MESOTHELIOMA

iVita Corporation put the final wraps on its Commander 3.0 software and announced the general availability of its asset information management system. It has also announced a partnership with PinPoint Corporation. The partnership with PinPoint fulfills another piece of the dream (see iVita Mines Assets for Bottom Line Health). PinPoint is currently strong in health-care, one of iVita's key verticals, where manufacturers use its wireless tags to track manufacturing process flow and other customers use it to track the location of assets in warehouses and storage areas.

Version 3.0 was released fairly soon after version 2.0, because the company has adopted what they call a flexible approach to architecture for the purpose of being responsive to customer suggestions.

The Commander 3.0 software, hosted through DataReturn, sports a Microsoft-style look, as shown in Figure 1. This screen shows a manager the assets of one fictitious company, Reliable Energy. The assets are tracked in two folders as shown in the right-hand pane.


The lower part of the screen is reserved for various kinds of messages. Here, an alert has been posted notifying the manager that a waterblaster (an asset worth approximately $100,000, not an industrial-sized version the neon colored water rifles that kids love) has been idle for more than the accepted time as defined by Reliable.

Additional features soon to be announced are exemplified by the following Figures, which represent a preliminary version of the forthcoming screen designs, made available to TEC by iVita. Figure 2 shows a more complex situation than Figure 1. Reliable has acquired Star Energy. In merging assets of the two companies the software has detected that there is now a need for another water blaster. This need would have been determined in one of a few ways. It might be an outstanding request from Star. Or it could be triggered by some rule that Reliable has developed, such as that for every eight widgets there must be at least one water blaster. Notice that the message window also contains news about items that have been submitted for bid and disposal on iVita's energy marketplace partner


We expect that iVita will develop a considerable following fairly quickly now that the product has gone into general availability The company is beginning to expand its sales force and has already seen substantial interest in its product from large enterprises.

While without any look-alike competitors, iVita is not alone. There are established companies that specialize in asset management, some of which are making their own connections to trading exchanges to make disposal of unneeded assets more convenient. (See Peregrine Polishes the Old In-Out-and-In-between). Other new ventures are attempting to add value to the disposal process itself. (See Antidisintermediation).

In the long run, therefore, iVita can expect to see various kinds of competition. However, at the moment it has a good chance to both define the market and build a strong customer base.

Given iVita's range of target verticals, we suspect that announcements will be forthcoming with other vendors of wireless tracking systems.

User Recommendations

The companies with the most to gain are those with large numbers of assets or large numbers of asset-using locations. Such companies would do well to contact iVita for an ROI analysis. Pricing of the product is fairly low - a few dollars per month for each employee in a company or division. Pricing per employee was chosen to make it easy for companies, once having taken the plunge with iVita, to decide to expand its use. Since the product is hosted and browser-based, integration costs may prove to be fairly small; that could make for a persuasive ROI argument even if only one water blaster purchase is saved.


SOURCE:
http://www.technologyevaluation.com/research/articles/tired-of-losing-your-oil-derricks-16129/

Many of us have heard the term before. The fact that you are reading this article shows that you are interested in it. The paperless office—is it a realistic goal? What are the benefits of a paperless office? Ironically, as you read this, you are probably surrounded by paper, as paper has blossomed into an integral part of our everyday business and personal lives. So, is it really possible to achieve a paperless office? And if so, why should companies want to?

The Advantages of Paper

Originally invented by the ancient Egyptians, paper has evolved and has successfully endured the test of time. It is nearly impossible to make it through the day without encountering this ancient invention. From books, to magazines, to newspapers, we are surrounded by paper. Paper is arguably one of the most used materials on Earth. But what is it that makes paper so popular, especially in the era of computers? According to Richard H. R. Harper's book, The Myth of the Paperless Office, there are four main reasons why paper is so desirable:

1. Paper documents are easy to navigate through.
2. Paper facilitates the cross-referencing of multiple documents.
3. Writing down notes is exceptionally easy to do on paper.
4. Switching between reading and writing is simple to do with paper.

Think about the last time you casually browsed through a magazine while at the grocery store or library. We take for granted the ability to pick up a magazine or book and quickly flip through the pages to see if the information inside is interesting. This ability to effortlessly move from page to page is ideal, and paper facilitates this action like no other material can. In fact, a study conducted by Richard H.R. Harper found that even employees at technologically advanced companies still use paper in their everyday functions because of the ability to quickly move through a document when browsing.

In addition to making it easy to move from page to page, paper makes it exceptionally easy for one to compare one document to another. Unlike a computer screen, where comparing two documents is somewhat of a challenge, comparing two paper documents is as simple as placing one next to the other and scanning each page. But after scanning the documents, making notes is even easier. With a cheap 25-cent pencil or pen, you can mark up a paper, with little to no training. However, this same action on a computer requires a bit more expertise to perform.

Ultimately, the main advantage of paper is the ease with which one can switch between reading and writing. This ability is so elementary and essential, that it is perhaps the single biggest reason why the amount of paper used has increased over the years despite the proliferation of computers.

So if paper is so great, why change a good thing?

The Disadvantages of Paper Environments

The very traits of paper that appeal to our sense of touch are the same traits that make paper a liability. Just think about that last time you misplaced an important document. Remember the amount of time you (not to mention others who assisted you) spent frantically trying to find it. Was the document thrown out? Accidentally shredded? Placed in the wrong spot?

The physical properties of paper make it very vulnerable in the fast-moving environments we work in. Paper is thin, lightweight, and flexible by nature, which are all highly desirable traits. Yet these are the same qualities that make paper very easy to lose, misplace, or destroy. Once a paper document has been destroyed, it can never be recovered. Of course, one can re-create a paper document, or one can use backup paper copies, if such copies were ever made. But is having duplicates of documents necessarily a good thing? Sure, they provide you with a backup “just in case,” but there are several hazards associated with having more than one copy of certain documents.

A major problem with duplicate documents is in maintaining accountability as well as strict confidentiality of the information they contain, particularly such sensitive data as client or employee records. Compliance with government laws, which protect and limit the distribution of and access to such information, may be impossible if multiple copies are kept and if employees fail to adhere to these regulations. Just think about the last time someone has left an open file on a desk or in a conference room, unattended.

Paper is very thin and occupies very little space when kept within moderation. However, over time, a modest accumulation quickly turns into excess, requiring massive amounts of storage space. To accommodate this need for storage space, we tend to pack paper into file cabinets, desk drawers, and any other crevice we find to get it out of our way until we need it again. Since paper cannot automatically delete itself in time, these piles grow quickly. Remember when you had just one file cabinet? Has that one cabinet now morphed into a dedicated file room, or worse, an off-site storage facility? What about your own personal workspace—has your work area transformed into a paper monster?

In addition to the physical properties mentioned above, paper also requires person-to-person interaction when transferring it. Have you ever needed a file from a coworker who was out of the office that day? What did you do? Like many, you probably raided his or her cubicle or office, hoping to locate the necessary file. Or have you ever worked outside the office and realized that you forgot an important file? Sure, you can have the information faxed to you, but is that really an optimal solution? In most cases, the answer is no.

To determine if the paperless office is right for your organization, you need to understand the benefits and the risks.

The Disadvantages of a Paperless Office

We have all heard of the paperless office, so why hasn't it caught on? Well, there are several reasons for businesses to not adopt it so quickly:

1. The technology can be costly.
2. Users may find reading from computer screens on a constant basis difficult.
3. Formal training is required.
4. Change, in general, can be difficult to initiate in an organization.

Like any new technology, there is usually an inherent cost of ownership, and depending upon several factors, this cost may be prohibitive. Unfortunately, many paperless office systems fall into this area. Getting a paperless system up and running, with servers, scanners, and software, may run in the thousands to hundreds of thousands of dollars. Even after making this financial sacrifice, reading off a computer screen versus off a paper document is generally harder to do. Think about it: isn't it much easier to flip through paper documents than to read off a bright computer screen?

