information from a repository that is often, obviously, larger than what is available to the public (since the aim of live assistance is the same as self-service—to answer customers' inquiries quickly and accurately, but with the preferred human touch).

The above considerations have marked a fundamental shift away from the time when any company could claim to perform a valuable service to customers simply by displaying information on its web site, without having to take into account who the customers were. Today however, virtually all companies must demonstrate their value to customers by segmenting information that is directly relevant to them.

Customer segmentation is not a new idea, since segmentation was supposed to be the way that—with the help of CRM tools—companies would offer the best possible service to their best customers. The problem with applying overt segmentation to customer service was that it then revealed a hierarchy that placed most customers at the bottom. This was so because, by definition, elite customers represent a small minority (the proverbial Pareto's 80/20 Rule). The premise of segmenting customers reinforced the idea that customers existed to create value for companies, rather than the other way around. Using this logic, most (up to 80 percent) customers were of little value to the companies that they bought products and services from.

By contrast, the practice of KM helps companies establish a bidirectional relationship with customers that rewards them for sharing knowledge (their product and service use experience), and not only for spending money. The latest generation of KM software makes this possible by enabling the company to combine what it knows about customers and what customers know about the company, and to offer this information as part of the resources available on its web site.

As discussed in Making the First Call Count by Greg McFarlane, an astute KM software has to make it easier for agents to author new knowledge when new services, products, or upgrades are in place. This reduces the need for agents (especially novice agents) to escalate calls to the upper service tier. This decreases the costs and the lengths of calls, but more importantly, it gets calls answered more quickly. In addition, the diagnostic search functionality helps resolve customers' issues quickly and accurately with its ability to pull answers from any data source an agent can connect it to, thereby giving agents the right information at the right time. Lastly, the automation of key resolution processes enables new agents to get up to speed more quickly. By pre-populating case notes and pre-establishing workflows and other techniques, the companies can create an environment that allows agents to operate as effectively as possible, regardless of their experience.

Integrating Customer Relationship Management and Service Resolution Management

2009-12-03T11:02:00.002-08:00

Inflation's Demise: The Impact on Business Information System Requirements

2009-12-03T11:02:00.001-08:00

Inflation occurs when an abundance of money exists in relation to goods. This creates artificial demand as consumers accelerate their purchases to avoid future price increases. Suppliers, competing to meet this demand, confront temporary capacity shortages that they alleviate by shifting resources to higher-margin goods and raising the prices of lower-margin goods. In addition, they accelerate purchases of material to avert shortages and avoid future price increases. These actions create additional demand for goods, perpetuating the inflationary cycle.

Today's ERP systems originated from Material Requirements Planning (MRP) and Manufacturing Resources Planning (MRP-II) techniques developed in the 1970s and early 1980s. They focus on improving the accuracy, speed and visibility of short- to medium-term resource planning and allocation decisions, thereby improving management's ability to confidently make profitable commercial decisions. They also focus on minimizing operating costs, and maximizing short- to medium-term revenues, through improved coordination and execution of daily sales, engineering, procurement, production, logistics, maintenance and accounting activities. In short, they are designed to maximize profits by timing business events so exactly that productive resources are committed as late as possible, but never too late to miss profitable sales opportunities.

These are very important business problems during inflationary times, because one or two avoidable, critical resource shortages could mean a missed sale and reduced ability to recover fixed costs. For example, accidental over-commitment of a bottleneck work-center or shipping vessel may delay the arrival of finished goods and cause upstream work-centers to shut down until the backlog is cleared. The cost of underutilized upstream capacity is still incurred, even if production or shipping delays cause lost or delayed revenues.

Prices stabilize or fall when an abundance of goods exists in relation to money. This artificially reduces demand as consumers postpone their purchases in anticipation of even lower prices. Suppliers, challenged to recover their fixed costs, now have excess capacity. They respond by cutting the prices of goods, especially their high-margin products, in order to stimulate sales. In addition, they decelerate their own purchases of material to use-up existing stocks, and await future price decreases. These actions further postpone the demand for goods, setting the stage for a deflationary cycle.

At this writing, Asia and other developing regions are slowly recovering from an acute recession and strong deflationary pressure, while other regions (notably, the United States) continue to enjoy robust growth and modest inflation. This disequilibrium has created a combination of inflationary as well as deflationary pressures throughout the world. For instance, demand for goods remains strong in the United States because buyers there still have inflationary expectations. Asian suppliers have cut prices in order to boost export sales and utilize excess capacity.

If, as many believe, the world is in transition from inflation to price stability or perhaps deflation, how will business priorities be affected before, during, and after the transition? How will changes in business priorities affect ERP system requirements?

Computerized Maintenance Management Systems: A Tutorial Part Two: Benefits and Interfaces

2009-12-03T11:01:00.000-08:00

A CMMS (computerized maintenance management system) can be one of the easier pieces of software to cost justify. This is not to say that every company should have one. Rather, the benefits are real and tangible; savings that you can take to the bank. You should analyze current maintenance practices, determine percentage of downtime, calculate yield loss, and loss revenue. Even if this information paints a rosy picture, you would want to look at your inventory carrying costs. Perhaps you are overcompensating for potential lost productivity due to equipment outage by stocking more inventory that is needed. The fact that you don't have the data to perform the above analysis may be a hint that your company needs a CMMS.

As we stated above, deciding whether to repair or replace a piece of equipment is a common problem facing many companies. With a CMMS, historical information about a piece of equipment�s performance is only a few clicks away. This historical information allows you to intelligently, and with justification, compare costs of maintaining versus replacing.

We take it for granted that a CMMS will produce the work order for a scheduled or unscheduled preventive maintenance or repair. Assuming the CMMS database is accurate and current, the CMMS generated work order should reduce the amount of data entry needed to capture information. Using the theory of negative confirmation, similar in principle to a picklist confirmation, only the exceptions to the work order need be entered. This would include additional parts consumed but not scheduled; parts scheduled but not consumed; and hours worked in addition to or less than estimated time to complete.

Another decision-making tool available in a CMMS is visibility as to what is not getting done via a backlog report. Accordingly, you can adjust and reset priorities. In a paperless CMMS environment, when you encounter a problem with a piece of equipment, you don't have to go hunting through file cabinets and dog-eared stacks of paper to find such things as warranty information. Instead, the warranty information becomes part of the equipment database, possibly eliminating or reducing vendor charges.

A CMMS allows you to evaluate the effectiveness of your preventive maintenance program. Performing preventive maintenance does not automatically guarantee that equipment will run longer and better. With the historical information maintained in a CMMS you can correlate the preventive maintenance with downtime. If your preventive maintenance does not reduce downtime, you may need to re-think it. In addition to preventive maintenance, a CMMS can remind you to perform inspections required by law. Finally, many insurance companies have recognized that the proper and faithful use of a CMMS can reduce the chance and frequency of costly insurance claims. Your facilities are safer because maintenance work gets done properly and reliably. Recognizing these benefits, insurers may pass along these savings in terms of lower premiums to companies that use a CMMS. In this case, your company is actually getting a double hit; internal savings through cost reductions and external savings through lower premiums.

At year end, a CMMS can assist you in preparing a more accurate budget, cutting spare part costs due to overstocking, and spreading maintenance dollars to more critical pieces of equipment. This information can also enable you to take advantage of volume and seasonal buying discounts.

How you rank these benefits in terms of return on investment (ROI) will depend on your company. However, with your detailed knowledge of the company, these benefits may be just the tip of iceberg.

Computerized Maintenance Management Systems: A Tutorial Part One: Challenges and Features

2009-12-03T11:00:00.000-08:00

Saying that a computerized maintenance management system (CMMS) is just another scheduling tool is tantamount to saying that the Titanic was just another boat. While maintenance scheduling is arguably its most important aspect, CMMS has many additional features that can help a company manage its maintenance function.

CMMS is using software to effectively and efficiently plan and execute tasks meant to maintain a company's operations to ensure maximum uptime of equipment critical to the production of finished goods. To successfully plan a maintenance procedure, the user needs accurate information on the equipment to be maintained, its components, and ongoing production or workload requirements. The maintenance skills and time available must be matched against the workload, equipment items, and availability. Parts and supplies must be procured in advance, in a well-planned fashion, to complete maintenance tasks on schedule. While maintenance may be complex, managing it should not be.

Part One of this two-part note helps you build a business case for CMMS in your organization by examining the maintenance challenges and problems confronting companies and the key features of a CMMS.

Part Two will address the benefits of CMMS and, of course, interfaces issues.

The maintenance challenges facing companies today is optimizing a facility's performance to maximize productivity, improve utilization, reduce waste, and lower operating costs. A major impediment to a facility's throughput and meeting demand is equipment downtime, planned or otherwise. A CMMS provides equipment and tool state modeling, planning and scheduling, performance analysis, preventive maintenance, and paperless operation to maximize needed equipment reliability.

And it's not getting any easier. In push industries, like process manufacturing, you need to react nimbly to changes in the marketplace and the needs for your customers. Equipment outage means lost opportunity, lost revenue, and lost customers. Automation has increased inter-equipment dependencies and demands on the maintenance personnel. Increased automation on the shop floor tends to drive spare part inventory further out of control, resulting in inconsistent or delayed repairs.

The high value of capital equipment and high cost of downtime demand a complete and current knowledge of a piece of equipment's performance and history. The break-fix mode needs to be stopped in favor of failure prevention. The overall control and consistency of repairs needs to be greatly enhanced. Finally, to obtain the maximum value from maintenance personnel, scheduling effectiveness and equipment utilization must be improved. If these challenges face your company, CMMS may provide the means for you to get behind the problem instead of waiting for it to steamroll over you.

The Rise of Price Management

2009-12-03T10:59:00.000-08:00

The previous note, The Case for Price Management, dealt with explaining the inadequacy of glorified price and discount list capabilities coming from traditional enterprise resource planning (ERP) and accounting back-office systems.

Given the prospective upsurge of pricing solutions demand, and the fact that an increased focus on change management often leads to better results, many professional services firms have begun to focus on price management. For example, Deloitte Consulting, anticipating a pertinent need, relatively recently launched the Pricing Center of Excellence, which is based on several years of experience delivering price and profit management projects. To that end, the practice has developed a detailed price management implementation methodology; created tools to streamline implementations; and included many vertical industry teams from across the company (from such sectors as the automotive, retail/consumer products, financial services, process manufacturing, and high-tech/electronics industries).

Depending on the pricing problem the company is trying to solve, there might be different pricing processes and software categories, such as:

* price execution
* price enforcement
* price visibility
* price optimization
* pricing management

For example, according to AMR Research, the price execution category is designed to control (or altogether curb) maverick selling practices, and to obtain insight and feedback from the field. This is the process used to capture pricing, most often in tables and spreadsheets, and then distribute that information as predetermined pricing to salespeople, for deal structuring support. In other words, price execution is the process through which prices are delivered and communicated to salespeople and buyers, whereas price enforcement involves the adequacy of the processes and tools (such as workflow management) supporting deal negotiation and contract compliance. Another related term on the execution side is price visibility: once users set a better price and understand how it performs, they want to put this into action and enforce it in the downstream components of the value chain. This execution and enforcement aspect of pricing has been particularly embraced by chemical producers.

Price optimization is the process through which the best prices are determined, based on multiple demand-side variables and market factors. Some of these factors are quantifiable (such as the inventory situation) and some are not (such as competitor moves or seasonality), which makes building pricing models a difficult process. Optimization looks at the profit-critical variables of the business, and advises management on how these variables can be changed to achieve greater total profitability.

In every business, many variables control or impact profitability. Some variables are obvious (such as selling prices), while others are not so obvious (for example, queue time in a production facility). Since these variables are interrelated, the best solution considers the variables within a holistic view of the business, so that over-adjusting some variables does not negatively impact others. As in the aairline industry, the best price solutions monitor the situation in real time, to get the information necessary for making quick decisions. These applications are typically a set of equations and parameters, and are used to decide what is (or is not) an acceptable price, given the customer and the circumstances.

The Case for Pricing Management

2009-12-03T10:58:00.000-08:00

Enterprises have long realized the importance of improving profits by curbing upstream supply chain costs, as evidenced by an increasing strategic approach to sourcing, e-procurement, and contract or spend management over the last several years (see The Hidden Gems of the Enterprise Application Space). However, this broad strategic approach, including education and discipline, has not been applied on the sales side. The kind of thoughtfulness recently seen amongst well-informed and disciplined buyers and purchasing managers has been lacking when it comes to deploying information technology (IT) systems for analyzing pricing processes, pricing optimization, sales force education, and price enforcement in the downstream components of the value chain. Another major deficiency is the dearth of software providers for the management needs of the entire price lifecycle, from price setting, price optimization, and price policy management, to deal execution monitoring, analytics, and reporting.

Justifying the "why" of pricing and profit optimization is fairly easy, since the objective is to increase profits and margins, and hardly anyone could disagree with that objective (see Profit Optimization—Can We Possibly Argue with the Objective?). But the "how" of the optimization is not easy. Although a simple analysis of the profit increase equation may prescribe raising prices, cutting expenses, or simply selling more—and all of these seemingly simple solutions are right in principle—the real problem is far more complex. For example, if one raises prices, will the customers continue to buy, or will they rebel?

On the other hand, if one cuts expenses drastically, will the product quality suffer as a result of resentful, underpaid, overloaded workers, or equally resentful (beaten up) suppliers delivering cheaper but inferior products? Will this drive customers away? Will the consequent warrantee cost increase to the extent that expenses actually rise instead? Moreover, at many companies, there is little cost-cutting maneuver space within operations, given that most enterprises have been watching their procurement costs closely, and evaluating their trading partners. The option of selling more is not simple either, because no one can control customer needs: one cannot know for sure that they will buy more. Some indications show that volumes would have to rise about 19 percent to offset the profit impact of a 5 percent price cut, and such demand sensitivity to price cuts is quite rare. And even if customers do buy more, the question then becomes, can this upsurge in demand even be delivered?

Thus, it appears that raising prices justifiably is the most effective way for enterprises to increase (or maintain) profits in times of both economic boom and slump. While this holds true for most environments, it is particularly true in the razor-thin-margin retail and commodity manufacturing establishments, where prices and availability are the only levers of competitive differentiation. Savvy and dynamically optimized pricing can then mean the difference between survival and failure. The Power of Pricing, the well-known 2003 McKinsey & Co. report, showed that a price rise of 1 percent, at constant volumes of sale and costs, should generate an 8 percent increase in operating profits, which is 50 percent greater than the impact of a decrease of 1 percent in variable costs (materials and direct labor costs), and more than 300 percent greater than the impact of a 1 percent increase in sales volume, even if one ignores the fact that increased production typically increases costs.

It is often not even necessary to raise prices, but rather to make sure that the customer is charged the theoretically right price (or something close to it) at the end of the day. Corporate nominal list price information might be visible in back-office systems, but the trick is to incorporate real-time, transaction specific, on- and off-invoice price adjustments (such as rebates and promotions, consignment costs, cooperative advertising, end-customer discounts, chargebacks, payment terms or cash discounts, online order discounts, performance penalties, receivables carrying costs, slotting allowance, stocking allowance, freight charges, or volume incentives). The real art is in discerning the actual price each customer has been charged per transaction, after accounting for actual deductions, many of which come only after the fact, from the nominal price. Related to this is the notion of the "pocket price waterfall" to display how much actual revenue the enterprises really keep in their pockets from each of their customer transactions, which thereby helps them diagnose and capture pricing opportunities.

ERP Systems and the ETO Manufacturing Market

2009-12-03T10:57:00.002-08:00

ERP Systems and the ETO Manufacturing Market Part Two: ETO versus Repetitive Differences

2009-12-03T10:57:00.001-08:00

ERP Systems and the ETO Manufacturing Market Part One: Event Summary

2009-12-03T10:54:00.000-08:00

In our relatively recent article about the still ongoing consolidation in the market, What Does Vendor Consolidation Mean To The End User? , we mentioned that the market will not stop short at the eventual "Big Five" or so of the largest leading vendors. Namely, we expect the market for application software to further segregate into two tiers.

The first group will be a limited number of very large vendors, while the second group will be a large number of small, highly focused vendors. The latter's business model will be focusing on a relatively small, tightly defined market with specific requirements that cannot be met with more generic products. Usually, these markets will be too small for the Big Five to want to compete, and will also have unique requirements that cannot easily be built into the more generic products offered by the Big Five. These specialists, boutique or niche vendors (whereby neither of these terms is meant in a derogatory manner) will compete by having in-depth product functions and intimate knowledge of their market place or by offering services (content or location wise) not available from the Big Five or large independent service providers. Example of these markets can be industrial (e.g., fresh meats, dentist offices, machine tools manufacturers, etc.) or regional (e.g., Chicago, New Orleans, Columbus, etc.) focus.
While competitive costs (i.e., ever lower and more flexible software license pricing with shorter implementations) and outstanding global service (i.e., proven implementations' payback benefits and subsequent customer loyalty) will remain important requirements for success, particularly in the lower end of the market; vertical focus will still be the key factor for survival.

Vendors that weather the ongoing carnage will have focused their business and product on a few particular, manageable industries (possibly only a single one for the smallest vendors), preferably those with a current low penetration, instead of a more generic, horizontal approach. There is a general consensus in a number of diverse industries that generic solutions require longer implementation timeframes, more customizations (or, possibly even worse, workarounds, and related dreaded backdoor knowledge just to keep the system running), and the complication of add-on solutions. Winning enterprise resource planning (ERP) and other enterprise applications products will thus demonstrate deep industry functionality and tight integration with best-of-bread "bolt-on" products in a particular vertical, which also means adding sector-specific, fine-grained capabilities.

As a matter of fact, verticalization can be seen as part of a larger effort by most enterprise applications vendors to ease the implementation of their products. By now, almost everyone in the IT industry has heard horror stories of enterprise applications implementations that took two or three years and cost tens of millions of dollars, sometimes only to be eventually abandoned (see The 'Joy' Of Enterprise Systems Implementations). That happens, in part, because the larger, generic ERP packages usually arrive needing to be configured for the business and the industry entirely from scratch. At least by configuring parts of the package in advance for a given industry and circumventing functions not required in that industry, these vendors can shorten and ease the implementation process.

In fact, software implementation time reduction is a key element of success in any enterprise-wide technology project. Users have thus increasingly looked for an ERP system designed for a specific business, since software that combines industry-specific functionality with the flexibility to accommodate each company's unique processes goes a long way toward improving the functional fit and the speed of implementation.

Closely related to the above need for vertical focus would be the inherent adequacies that traditional ERP systems have commonly exhibited owing to their genesis (see Enterprise Applications—The Genesis and Future, Revisited), and which have left enterprises struggling with a system that does not mesh with their manufacturing operations. Although, as possible remedies of these shortcomings, the lean, flow and demand-pull manufacturing philosophies have lately been getting an increased interest. Namely, the ERP systems of the 1990s have been burdened with the liability of carrying on some well-known manufacturing resource planning (MRP) problems like unnecessarily complex multilevel bills of material (BOMs), infinite capacity assumption, inefficient workflows and unnecessary (i.e., no value-adding) transactions, activities and data collections, which have not been amenable to mass-customization but rather to traditional push-demand, mass production and inventory building trends. For more details, see Pull versus Push: a Discussion of Lean, JIT, Flow, and Traditional MRP.

Still, while some tout that regardless of the industry, type of manufacturing environment, or product volumes, flow manufacturing principles can be implemented successfully, the concept has not been all things to all people so far. It is still challenging or even unsuitable to deploy in a jobbing shop that does highly configure-to-order (CTO) or unique engineer-to-order (ETO) products having high setup times and long lead times, although it has been occasionally deployed there with almost as much success as within high-volume, more repetitive make-to-demand environments. Namely, lean manufacturing and just-in-time (JIT) concepts, which emphasize continuous improvement of processes that lead to, for example reduced inventory throughout the supply chain, shorter lead times, and faster cycle times, all enabling improved response to customer demands, are indeed universal across the board and cannot be debated.

Integration with Relationship Management

2009-11-09T04:55:00.002-08:00

The ability to manage relationships with customers, vendors, and others is fully integrated with standardized functionality for supply chain management. This level of integration contrasts sharply with add-on functionality such as a third-party customer relationship management (CRM) application. Illustrations of integrated functionality include the following:

* Contact interactions reflecting supply chain activities. The system automatically records contact interactions involving sales and purchase documents. For example, an interaction may represent sending a document for a sales quote or invoice, or a purchase quote or order. Each document is treated as an interaction.

* Contact interactions reflecting outgoing calls, e-mails, and cover letters. The system automatically records contact interactions involving outgoing communications initiated from within Navision, such as originating a phone call. Outgoing e-mail becomes an attachment to the interaction. Incoming e-mails can also be automatically recorded as a contact interaction and attached to the interaction.

* Contacts. You can create contacts from existing information about customers and vendors (and vice versa), and automatically create contacts when adding customers and vendors.

* Create sales quotes and orders for an opportunity. A sales quote can be defined for an opportunity (where the opportunity represents a potential sale to a contact) and converted to a sales order.

* Contacts and commerce portals. Business with a contact can be conducted through a commerce portal.

Other relationship management capabilities go beyond these integration features. As part of generating and qualifying leads, for example, you can create a campaign, assign a subset of contacts to the campaign, define a template for sending information (such as mailings or e-mail) or making phone calls, and track responses for the campaign. The system automatically records the sent information and responses as contact interactions. Contact interactions can be manually added, and contacts can include banks, accountants, lawyers, travel agencies, government authorities, press, and others. The system supports the identification and tracking of opportunities within user-defined sales cycles, and recording the related contact interactions. Contact information can also serve other purposes, such as printing labels or exporting data for external telemarketing.

Integration with Warehouse Management

2009-11-09T04:55:00.001-08:00

Integrated warehouse management functionality is already included, thereby avoiding the need for a supplemental application. It supports both order- and document-based approaches to warehouse management, and a natural growth path to more advanced functionality. For example, suggested put-aways can account for item characteristics (such as weight or cold storage requirements) as well as bin characteristics (such as weight limitations or cold storage capabilities).

Integration with E-commerce

E-commerce builds on the natural design of an ERP system since it provides electronic communication of basic transactions. Integrated e-commerce functionality is supported in several ways, including Biztalk transactions, reverse auctions, commerce portals, and user portals.

Biztalk Transactions for Sales and Purchasing. The symmetry of sales and purchasing functionality is reflected in Biztalk transactions, as shown in the following figure. For example, an outbound Biztalk sales quote and sales order confirmation can be sent to a customer. Conversely, an inbound Biztalk purchase quote and purchase order confirmation can be received from a vendor. Each inbound transaction can have an optional e-mail notification sent to the internally responsible person.

E-Commerce Sourcing via Reverse Auctions. A reverse auction provides an electronic approach to sourcing a purchase. It includes sending a request for quote to multiple vendors, obtaining vendor responses on a web site, reviewing the quotes, communicating to vendors whether their quote was accepted or rejected, and creating a purchase order from the quote.

Manufacturing Environments and Integration with Other Functions

2009-11-09T04:54:00.000-08:00

Definition of Product Structure Information. Master bills and master routings define product and process design, with optional bill and routing versions. Their identifiers are assigned to relevant manufactured items and specified on production orders. Planned engineering changes are identified using date effectivity for each bill and routing version; date effectivity can also be identified for material components. The master bill and routing information provide the basis for costing and planning calculations. Routing information is optional, and some firms coordinate production activities without it.

The order-dependent bill and routing for a production order initially reflect the assigned master bill and routing, and can be manually maintained to identify a custom configuration. The system models a multilevel custom product configuration using order-dependent bills and multiple linked production orders tied to the sales order.

Variations in Production Strategy. Selling stocked product involves a make-to-stock production strategy, where sales forecasts typically drive end-item replenishment. A make-to-order production strategy often requires stocked components, where replenishment may be driven by component forecasts. The production order for a make-to-order product is typically linked to a sales order. A make-to-order product may have make-to-order components, so that multiple linked production orders are tied to the sales order. The linked production order(s) can be generated during sales order entry, by planning calculations, or by manual assignment.

Lean Manufacturing Practices. Lean manufacturers often require auto-deduction of material and resources, bin replenishment of floor stock material, order-less reporting of production, or constraint-based scheduling of manufacturing cells.

Design Factors Shaping System Usage in Distribution Environments

2009-11-09T04:53:00.002-08:00

Major factors shaping system usage include item definition, symmetry of sales and purchasing functionality, sales variations, symmetry of warehouse functionality, and the capabilities to model variations in multi-site operations.

Item Definition. Item master information consists of company-wide and location-specific information. Company-wide information, for example, includes the item number, lot/serial tracking policies, and a costing method (such as standard cost or an actual costing method). Location-specific information includes the item's costs and replenishment method for each location. Non-stock items can be defined in the item master, as well as item variant codes to handle color/size variations of the same item.

Primary Engine for Coordinating Supply Chain Activities. Planning calculations synchronize supplies to meet demands and generate suggested action messages on worksheets. Replenishment logic within the planning calculations includes time-phased order point, DRP, and MRP logic.

Symmetry of Sales and Purchasing Functionality. Sales and purchasing both handle documents for quotes, blanket orders, orders, invoices, returns and credit memos, with parallel approaches for handling cross-reference identifiers, prices and discounts, special charges, and order-related text. Symmetry is also apparent in the definition of customer and vendor information, and the handling of special orders and drop shipments.

Variations in Sales. Sales order line items can identify material items (including special orders, drop shipments, and kits of components) as well as resource time, special charges, and text. Pricing and discounting schemes can reflect product and customer groups, quantity breakpoints and date effectivity, and discounts based on total order value. Sales can be forecasted to drive purchasing requirements.

Symmetry of Warehouse Functionality for Inbound and Outbound Shipments. The same functionality for handling outbound shipments applies to sales orders, transfer orders, and returns to vendor. Similar functionality for handling inbound shipments applies to purchase orders, transfer orders, and customer returns.

Variations in Warehousing. Shipping activities can focus on individual orders or a pick document, while receiving activities can focus on individual orders or a receipt document and an optional put-away document. Put-away suggestions can optionally account for bin location considerations, such as location preferences and capacity constraints. Movement within a warehouse can reflect bin replenishment policies, such as replenishing bins from a bulk storage area.

Design Factors Related to Customization Capabilities

2009-11-09T04:53:00.001-08:00

Customizations range from the simple to the complex. Complex customizations typically entail significant changes to system functionality and logic. Simple customizations typically involve minor changes to the user interface and reports, and do not impact system logic. Several tools support simple customizations as illustrated below.

Customizing Window Layout for the List Format. The list format allows an end user to tailor window layout by selectively hiding, showing, and sorting fields via drag-and-drop. This provides a simple approach to customizing window layout and the system remembers each end user's preferences. In addition, an end user can view all available fields (and their values) in the table related to a record.

Customizing Window Layout for the Card Format. The card format can be changed with an easy-to-use forms designer, such as changes to field labels, to show or hide fields, and to rearrange fields on tabs.

Customizing Reports and Documents. The format and content of reports and documents (such as an invoice) can be customized using a report designer tool. The tool also supports export/import for exchanging spreadsheet data. Customizing via Additional Fields. New fields can be added to tables with immediate visibility in list format windows and availability for customizing card formats and reports.

The object-oriented design also supports more complex customizations. Numerous case studies throughout the book illustrated some of these customizations.

Managing Your Supply Chain Using Microsoft Navision

2009-11-09T04:49:00.000-08:00

The user interface within Microsoft Navision provides consistency across all windows that assists ease-of-learning and ease-of-use. In addition, a graphical user interface supports user-defined work flows so that a user can select the desired step and access the relevant window. A few illustrations are provided below about the basic types of windows comprising the user interface.

Card versus List Format. Records can be viewed individually in card format or all together in list format, where the list format works very much like a spreadsheet. Customer master data, for example, can be viewed and maintained in card format for a single customer or viewed in list format for all customers. Both formats support access to related information and forward/backward browsing. The card format often segments data into tabs, while records in a list format can be copied and pasted into a spreadsheet.

Some windows with header and line item information employ a combination of card format and list format. A sales order, for example, consists of header information in card format and line items in list format. The header information for all sales orders can be viewed in list format.

Find Capabilities. Find capabilities can be based on any string of embedded text in a record identifier (such as customer number) or its attributes.

Filtering and Sorting. A filter limits the displayed records based on values in one or more fields, with sorting based on any field. The user can browse forward and backward through the subset. Filtering logic includes equal to, different from, greater than, less than, intervals, and wild cards.

Drill-Down Analysis. The system supports several drill-down approaches, such as drill-down to the source transactions and drill-down to the details comprising a summarized value.

PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part Three: Strengths

2009-10-28T06:29:00.001-07:00

Recently "inaugurated" as the No. 2 leading business applications provider after digesting former J.D. Edwards & Company, PeopleSoft, Inc. (NASDAQ: PSFT), has been making decisive moves to deliver a number of new, and refurbished solutions, in a great part by leveraging the recently acquired product portfolio. Although the vendor has acted swiftly on assimilating the former competitor (see PeopleSoft Gathers Manufacturing and SCM Wherewithal), these recent initiatives might show us that the vendor has moved even farther from the digestion stage into a full-blown execution and productivity phase.

Recent announcements that reflect this are

* PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD), on May 3, at COMMON 2004, the IBM iSeries user conference.