But even if you manage to keep your hardware and software cost to a minimum, and even if reading from a computer screen is no big deal, you may still be faced with the difficulty of learning how a paperless system works. Unfortunately, many of the paperless systems on the market today are complicated and exceptionally difficult to learn, which almost eliminates their potential benefits; people will resist learning a new system that they may view as a waste of time because it is too complex.

This brings us to the last point, and that is getting your employees to change. Face it, people are creatures of habit, and getting acceptance from the masses for a new process or procedure may prove fatal to your goal.

Yet, despite these inherent disadvantages, the paperless office has considerable benefits.

The Benefits of a Paperless Office

While it is relatively easy to calculate the long-term savings of going paperless given your current off-site storage costs, employee time spent transferring and locating files, and the amount of office space being used for storage, the real benefits of moving away from a paper-based operation can surpass these savings.

Perhaps the chief benefit that can be seen is in the paperless office's main objective: the ability to protect, locate, and access data at all times.

But again, is having a truly paperless office realistic? To answer this question, it is important to understand what paperless really means.

This is part one of the two-part series So, You're Considering a Paperless Office? In part two, find out what is really meant by the term paperless office and, if it is right for your organization, what are the steps to take to implement one.



SOURCE:
http://www.technologyevaluation.com/research/articles/so-you-re-considering-a-paperless-office-19151/

Plant execution software systems have many different scopes, forms, and formats, and they mean different things to different folks. Although plant execution software is used widely in a number of industries, it is rarely described similarly, and its functions are hardly ever identical.

An execution system used at an electronics discrete manufacturing facility is similar only in concept to one used at a food processing plant, and these differ substantially from that used by a pharmaceutical or chemical manufacturer. Time and experience have led the most successful vendors to pursue a “narrow-and-deep” strategy, and to devote their software development to the industries they know best. Even still, the names given to the various components of the execution systems vary greatly among industries and even among companies within an industry—if not between plants within a company.

To add further confusion, official definitions of a manufacturing execution system (MES) differ as well. APICS Dictionary (11th edition) defines it as

[p]rograms and systems that participate in shop floor control, including programmed logic controllers and process control computers for direct and supervisory control of manufacturing equipment; process information systems that gather historical performance information, then generate reports; graphical displays; and alarms that inform operations personnel what is going on in the plant currently and a very short history into the past. Quality control information is also gathered and a laboratory information management system [LIMS—applications used to manage the collection of samples, collection and formatting of test results, and the reporting of results by sample or product category, whereas these applications may be environmental-, medical- or research-focused] may be part of this configuration to tie process conditions to the quality data that are generated. Thereby, cause-and-effect relationships can be determined. The quality data at times affect the control parameters that are used to meet product specifications either dynamically or off line. [italics added]

Gartner’s IT Glossary defines MES as a

computerized system that formalizes production methods and procedures within the manufacturing environment, providing online tools to execute work orders. The term is generally used to encompass any manufacturing system not already classified in the enterprise resource planning (ERP) or open control system [OCS—a manufacturing system that is based on a set of commercially available, standards-based technologies, and that permits the open exchange of process data with plant systems and business systems throughout a manufacturing enterprise, whereas "control" refers to process control for discrete, batch, and continuous-process manufacturing, as well as computer numerical control and other motion controls] categories. In the broadest definition, MESs include computerized maintenance management systems (CMMSs), LIMSs, shop floor controls (SFC—a system of computers and controllers used to schedule, dispatch and track the progress of work orders through manufacturing based on defined routings), statistical process control [SPC] systems, quality control systems, and specialized applications such as batch reporting and control. [italics added]

What these lengthy definitions illustrate is that it can be difficult to easily identify or define the full range of applications used on the plant floor, let alone determine what falls exclusively under MES. Moreover, vendors never hesitate to add to the confusion by using creative labeling to suggest difference.

To put MES into perspective, it can be defined both broadly and specifically. Broadly speaking, MES can be regarded as a collection of business processes that provide event-by-event, real-time execution of planned production requirements. For example, it can calculate what and how much to produce, based on information from the enterprise planning level. From electronic production management systems to shop floor data capture, MES functions manage operations from point of order release to manufacturing, to point of product delivery to finished goods.

A narrow definition of MES is that it serves as a work order–driven, work-in-process (WIP) tracking system that manages and monitors production events and reporting activities. It captures “live” information about setups, run times, throughput, yields, etc., allowing managers to better measure constraints, identify bottlenecks, and get a better understanding of capacity. It closes the loop for production management and helps ensure production is followed as planned.

MES Today

Seen as a bridge from the plant floor to the rest of the enterprise, MES has become the principal means of delivering real-time order status to the supply chain, for available-to-promise (ATP) processing, and for “closing the loop” with sophisticated enterprise and supply chain planning systems.

As a result, and despite the disparities surrounding MES systems, some similarities exist regarding its general functional scope. The functions and information collected in these systems can be categorized similarly. Overall, MESs try to bring pervasive computerization to plant floors in a systematic way by placing diverse functions on a single platform, including quality management, document management, and plant-floor dispatching. The components of these systems can, in principle, be divided into two categories: 1) core functions, which are directly associated with managing the production process and are included in most vendor packages; and 2) support functions, which are somewhat peripheral to the central order management process, and are only provided as options.

An MES tracks WIP through detailed product routing and tracking, labor reporting, resource and rework management, production measurement, and automated data collection (ADC). In other words, it acts as a collection point, clearinghouse, and translator for data that is needed on or is generated by the plant floor (see The Why of Data Collection for more information). It also offers exception management, which provides the ability to respond to unanticipated events that affect the production plan, such as a bill of materials (BOM) item shortage for a work order in process. Most systems include the ability to react to exceptions, following rules that are typically plant-centric, and exception management generally requires some level of configuration or customization in order to meet local requirements.

These core functions are fulfilled through modules like Order Management, which can accumulate and manage work orders that have been received from the planning system, often through some planning system interface that defines what and how information is exchanged. It performs common tasks such as quantity changes to orders; combining or splitting orders; running short-term what-if analyses to determine best current resource use; and prioritizing, dispatching, and scheduling.

A Workstation/Work Centers Management module can implement a work order production plan, and assign workstation scheduling. It is also responsible for the logical configuration of each workstation. The availability of current resources and current scheduling requirements, by operation, are normally maintained here.

Additionally, the Inventory Tracking and Management function develops, stores, and maintains the details of each batch, lot, or unit of inventory of the WIP. The Material Movement Management module schedules and manages the movement of material, either manually or automatically. Through such modules, an MES application can deliver a proven, reasonably justified, closed-loop system for highly complex manufacturing environments that have high product mix; real-time, event-driven conditional workflows; and heavy ADC requirements (such as for lot/serial tracking).

Peripheral MES Functions

What may be a critical flaw of the MES vendor community is its failure to define clearly and consistently the functionality of MES, adding to the confusion of buyers. When a provider declares itself to be an MES vendor, often all it is really saying is that it is not an ERP, enterprise asset management (EAM), or open control software (OCS) vendor, which leaves the user to guess what functionality scope the vendor really provides. MESs come in all shapes and sizes and can have one or more of the components outlined above, depending on the industry and user company.

For instance, a vendor might call a single module—such as a SPC or a physical infrastructure management system (PIMS) package—an MES system. Others may offer a wide assortment of systems and collectively referred to them as an MES, but have no tie between the packages. Also, in some instances, core functions will generally be well integrated, but most of the support functions will not. For example, while more modern applications pay more attention to data integration issues, most current plant-level execution systems still consist of disparate components.