* A new release of PeopleSoft World that included more than 280 new features and enhancements that span the product family's human capital management (HCM), supply chain management (SCM), and financial management (FM) applications, and a new web-based user interface (UI),on March 18 at CeBIT 2004.

* Further extensions of the longstanding partnership with IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit which expands their global alliance by enabling IBM's expanding SMB reseller channel (see IBM Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications. PeopleSoft on May 18.

For details, see Part One.

The vendor's solutions within enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), enterprise portals, business intelligence (BI), and supplier relationship management (SRM) functionality provide a wide scope of features, and very few smaller vendors can provide tightly integrated applications of this magnitude under one umbrella. Furthermore, PeopleSoft has one of the strongest product technology in terms of scalability, and support for almost all industry relevant platforms and middleware standards, with Web service standards like XML, simple object access protocol (SOAP) and universal description, discovery, and integration (UDDI) being already embedded within their latest product releases, such as has been the case with the PeopleSoft's AppConnect platform.

Yet, even for the upper mid-market, the pre-configured tier one PeopleSoft Enterprise solutions remain complex applications, and the Internet architecture and new intuitive interfaces can mitigate that only so much. This perception of complexity remains ammunition that the incumbent tier two vendors will continue to exploit in order to hinder bigger brethren's attempt to penetrate their traditional stronghold. Furthermore, not all powerful functionality (e.g., SRM or product lifecycle management [PLM]) would be readily available for many of those pre-configured solutions, which may be a serious drawback when competing against the solid tier two vendors which have long-offered their entire suites without any disparity between solutions for bigger and smaller customers (e.g., Intentia, IFS, QAD , SSA Global, MAPICS or Glovia). The "Accelerated Solutions" or "All-in-One Solutions", while enabling large vendors and their channel to offer a fixed price and fixed time implementation program in a modular way, may sometimes not necessarily offer total extended-ERP functional scope. By the time the customer puts together modules to build a full collaborative enterprise system for a mid-market company, and then adds up the multiple implementation time and cost, all the touted benefits might have been annulled in some instances when incumbent mid-market vendors cover all the bases with their well-entrenched offering.
Thus, it is not difficult to justify the former PeopleSoft's "accelerated" mid-market initiatives to be gradually supplanted by selling the genuine PeopleSoft EntepriseOne product within its native, upper mid-market segment, where it has long successfully given run for the above-mentioned tier two solutions' money. Moreover, tackling the lower market segment has proven to be a much tougher nut to crack for several reasons. The main reason would be that this is the home ground of the likes of Microsoft Business Solutions (MBS) (see Microsoft Keeps on Rounding up Its Business Solutions), the Sage Group, whose US subsidiary is called Best Software, and which has recently acquired Softline and ACCPAC (see Will Sage Group Cement Its SME Leadership with ACCPAC and Softline Acquisitions?). The list does not stop here, given the likes of Exact Software (see Exact Software—Working Diligently Towards the "One Exact" Synergy), or Epicor Software, which has lately had its share of recovery and subsequent acquisitions (see Epicor Conducts Its Own ROI Acquisition Rationale) and which is soon to be merged with another SMB stalwart, Scala. Finally, there are a number of other highly specialized and newcomer smaller companies like SYSPRO, Intuit or NetSuite catering to specific industries for accounting and manufacturing systems, while also building simple homegrown systems to handle functions like CRM or sales force automation (SFA).

The above vendors understand this market and have thus gained the market and mind share, and loyal customers. In addition to product offering, they have long heavily invested in recruiting, motivating, and supporting the value-added resellers (VARs) that service the segment. Thus, trying to sell simplified versions of mySAP Business Suite, PeopleSoft Enterprise/PeopleSoft EnterpriseOne or Oracle E-Business Suite, without a serious re-engineering of these products, has not worked so far in the lower-end of the market.

PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part Two: Market Impact

2009-10-28T06:28:00.000-07:00

Recently "inaugurated" as the No. 2 leading business applications provider after digesting the former J.D. Edwards & Company, PeopleSoft, Inc. (NASDAQ: PSFT), has been making decisive moves to deliver a number of new, and refurbished solutions, in a great part by leveraging its recently acquired product portfolio. Although the vendor has acted swiftly on assimilating its former competitor (see PeopleSoft Gathers Manufacturing and SCM Wherewithal), these recent initiatives might show us that the vendor has moved even farther from the digestion stage and into a full-blown execution and productivity phase.

Recent announcements that reflect this are

* PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD), on May 3, at COMMON 2004, the IBM iSeries user conference.

* A new release of PeopleSoft World that included more than 280 new features and enhancements that span the product family's human capital management (HCM), supply chain management (SCM), and financial management (FM) applications, and a new web-based user interface (UI),on March 18 at CeBIT 2004.

* Further extensions of the longstanding partnership with IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit which expands their global alliance by enabling IBM's expanding SMB reseller channel (see IBM Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications. PeopleSoft on May 18.

For details, see Part One.

The importance of the above announcements is multifaceted. First, against the background of SAP having to recently tackle the lower-end of the mid-market by acquiring and then further sprucing up a more suitable and genuine product for the segment, PeopleSoft stands a good chance in the market segment by leveraging a revamped release of a tried-and-true vantage product. (See SAP Tries Another, Bifurcated Tack at a Small Guy and SoftBrands to Institute Fourth Shift for SAP Business One Manufacturing Work-Plan for information on SAP.) To refresh our memory, the original J.D. Edwards WorldSoftware product was launched in 1984, and it has always run only on the IBM eServer iSeries platform (formerly AS/400). It has also since become one of the most stable and widely used ERP applications on the platform, with 3,400 almost religiously loyal customers worldwide, and it was available in 21 supported languages.

However, while the product was both a blessing and a curse for its original owner, the new owner, PeopleSoft seems to have learned from these experiences to its advantage. Namely, throughout the 1990s, the former J.D. Edwards has kept its focus on what was then the breadwinner, the RPG code-based World product. It maintained strong services until its next-generation OneWorld product (currently called PeopleSoft EntepriseOne) was released in the late 1990s. The vendor had thus established itself at that stage through a combination of its reliable product and a strong services organization, which was able to help a tide of enterprises overcome the Y2K compliance issues.
In addition, a former J.D. Edwards' US-focused, mid-market program called Genesis, which aimed at ensuring stability and low support must-haves for the market segment, through a competitively-priced older (and thus market-proven) release of J.D. Edwards' World, had been sold to enterprises with less than $100 million (USD) in annual revenue by distributors that provided local support. However, the program had not fully fulfilled its indisputable promise because of J.D. Edwards' lack of willingness to take a more aggressive stance in building up its distribution channel. PeopleSoft will have to watch carefully in order not to repeat the mistake.

Although J.D. Edwards had avoided the financial turmoil that its traditional AS/400-based competitors experienced in the mid-1990s, when some, like former SSA (now SSA Global) and JBA International (now part of Geac Computers) were fatally wounded, it has still had an Odyssey-like transition from solely IBM iSeries and DB2 platforms to UNIX, Oracle, and Microsoft Windows NT/2000 while keeping most customers committed and arguably content.

Namely, although erstwhile J.D. Edwards had successfully targeted conservative AS/400-oriented enterprises with its mature World product and a well thought-out migration to the next-generation, cross-platform, ERP application OneWorld (i.e., owing to a well-conceived data model consistency, virtual functional parity, and the ability to have the older and next-generation applications coexist), it has nonetheless not been an easy and completely successful feat for many reasons. For one, it has taken several years for former OneWorld to entirely reach the functional parity with its older and more mature sibling, WorldSoftware. Also, because of J.D. Edwards' heritage and market presence, iSeries had initially, and for a long time, been the dominant platform even within the OneWorld constituency. While the Microsoft Windows NT/2000 platform, in particular, has long been capturing an increasing share of the overall OneWorld deals and prospects, still, J.D. Edwards' belated entry to the non-iSeries ERP market hampered its success, since it had not initially been a known force for UNIX, Oracle, and Windows customers.

Then again, most new functional enhancements have since been added to the more technologically promising (in terms of support for multiple platforms and scalability) OneWorld product, which had meanwhile gained a functional edge over World in most areas, especially outside the core ERP scope. However, it still would fall behind in others, including certain financial and accounting modules. Also, J.D. Edwards' growing implementation partner program at the time had targeted the more attractive non-iSeries platforms, whereby the WorldSoftware's user enterprises and partners have thus long been wary of J.D. Edwards' (and, eventually, PeopleSoft's) intentions to indefinitely support the ageing product, given the company's development effort immediately prior to the acquisition had mostly been on extending the OneWorld's footprint (meanwhile once again renamed into J.D. Edwards 5, shortly prior to being acquired by PeopleSoft) and ensuring the upgrade path from World to OneWorld.

In contrast, because of OneWorld's immaturity, there were initially only a few operational installations, while experienced service and support personnel were also limited, as both the internal and external professional services organizations made the slow transition to OneWorld. Thus, many enterprises facing tight Y2K-related deadlines at the time (the late 1990s) had to opt for a coexistence strategy of OneWorld and World, which could work off the same data at the same time. Many enterprises would logically then deploy the most mission-critical, shortest timeframe functions on World and implement OneWorld in non-mission-critical areas. Eventually, most of these problems were solved by the still independent J.D. Edwards. However, the bottom line has since resulted in an attractive J.D. Edwards 5 (now PeopleSoft EntepriseOne) product suite, while the World product has been all but relegated to the status of a "stabilized" product, with a quite disenchanted channel and disconcerted user base (for more details, see J.D. Edwards Finds Its Inner-Self Within Its 5th Incarnation).

Expansion To the SMB Market Worldwide

2009-10-28T06:27:00.002-07:00

The above moves are parts of the longstanding partnership that has been further extended on May 18. Namely, in a move to dramatically expand PeopleSoft's reach in the small and mid-size business (SMB) market worldwide, PeopleSoft and IBM (NYSE: IBM) announced during PeopleSoft 2004 Leadership Summit the plans to expand their global alliance by enabling IBM's expanding SMB reseller channel (see IBM Express-es Its Candid Desire for SMEs) to offer PeopleSoft applications. PeopleSoft and IBM pledge to deliver jointly developed, industry-specific hardware and software solutions, and will make specific solution bundles available to resellers.

The new initiative is expected to add hundreds of IBM resellers to PeopleSoft's channel efforts, as the expanded channel relationship will deliver jointly developed, pre-integrated hardware, software and services offerings through regional solution providers. Additional elements will include joint cooperative marketing to drive application software leads to the channel, and a joint advertising campaign to position and promote channel partners and the combined PeopleSoft and IBM solutions in local markets. The two companies also plan to leverage IBM's Small and Medium Business Advantage program to provide sales incentives, marketing tools and resources, training, and demonstration capabilities to the SMB channel partners.

PeopleSoft and IBM also announced an industry-tailored offering for tier two and tier three automotive suppliers that will be delivered through the new channel relationship. This announcement builds on the two vendors' Life Sciences and World Express initiatives announced earlier this year. Namely, the new IBM Automotive Solution offers PeopleSoft EnterpriseOne applications running on the IBM eServer xSeries technology, along with pre-integrated IBM middleware and industry-specific best practices from IBM consulting.

The new solution promises to enable automotive companies to become demand driven, whereas in the past, manufacturers have had to choose between being customer focused or operationally efficient. Demand-Driven Manufacturing, an initiative that has been extensively touted by PeopleSoft during its recent Summit, is the ability to deliver any product, in any configuration, at any quantity to meet customer demand at significantly lower costs to the manufacturer, driving the higher levels of profitability. PeopleSoft claims to be the only enterprise applications vendor to currently deliver a complete demand-driven manufacturing solution—from customer demand to supply chain planning (SCP) to manufacturing planning and production to in-bound supply—all operating in real-time. With its extended IBM alliance, these capabilities should now be within the reach of small and mid-sized businesses around the world.

The strength of this alliance is supported by the remarkable price performance improvements PeopleSoft applications have reportedly achieved running on the new IBM eServer i5 series. Namely, in a real world SMB environment, PeopleSoft EnterpriseOne Rapid Start running on an IBM eServer i520 supported 60 percent more users at 40 percent less cost than the same configuration on previous iSeries boxes. For PeopleSoft World Express, the i520 supported the same number of users for up to 40 percent less hardware cost. Even under demanding conditions, the i5 series with PeopleSoft maintains its high performance levels, given that recent tests running a mixed workload of web serving, collaboration, and PeopleSoft World have demonstrated the ability of the i5 to deliver sub-second response times even at 97 percent system utilization.

The companies also intend to collaborate on a new Linux program that will extend the benefits of these SMB solutions to the open source operating environment, building on the recently announced availability of EnterpriseOne on Linux. IBM and PeopleSoft will conduct a series of enhanced performance characteristic tests across a variety of Linux server configurations, for the IBM eServer xSeries, providing customers with the information they need to guide their Linux application strategies. In addition, IBM and PeopleSoft plan to launch a series of joint promotions and incentives highlighting EnterpriseOne, DB2, WebSphere, and IBM eServer xSeries on Linux, beginning with a joint marketing initiative and concentrating initially on Asia Pacific and Europe

PeopleSoft Revamps World for Its Mid-Market "Express" Conquest Part One: Recent Annoucements

2009-10-28T06:27:00.001-07:00

One of the moves took place on May 3, at COMMON 2004, the IBM iSeries user conference, when PeopleSoft announced PeopleSoft World Express, one of the industry's most comprehensive solutions for smaller businesses with annual revenues between $20 million and $100 million (USD). The solution also exhibits vertical focus and is thus available for industrial manufacturers, wholesale distributors, homebuilders, and construction companies. Developed exclusively on the IBM iSeries platform, PeopleSoft World Express builds on twenty years of enterprise applications innovation, strong customer satisfaction, and the reliability of its progenitor—the former J.D. Edwards WorldSoftware (now PeopleSoft World) suite. With this rejuvenated offering, PeopleSoft hopes to be able to deliver a comprehensive solution to an entirely new market segment—one that demands low maintenance solutions and a rapid return on investment (ROI), without sacrificing their need for rich functionality.

To that end, PeopleSoft World Express includes

* The ample suite of PeopleSoft World applications that provides the foundation for somewhat "lighter" PeopleSoft World Express with PeopleSoft World Financials, PeopleSoft World Distribution, PeopleSoft World Manufacturing, PeopleSoft World Human Resources, and PeopleSoft World Project Management.

* The new solution is configured with fifty-one industry-specific business processes, including returning an item to a supplier; performing product costing and item introduction; purchasing an inventory item; managing accounts receivable balances; and so on. These embedded business processes should enable small businesses to implement the solution relatively quickly with a reasonably rapid ROI. As mentioned earlier, the templates are currently tailored for customers in the industrial manufacturing, wholesale distribution, homebuilding, and construction industries. For example, the suite for construction companies includes a job costing process that lets companies define the complex project job, such as the building of a bridge, and then define and track all the costs associated with that job.