Following is a list of key MES functionality, which also illustrates the overlap that can occur between enterprise applications and plant-level systems:

* Computerized maintenance management system (CMMS) or EAM system
These systems manage production equipment maintenance and repair-related issues, including predictive and preventative maintenance; work order and labor scheduling; procurement and storage of the repair parts inventory; and equipment-record maintenance. For more information, see EAM Versus CMMS: What's Right for Your Company?

* Time and attendance/clock system
These systems usually include clock-in/clock-out information and labor and employee skills data. Such systems minimize the time required for labor data input. The product generates payroll timecards or an output file for external payroll systems. It also generates more accurate job costing information by tracking labor to specific tasks.

* Warehouse management system (WMS)
These systems are primarily used for monitoring and managing outbound inventory activities. Supply chain execution (SCE) tasks, for example, can also include logistics and other transportation management data, and some systems are also capable of inbound raw or purchased material management. Product location information and order fulfillment instructions are two of many online functions.

* Statistical process control (SPC)
This is a quality control method that focuses on continuous process monitoring rather than the inspection of finished individual products—it has the ability to do capability calculations based on the data that users capture from the shop floor.

* Quality management system (QMS)
These systems may or may not be tied together with SPC or ISO 9000 quality standards, but whether stand-alone or combined, these packages are frequent components of the production process. The same holds for LIMS and environmental safety and health (ES&H) systems, which is a category of software applications that deals with regulatory compliance, such as the US Environmental Protection Agency (EPA) or Occupational Safety and Health Administration (OSHA) requirements.

* Process data/performance analysis or process information management system (PIMS)
Such systems that involve process data collection and management can be a standard package developed for specific applications, such as time/cost variance information or manufacturing process records.

* Document management (DM) or product data management (PDM) system
These systems can handle unstructured data, which can be used to create product drawings and process information, and supply data for plant-floor use. For more information, see Mainstream Enterprise Vendors Begin to Grasp Content Management.

User Recommendations

Ultimately, all major plant automation systems vendors have devised some form of software architecture to support not only open integration, but a common approach to plant data and common services like alarming and trending. Additionally, traditional MES technology providers have been extending their systems to include improved support for a wider variety of functions, including quality assurance (QA), product lifecycle management (PLM), and supply chain collaboration.

In any case, prospective manufacturing system users should not be too concerned about buzzwords and acronyms, but rather define their requirements around the key manufacturing processes, such as “get-ready to” or “plan and prepare” production, production execution, information processing, information analysis, and action coordination. Enterprises should, to that end, thoroughly analyze their typical manufacturing scenarios, identify their information collection requirements, both on the production side and on the planning side, and evaluate whether these are things their existing enterprise system can handle.

Depending on the enterprise’s style of manufacturing, deploying an MES or other plant-level systems might not be particularly beneficial. Namely, a predominantly manual-job shop with low product volume might manage with an ERP system that can deliver work instructions and provide a manual or "paper-on-glass" interface for shop floor personnel to enter job completion and quality status information.

But, traditional ERP systems cannot effectively handle high-speed, high-volume, and high-mix environments where data must be collected and coordinated with plant automation equipment. Enterprises that fall into this category, or enterprises that are in regulated industries where there is a greater need for tracking and tracing capabilities, or plants struggling with excessive scrap levels, poor machine/personnel utilization, or quality issues, might be good MES candidates, since an MES will give users better visibility into plant operations.

While MES systems typically involve more customization than their ERP counterparts, MES vendors should offer templates containing requirements of the prospect’s industry, so that no one has to start from scratch to determine what type of functionality falls within the vendor’s definition of MES. This should keep cost and risks down. Also, for enterprises that will likely grow and expand into mixed manufacturing environments, scalability remains an important issue, because it will help “future-proof” their MES investment. Such enterprises should select a product that covers a variety of manufacturing operations, from batch processing via repetitive discrete manufacturing to assembly-to-order (ATO).


SOURCE:
http://www.technologyevaluation.com/research/articles/what-are-manufacturing-execution-systems-19262/

For all the reasons detailed in The Anatomy of Retail Sourcing Processes, the issue of how to achieve more transparent and cohesive sourcing processes has become a frontline concern for many retailers, driven by boardroom directives to boost margins through the direct sourcing of lower priced international products.

For more information and background, please see The Blessing and Curse of Global Sourcing and Supplier Management, Distinctions and Benefits of Strategic Sourcing, The Promise (and Complexities) of Private Labels, and The Anatomy of Retail Sourcing Processes.

The sad fact is that few information technology (IT) systems fully support the complexities and unique requirements of global trade. Many outmoded sourcing programs (some of which are part of traditional enterprise resource planning [ERP] and accounting systems) have not been designed to factor in currency fluctuations, customs duties, or additional bank processing fees. This has resulted in much of the accounting for these items still being performed manually. It is no wonder that, within only a few years of deployment, less than 15 percent of available software functionality is customarily being used (see Application Erosion: Eating Away at Your Hard Earned Value).

While outmaneuvering the global competition requires that companies be well prepared to source anywhere and sell anywhere in addition to having an understanding of the global supplier market trends, buyers require much more intuitive tools to solicit quotes from trusted suppliers, analyze and compare responses, and ultimately manage critical path items, such as testing and sampling. In other words, to rapidly respond to customers' demands, companies must have the ability to seek out the most appropriate global suppliers and factories, and then get these facilities up and running on the retailer network of systems as soon as possible. In terms of major “ifs, ands, or buts,” according to the Retail Systems Alert Group's (RSAG) benchmark study from November 2006—see The Promise (and Complexities) of Private Labels—the following top sourcing challenges remain:

* finding and keeping dependable partners;
* unpredictable lead times and delivery windows;
* geographically dispersed supply chains slowing down reaction times;
* potential profit not always realized;
* vulnerability to shocks within supply chains;
* counterfeiters and diverters diluting the brand equity;
* cultural and language barriers;
* increased working capital for imported goods;
* fair labor practices in sourcing countries; and
* political instability in sourcing regions.

Outsourcing to geographically remote countries has introduced many additional difficulties for retailers. Even with the benefit of Web conferencing, retailers find it ever more expensive and time-consuming to travel the long distances to outpost research and development (R&D) centers, since the costs of doing so may negate the initial potential benefits of outsourcing. It is particularly costly and time-consuming to set up an international sourcing office, as it takes at least a few months to get new suppliers on board and the office running effectively. Additionally, increasing fuel prices and fear of disease outbreaks like severe acute respiratory syndrome (SARS) or bird flu can contribute to reduced executive travel and more reliance on Web-based collaboration (although the benefits of the rapport established in person-to-person meetings cannot be replaced in some cases).

Delays and other problems in communication caused by different time zones, workdays, and holidays can further reduce supply network visibility and the closeness of the working relationship, thus seriously obstructing an effective, demand-driven approach (see Demand-driven Versus Traditional Materials Requirement Planning). Cultural and language differences are other hurdles to outsourcing successfully, and even slight misunderstandings or miscommunications can prove quite costly.

Skills availability and consistency as well as differing standards in quality can also present problems with far- or near-shore sourcing. Since cultural differences are generally less pronounced with near-shore locations, and because of the real concern over political instability and currency fluctuations in some geographic regions, US retailers might still prefer to deal with “south (or even north) of the border” options. In addition, alignment with the European Union (EU) laws can be complex, and EU law favors dealing with EU and soon-to-be EU countries.

The 2007 APICS program Certified Supply Chain Professional (CSCP) Learning System, Module 2: Building Competitive Operations, Planning, and Logistics summarizes well why a company should thoroughly consider the advantages and risks of product assembly in another country. On the plus side, potential benefits include lower labor rates (depending on the country); lower material costs; lower benefits costs in countries with national health care; favorable duty rates (especially if materials are domestic); lower taxes; and smaller capital investment (if assets are transferred to the foreign country).