* PeopleSoft distributors will provide user training and implementation services for the PeopleSoft World Express solution. The distributors are certified by PeopleSoft and have comprehensive industry knowledge and implementation skills.

* The product runs exclusively on IBM iSeries, one of the world's most reliable and cost-effective business computing platforms.

PeopleSoft World Express will be generally available in North America in the second quarter of 2004, while it is planed to be introduced in countries in Europe and Asia Pacific throughout the next two quarters. In addition to English, the software is currently available in Japanese, French, Italian, Spanish, and German.
The announcement came at the heels of the March 18 announcement at CeBIT 2004, when PeopleSoft announced a new release of PeopleSoft World that included more than 280 new features and enhancements that span the product family's human capital management (HCM), supply chain management (SCM), and financial management (FM) applications, and a new web-based user interface (UI). The announcement marked the first release of PeopleSoft World under the PeopleSoft brand name and underscored the new owner's commitment to PeopleSoft World customers, which have for many years been disconcerted owing to the former owner's treatment of the product as ageing, legacy technology. This new release, PeopleSoft World A7.3 Cumulative Update 15, has been generally available since March 31, 2004, and is available at no cost to PeopleSoft World customers on a current maintenance agreement with PeopleSoft.

Some more notable new features and enhancements to PeopleSoft World include

* New HTML User Interface—PeopleSoft World users, both power and casual users as well as customers and partners, now have anytime, anywhere access to critical business information through an Internet browser. By automating many repetitive navigation tasks found in a data capture-productive, character-based environment, the web-based interface should enable PeopleSoft World users to take advantage of productivity tools like integrated calendars and automated field formatting.

* Manufacturing and Distribution Management—Sales order demand information can now be included throughout the forecasting processes, which should increase supply chain visibility and improve planning and forecast accuracy.

* Financial Management—New features allow users to fairly quickly respond to organizational changes, streamline balancing and reconciliation with enhanced reporting capabilities, simplify management of fixed assets, and leverage enhancements to the cash basis accounting functionality.

* Human Capital Management (HCM)—The product meets new regulatory requirements for SUI (State Unemployment Insurance) and provides employers with faster, more accurate assessments of employee benefit and accrual amounts.

* Integration with PeopleSoft Enterprise Performance Management (EPM)—New integration between the PeopleSoft Enterprise and PeopleSoft World products consolidates customer data from PeopleSoft World onto PeopleSoft's enterprise warehouse. As a result, PeopleSoft World customers can now leverage the EPM applications with their World data.

Best-of-breed Approach to Finance and Accounting

2009-10-28T06:26:00.001-07:00

CODA Group, a finance and systems specialist headquartered in the United Kingdom, offers financial solutions that help companies grapple with international business issues such as language, currency, and compliance. Designed to be an "upgrade friendly system", CODA applications offer open and standards-based reporting tools. CODA's alliance with Microsoft Corp. has allowed it to deliver a range of financial and management accounting systems, and it has made several strategic acquisitions to further strengthen its position as a compliance solution.

Part Three of the Composing Collaborative Financial Applications, CODA series.

Among its recent endeavors, CODA has recently announced new set of financial planning and budgeting products: CODA s-Planning ("s" standing for "standard") and CODA c-Planning ("c" standing for "collaborative"), as well as a range of improved analysis and reporting tools, which will be detailed shortly. Nevertheless, to date, these corporate performance management (CPM) capabilities have targeted mainly existing customers of the CODA transactional systems. These users have focused on financial analytics, budgeting, and planning, either through Microsoft Excel integration within CODA c-Planning and CODA s-Planning, or through a partnership with Cognos for enterprise-level planning and budgeting. CODA's consolidation capabilities have traditionally been limited to the basic ones inherent in Coda-Financials. While these are adequate for simpler enterprises, the vendor has thus far been unable to successfully compete with offerings from specialists such as Hyperion Solutions, Geac (formerly Comshare), Applix, Longview, Outlooksoft, or Cartesis. Yet, the importance of these functionalities has been witnessed by Cognos' acquisition of Adaytum in 2003 and Business Objects' recent acquisition of the specialist SRC. See Financial Reporting, Planning, and Budgeting as Necessary Pieces of EPM for information on the functionality.

Thus, this merger deal should benefit both parties for many reasons. While Simple Concepts should get access to CODA's well developed global distribution channel and benefit from its financial stability, CODA should fill the financial consolidation gaps in its solution. Immediate cross-selling opportunities into CODA's install base will expand further as CODA translates OCRA into more languages. Not to mention, there are opportunities coming from OCRA's prior integration with SAP, Oracle, and other leading enterprise resource planning (ERP) solutions. The acquisition also gives CODA a base for strengthening its direct sales operation and presence in Scandinavia.

The two recent acquisitions came at the heels of CODA's June 2005 launch of a suite of add-on applications that extends the range of planning and budgeting requirements: CODA s-Planning and CODA c-Planning . These could offer more benefits for CODA-Financials users. The suite includes Version 3 of the much talked about CODA-XL application. CODA-XL allows the fairly simple and secure output, manipulation, display, sharing, and input of CODA-Financials data within Microsoft Excel. s-Planning and c-Planning were seen to enable users to carry out a range of day-to-day tasks, such as producing and sharing statutory reports; processing expenses; or even developing and setting financial budgets using CODA-Financials alongside Excel and the other familiar Microsoft Office tools that most organizations probably already have in place. These new products were meant to make CODA-Financials the launch pad for a quicker and easier budget cycle. By combining the functionality and embedded control of CODA with the familiarity and convenience of Microsoft Excel, CODA s-Planning and CODA c-Planning should streamline the seeding, preparation, manipulation, and production of budgets, based on (or update) the user's CODA-Financials data. Moreover, CODA continues to develop its relationship with Cognos, offering the Cognos Enterprise Planning product where clients have wider enterprise requirements. The vendor also uses a mix of partnership and in-house development to address other CPM elements, such as activity-based costing (ABC), strategic planning and scenario analysis, shareholder value measurement, activity monitoring, information distribution, etc.

In addition to the "standard" budgeting and forecasting facilities provided by CODA s-Planning, users have the option to make their entire cycle more coordinated, efficient, and controlled by opting for the "collaborative" add-on of the CODA c-Planning product. This interfaces with the CODA-Control process management solution, adding a facility to publish budgets as CODA-Control web sites and tasks. This will keep all participants informed and aware of the input needed and when it is required. There are also audit trails and document history to support compliance reporting. CODA c-Planning aims to help organizations set financial budgets and collaboratively develop plans, which both reflect top-down business objectives and assess the need to account for bottom-up creativity and realities. For example, it will give budget managers visibility of process bottlenecks, including vacation and sick days of department managers, information on groups waiting for information from subsidiaries, and vice versa. Conversely, many other peer products focus purely on bringing together and reporting the figures in the system, and not on collaborative processes that are key to collecting and verifying the figures in the first place. The application's aggregation features often make the budgeting and planning process quicker, more dependable, and more predictable, giving financial professionals more time to analyze and consider their overall budget before making decisions crucial to the organization's mid-term plans.

Another analytic module worth mentioning is the CODA Collaborative Scorecard, which helps user organizations link corporate goals through group objectives and individual performance. Designed to be deployed to every desktop in the enterprise, the product supports multiple performance management methodologies. Generally speaking, scorecards assist organizations in monitoring their business performance beyond bottom-line results by tracking both financial and non-financial measures, and then reporting them in a graphical user interface (GUI). A key element is the way they cascade corporate goals through the organization, helping managers to set individual objectives, and then aggregate performance results back up through the company structure, so that management can review the contributions made by individuals and groups. This aligns corporate strategy with the activities of individuals within the organization.
Related to the above line of products is CODA Analytic Explorer, which is a business intelligence (BI) tool that allows CODA users to carry out multidimensional browsing across CODA-Mart and any other relational data source. It is a generic, on-line browsing tool with both two-dimensional and multidimensional browsing capabilities built in, and has a separately licensable cube builder that provides extra performance. As finance departments struggle to add value to their businesses, performance management enables them to deliver better decisions more efficiently. However, CPM is not about static plans that sit on the shelf and get dusted off at board meetings, but rather about continuously adjusting to the range of inputs that the business is constantly receiving. To that end, CODA Analytic Explorer provides the ability to investigate exceptions and trends quickly and easily, so that corrective actions can be taken, and forecasts and plans reviewed.

CODA-XL is now in its third release. It provides a two-way bridge between Excel, which is indisputably the most popular spreadsheet, and CODA's enterprise-level financial and CPM products. CODA-XL was launched in 2003 and brings the familiarity of the Excel interface to CODA-Financials. It should provide customers with several benefits, such as reduced training for end users of CODA-Financials during implementation. Other benefits typically include the elimination of transcription errors and file-handling overheads during the transfer of data between CODA-Financials and Excel. Thus, it may prevent the proverbial "islands of information," where local systems containing great value and insight are locked on individuals' desktops and personal computers and cannot be shared across the organization. However, unlike some similar products from competitors, CODA-XL goes beyond exploiting the familiarity of the user interface (UI) and makes use of the success that Excel enjoys as an informal business modeling and planning tool. It provides "What If?" scenario testing with the option of writing back from the spreadsheet to CODA-Financials. For example, the CODA Security Model is fully embedded within CODA-XL, thus ensuring consistent data security. This means that while add-ins to Excel deliver rich CODA functionality accessed directly from the Microsoft Office desktop, they must respect the same CODA security, validation, and business rules. For example, Excel formulas referencing live account balances are stored directly in CODA Database, with all necessary authorizations for users appearing down to the spreadsheet cell level. For more on the advantages and the inherent risks of Excel-based tools, see Vendors Harness Excel (and Office) to Win the Lower-end of Business Intelligence Market.

Within CODA e-Finance (a Web-based version of the product), all reports validated and cross-checked on-line to validate, to eliminate separate, unsecured reporting tables. "Lights out" scheduling and Web document publishing also eliminate manual intervention. In addition, the data manipulation capabilities of Excel mean that management accountants can build and model scenarios that can be tested against real data relatively quickly, which can be very useful for creditor and debtor management, customer profitability analysis, and ad hoc queries. Furthermore, US Security and Exchange Commission (SEC) submissions can be made through Microsoft Word documents with embedded "live" Excel documents that do not have cut and paste, export, and manipulation functions, which can introduce the potential for errors. Non-programmatic, wizard-driven automation of data entry with real time validation direct from Excel (transactions, allocations, masters, budgets, and forecasts) also eliminates open database connectivity (ODBC), direct structured query language (SQL) updates, relational database management systems (RDMBS) logons, etc., which are also points of risk.

Recent Summer Acquisition Spree

2009-10-28T06:25:00.000-07:00

Compliance is a major issue in the US, particularly as more organizations struggle with the provisions of SOX, but it is also rapidly becoming a key issue in many other countries as legislation is introduced around the world to improve corporate governance. Thus, in August 2005, to further bolster its financial control capabilities, CODA announced an acquisition agreement and partnership with Control Solutions International, a global provider of assurance, risk management, and compliance advisory services. Founded in 1991, Control Solutions was one of the first firms dedicated solely to providing support to internal audit functions and to helping companies realize the benefits of effective internal controls. Control Solutions' services include internal audit outsourcing and co-sourcing, SOX first-year compliance and annual recertification, technology audits and advisory services, quality assurance reviews, enterprise risk assessments, and internal audit start-up services. The firm has reportedly developed close and long-term relationships with a diverse client base of leading companies through flexibility, open communication, and a "value-added" project approach. It has over 800 experienced internal audit professionals and 21 directors in offices around the world.

Under the terms of the agreement, CODA acquired the Sarbanes-Oxley Controls Evaluation Tool (SOCET) product from Control Solutions. SOCET is a Web-based internal controls documentation, evaluation, monitoring, and project management application designed to facilitate SOX compliance, and is currently deployed at a number sites of Control Solutions' major customers. CODA pledges to take on the future development and marketing of the product, whereby existing customers will receive support through the US-based support desk of CODA Financials Inc., part of the company's global support operation. Also as part of the agreement, Control Solutions and CODA will jointly develop additional, comprehensive compliance software products to help customers comply with SOX and other regulations, such as the European Union's Basel II.

Control Solutions has leveraged its breadth and depth of internal audit experience to assist over 250 US-listed companies with SOX readiness and ongoing compliance. After achieving a quick compliance fix , the next challenge for companies is "making SOX stick" , turning the near-impossible project into a practical and sustainable process, where documented processes are transformed into systems that drive the finance function. Accordingly, SOCET adds effective management dashboard reporting to the features of CODA-Control. The combination should bring additional value to existing customers. With the addition of SOCET and the opportunity to capitalize on Control Solutions' SOX expertise, CODA hopes to soon be a one-stop software shop for the whole process compliance cycle.

Future versions of SOCET, now re-branded as CODA-Control Assessor will support compliance with international regulations, since, while Control Solutions will provide the internal controls experience, CODA will provide the software to deliver it. Additionally, CODA-Control currently provides a Web-based platform for defining, rolling out, monitoring, and executing a complete range of financial, human resource (HR), and IT processes, in order to provide the visibility, repeatability, and an audit trail that is required to drive ongoing adherence to a user company's defined compliance procedures. SOCET similarly provides a Web-based environment to facilitate the testing and evaluation of financial, HR, and IT processes by an organization's internal audit team. The tool also provides management information on the status project testing and presents the information in an executive dashboard. As such, CODA's existing compliance application and SOCET are functionally highly complementary. On the technology front, both leverage Microsoft .NET, Internet Information Server (IIS) Web Server, and Structured Query Language (SQL) Server databases.

Control Solutions' deep expertise and experience in running over 250 SOX compliance projects in the US have shaped the design of SOCET. By transferring ownership to CODA, existing users should benefit from both CODA's support infrastructure and ongoing development, while CODA can continue to draw on Control Solutions' domain experience for the product's ongoing design. The roadmap for SOCET shows that the solution will become integrated into the CODA compliance suite (whose footprint will thereby be extended), while retaining its current ability to run as a standalone application. CODA will shortly announce a solution to greatly accelerate the design of controls and thereby provide a more complete solution for designing, implementing, sustaining, and testing the controls for SOX and other existing and emerging compliance initiatives, globally.