On the minus side, however, a company may encounter a multitude of potential problems. These challenges include possible costs and disruptions caused by time zone differences (there is up to a fifteen-hour difference between the US and Asia); higher transport costs and longer lead times; higher relationship management costs for communications, travel, etc.; possible political risks in unstable, unfriendly countries; costs of hedging currency exchange risks; costs of maintaining environmentally responsible forward and reverse logistics chains; environmental costs for mitigating air, water, and noise pollution and for preventing the spread of disease-harboring species; higher costs of increased safety stock; costs of holding inventory in warehouses or in the pipeline; shrinking inventory due to theft, damage, spoilage, etc.; increased costs of insurance against damage, theft, spoilage, etc.; and so on. For more information, see Understanding the True Cost of Sourcing.

How to Reconcile These Conflicting Objectives?

The benefits of private label merchandise can be so large that they become crucial to retailers' strategies—to the extent that ignoring global sourcing is no longer an option for most. The issues discussed above could be particularly critical and even more complex for companies that offer their sourcing services to other independent retailers. They must also comply with those retailers' unique billing and documentation requirements as well as internal invoicing and vendor payment for goods bought on their own behalf.

Again, an astute sourcing product lifecycle management (PLM) and finance management package should be able to enumerate all the elements (line items) of an original order and, in turn, trigger the generation of other documents, such as the letter of credit (L/C), the packing list, the advance shipping notice (ASN), the bill of lading (B/L), the commercial invoice, and the service invoice. These documents—and the detailed information regarding carriers, shippers, country of origin, export country, import country, and final destination—are essential for meeting the ever more stringent global trading security standards and for clearing customs without delay. This synchronization of all participants within the supply chain would be a major performance enhancement to speed up the product-to-market time. For more information, see Globalization Has a Profound Impact on the Supply Chain and Supporting Information Technology.

A number of major, and often conflicting, objectives discussed thus far have been driving retailers to turn to IT solutions to streamline their sourcing and logistics processes. One key objective is the pursuit of lower prices, which often involves extended supply chains to remote, lower cost regions. On the other hand is the contradictory quest to shorten cycle times, which is essential, but so is having quality control that ensures companies receive their merchandise on time and according to exact specifications.

Until fairly recently, the Internet has been neither reliable nor ubiquitous enough to support such broad supply networks and resolution of these networks' issues. Lately though, the Internet has reached a much higher level of security, bandwidth, and connectivity, which coincides with emerging applications designed to run over the Internet and offer near real-time data and events for managing and analyzing the variables of global sourcing. For instance, Web-based supply chain visibility tools have reportedly helped many companies improve their production lead times, better manage their inventory movements, and track the production and delivery of products in near real time. Moreover, Web-based sourcing tools can help these organizations identify suppliers, negotiate contracts, ship manifests, streamline sourcing through event management, collaborate and plan with their trading partners, and ultimately increase their on-time deliveries.

Some importers might have both “big ticket,” expensive items along with high volumes of low-cost accessories sourced directly from Asia. Such a situation requires an integrated approach within the supply chain and more accurate visibility. Again, collaboration among suppliers, logistics providers, buyers, and product managers is critical throughout the entire product life cycle. An astute sourcing software suite should enable product managers and buyers to quickly develop comprehensive requests for quotes (RFQs) for their global sourcing efforts.

Such a solution should also be able to normalize disparate currencies, languages, and lead times, and automatically calculate the estimated landed costs for a clear understanding and comparison of all offers submitted by competing suppliers. For these suppliers, which are located around the globe, the suite should seamlessly unite and coordinate such details as product specifications, RFQs, quality control, packing lists, and all the invoices and customs paperwork, thus eliminating redundant data entry errors and speeding up production. Such a solution should also enable buyers and trading partners to more quickly collaborate on accommodating change orders in an effort to respond to any fluctuations in market conditions.

With suppliers on the other side of the globe, it can be hard to check to see how things are going, and one typically finds out about a problem after the fact—more specifically, when the goods arrive. Therefore, taking the above analysis of strategic sourcing, although some vendor relationships can be smooth and run on “automatic pilot” (meaning companies might occasionally monitor purveyors of office supplies for best prices and basic service requirements), a much deeper and more involved relationship is essential for strategic vendors—that is, retail goods suppliers that must deliver to specifications, on time, and at the right cost. These vendors can be evaluated on many key performance indicators (KPIs) in a holistic scorecard-based fashion. Some of these KPIs can be on-time delivery, quality, innovation (organization health and technology), responsiveness and customer service, security, social compliance, etc.

A class of vendors, including Eqos, TradeStone, i2, MatrixOne (now part of Dassault Systemes), New Generation Computing (NGC), and TXT e-Solutions, to name only some, attempt to holistically combine sourcing, PLM, and supplier management processes throughout all the following steps:

1. Concept—studying the fashion influences and trend boards
2. Specifications—design and technical information, with suppliers' approval as a matter of course
3. Selection—identifying the right product at the right price from the right supplier, entailing the issue of RFQs, response analysis, supplier creation and selection, and product or prototype testing
4. Buy—managing the purchase order (PO) process, entailing product creation, PO creation, and product sample testing
5. Produce—monitoring production and quality, including making and inspecting the product batches
6. Move—tracking shipping progress within the supply chain
7. Sell and service—monitoring and managing the product's life cycle, which entails product availability and quality

Quintessential is the underlying and omnipresent “quality, risk management, and compliance” process, which entails recruiting, managing, and monitoring suppliers as well as controlling quality and tracking compliance.

Quality Assurance Never Stops

Contrary to the harsh realities of retailers today (where processes remain heavily “silo'ed,” with no automated workflow management), the software providers listed above recommend that at least the initial sourcing stages (from concept to buy) be automated and monitored. The potential benefits can be substantial for retailers that work collaboratively with key suppliers to enhance cross-company product development processes in addition to adopting joint innovative packaging and marketing strategies. As competition becomes stronger and the pace of product introduction continues to grow, the effective scaling of product development and life cycle activities is mandatory. From facilitating collaboration with key suppliers to reducing miscommunications and errors in the early stages of a product life cycle, integrating "pre-SKU" (stock-keeping unit) with "post-SKU" information is critical.

Thus, owing to the integration with core systems for product data management (PDM) and purchasing, from the initial sourcing process steps, a one-time data entry with all pertinent information must be held in a single repository and shared with users and other stakeholders as appropriate. As for quality and risk management, supplier assessment should be managed from the earliest stages throughout the entire product life cycle. This data repository, which must be held centrally, should enable suppliers to maintain their own pertinent information (as it changes, and of course, only data that is permitted by the retailer), while automated creation of a supplier record in core business systems once that supplier has been approved should be possible.

Then, as the process extends into the produce phase, it should be led by the order management process tracking and workflow management (to control the order definition, acknowledgement, and acceptance) while the supplier performance KPIs continue to be monitored through the inspection and audit process. Control and monitoring do not stop there given the extension of tracking and workflow to manage logistics processes via integration with 3rd party logistics (3PL) providers. Ongoing assessment of supplier performance continues at the dock side (for example, ensuring that all is in accordance with the Intergovernmental Organization for International Carriage by Rail [OTIF] metrics and recommendations). Last but not least, during the sell and service phase, one should monitor the performance of in-store products. This review process is driven by KPI tracking and monitoring; performance of individual products are tracked, and KPIs are shared with suppliers as appropriate.

Most retailers are consistently striving to improve the performance of each and every supplier, while the market leaders are effectively building and managing supplier relationships and looking for ways to improve the performance of their overall global supplier network. The emergence of industry standards, more effective KPI programs, and analytic tools is enabling companies to benchmark individual suppliers against other in-network partners as well as suppliers outside the retailer's network. As the cliché goes, “change is the only constant,” but one can never underestimate the need to plan for change, from incidental and inevitable changes to significant business changes, such as executive moves, organizational restructuring, or shifts in the competitive or regulatory environment. Trading partners must also plan for the positive changes that need to occur within the alliance, since a supplier relationship can succeed only if continuous, incremental improvements are systematically built in.

The information shared between partners should enable them to work more efficiently with one another. To that end, apparel retailers find themselves in an especially dynamic environment in which suppliers appear and disappear with astonishing frequency, and in which key designers and purchasers often jump from one company to another. Their response has to therefore be multi-pronged, starting with finding ways to shift supply channels quickly when one supplier goes under. However, garment retailers must also continually look for ways to help each important supplier succeed as well as be careful to strengthen relationships with the individuals within the vendor companies, not just with the companies themselves.

For example, garment retailers must recognize that its buyers will not be the only employees directly affected by each relationship it establishes with a remote fashion manufacturer. Its marketing decision makers will want to raise issues about responsiveness and timing, whereas regional managers will want to know how flexible the supplier can be in responding to differences in local trends. The IT departments will need to design methods for real-time sharing of information at all points in the supply chain, from placing POs to tracking store deliveries and transfers of discounted goods. Other issues, such as quality control and shipping and delivery logistics, need to be considered. In each case, the people most directly responsible—and those most directly affected—need to be brought into the process as early as possible.

Even mere paperwork can account for up to 7 percent of the total cost of international trade. Retailers spend most of their time on such activities as coordination of document changes with their suppliers (for example, specification changes, work in progress [WIP] activities, delivery date revisions, shipping and labeling revisions, etc.), with delays or lengthy lead times as a result. Further, intensifying global security concerns mean that much more information is required by governments (as opposed to merely applying customary harmonized tariff schedule [HTS] codes and checking whether something has, for example, been made from an endangered species of animals), and component tracking has become essential to conducting business across borders.

With shipment security under increased scrutiny since 9/11, retail importers have had to adapt to a changed world of customs compliance, since ensuring that shipments comply with the US Customs & Border Protection (CBP) security requirements has added a new level of complexity to apparel importing, and the risks of failure to comply are much higher today.

Particularly with the elimination of trading quotas and less need to closely track data for quota limitations purposes, the focus for US Customs and importers has turned largely to security compliance. For instance, post-9/11 US Customs require importers to classify the ingredients of all foreign-sourced goods, such as by country of origin for each material. Many retail importers have lately been striving for a zero-tolerance standard in their security and social compliance efforts rather than on the traditional standard of reasonable care applicable to customs and trade compliance. Some are hoping to achieve best practices that would promote them to the Tier 3 status of the voluntary Customs-Trade Partnership Against Terrorism (C-TPAT) program, which would then exempt them from nonrandom Customs security inspections and ensure greater speed-to-market. For more on the topic, see Dealing with Global Trade Management Complexity.


SOURCE:
http://www.technologyevaluation.com/research/articles/no-one-said-sourcing-overseas-would-be-easy-19074/

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 offerapart from some referencesoutside 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.

This is Part Three of a four-part note. Part One detailed the merger. Part Two discussed Intentia. Part Four will cover challenges and make user recommendations.

Impact on Lawson

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.

Merger Hopes

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 range, 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.

But the combined force of Lawson and Intentia is betting that prospective customers from this market lack the resources required to implement rigid and large enterprise solutions from the likes of SAP or Oracle, but still have complex processes and requirements that do not fit the scope of small enterprise solutions, as provided by MBS. Further, these customers' return on investment (ROI) model requires viable technology than will be effective for 510 years or more, and can service operations across multiple nations or regions, or globally. This will automatically eliminate some aging mid-market solutions and exclude some small local market suppliers.

Subsequently, Intentia and Lawson have determined that a strange algebraic calculation of 1+1=5.8 will ensue from their union. While each vendor alone had an addressable market (based on their separate market segments and geographies) of about $1 billion (USD) each, combining, will give the two companies an addressable market of $5.8 billion (USD).

While we can dispute this projection, both companies will be able to leverage the other's presence in regions as a point of entry. Intentia hasn't been able to establish itself in the North American market, and conversely, few European and Asia-Pacific companies have bought Lawson's software. Their union will also makes sense for prospects located in geographies that are served by one vendor carrying solutions that are limited to one vertical. Lawson, which serves more industrial and regional sectors, should have a greater chance at bidding. Indeed, overall, Lawson has benefited from the general consolidation of the enterprise application market. Now that a lot of its former competitors are out of the way, Lawson has been shortlisted in its market segment more frequently. Ultimately the probability of success for Lawson and Intentia should certainly be better now that they are one large company—however, the question is, how much better will they be together?


SOURCE:
http://www.technologyevaluation.com/research/articles/market-impact-of-lawson-intentia-merger-18239/

The one certainty in the world of value-added resellers (VARs) is that there is no cure-all, and no magic fix. We've taken a look at some approaches in parts One and Two of this series, but it's worth exploring some other intriguing tactics.

Part Three of the series The Cha(lle)nging World of Value-added Resellers.

Indeed, most vendors' business models are of a hybrid nature, where there is a tiered approach to demarcating direct sales from the channel-driven model. Typically, most vendors will want to give special, personal "care and feed" to customers of strategic importance, whether because they are large and widespread global corporations, or because they spend a certain annual amount on the vendor's software. Larger businesses typically manage infrastructure and integrate products to a large extent with their own information technology (IT) resources, while smaller and midsized companies buy the infrastructure within the applications, and want integrated products containing only the features they need. Also, small and medium businesses (SMBs) typically want ready-to-go business processes with built-in flexibility to accommodate their inimitable processes, whereas their larger brethren want the unrestrained capability to customize solutions to fully fit existing best processes (see Cookie-cutter Solutions Won't Cut It with the Mid-Market).

The channel will typically service customers of a lesser size (whose sales, delivery, and support demands are amenable to an indirect channel, anyway) in the markets where the vendor is present too, or it will service the countries and vertical segments where they exhibit better-attuned localization skills and heritage than the vendor. For some time, there has thus been an abundance of vendor hustle and bustle aimed at polishing their channel-friendly qualifications in the hope of attracting new allies, preferably by luring them away from competitors. Some sweetheart deals (such as guaranteeing margins as high as 35 percent, offering discounts up to 50 percent on the core vendor's product for internal use, and providing free sales training for up to 5 people) have been offered to existing qualified resellers of competitive products.

To take another example, Sage Select partners are rewarded with free education and training programs, free Sage Software products for in-house use, extended marketing programs (including additional co-op funds), and improved margins. Through an extensive network of well chosen business partners, Sage offers small and midsized organizations a broad lineup of business management applications (from back-office solutions like Sage MAS 90 ERP to renowned front-office applications such as Sage CRM SalesLogix). On the other hand, SAP considers two-tiered or hybrid distribution whenever it gets a critical mass of customers, if its partners are generating significant revenue in the market. To help generate business in the SMB space, 75 percent of SAP's marketing funds are now spent in this sector, 80 percent of which can be accessed by partners. Logically, SMB market incumbents such as Sage, on the other hand, are wholly focused on SMBs.

Sage Software has been focused on the SMB market since its beginning, and long ago recognized the need for resellers to provide local sales and services for its growing list of products. While some vendors will customarily help to kick-start their reseller channel and then leave them to either succeed or fail on their own merits, Sage has taken the view that a partnership between vendor and reseller is a basic requirement for success. Many vendors pay lip service to the idea of partnership, but Sage tries to truly live up to it, having delivered such strategies as the 100/100 program, which provides a direct investment of $1 million (USD) to assist its channel partners in qualifying, hiring, and training professional sales people. The vendor also delivers training programs in project management and general business management, offers marketing advisors, and even delivers business mentoring affiliations. Sage's turnkey marketing programs aim at simplifying marketing processes for these VARs, thus helping them to drive new business at minimal cost. Sage continues to innovate in these areas, and will announce extensions to the assistance programs at upcoming partner events, with an eye towards helping VARs in their efforts to recruit effective consultants, as well as supplying many other benefits.