At this stage, even without SOCET's additions, CODA-Control delivers a centralized management and document repository. This is a repository web site that pulls together the tasks, people, supporting documentation, and necessary choreography to ensure that the process is completed in a compliant and efficient manner. It will also offer reasonably quick deployment and adoption and will be an easy-to-use implementation of a best practice model for a given financial process. CODA-Control also has a minimal user learning curve that leverages existing Microsoft Office skills and existing back-office applications. The product will also foster consistency throughout the framework to implement preventive controls that ensure repeatability of process completion, and this will be done in a way that promotes continuous process improvement. It will also offer "Command Center" visibility of current process status, percentage of completion, current hold-ups, task assignments, etc., and an entire audit trail of tasks, documents, commentary, etc. These features will be accessible to users and their auditors via an intranet uniform resource locator (URL). However, the product is also an extensible platform that supports automated task completion using Web service interrogation and automated updates of back-office systems. It also associates electronic forms to their related tasks using Microsoft InfoPath, and ccontrols both recurring financials processes (such as period-end closing, internal audit programs, budgeting, planning cycles, etc.) and ad hoc processes (including new hires, new vendors, capital projects etc.). Last but not least, the product also controls business processes such as the opening of new locations, corporate responsibility programs, HR processes, and so on.
In July 2005, CODA announced that it had also acquired Simple Concepts AB, a financial consolidation software specialist for 3.25 million, plus incentive based payments. Simple Concepts' consolidation and treasury system, OCRA, will be made available worldwide as part of the CODA Financial Intelligence suite for all leading enterprise resource planning (ERP) and finance systems. Simple Concepts' offices have become the headquarters of CODA's new Nordic operation and Simple Concepts' office in Tallinn, Estonia is CODA's first directly owned operation in Eastern Europe and the Baltic states, and will continue to be the research and development center for OCRA. As part of the acquisition, CODA has retained the services of both of Simple Concepts' founders; Alar Lange is the managing director of CODA Nordic, while Lars Svensson retains responsibility for the development of OCRA.

The acquisition had apparently been in the works for a while, and when the announcement was made, CODA had already built CODA-Financials to integrate with the acquired product. The product, now branded OCRA: a CODA solution, will immediately be made available in a standalone form, and as an integral part of the CODA Financial Intelligence suite. OCRA will be available with CODA Dream, a product offering for the lower-end of the market. CODA Dream resulted from CODA's early 2003 acquisition of the former SquareSum, and will be made available to customers and prospects in the fourth quarter of 2005 or possibly earlier. OCRA is reportedly the number one consolidation product in Sweden. Over ninety client organizations in Scandinavia use the product as their core consolidation and reporting tool, and CODA has a number of CODA Financials customers who have multinational requirements, which should make OCRA appealing. OCRA has gained a reputation in Europe as being a functionally and technically superior solution, because it is Web-based and uses a powerful workflow (as will be detailed below). It also is only a fraction of the cost to implement when compared to current traditional market leaders which will likely be another incentive for users to adopt the tool.

Consolidation applications handle the process of analyzing, reporting, and reconciling the accounts from across a group of companies into a single "consolidated" group report. Financial analytics software works by consolidating data from disparate systems into one source, giving financial analysts—and, more crucially, decision makers in other departments—a consistent view of performance across the organization. Using simple queries, such as "What were our sales figures in a particular region this quarter?", through a browser or a client-server user interface (UI), managers can get a "single view of the truth" and significantly reduce the amount of time it takes to get the desired financial answers.

Unlike most of its rivals, OCRA delivers this capability via the Internet, and it combines operational financial control with statutory group accounting, and delivers multi-dimensional reporting with a whole range of options, via built-in reporting and analysis through its hybrid multi-dimensional and hierarchical database structure. Also, OCRA is designed around a workflow method with embedded rules, procedures, and techniques used and verified by auditors with years of experience. The product is currently available in English and Swedish, and is being translated into CODA's core languages. Other languages will be delivered according to customer demand.

Joining the Sarbanes-Oxley Bandwagon; Meeting the Needs of Small and Medium Businesses

2009-10-28T06:24:00.000-07:00

The need for solutions that can meet compliance regulations has grown. In 2004, finance executives around the world became increasingly sensitive to the need to improve reporting in relation to their corporate governance and regulatory compliance obligations. CODA Group, a United Kingdom-based finance management system specialist responded by launching CODA-Control, a task modeling tool (engine), which helps user companies control and audit business processes, and automate data collection for financial reporting. CODA-Control is one of CODA's recently unveiled collaborative solutions, and aids regulatory compliance, period-end financial closing, and automates financial procedures, thus possibly reducing escalating audit costs and lowering the risks of non-compliance. The product takes the organization's best practice model of a documented financial process and automatically generates a dedicated shared, secure, in-house team web site through which the execution of the entire process is controlled. CODA-Control helps transform the organization's processes into highly repeatable, auditable, and controllable events.

Part Two of the Composing Collaborative Financial Applications, CODA series.

As exemplified by CODA-Control, CODA views Microsoft technology as its primary development platform for its process control applications. This should help organizations manage and improve complex business processes, such as those geared towards enabling compliance with the Sarbanes-Oxley Act (SOX) of 2002 and towards facilitating month-end closing. CODA's decision to design a control application using the Microsoft SharePoint Products and Technologies platform has even been cited as a key factor in some customers' decisions to purchase CODA-Control.

To put this into context, SOX was passed by the US Congress in response to a number of high profile financial scandals, such as those at Enron, Tyco, and WorldCom, with the idea of making corporate accounting procedures more transparent to investors and regulators. Even before these fraudulent scandals, missed earnings announcements were often accompanied by chief executive officers (CFO) stating that financial expectations were not met due to a "lack of visibility" into corporate activities. These CFOs would frequently blame unforeseeable events, such as a key customer canceling a major order unexpectedly, or suppliers ramping up prices due to a shortage of raw materials. Regardless of the reason, CFOs are increasingly being called upon to give more accurate estimates of their earnings potential, and explanations as to why their company failed to meet these estimates.

Although the SOX law included a number of new mandates, two sections in particular have had clear implications for corporate information systems. Section 404 (Management Assessment of Internal Controls) requires management to assess, on a yearly basis, the effectiveness of its own internal controls and procedures for financial reporting. Section 409 (Real Time Disclosure) requires companies to disclose material changes in their financial condition or operations on a rapid and current basis. These two sections have prompted many predictions regarding how much must be spent on information technology (IT) in order to meet compliance needs (albeit, this may be at the cost of stalled projects in other areas that are now considered lower priority). Section 404 requires audits of internal controls, and has caused executives to reexamine, and possibly replace, operational systems that are not well integrated with financial systems. For example, an accounts payable (AP) system that does not systematically match purchase orders and receipts to vendor invoices, before the payment is made, might be vulnerable to fraud. Such a system may also be vulnerable to abuse by someone who creates fictitious employees and suppliers and then pockets the money. In addition, an invoicing system that is not integrated with shipping might allow a manager to improperly recognize revenue that was not yet earned.

Section 409 seems to call for a more transparent and integrated financial reporting system than many companies have. For example, companies that work on a ten day financial closing period seem to be at risk for non-compliance with real time disclosure, which currently demands the disclosure of material events within forty-eight hours. The problem is particularly acute for firms with multiple operating units and decentralized systems, because, in recent years, many enterprises have grown both organically and through acquisitions. As a result, accurately reporting on these business units requires a significant number of "manual" accounting processes and adjustments. Such companies will either need to adopt a common financial reporting system, perhaps by integrating multiple systems with a financial reporting layer at the corporate level, or by implementing a corporate performance management (CPM) solution to provide near real time analytics.

In any case, the requirements of SOX increase the amount of required manual processing, which, in turn, significantly increases the cost of compliance. The ongoing cost of testing manual financial controls to ensure SOX compliance, and the ongoing compliance risks associated with those controls are forcing companies to move towards financial systems that not only record transactions, but also manage the entire SOX 404 compliance process. Early adopters of SOX-compliance have reportedly learned some hard lessons by using SOX programs that highlight manual, paper-based processes. Such processes are very costly to audit as commpared to automated processes, and it is quite time-consuming to reconcile and correct errors. Such systems are also at higher risk for human errors and omissions.
In light of this, small or medium business faces a daunting task. It is no longer enough for a company to develop a strong business plan, have a breakthrough product or service, and build strong and effective distribution channels. The complexities of today's business world have created new risks, with a myriad of regulations and complex reporting requirements that can overwhelm a lean and focused organization, regardless of its size. The logical question is how a smaller organization, with limited resources, is supposed to cope with all of this, and, even more importantly, how it will stay abreast of the additional changes that are on the way. For instance, under existing (and soon to be outdated) accounting rules, a company might value its inventories at historic cost. For example, an electronics goods vendor might value unsold, months-old DVDs at the amount they could have been sold upon their initial release. However, under the forthcoming proposed International Accounting Standard (IAS-2), a company has to give an up-to-date net realizable value (NRV). In other words, it must give an accurate estimate of the products' market value at the time the report is published, with the idea that all corporate assets must be valued at their fair value, rather than at their problematic historic cost. Companies will also need to account for the cost of all employee compensation plans. In particular, this means that the cost of stock option plans or any shortfall in company pension funds must be recorded in the accounts.

Given the magnitude of tracking these types of nuanced accounts, the only sensible answer is to use technology, since many tools have been developed that can greatly simplify the process. Indeed, new versions of compliance software represent big improvements over earlier incarnations. Certainly, in addition to CODA-Control, recent releases from Axentis, ACL Services, Certus, Oversight Technology, Hummingbird, OpenPages, Virsa Systems, Precision Consulting, and Approva reflect a more realistic understanding of the compliance burdens. Some of these solutions compare a company's current controls to compliance "best practices", offering solutions on how to shore up weaknesses and better segregate duties. For example, the software can govern who has clearance to write checks to vendors, to pay employees, or to add revenue in a given quarter. Such software can also enforce the rules by, for example, alerting compliance watchdogs if an unauthorized person attempts to make changes, and can thus act as a mechanism to prevent fraud. Other solutions can help managers document policies and procedures, create electronic archives of those policies, or flag internal transactions that look suspicious.

Investment in CODA-Control-like financial systems might provide a cost-efficient solution that would allow business managers to focus more time on operations and less on compliance. Further, these systems might allow user enterprises to streamline the integration of new divisions into their financial systems and processes, ensuring that the business processes of the acquired units are SOX 404 compliant. Nonetheless, before they can benefit from this technology, small business managers must select the right tools. For more on the critical attributes of SOX tool sets, as well as a discussion on how to use them effectively to maximize payback on the investment of time and money, see Attributes of Sarbanes-Oxley Tool Sets.

Many SOX-compliant businesses will likely still spend many thousands of labor hours and millions of dollars in documenting their accounting processes. In addition, many companies will continue to incur significant annual audit fees for the ongoing testing of manual processes. CODA-Control might come in handy as a practical and affordable solution to this problem for medium to large companies, since CODA can transform manual processes into visible, repeatable, controllable, and auditable events. In other words, it might make auditing simpler, quicker, and cheaper, and thereby change CFOs and controllers back from being slaves to SOX to being masters of finance. In particular, the automation and centralization of manual processes should reduce both the risk and the associated costs of audits because the required checks and balances should be enforced by the system. In addition, processes in remote locations can be tested centrally, re-keying errors are eliminated (and reconciliation effort is thus reduced), and authorizations can be captured electronically and viewed on-line, because one can implement preventive controls to preempt errors before they occur. While there is no panacea for ensuring adherence to documented best practices, automated process management, such as the CODA-Control solution, still seems to be an essential part of first two years or so of any SOX compliance program.

The CODA-Control solution is available to all organizations, particularly those subject to SOX-compliance, and is independent of a company's financial accounting system. A Microsoft SharePoint web site powered by CODA can deliver tasks, forms, attachment, documents, etc. to business units' diverse transactional systems, and even include all necessary language translations. CODA expects demand for the solution to be extremely high in 2005 and 2006, and has specialist implementation resources available to support organizations worldwide. Still, while such software can help, it is not going to completely automate compliance, which will continue to be a huge manual effort, as there is no substitute for a manager's understanding of the business when it comes to assessing, designing, and implementing proper internal controls.

Composing Collaborative Financial Applications

2009-10-28T06:20:00.000-07:00

Founded in 1979, and headquartered in the United Kingdom, CODA Group is a finance management systems specialist, and part of the publicly traded CODASciSys plc. group (AIM: CSY). After a series of changes which began in the late 1990s when it was first acquired and then divested by former Baan to Science Systems, and then in early 2000, CODA changed its name to CODASciSys. (See Baan Posts $236 Million Loss and Sells Off Coda for Nearly $40M Less Than It Paid). The group offers a broad suite of products and services designed to meet the needs of financial and accounting departments. Its offerings range from financial, accounting, and procurement systems linked to a complementary suite of applications that support finance, reporting, and analytic processes across the organization, through to planning, budgeting, consolidation, reporting, and analytics. It also encompasses process control and compliance management. Its traditional transactional systems are applications that optimize accounting, procurement, asset management, and e-commerce across (and beyond) the entire, often distributed, user enterprise.

Lately, the vendor has expanded into a range of integrated business intelligence (BI), planning, forecasting, and consolidation analytic tools to deliver a more complete, near real time picture of the user organization's finances, performance, and opportunities. Among these complementary applications, which will explained in more detail in this article series, is a range of new collaborative applications that will streamline and automate key business processes, such as regulatory compliance, financial period-end close, and corporate responsibility programs.

Currently CODA employs more than 550 people around the world and delivers global sales, service, and support through its own offices in 11 countries. It has a carefully selected network of partners in a further 17 countries to provide implementation services, training, and support for over 2,500 customers in over 100 countries. Of its total number of employees, about 170 are in research and development (R&D), 60 in support (with 15 based in the US), and 110 in consulting. Its worldwide customer base includes medium and large user organizations found across many industry sectors, such as insurance, shipping, transportation and logistics, retail, banking and finance, professional services, and the public sector. While retail is one of the stronger sectors for CODA in the UK, transportation and shipping and financial services companies are the frequent users in North America.

CODA Financials, Inc., located in Manchester, New Hampshire (US) is one part of the CODA Group. Present in the US and Canada since 1988, CODA Financials has a rich history of helping finance departments solve complex problems where issues of scale or high transactional volumes, reliability, and performance are of primary importance. While many may not have heard of CODA itself, many have heard of some of the global, blue chip organizations that are using CODA products and services to support their business. CODA has more than 250 customers in the US and Canada, including Booz-Allen & Hamilton, Maher Terminals, Texas Pacific Group, Lin TV, Pan-American Life Insurance, and Reno Depot, that have delegated their financial intelligence requirements to CODA. Globally, and across some industry sectors, clients include IKEA in retail, AMBAC Assurance Corporation in the financial services, Central Ohio Transit Authority (COTA) in transportation and logistics, and the Fashion Institute of Design and Merchandising in education.
A key attribute of CODA's offerings is its "multi" features. It can handle multiple companies, multiple currencies, multiple languages, and multiple charts of accounts in a single product's instance or database. Thus, its single or "unified" ledger architecture, which processes and holds the user company's financial data in a single ledger and in real time, eliminates traditionally lengthy and tardy batch updates between sub-ledgers. Consequently, a near real time financial position is always maintained, and the entire general ledger (GL) should always be balanced. Additionally, the Multiple Dimensional "Flexchart" capability supports up to eight variable length account code segments, which enable revenue and expense tracking at a highly detailed level. The Hierarchies and Account Groups features add virtually unlimited account "roll-ups" to meet inquiry, reporting, and drilldown needs.