In addition to financial incentives which aim at coveted recurring revenues for partners, vendors increasingly tout their suites' cloning facility for providing a cost-effective means for resellers to develop and subsequently own their own vertical solution. To that end, Sage offers product suites designed to serve a range of industries, including manufacturing, distribution, accounting practices, non-profit organizations, construction, and real estate. Yet despite the recent craze for enticing and poaching partners, the truth of the market place is that the universe of business partners for business management applications is not swelling with unknown partners deciding suddenly to get involved with enterprise applications for the first time. Instead, the universe of existing applications partners is relatively stable; some occasional movement from dropping one product in favor of another occurs naturally, and no single vendor is immune to losing partners.

Another Hybrid Approach

One vendor with a historically direct sales approach and "not invented here" attitude, Intentia, has recently introduced the concept of a blend between direct and indirect sales, especially in high growth industries and emerging markets. After signing several partnerships in the Asian Pacific early in 2006 (most recently in April), this global enterprise solutions provider for the manufacturing, distribution and maintenance industries (soon to be part of Lawson Software) is strengthening its route to channels by formally announcing its strategy in Europe, Middle East and Asia (EMEA). It has appointed a new vice president of partner channels in EMEA, and unveiled its Business Partner Jump Start program.

Intentia believes this initiative will extend its geographic reach across the region, and add value to customers by providing a greater choice in local partners with new industry skill sets. It currently has a team of twenty people across the region to help drive its indirect sales strategy. By 2008, its aim is to increase license revenues from the channel to represent 30 percent of Intentia's total license revenues. Business partners selected by Intentia will qualify for the EMEA Jump Start Program, which will provide business partners with the tools necessary to differentiate themselves in the market, such as a start-up kit with price lists, catalogues and current product information; training at Intentia University, including seminars, classroom instruction and Web-based learning; and the opportunity to earn Intentia product certification. Other benefits should include pre- and post-sales support, the use of Intentia marketing kits, a joint marketing program, dedicated sales support, and sales leads for qualified partners. Additionally, sales tools will be made available, such as competitive analysis support, configuration support, and free online product demonstrations.

In 2005, Intentia recruited twenty-three new partners to its channel network, and is aiming at adding another fifty during 2006. These partners will play a major role in supporting new business and implementation efforts for Intentia's enterprise application suite across its core target markets—in particular food and beverage (F&B), fashion, wholesale distribution, and enterprise asset maintenance (EAM).

Some Traditional Value-added Resellers Also To Turn Into Independent Software Vendors

Recognizing the trend favoring systems integrators, distributors, resellers (or whatever other labels one can apply to these firms) that have some value added, ePartners, a leading Microsoft-based strategic and technology consultancy with twenty-three offices in North America and Europe, announced a major shift in strategy early in 2006. This shift was heralded by the release of the ePartners Solution Series, a suite of software and services that caters specifically to select microverticals in the health care, government, and manufacturing sectors. These solutions, created for the Microsoft platform, focus on industry-specific business issues and processes not addressed by many other solution providers.

Headquartered in Seattle, Washington (US), ePartners has become a larger and more global company (with nearly $80 million [USD] in annual revenues), thanks to recent mergers and a management change. Its previous incarnation had long been based in Irving, Texas (US). The privately held firm is backed by Needham Capital Partners, Mobius Venture Capital, Texas Growth Fund, Austin Ventures, Liberty Mutual, Madrona Venture Group, Rustic Canyon Partners, Capital Resource Partners, and Charterhouse Group. Combining fifteen years of experience of merged entities, ePartners has deployed financial and sales solutions to thousands of midsized companies, spanning more than forty-five industries. These companies depend on ePartners' 400-strong consulting organization for help in aligning business and IT strategies, improving business processes, and deploying and supporting solutions to accelerate business results.

But by developing and aligning industry solutions with specific market segments, ePartners hopes to greatly enhance the range and depth of services it can provide, while improving the client's experience and reducing their total cost of ownership (TCO). The technology comprised in the ePartners Solution Series is the result of extensive development of the full suite of Microsoft Business Solutions (Dynamics), as well as the development of customized .NET vertical applications and Microsoft SharePoint portal technologies. ePartners clients should thus receive a cohesive solution that includes almost everything from exhaustive enterprise resource planning (ERP) and customer relationship management (CRM) to business intelligence (BI) solutions with real-time key performance indicators (KPIs) for executives and middle management.

This strategy will facilitate growth of ePartners' consulting and development staff by more than fifty subject matter experts over the next two quarters, with most coming directly from the targeted industries. The ePartners projection is that by 2007, over 80 percent of new customer additions will be comprised of these microverticals. Preparation for the shift in strategy has included a significant investment in market analysis and testing, as well as a complete reorganization of the ePartners sales and consulting teams. Initially, ePartners will roll out Microsoft-based solution sets for the following microverticals:

* pharmaceutical companies
* discrete high tech manufacturers and their supply chains
* construction firms
* professional sports organizations
* health care providers
* media and entertainment
* state and local government (including public housing authority management)

Consequently, there appears to be another VAR level developing in terms of revenue and size, global reach, and business capabilities (see Global versus Local Channel Approach, Who Will Win?). Beside ePartners, one should expect similar moves from the likes of Tectura, which, in addition to a hefty $150 million (USD) (approximately) in revenues, also sells Microsoft accounting packages enriched with highly specialized editions, to such markets as life sciences and aerospace. Denmark-based, Columbus IT, with about $120 million (USD) in revenues, acquired the VerticalSoft independent software vendor (ISV) partner in 2005 (with the process manufacturing solution for Microsoft Dynamics NAV). And Seattle, Washington (US)-based Avanade, with about $300 million (USD) in revenues, acquired En'tegrate in 2005 (with the lean manufacturing solution for Microsoft Dynamics AX). Both appear to be going in much the same direction. For Sage, one can point to BDO Seidman, and Hightower, the Sage reseller that has been known for its MAS 90 ERP add-ons.

This trend is an extension of what has been happening in the industry for many years, with the mix of ISV/VAR relations with vendors. There are hundreds of ISV products extending Sage MAS ERP, Sage ACCPAC ERP, and Sage Pro ERP, for example, providing ready-made systems to fit a great range of business environments. And (especially in the case of Sage MAS 500 ERP and Sage Pro ERP, for which source code is available), the VARs that are also ISVs number in the hundreds, as resellers custom fit applications to SMB needs.

User Recommendations

Despite the moves of the vendors and VARs we've discussed, addressing the needs of SMBs requires significant changes within traditional business models. Creating an indirect channel and building trust-based collaborative relationships with a large number of partners is certainly trying, although judging by the moves and initial success (in terms of growth) of the vendors mentioned above, some seem to have understood the formula for success.

With the shift in VAR capabilities comes a need for prospective users to make a candid and up-front evaluation of their own readiness to take on a long-term, large-scale project like an ERP installation. The foundation of any enterprise application implementation must be the proper alignment of the customers' IT technology with business strategy, along with subsequent software selection. This is the perfect time to create a business case and to galvanize the entire organization towards sharing a vision and buy-in, both being the key success factors (KSFs). We recommend that companies first analyze and build a business case that defines specific benefits, calculates overall investment, and identifies criteria for success—independently of the software and service provider. They must also understand how they will use metrics to measure the implementer's performance and the project's progress. The preparation needed on the part of the user organization is all-embracing, and the top executives in particular have to do the foundation work and lead by example. These steps are often neglected, however, despite the amount of expert literature emphasizing their importance.