Additionally, the complementary CODA analysis and collaborative solutions have been designed to integrate seamlessly both with CODA applications and other leading operational systems to capitalize on customers' existing information technology (IT) investments. Increasingly, CODA solutions are also being used to address the complex requirements of companies that need to intelligently share information with business partners, customers, and suppliers. Furthermore, "upgrade friendly" interfaces underline the vendor's technical vision for integration. For instance, CODA's application programming interfaces (API) "de-couple" the source and feeder applications, thereby enabling system upgrades without having to reengineer interfaces. Application-driven form and report customizations are preserved during upgrades.

Last but not least, the open and standards-based product architecture supports multiple platforms, third party reporting tools, secure Microsoft Office integration, and extensible markup language (XML) and Web services integration. Earlier in 2005, Microsoft Corp. and CODA announced a multiyear alliance intended to enable CODA to deliver a range of financial accounting, management, analysis, and control solutions that take advantage of the Microsoft platform. In addition to CODA's existing line of financial management products for the Microsoft platform, versions of the company's next generation of analysis and process control solutions—including CODA-Analytics and CODA-Intelligence for corporate performance management (CPM), and CODA-Control for compliant process management—will be built using Microsoft technology. Among these are the Microsoft .NET Framework, Structured Query Language (SQL) Server 2005 Integration Services and Analysis Services, Microsoft Office System, Windows Server 2003, and SharePoint Portal products and technologies. CODA maintains that the alliance should help it deliver solutions that will allow enterprises to analyze, control, and exploit changing business dynamics and realize greater value from their financial systems investments. By building on the Microsoft platform, CODA pledges to deliver greater customer value with solutions that are even easier to use, deploy, and maintain, and will help reduce ownership and integration costs.

The alliance between CODA and Microsoft builds on the late 2004 announcement that highlighted CODA's support for the new Microsoft Development Center in Denmark. CODA was the first Microsoft independent software vendor (ISV) partner to take advantage of the center to design, develop, and improve solutions that use the latest advancements to the Microsoft platform. The resulting system architecture designs now include a number of new technologies that aim to helping performance and customer usability, as well as to accelerate CODA's time-to-market with its new application architecture. The new technologies include

* Information Bridge Framework (IBF). Allows data from line of business (LOB) systems (such as CODA�Financials) to be "brought to life" inside the Microsoft Office Suite and related systems that use MS Office technology (such as CODA Collaborative Control and CODA XL)

* Microsoft BizTalk Server 2004. Microsoft engineers reportedly helped the CODA team understand the tight integration of BizTalk into CODA applications, facilitating complex hub-and-spoke back-end business integrations.

There is also an apparent commitment to Microsoft technologies; for example, analytics solutions like Analytic Explorer and CODA Intelligence will exploit SQL Server 2005 integration services, analysis services, and reporting services, while process automation and modeling solutions like CODA-Control will exploit latest Microsoft Office technologies. However, other CODA transactional solutions for financial management support many other platforms and configurations, including OpenVMS (Virtual Memory System), IBM iSeries (AS/400), UNIX, open source, client/server, Web technologies, and Web services (without imposing the choice between client/server and Web-based configurations on the customer). On the application server side, with the choice of the Microsoft SQL Server, Oracle, IBM DB2/400, or Sybase database platforms and the choice of Windows Server, UNIX (HP UX, Sun Solaris, and IBM AIX versions), and IBM iSeries operating systems (OS), application services provide and enforce business rules, security, and validation. The application server includes a single point of maintenance for users, roles, business rules, account validation, reporting roll-up structures, master file details, document posting rules, inquiry templates, pay, matching, etc. The system features a scalable financial engine that can accommodate between tens and thousands of concurrent connections with a farm enabled Web server.

On the other hand, by leveraging extensible markup language (XML) and transmission control protocol/Internet protocol (TCP/IP), Web servers (which can be eithher the open source Apache on UNIX/IBM iSeries/Linux or Microsoft Internet Information Server [IIS] on Windows) enable a scalable delivery of CODA functionality to a Web browser and to Web service-enabled user interfaces (UI), and also serve as gateways for integration. They enable location independent, tailored, intuitive user operation. Form modifications are stored as separate XML documents, and thus become "upgrade friendly" as customizations are preserved during future upgrades. In addition, the use of hypertext markup language (HTML) over HyperText Transfer Protocol (HTTP)/ Secure HTTP (S-HTTP) enables multi-window, browser-based access to complete CODA functionality, as well as centralized configuration, rollout of the user's desktop environment, and a zero-client footprint installed across a secure intranet connection. Moreover, CODA-Portal provides a common platform to view both live CODA data and non-CODA data published as Web documents.

The Challenges of the Lawson-Intentia Merger

2009-10-03T05:23:00.002-07:00

The new management team for the company resulting from the merger of Lawson Software, Inc. (NASDAQ: LWSN) with Intentia International AB (XSSE: INT B) will have its work cut out for it. Both companies serve different markets, which will hopefully extend, not cannibalize each other's client base, but combining two companies with financial and revenue growth issues is not exactly a recipe for success. Although recent quarters for both companies have shown license revenue increases and profitability, neither Lawson nor Intentia have been stellar in terms of their financial performance lately. Despite this recent increase, overall Lawson has been experiencing declining license revenue (down nearly 20 percent since 2002) and has been keeping some appearances of profits mainly by cutting costs. Now that revenues are increasing, this cost cutting and revenue management strategy may provide further opportunity. Intentia, on the other hand has been on a losing streak for years, with its last profitable full fiscal year was 1998. Intentia's financial situation has at least played in Lawson's favor to acquire Intentia's assets at a good price—about 1.2 times its revenue, and become somewhat a bigger partner in what has been touted as the "merger of equals". For details on the merger announcement, see "New" Lawson Software's Transatlantic Extended-ERP Intentions.

Part Four of the "New" Lawson Software's Transatlantic Extended-ERP Intentions series.

This merger is not a mere consolidation of a smaller and struggling vendor by a bigger and more viable one. The intention is to grow a company that remains profitable on both sides. But it is questionable whether the existing Intentia and Lawson sales and service organization can sell and support each other's products. While having little overlapping functionality in the product lines is favorable, the downside is that the products serve quite different industries and different geographical markets, meaning the "common denominator" of post-integration cost-cutting synergies and cross-selling opportunities is low. Cross-selling brings the challenge of preparing Lawson's North American channel to sell in unfamiliar manufacturing, maintenance, and distribution industries. Currently, there are only a few seasoned Intentia implementers in the region nowadays and, vice versa, in terms of Intentia's European and Asia-Pacific channel that has been selling to the service and non-manufacturing industries. One should also not neglect the possible brand confusion in many markets either. For example, the Lawson brand will hardly ever resonate with prospective users in many manufacturing segments, even in North America, let alone elsewhere.

Executives of both merging parties have pledged to participate equally in managing the new combined Lawson and are committed to developing and supporting both vendors' current products through 2010. However, although this should comfort existing customers that their investments are not endangered, it limits "new" Lawson's opportunity to achieve significant near-term cost savings through customarily more forceful rationalization to bolster its near-term financial health. Quite the contrary, this will require investments in both complementary product lines that will need to be evolved and supported in the short-to-mid term, in order to eventually take advantage of any up-sell or cross-sell opportunities until a more unified next-generation product can be delivered. At the same time, the new entity will have to carefully blend the differing corporate cultures of merging parties, both of which have traditionally been proud of their product, with resulting in a "not invented here" attitude.

Further, even at the technology front, where the two vendors have the most in common, they will still have to resolve separately launched initiatives to create a unified next-generation set of software oriented architecture-based products (SOA). For example, while Intentia has rewritten its product in Java, Lawson still has a proprietary fourth generation language (4GL) in the business logic layer of its three-tier architecture. This proprietary 4GL defines business logic with a computer aided software engineering (CASE) tool that generates a COBOL executable. Going forward, Lawson plans to use Java, or rather a highly intuitive 5GL named Lawson Pattern Language (LPL) that would generate Java code, rather than the 4GL, while the presentation layer already uses extensible markup language (XML). The recently unveiled Landmark project, however, has great potential, but is still unproven and needs to be rationalized with development efforts at Intentia. For more information of the "New" Lawson's technology blueprint, see A New Platform to Battle Software Bloat?.
One can point out the success of similar mergers between Epicor and Scala or SSA Global and Infinium, but the major difference is that these respective vendors had more in common. They had a greater critical mass for synergies than Lawson and Intentia, and moreover, the acquiring vendors, Epicor and SSA Global had already "turned the corner" financially before their mergers. Although some might argue that Lawson and Intentia have also had a turnaround, Lawson will be caught between "the hammer and anvil" in an environment where everyone is concerned with the financial health of the software vendors. They have had to continue their cost containment efforts while enhancing both current product lines, developing the next-generation ones, growing top-line revenue, and increasing brand recognition.

To that end, the new management team will need to score some early wins to demonstrate the synergy of the deal. The primary goal will be to quickly develop the necessary integration to push Lawson financial and human resources (HR) applications into Intentia's installed base and Intentia's manufacturing and maintenance modules into Lawson's.

The management teams at Lawson and Intentia certainly understand the efforts ahead, and they both have experience in dealing with revitalizing stalled software companies. Bertrand Sciard, the president and chief executive officer (CEO) of Intentia, who will become the chief operating officer (COO) of the new company, and Romesh Wadhwani, who will serve as one of the co-chairs, have seemingly paved the way for "new" Lawson if one is to judge their record at Intentia so far. They have reduced the number of targeted markets, reduced costs, and emphasized license revenue growth. Likewise, Harry Debes the former president and CEO of Lawson, and the new management team will first return to their core competencies, and allocate their resources to a few existing markets and products where Lawson has traditionally been strong. Once the acquisition is finalized, the vendor hopes to have organic growth in its traditional strongholds of health care, retail, government, and financial services, while gaining new traction in areas in which Intentia has been strong. Another part of the plan is to add a new sales force in 2006 to handle the renewed focus.

Like Infor, both Lawson and Intentia have adopted a strategy that is highly focused on specific industries, which is possibly the only way to compete these days against the "two-horse race" between SAP and Oracle, particularly in the top tier. If these notable challenges can be overcome, the new Lawson will have a chance to stake a leadership position in the upper mid-market, enterprise resource planning (ERP) segment, and give customers in those industries another viable choice. But to that end, it must crisply define its target markets, create more viable leads, provide its people with appropriate sales and product training, ensure that they are properly resourced to cover the territory and offer its clients a complete solution to their needs—a full vertical-specific software suite complemented by Lawson consulting services.

Lawson admits that its solutions are less vertical than they could be, particularly when compared to Intentia's. Namely, the number of customers in certain industries have been the result of circumstance rather than the vendor's deliberate and orchestrated effort to deliver a perfect-fit solution. The vendor offers primarily horizontal solutions (HR, financials, and procurement) with a few vertical-point solutions that extend its offerings. Lawson might have a more complete solution in the retail sector, but that is more an exception, not a general rule. Regardless, in each of its target verticals there is still a lot of opportunity that the vendor does not currently address. Yet, in order to be an effective vertical-solutions company, it must offer its clients the mission-critical, vertical-specific applications they need in addition to the back-office ERP solutions it provides today. Thus, there is both a challenge and an opportunity to fix this and thereby grow the footprint and revenue with each client.
This brings us to the opportunity for new Lawson to enter into more strategic alliances with systems integrators (SIS), consultants, and resellers to benefit from the partners' resources, expertise and customer base. Traditionally, both Lawson and Intentia have been remiss to cultivate strategic relationships with system integrators that have also demonstrated vertical expertise. Yet, the main cause of Intentia's protracted losses is that more than half of its revenue traditionally comes from professional services by Intentia's well remunerated (and perhaps spoiled, by US workplace standards) staffers. The gross margin on these services has been around 10 percent, which is way too low to sustain the cost of new product development.

Also, integrators need templates, specific expertise, and other intellectual property furnished by the vendor, otherwise they will end up over customizing the solution, which defies the purpose of an integrated approach in the first place. Intentia and Lawson have only recently made a point of concentrating their internal sales efforts on their traditional vertical markets and to rely on partners to address and develop particular industry needs, thereby expanding its functionality footprint.

Additionally, while Lawson and Intentia have long provided professional services to ensure high customer satisfaction ("to get one client at a time and keep it forever"), the relatively recent announcements of vertically focused system implementation partnerships, with, for example, CSC and Capgemini for the health care industry, and with Answerthink and Deloitte for the service automation sector, should bode well for the company's continued market success. These partnerships might be the sign that Lawson has begun to address its system integration partnerships as strategic rather than opportunistic. Also, partnerships with renowned middleware and enterprise application integration (EAI), infrastructure and applications management vendors including IBM, WebMethods, Sun, BEA Systems, will provide Lawson with toolkits that are readily available for making deeper functional adjustments and customizations. They will also allow for better scalability, security, and load balancing and overall, it will contribute to areas where the company has traditionally trailed the bigger competitors. Other strategic relationships should also allow Lawson to expand its product functionality through the offering of services that are not its core competency, such as BSI TaxFactory for state and local tax data.

The size and scale of future engagements could, on the other hand, be more attractive to the consulting and system integration (SI) giants to bring real value to Lawson. When integrators participated in the past, they all too often acted like "ambulance chasers", showing up at the last minute when a deal had already been decided, asking to be introduced to the account and often getting in the way of the Lawson' relationship with the customer. Only when a services partner is actively campaigning for Lawson to win the deal and is working with its services management team to share the work in an equitable manner, will it deliver value.

Lawson and Intentia will therefore have to put lots of thought and effort to select the most appropriate partnerships for each ttargeted vertical sector as to avoid internal competition; to further focus these partnership; and to reach the critical mass of trained professionals for the industry sector. When it comes to staff augmentation, the current 15 percent or less margins the two vendors have been getting from third-party service providers remains unacceptably low. For this kind of work, they will likely further explore offshore resources to get at a better price for the clients and a better margin for new Lawson. At present IBM and Symphony have offshore relationships with Intentia and Lawson has an offshore relationship with Xansa, and going forward they will explore both of these offerings as well as others, including having its own offshore operation.
Further, while "old" Lawson's deliberate decision not to offer a manufacturing product suite has been known, the company's CRM strategy has been less clear-cut. The vendor departed from its plans to develop CRM functionality in house in 2000, and partnered with Siebel instead (see Lawson Software's CRM and ASP Moves— Wise, Bold, Injudicious, Enforced, or Something Else?).