Systems integration service provider selections and project planning should involve the same amount of due diligence as business IT strategy definition and software evaluation. Users involved in selections or early project planning should seek expertise from professionals who can understand the pitfalls of implementations and offer guidance. Experienced consultants can also help determine which system customizations to keep, which to further update, and which will be rendered obsolete by a new or upgraded system. The old German proverb "such a beginning, such an end" applies: many failures can be traced back to poor software selection. But it is no longer enough to evaluate the original (vanilla) ERP product's features and functions, since the prospective customer has to take the participating VARs and ISVs into consideration. The need to determine who exactly delivers what, and who is accountable for what, goes without saying. Finally, users are strongly advised to require fixed time and cost contract commitments from both vendors and vendor affiliates.

The scripted scenario demonstration phase of an enterprise system selection process is the perfect opportunity to put candidate packages through their paces, and prospective users must exercise this prerogative. However, instead of letting vendors (including VARs) take charge of the demo and perform their flashy "dog and pony" shows, the companies should unequivocally insist on vendors showing how their proposed system will help achieve the desired user objectives (see Demonstration Post-mortem: Why Vendors Lose Deals).

Only by a diligent process of evaluation that includes a plethora of other factors, such as scripted scenario demonstrations, outcomes for reference site visits or calls (see Client References—Still a Valuable Part of Vendor Selection?), and product flexibility (customizability, interconnectivity, data conversion, and so on), can users hope to select an enterprise business system that will serve their organizations and deliver the expected benefits.



SOURCE:
http://www.technologyevaluation.com/research/articles/innovative-approaches-in-the-free-for-all-world-of-value-added-resellers-18546/

Beyond the Market Impact of the events covered in Parts One and Two of this note, Geac Computer Corporation Limited (TSX: GAC) faces serious challenges.

Although it is functionally strong, Geac System21 has until recently lacked some of the technology and buzzword must haves' such as a web-based, server-centric architecture, XML-based integration and sales force automation (SFA) that have been natively provided by many of its rivals such as SAP, Intentia, IFS and J.D. Edwards. In contrast, Geac products have mostly "talked" to the outside modern collaborative world through a plethora of open APIs (application programming interfaces) and the company has remained content (or forced) to settle for best-of-breed' connectivity. Additional functional suites like CRM, advanced web-based product configuration management, business intelligence (BI) and so on have been provided largely through partner alliances such as with Cognos, Information Builders, and Business Objects for business intelligence (BI), Applix for its iCRM and interactive planning solution, and with former Frontstep for its SyteLine APS and SyteCenter solutions.

By delivering the above-mentioned native enhancements within System21 Aurora, Geac might partially allay some customers' fears that System 21 functionality will increasingly lag that of its major competitors. Still, the tacit stance Geac has assumed while developing the Aurora enhancements over the last few years has come with a cost of lost mind share and a consequent challenge of putting the product back on prospects' radar screens. In fact, Aurora is a 2nd or 3rd-generation of web-enablement, given the web-based supplier- and customer-facing applications have been available in earlier System21 versions since the late 1990's. This lost mindshare will make selling the product to new customers quite difficult, especially considering a tough selling climate.

Further, Geac will have to also embrace and promote a rock solid strategy for integrating its product suite with multiple partners. The company may benefit from following J.D. Edwards' example and closely partnering with a major enterprise applications integration (EAI) vendor in order to ease integration with its partners. In line with this thinking, Geac already has strong technology partnerships with IBM and Jacada (for hardware and middleware). The Aurora product uses the latest IBM technology, and the dependence on IBM has largely helped Geac curb its development costs while delivering a number of additional modules running on a unified platform.

Still, the process of harmonizing the installed user base across a controllable number of active software versions remains a major challenge. If history helps us predict the future, most contemporary vendors will not be able to pull off a smooth evolution from their current architecture to the next-generation. The problem largely involves the issue of being limited by the past, making it more difficult to truly transition to a new architecture (for more information, see What's Wrong with Application Software? It's the Economics).

It is needless to say that the still varied product portfolio under the Geac banner will inevitably take more pondering and soul-searching and may likely act as a distraction from the primary products' strategy. Geac has already begun to address this matter by divesting a number of less-profitable and non-viable products (see Geac Decomposes To Survive), but it still has a few products running on disparate platforms, from mainframes to web-based architectures.

Having an unfocused, multi-product and multi-technology strategy in markets with diverse dynamics typically multiplies and overstretches sales, R&D, and service & support resources, jeopardizing the products' possible long-term success in their respective niches. This market perception and sentiment is not to be neglected, as some customers feel that Geac essentially treats some venerable products like the M-Series (a.k.a., Millennium, acquired from former McCormack & Dodge) as a cash cow and has long not reinvested significantly in the product's enhancements. At the same time, the support fee is perceived as costly, while the Millennium architecture is unique enough that it is difficult to find resources to support the application independently. Time alone will tell whether the Extensity and Comshare acquisitions and IBM technology overlay will add some major new value atop these applications. At least, the opportunity seems to be there.

This is Part Three of a three-part note.

Part One detailed recent events.

Part Two discussed the Market Impact.

External Partnerships and Integration Costs

Geac still has quite a range of functionality to cover through external partnerships for some of its products, which gets increasingly complicated to track for several products and their multiple releases (see Geac Trying Its Luck in Partnering). The partnerships are intended to, for example, enhance Geac's StreamLine Windows NT/2000-based ERP solution aimed at manufacturing companies with 5 to 150 users. Geac's customers should benefit from being able to use Eden Origin, a tool that enables product configuration/product search engine via a Web-enabled interface. Through Geac's partnership with Preactor International, small to medium (SME) manufacturers might benefit from advanced planning and scheduling (APS) and finite capacity scheduling. However, given that the above functionalities have become all but commodities nowadays, Geac will have to work much harder on StreamLine's enhancements if it is to match the functionality from many competitors, as most of the e-business and CRM components are still lacking. The product's scope still remains within managing the flow of production through the supply chain, from purchasing of raw materials to sales and distribution of finished goods.

While the best-of-breed approach has its merits and is a necessity for some plant-level applications that ERP vendors do not typically provide (e.g., data acquisition), it inadvertently leads to additional integration costs and complicates service & support arrangements. Interfaces between disparate applications like ERP, SCM, CRM and/or e-business usually require significant tailoring across different product versions. Things can get even more complicated due to partners' potential troubled performance and subsequent demises or change of ownerships, like in the recent case of Applix iCRM divestiture or Frontstep's acquisition by MAPICS, which both happen to be embedded within some earlier Geac's products' instances, albeit under OEM agreements that give the vendor the right to source code. All of the above can be a barrier to future changes as further modifying already modified code is notoriously time consuming, costly, and risky.

Thus, Geac has some remaining work to do, in terms of functionally bolstering some of its previously neglected products and figuring out a middleware and web services framework for its users. The traditional problem for Geac has been its preference for acquiring new products rather than pursuing in-house product development and/or true strategic alliances. While the strategy might have worked in a number of esoteric industries with a low penetration of competitors like hotels & restaurants, real estate and construction, it is indisputably a completely different ball game in the global enterprise applications market in the mainstream industries. Modern enterprise applications must be able to support dynamic business requirements, and every vendor is compelled to add much more value to its products and services portfolio to attract and retain customers, rather than mainly invest in the existing bundle of disparate core products and hope for endless support revenues. Geac's fierce competitors mentioned earlier have long grasped this reality and have acted accordingly.

Realizing the crying need to change its faltering business model, Geac seems to be finally addressing its strategic options, with the above product strategy announcements showing it is serious about appeasing and shoring up its large customer base. One is only to hope that Geac's renewed interest in alliances and acquisition will be to the point of effectively enhancing prosperous product lines as required by its large installed base.

The Extensity and Comshare purchases should seemingly provide Geac with enhancements to its multiple core ERP systems for a modest price tag. In times when everybody is keeping a close eye on all IT investments, financial management products that help companies achieve better control of spending and/or streamlined financial processes should provide strong value propositions and quick Return on Investment (ROI). Geac's industries of interest such as construction, apparel, automotive, financial services, healthcare, property management, real estate, libraries, public safety and government all experience the need to streamline processes involving procurement and time/expense management. Comshare's MPC suite of financial planning, budgeting, forecasting and consolidation software should also provide many cross-sell opportunities to Geac's existing enterprise customers, since MPC should appeal to the same C-level executives and corporate controllers that rely on Geac's ERP transaction systems.

In addition to cross-selling more products to its existing customers, the acquisitions hold the potential of generating new customers. The tough financial climate bundled with increased regulatory requirements (i.e., the Sarbanes-Oxley act) put added pressure on measuring and optimizing business performance, and financial analysis and planning appear to be exactly what the doctor ordered. When C-level executives are held severely accountable for the accuracy of these reports, there should be a high priority and easy justification for investments in financial analysis and business performance management. The addition of Comshare MPC to the Geac product line is in direct response to requirements from Geac customers, given that AS/400-based applications have traditionally lagged in financial reporting capabilities. Geac's existing mainframe and client/server customers are also calling for financial reporting capabilities. One could notice a parallel with the recent SSA GT's acquisition of Elevon (formerly Walker Interactive), although one might be intrigued with low-profile publicity about the Elevon acquisition that was atypical to other recent SSA GT's purchases.

Given the saying "once bitten, twice shy," one should believe Geac will have carefully thought out the rationale for the above two acquisitions. Although there is still sizable work ahead winnowing out the remaining under-performing units/product lines, there is a strong opportunity, provided Geac can regenerate its growth strategy. Although it remains at the fringe of Tier 1 enterprise applications providers, the company's focus on real-time financial reporting and BPM has earned it renewed respect in the market and some new customers. Comshare, in its own right, was one of the first vendors to have produced an executive information system (EIS) capable of pulling in data from various applications and presenting it in a compact form. Unfortunately, the EIS technology has since been eclipsed through the advent of integrated BI suites and portal technologies. Further, although Comshare has achieved a strong customer satisfaction rating, its dubious viability has traditionally been a major hurdle when competing against much larger and more visible competitors like Hyperion or Cognos. Geac's deeper pockets and much larger size should help it allay these sorts of past problems.

Given the fact that Geac too was up for sale in 2000 (see Geac Lives By Acquisitions; Will It Die By An Acquisition?) its turnaround has been impressive. However, a frequent turnover of CEOs will not fly very favorably with the market, although Jones' appointment should indicate keeping the course. Moreover, the leaner company with a large customer base and a palatable market capitalization of slightly over $300 million remains an attractive acquisition target in this seismically consolidating market. Still, the recent Comshare acquisition for cash and an impending products' merger might put off the acquisition spotting vultures for the time being.

User Recommendations

Geac's viability has long not been an issue. At least it should not be used as an excuse for not putting Geac on evaluation lists. The rejuvenated management team has done a praiseworthy job of bringing the company back to health while concurrently unveiling a new System21 product that can compete with the other products in the market. Deep vertical functionality, process integration, and the communication of a detailed product strategy blueprint to the market should help users manage total cost of ownership (TCO) during this era of conservative IT budgets.

While recent events continue to improve Geac's balance sheet, a more encouraging sign is the company's intent to become a true software-developing vendor, not simply a software collector and dealer. The challenge for current and potential users is to discern Geac's corporate strategy viability within the product line/industry in question. Users will benefit from approaching Geac and informing themselves about the company's plans for future service & support (or divestiture and/or product stabilization?) of its individual products as well as the ramifications of migrating (or not) to its new product offering. Users should vigorously question Geac on its future options and investigate alternative solutions now to fully understand their situation and options.

Mid-market manufacturing companies in Geac System21 Aurora's key vertical industries, including apparel, electronics, food and beverage, and automotive supply that are considering a new ERP system should evaluate the offering while observing closely Geac's future plans. Typical customers are small to mid-market enterprises, many of them operating in complex supply chains serving some of the world's largest manufacturers and retailers. As for manufacturing environments, System21 Aurora is amenable to many environments — from repetitive, batch process, hybrid, configure-to-order (CTO), engineer-to-order (ETO), to mixed mode. If vertical-specific solutions are near a perfect fit, Geac System21 Aurora should be evaluated given Geac's apparent determination to keep it highly competitive, but prospective customers looking to implement a comprehensive extended-ERP system outside of Geac's traditional vertical focus may benefit from considering other options.

Existing Extensity and Comshare customers looking to expand beyond their financial packages into ERP/supply chain planning should consider evaluating appropriate Geac's products. Conversely, Geac users with a need for a strong financial spending, planning, budgeting, consolidation, etc. products should consider Extensity and Comshare as high-priority contenders, although questioning the level of integration between the products goes without saying. Still, Geac's existing relationships with BI vendors like Cognos and Business Objects may become strained because of inevitable functional overlap, and Geac users of these applications should clarify their options with Geac's management.

The E (Expert) and M (Millennium) series, which are IBM S/390 mainframe-based, will likely not receive major functional enhancements owing to aging technology. Still, existing users should investigate Geac's plans to leverage Comshare and Extensity add-on enhancements to the systems. The SmartStream suite that supports client/server-based UNIX and Windows NT systems, the StreamLine series of NT-based back-office products, and System 21 Aurora are thus the most likely recipients of R&D funds. However, overlapping modules in SmartStream and StreamLine will likely be rationalized as to minimize duplicated R&D costs. Consequently, System21 Aurora and StreamLine are the likely core ERP systems going forward, both providing scaleable and flexible ERP and e-business systems built on IBM middleware technology.

As for the newly added and/or anticipated functional footprint, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of enhanced product functionality. Existing customers, particularly those that have been yearning to rejuvenate their almost outdated technologies should welcome Geac's plans and check whether any new product in the family might be a fresh enhancement or even replacement -- although product switching is typically a bumpy road for users of legacy applications. Less technologically aggressive global companies and/or their divisions that have been happy with their existing product's performance may be better off by staying with older instances for the time being.

Nevertheless, at the end of the day, users will have to undergo a thorough what if' scenarios' assessment such as porting onto another platform, keeping the status quo, migrating to another product from the same vendor, going for another ERP provider, etc. Identifying and approaching your local sales representative and vigorously negotiating assurances and firm commitment to future product roadmap, and service and support would be the best course of action at this stage. For more rationale on what to do about your legacy application in place, see The "Old ERP" Dilemma: Replace or Add-on, The Old ERP Dilemma: How Long Should You Pay Maintenance?, and The Old ERP Dilemma - Should We Install The New Release?

On a more general note, existing customers of once-troubled vendors should address their concerns directly to the management and put contingency plans in place for ongoing support. Potential customers should proceed cautiously, buying components in a tactical manner and with a tangible, quick ROI. Stick to a series of smaller projects targeted at streamlining a specific business process. Keep it simple and smart, and be aggressive while negotiating risk allocations, price parity and general terms and conditions. Fixed project prices (as opposed to time and material pricing), milestone payment schedules linked to deliverables, and a penalty clause for late deliveries (as well as a profit sharing incentive for early completions) should be a matter of course. It also might not hurt to consider reviewing your current processes and systems to find any still undetected malfunctioning practice in accounting and/or financial reporting.

More on a general note, leading applications vendors are reaching parity in many areas. New users should base their software purchase decisions on many other criteria such as impending integration costs, product usability, product architecture, and TCO. Given the vendors' zeal for new license revenue, take advantage of any assistance offered by vendors identifying ROI, both in application customization for vertical industries and in integration to your legacy applications.


SOURCE:
http://www.technologyevaluation.com/research/articles/geac-gets-its-commonsense-share-of-consolidation-with-revolving-door-ceos-no-less-part-three-challenges-and-user-recommendations-17032/