The partnership has, however, had only limited success in the financial institutions sector, and the reasons thereof would be too extensive system modifications and price tag to handle the needs of other verticals, which often do not require a product-oriented, customer relationship management (CRM) system per se either. Indeed, Lawson confirms to have ended its reseller agreement with Siebel because its customers, given the verticals they play in, were reportedly not demanding a CRM solution from Lawson.

An exception is professional services, where Lawson's Service Process Optimization (SPO) solution already offers strong native CRM functionality. Also, service automation is a vertical where opportunity management remains the main CRM need and where the alliance with Interface Software will play its role (see Interface Software Expands Its CRM Functionality).

Still, while there is also the truth in the claims that the ERP and the CRM decisions are often made separately, vendors like SAP, Oracle, or SSA Global will beg to differ. This may result in a number of lost opportunities in the future, since certain customers prefer more complete native solutions from a single vendor. Time will only tell whether Intentia's adequate CRM functionality for manufacturers will be enough of a jump start for Lawson's missing order entry and management capabilities for disparate industries. In any case, the CRM strategy remains muddled at this stage.

Increased momentum in top-line revenue and improved market perception and awareness are needed for Lawson to remain competitive in a rapidly consolidating market, since any instability and uncertainty during the impending integration process could lead to a further drop in new license sales (although license revenues are currently increasing) and vulnerability to many remaining predators in the market. Still, since both vendors' performances and global recognitions have been suboptimal lately (especially due to the uncertainty caused by constant acquisitions and mergers), they may not have much left to lose, and this merger is certainly worth a shot.

Market Impact of Lawson-Intentia Merger

2009-10-03T05:23:00.001-07:00

While we do not indulge in speculating who is likely to merge with whom in the highly tectonic enterprise applications market, we have to admit that the merger of Lawson Software, Inc. (NASDAQ: LWSN) with Intentia International AB (XSSE: INT B) had not crossed our mind before it actually happened. (For details on the merger announcement, see "New" Lawson Software's Transatlantic Extended-ERP Intentions).

The move was quite a surprise, since both Lawson and Intentia, which have hardly competed directly, and had undergone major restructurings, put their product technological roadmaps on similar courses, and resisted many attempts to be acquired, and they even repeatedly professed interest in acquiring and assimilating smaller direct competitors. There were rumors of Lawson being acquired by Oracle or merging with its former customer relationship management (CRM) partner Siebel Systems, and of Intentia merging with another struggling Swedish peer, IFS (see IFS Continues Its Reinvention through Pruning). Also there were suggestions of Intentia merging with a recovering Geac or being acquired by SSA Global.

There were other indications that deflected any indication of an Intentia-Lawson merger, such as Intentia's recently lost bid for MAPICS, which instead was awarded to Infor Global Solutions. Moreover, as mentioned in Intentia Prepares for Merger with Lawson, Intentia has been revamping its sales channel strategy, and, prior to the Lawson announcement, Intentia had not been secretive about the fact that it earmarked some of the $85 million (USD) raised from investors for acquisitions. This further obscured any indication of a merger between the two companies.

Yet ironically, the similar, concurrent, and respective moves of the two merging parties to execute a company turnaround are exactly what might produce some method to the madness of Intentia-Lawson merger. Their union somewhat resembles a personal relationship where opposites attract, and while their coupling may not have been love at first sight, it might still become a successful marriage of convenience.

The force-joining deal might bring about a much needed, stronger statement for the market, and reverse Lawson's and Intentia's negative momentum, where both companies struggled in the frenzied and rapidly consolidating enterprise applications market. Intentia is hoping that Lawson's domestic brand recognition, in addition to Intentia's renewed vertical focus, and Java technology, will propel it to a greater success in the US market. Intentia entered the US market in the mid-1990s, but has not really racked up any large scale customer wins . Currently it only has about 200 customers that mostly within the fashion and apparel sector. Intentia's Americas business has, in the past, been an admittedly small investment, accounting for just roughly 5 percent of sales.

The issue, however, for Intentia has thus long been whether prospective multinational user enterprises will buy the idea of its future-proof Java technology, when it remains apparently a niche player with little to offer�apart from some references�outside Europe and Scandinavia. The "big few", companies of such stature as SAP, Oracle (now with PeopleSoft and J.D. Edwards), SSA Global (now with Baan, Marcam, Ironside, EXE Technologies, Infinium, Arzoon, etc.), Infor (now including MAPICS, Lilly, Mercia, NX Trend, SCT Process, etc.),and Sage are bound to look better. As will Microsoft Business Systems (MBS), which is at the lower-end market, but is working its way up.
The same can be said for Lawson, which has long competed successfully against the likes of SAP, former PeopleSoft, and Oracle, (see Lawson Asserts Itself, Draws a Bead on Bigger Players). Yet lately, it has been an uphill battle, especially since Oracle's protracted attempt to acquire PeopleSoft, resulted in much uncertainty in the market.

Additionally, Lawson's recent financial results were not too impressive. Increases in its profits were due to cost-cutting measures, and could be regarded as mere smokescreen for seriously slumping new license revenues. This possibly indicates that Lawson's vertical focus has not necessarily been an impervious strategy during the economic slowdown and an increasing competition.

Based on the most recent restructuring, which was undertaken in the first quarter 2005, the company managed to show $5.3 million (USD) in profit, due mostly to cost containment, with some additional improvements in services margins and a reduction in days sales outstanding (DSO). Yet, revenue has been stubbornly declining, down to $335 million (USD) in fiscal 2005 from $354 million (USD) a year before. Of this, the biggest concern was the steep drop in license revenue, which was down to $58 million (USD) in 2005 from $92 million (USD) a year earlier. On a more positive note, Lawson has maintained a strong balance sheet and a strong cash position; however, license revenues were still weak prior to the most recent quarter (the first quarter fiscal of 2006, ending August, 2005). However, the new chief executive officer's (CEO) focus on sales, caused license revenues to rise 40 percent. Still, the current quarter has not the best for license revenues, but it beats Lawson's license revenues for each of the quarters in the last fiscal year. In addition, it raised the outlook for the second fiscal quarter of 2006.

Nonetheless, the company had to trim its workforce a few times since going public in 2001, sometimes even by a double-digit percentage, in an effort to cut costs. This, combined with transferring some development work to India, where many peer companies, including Intentia, have found a cheaper labor. Lawson has lost a fifth of its workforce (down to over 1,500 now) since before its first major round of layoffs in June 2002, when it laid off 110 employees or 5 percent of its erstwhile workforce. The worst layoffs, however, took place in September 2002, when the vendor cut over 230 jobs, or 12 percent of its employees (see Lawson Software-IPO and Several Acquisitions After). Still, by reacting to current realities and adjusting its operational plans quickly to support the firm's strategic goals, along with aligning everyone's actions toward those goals, Lawson has at least demonstrated impressive management and financial discipline. One should note, however, that the CEO of Lawson, Harry Debes is investing in a new sales force, as the vendor has been attracting experienced sales expertise to increase its reach.

Somewhat resembling Intentia in some regard, "old" (or still current) Lawson Software could be regarded as an enterprise applications market anomaly. For one, the company, at its peak in fiscal 2002 boasted annual revenues of nearly $430 million (USD), but it has only a slim presence of less than 10 percent of revenues outside of its US domestic market. Further, it remains a major force in enterprise applications software, yet it does not cater the functionality for the manufacturing sectors, and the vastness of its sales are thus derived from just a few service-oriented vertical markets—primarily health care and retail.

Lawson has also made forays into the public sector, including US state and local governments, kindergarten to grade twelve (K-12) education institutions, public authorities, etc. It has also entered the financial service market, which includes banks and insurance providers. It has signed more than 140 public sector customers in the last three years or so. To that end, currently with over 2,000 customers in total, Lawson serves 2 of the 10 largest (by population) US state governments (or five of the top 20), and 4 of the 20 largest city school districts in the US. Lawson's software is in use at more than 1,300 schools with combined enrollments exceeding one million students. New markets that Lawson intends to seriously tackle include transportation and distribution, energy and utilities, gaming and entertainment, and publishing.

The irony might be that Lawson's and Intentia's similarities will bode well for the merger's success. However, a protracted regional/niche nature, focus on the functional and technical prowess of products rather than using a concurrent approach of savvy marketing and brand recognition creation, along with a lack of strategic product and systems integration partnerships due to the negative "not invented here" corporate cultures, will remain impediments unless promptly tackled and solved. For that reason, Lawson's recently espoused a 1,000 Days Customer Manifesto initiative. It is designed to nurture a loyal and happy client base in a market where there is little brand loyalty. Not only is the Manifesto designed to help drive additional revenue from loyal accounts, but it will foster a larger base of reference accounts, which will hopefully help win new clients. However, it has apparently been insufficient to overcome the clout of Lawson's more viable competitors. To make further headway, Lawson has partnered with IBM. Lawson believes this will increase its eco-system. This, combined with its increased size, new Lawson will hopefully attract new partners. Although its too early to tell for sure, the recent quarter might indicate that the value proposition is beginning to win with clients too.
The Lawson/Intentia merger, whether a virtue of necessity or a truly a bold initiative, is their joint proposition to re-energize their fight for market share. Alone, neither would have sufficient clout nor momentum. They have stated that they intend to focus on the enterprise resource planning (ERP) mid-market. As a result, both vendors should, at least on paper, double their individual sizes through this merger, dramatically expand their global reach, and leapfrog, revenue-wise, over revered competitors such as SSA Global, MBS, Infor, and Geac. One should never underestimate how important size and a global presence can be in a boardroom presentation before the selection committees when opponents are giants like SAP or Oracle.

The minimal geographic and industry overlap should present some cross-selling opportunities on a global scale. For example, Lawson should bring analytics, enterprise process management (EPM) and business intelligence (BI) to Intentia's base (although Intentia has been leveraging its partnership with Cognos to address this group). On the other hand, Intentia brings strong enterprise asset management (EAM), product service and manufacturing capabilities to Lawson customers, such as health care (to asset-rich hospitals) to complement Lawson's procurement and material management capabilities. Intentia's EAM and maintenance, repair and overhaul (MRO) capabilities might come in handy for Lawson to finally get a foothold into the utilities segment, where it has been unable to make a dent with only strong financial and human resources (HR) capabilities.

Likewise, there might be a synergy in the retail sector, where Intentia could certainly contribute with its solutions for fashion and consumer packaged goods (CPG) manufacturers and distributors. Lawson could take it from there to cover the retailers' functionality (there might also be some synergies between combining capabilities of the Intentia food and beverage with Lawson's grocery solutions). Also, given that the Symphony Group also owns the GERS Retail product, look for some possible mutual product developments in the future, especially in light of Oracle's intention to enter the retail sector as seen with its recent acquisitions of Retek and ProfitLogic. SAP has also responded in kind by acquiring Triversity.

Surely there is some inevitable overlap in the realms of financials, HR (where Lawson has far stronger capabilities), and procurement (where Intentia excels). However, it is likely that Lawson's upcoming blueprint for Landmark service oriented architecture (SOA), and Intentia's Java code base will eventually enable both companies to mix and match the best of each other's product offerings. In addition, both firms are already committed to IBM's technology stack. They will leverage WebSphere portal server, WebSphere application server, and WebSphere business integrator. For the time being, Intentia and Lawson applications and clients will remain on separate tracks.

Lawson is also staking its claim on the upper mid-market sweet spot, where companies with more than $250 million (USD) and less than $1 billion (USD) in revenues are situated. Lawson cites that over 70 percent of Oracle's and SAP's sales have to companies outside of this rrange, making more than $1 billion (USD) in annual revenues. Also over 70 percent of MBS' and Sage's sales have been to companies with less than $250 million (USD) in revenues. By contrast, Lawson and Intentia combined, will get 75 percent of their sales from companies in the middle ground; however, SAP and Oracle are trying to reach this market. Additionally, Microsoft and Sage are trying enter this market, as are companies like SSA Global, International Business Systems (IBS), Infor, Geac, QAD, IFS, Epicor, Glovia.

Intentia Prepares for Merger with Lawson

2009-10-03T05:22:00.000-07:00

Not waiting for the merger transaction with Lawson Software, Inc. (NASDAQ: LWSN) to close, Intentia International AB (XSSE: INT B) announced the release of Intentia Application Suite (IAS) 5.1. IAS is a full integration of Intentia's entire application portfolio that, like Lawson's upcoming Landmark product, uses service-oriented architecture (SOA) to create business processes and develop applications flexibly, while enabling Web services and a faster return on investment (ROI). For details on the merger announcement, see "New" Lawson Software's Transatlantic Extended-ERP Intentions. IAS is a solution aimed specifically at companies in the manufacturing, distribution, and maintenance industries. Particular focus is placed on those companies in food and beverage, fashion, wholesale distribution, and asset and maintenance intensive industries that include enterprise asset management (EAM) and product service management (PSM). It consists of eight Intentia application areas, including customer relationship management (CRM), enterprise management (ENM), supplier relationship management (SRM), supply chain management (SCM), enterprise process management (EPM), workplace management (WPM), value chain collaboration (VCC), and foundation and tools (FTO).

Part two of the "New" Lawson Software's Transatlantic Extended-ERP Intentions series.

Intentia points out that the product is further evidence of the company's ongoing commitment to SOA (for more of pertinent information, see SOA-based Applications and Infrastructure--The Next Frontier?). Intentia invested early in Java technology and currently has over 250 live customer implementations, and it already delivers a fully Web services-enabled application suite.

The latest release boasts many new features within the CRM, SCM, and FTO applications. Within the CRM applications, the Intentia e-Sales product has a new advanced channel, category, and market analysis functionality, which is provided through Cognos ReportNet. It is designed to improve a user company's ability to implement sales strategies in order to increase revenue and profit. In addition, new capabilities should help fast-moving consumer goods (FMCG) and consumer packaged goods (CPG) companies improve category, space, and promotion management. Information from both the sales and order fulfillment processes is now available in the field sales solution, which should enable salespeople to improve individual efficiency during customer visits, and ultimately, create opportunities to increase sales.
Within the supply chain planning (SCP) realm of the SCM applications, Intentia has introduced sales quotas, transport rules, and purchase agreements functionality. These constraints aim at increasing planning efficiency and optimizing profit by controlling what, how much, when, and to whom products are purchased, processed, moved, and sold. Lastly, Movex Adaptation Kit (MAK), a tool within FTO, has new features that reduce the time, effort, and cost involved in supporting and maintaining IAS. These new features include validation wizards, improved language editing, and one-click analyses.

As to further vertically differentiate its functional scope, mid-July, Intentia also released a stock build optimization solution that strives to maximize food and beverage manufacturers' stock mixes and reduce the surplus of finished goods inventory by up to 20 percent to avoid stockouts and product waste. In other words, the solution tackles one of the major issues facing the food and beverage industry—the need to build stock to meet seasonal peaks and promotional spikes. According to reports from the Food Marketing Institute and Grocery Manufacturers of America, product waste is estimated to have cost food manufacturers $2.57 billion (USD) in 2004, and $6 billion (USD) in lost retail sales from stockouts, which run as high as 13 percent during promotion periods.

To that end, the Intentia solution processes a wide spectrum of business variables that impact stock exposure risk. Today, manufacturers still rely heavily on spreadsheets to calculate stock builds, which becomes unmanageable given the number of products and factors that must be navigated. These include changes to capacity, shelf life and cost constraints, margins, new products, and recipe and manufacturing process changes. In fact, according to a measurement formula created by Intentia, the level of stock build complexity increases exponentially with the number of production lines and products planned. For example, increasing the number of products from two to four over a twelve week planning period increases data complexity by a factor of 100, and from two products to six by a factor of 10,000.

To calculate the optimum target stock per period, by product stock keeping unit (SKU) and to meet peaks based on demand forecast, available production capacity, existing inventory, and costs, the stock build optimization solution creates a time-phased stock plan—reportedly in a matter of minutes. This plan optimizes customer service levels and profit margins, thus eliminating over-stocking and the risk of product waste. The solution also incorporates the shelf life of each product, regardless of whether the products are stored under room temperature, chilled, or frozen conditions.

During the stock build optimization process, the solution evaluates the cost impact of alternative manufacturing processes, production costs, and stock holding costs to ensure that all possibilities are explored. Maximum and minimum stock levels and the days' coverage of stock are taken into account during the stock build process. In addition to managing these complex variables, Intentia's stock build optimization solution provides manufacturers with the opportunity to collaborate with retailers by creating promotional scenarios and proposals that can utilize spare capacity and inventory. The solution might have the added advantage of requiring little or no alteration to current business processes, as it runs on a personal computer (PC) with Windows XP, and takes approximately 15 to 20 days to install, while using only limited resources from the user company.
To prepare for a merger (though it was still not clear with whom the merger would be), many rationalization and cost-cutting moves were set in motion at Intentia in late 2004. Under the helm of Intentia's president and chief executive officer (CEO) Bertrand Sciard, products, target markets, and sales channels were revised. Namely, Sciard's vision of "New" Intentia at the time, was to be better focused, and well financed and structured for profitable growth. He sought to invest in customers, products, and technology, while targeting leadership positions in defined markets. Significant financial investments from then new partners, Symphony and Tennenbaum, had also prompted major organizational restructuring and permitted a new "Make, Move and Maintain (M3)" business strategy. In other words, to achieve a focused customer commitment, Intentia had proclaimed itself to be 100 percent dedicated to bringing software applications and consulting services to the M3 market—companies whose core processes involve manufacturing, distribution, and maintenance.

The vendor has since been "100 percent committed to a 90 percent fit-to-purpose, out-of-the-box; and 100 percent committed to delivering value every time, since 100 percent of its resources, 100 percent of its software and 100 percent of its experience is in servicing this market". In other words, by targeting fewer industries and geographic markets, Intentia plans to provide M3 customers with a stronger value proposition and strive to create solutions that are up to 90 percent natively prepackaged for their location and industry requirements.

To exemplify how Intentia offers extensive functionality, one needs to look at the types of industries it serves. For example, the fashion industry, must handle the interplay of color, shape, and size in production, and inventory management, see Intentia: Stepping Out With Fashion and Style. Meanwhile, in food processing, beside the stock build optimization, there is often the need for traceability "from sheep to shelf" (not to imply from "mad cow" to "shelf" or from "hoof to mouth"). For more pertinent information, see Intentia's Movex for Food and Beverage: Gaining a Foothold in North America and Is Intentia Truly Industry's First in Food Traceability?).

In terms of regional focus, Intentia concurrently made fewer selected markets, such as the US, China, and Japan, the center of its attention. Globally, Intentia focused on four industries—food, fashion, wholesale distribution, and service and maintenance. However, in the Americas, the focus was initially on food and fashion. Its primary customer target is mid-tier businesses with revenues ranging from $100 million to $1 billion USD, yet are hindered by time and cost constraints, and limited resources which prevent mega tier one-type enterprise solution implementations. Nonetheless because they compete within extensive national and global supply chains, serve demanding customers with large purchasing power, and manage multiple supplier sources and relationships etc., they have complex requirements, which cannot be meet by small enterprise solutions.

In other words, these target customers need an experienced, committed, financially stable supplier that can deliver immediately and provide long-term, scalable solutions. An extensive, prepackaged comprehensive solution with the right technologies permit rapid deployments with minimum resources at a reasonable cost. Custom enhancements are supported through available add-on products, such as Movex Advanced Production Planer (APP), e-Sales, e-Procurement, Movex SMS (a mobile sales force automation component for fashion), and Movex Opportunity Analyzer (see Enterprise Process Improvement (EPI) Software: Customer and Software Vendor Collaboration), and with the recent services from best-of-breed partners.

In our opinion, Intentia's pre-merger and pre-Sciard problems mainly stem from the previouss, stodgy management team, who had long fostered the "not invented here" culture and would bristle at any constructive criticism. The new team has apparently been more competitive and open to challenging questions. It has also been more open to partnering, and certainly not reticent to making tough decisions.

Challenges and User Recommendations for a Focused Enterprise Resource Planning Solution

2009-10-03T05:21:00.000-07:00

Impressive Enterprise Resource Planning Solution Gets A Little Help From Its Friends

2009-10-03T05:19:00.000-07:00

Strategic Systems International (SSI) (www.ssi-world.com) has been developing, implementing, and supporting packaged enterprise systems since 1982, initially as an information technology (IT) department of Powell Duffryn plc, and since 1998 as a privately held company (till becoming part of Chelford in the early 2000s). Despite impressive product depth and breadth (for instance, customer relationship management [CRM], workflow, traceability, and quality management are provided natively), SSI has longstanding partnerships with several best-of-breed specialists. These specialists include Mitrefinch for human resources (HR), payroll, access control, and time and attendance (T&A); and Greycon for advanced planning and scheduling (APS) tools. They also include several partners, such as Barloworld Optimus, for demand planning; i2i for export documentation; Cognos for business intelligence (BI) and reporting; and Intermec for mobile computing, bar coding, and shop floor data collection. The long-term and embedded nature of these partnerships makes the integration almost seamless and transparent to the customer.

Part Four of the series Vendor Defends Its Strongholds With Focused Enterprise Resource Planning Solution.

The deepest partnership has likely been with CODA, a preferred best-of-breed financial management and accounting system, with over fifty common customers. Having CODA as an intrinsic part of TROPOS places SSI in a very competitive position, even against the likes of SAP or Oracle. For instance, some of the key attributes of CODA's offering include multi- "just-about-everything" (such as multiple companies, multiple currencies, multiple languages, and multiple charts of accounts) in a single product's instance or database. Thus, single or "unified" ledger architecture, which processes and holds all the user company's financial data in a single ledger and in real time, eliminates traditionally lengthy and tardy batch updates between sub-ledgers. Consequently, a near real-time financial position is always maintained, and the entire general ledger (GL) should always be in balance. In addition to the real-time update, the unified architecture advantages include elimination of the need for reconciliation, simpler data retrieval, more efficient processing, and a consistent "look and feel."

CODA solutions are also being used to address the complex requirements of those companies that need to intelligently share information with business partners, customers, and suppliers, which is in tune with the SSI's collaborative framework philosophy. For more information on CODA, see Best-of-breed Approach to Finance and Accounting.

Furthermore, when the Chelford Group acquired Shian, it acquired considerable Microsoft expertise in Microsoft SQL Server, Reporting Services, Analysis Services, Business Scorecard Manager, SharePoint, and Web services development. With these, SSI can develop impressive in-house information worker and BI solutions, intranets, extranets, and so forth, to combine the functionality of TROPOS with the information delivery capability and role management provided by Microsoft's range of tools and technologies. With the arrival of Microsoft CRM 3.0, this has become even more pervasive, as the Microsoft environment we are all familiar with on the desktop now becomes the enterprise environment, encompassing all enterprise resource planning (ERP) and office functions in one, including contact management. This is one area that will likely see significant growth as companies finally manage to "join up" their ERP and desktop systems. See Major Vendors Adapting to User Requirements for more insight on this area. Prior to the Shian acquisition, SSI had largely relied on the agreement to offer VECTA sales intelligence software integrated with the TROPOS ERP solution.

For background information on SSI and TROPOS, see Vendor Defends Its Strongholds With Focused Enterprise Resource Planning Solution. For a discussion of TROPOS for selected industries, see A Focused Web-based Solution for Chemicals, Drugs, and Mill-Based Industries. For an examination of the TROPOS strategy, see Web-based Enterprise Resource Planning Solution Exhibits Lean Approach.
Early in the 2000s, the company launched a partnership with UK-based Barloworld Optimus, whose inventory optimization Optimiza tools (privately labeled as the TROPOS Optimiza module by SSI) have helped many user companies cut stock levels while simultaneously improving product availability. Optimus has an innovative inventory management methodology, whose aim is, like many other inventory optimization products to enable clients to reduce investment in stock while at the same time maintaining or improving customer service levels (see Inventory Planning and Optimization: Extending Your ERP System and Lucrative but "Risky" Aftermarket Business—Service and Replacement Parts SCM). Managing risk is about managing the cost of maintaining unnecessarily high levels of inventory against the risk of running out of stock at the crucial "moment of truth," when a customer actually wants something. Most traditional ERP systems record transactions, run programs to suggest re-ordering based on fairly crude algorithms or even more dubious forecasts, and occasionally come with some form of management reporting. Few, if any, include more sophisticated inventory management tools of the level required for the consumer goods supply chain.

For a more detailed discussion of inventory optimization, see Yes, We Have No Bananas: Consumer Goods Manufacturers Serve Demanding Customers.

With functionality aimed at both senior executives (who can fairly quickly and easily see the cost of excess inventory and potential stockouts) and purchasing specialists, Optimus touts a solution that provides more complete decision support capabilities for the inventory chain. Established in South Africa for over 15 years, Optimus has over 350 operational customer sites in 5 continents, many of which come from dozens of partnerships with vendors like SSI. Areas of particular expertise include the automotive aftermarket, steel production, and chemicals.

The central problem of inventory management is the lack of any link between the macro level of corporate stockholding policy, and the micro level of day-to-day purchasing. But the Optimiza methodology makes that link. The product generates a risk profile—taking into account the level of forecast accuracy and the performance against schedules of the supplier—for each line item. Items are classified according to their criticality, with the computer generating forecasts for less important classes (the most crucial items, though, require management input). Part of the complete Optimus methodology is a regular executive review of forecasts and inventory levels, and SSI consultants can, if needed, facilitate this meeting for common customers.

There are a number of stand-alone forecasting packages on the market, and although useful, their effectiveness is limited because of the difficulties in using them as an integrated part of the planning and decision-making process. Namely, these typically do not take risk management and inventory optimization into consideration, and are difficult to integrate with ERP systems. Conversely, Optimiza includes forecasting as an integral part of the inventory optimization process. There are a number of factors that affect the accuracy of a forecast, and the most common basis of forecasting is historical information, despite the fact that most historical data is a record of what actually happened, and not necessarily of what the customer actually wanted to happen. For example, stockouts might appear as reduced demand, whereas in fact they were unsatisfied demands. The effect of stockout hence needs to be automatically eliminated from the sales history to provide a more realistic forecast. Thus, a key feature in the forecasting module is automatic "outlier elimination," which allows the system to adjust historical data points to reduce the effect of non-standard market events, such as once-off sales (or missed sales), on forecasts. The benefits are better forecasts, and less time spent in identifying these anomalies over thousands of line items.
Embedded in Optimiza is the "Tournament" forecast method, which runs many algorithms, optimizes parameters (based on root mean square errors [RMSE], a mean absolute deviation [MAD], or a fit coefficient, which is a measure of how well the predicted values from a forecast model "fit" with real-life data), measures accuracy against past demand, and then recommends the optimum forecast method by measuring the accuracy of the method for each line item.

The forecasting module incorporates more than twelve algorithms, including moving averages, weighted moving averages, and exponential smoothing with trend analysis and seasonality options. Manual adjustments can be electronically recorded, together with user comments in the meeting (or conferencing) comments facility to collaboratively support changes. Adjustments to future demand can also be made so that promotional or marketing events can be added to the underlying demand by product. The net result should be reduced risk, leading to improved service levels and optimized inventory levels, and distribution operations too can run their businesses using planned demand where decisions are made proactively. The forecasting module enables users to conduct detailed reviews of their data, segmenting it into templates by product, supplier, major grouping, product grouping, or Pareto/ABC-type analysis category. The business can forecast on a group or family level, and explode the forecast down to the lowest item level.

An ERP system typically uses parameters to control replenishment policy, and this is usually set by category or product group. However, different product categories may require different decisions relating to replenishment, safety stocks, and customer service levels. Without a specific inventory optimization tool, it is difficult to identify which product requires which set of inventory rules, since these can vary according to item cost, demand, order frequency, supplier, stocking location, value, shelf life, perishability, purchasing rules, or often rather subjective criteria set by sales and marketing policies. Certainly, inventory targets must be scientifically derived and realistic in terms of being achievable, and Optimiza allows the user to filter products according to criteria such as product hierarchical categories, or supplier categories via templates for each user or stocking location. Thereafter, the user is able to allocate products into Pareto groupings based either on turnover value by cost price, selling price, or profit margin; or by unit of issue, which ensures a more strategic focus.

Furthermore, appropriate policies for inbound lead times, review periods, and replenishment cycles, can be set prior to using sophisticated safety stock tables to model optimum safety stock levels. Optimiza has user-defined mechanisms for quick and easy identification of both non-stock and slow-moving items, whereby both have a specialized category that allows the user to separate them for different focus and attention. Consequently, slow-moving, erratic-demand, or maintenance items can be treated differently from fast-moving items, using tables to set optimal levels based on lead-time annual demand and service level. Service level settings can be set by criticality of the product to determine the optimum bin level for just-in-case or insurance items.

The calculated inventory model allows the user to determine the impact of alternative policies, prior to implementing changes. Optimus highlights the trade-off between the cost of carrying stock and the cost of stockouts, which allows the user to exercise "what-if" scenarios with different policy settings. When the optimum policy has been modeled and set, the product flags any sub-optimal transactions, by alerting the user through a management cockpit, which highlights problem areas. The management cockpit presents the top suggested value-adding activities to the user on a daily basis, with graphical profiles being used to monitor the daily progress to realign inventories against the optimal policy. The profiles display a graphical view of the risk profile for each individual item, as well as the minimum and maximum levels in graphical and numeric formats.