Confronting Core Global Trade Problems: Order, Shipment, and Financial Settlement

To reach its aspirations of creating an end-to-end global trade management (GTM) solution, TradeBeam, a leading provider of global trade solutions, has designed several so-called "solution blueprints" for solving specific global trade issues. Solutions range from providing import shipment visibility and trade compliance to eliminating financial discrepancies while managing letters of credit (LC). TradeBeam's Solution Blueprints begin with the key pain points of global trade and identify tools and strategies available to corporations seeking the advantages of optimized GTM. They include a non-prescriptive set of GTM applications that, individually, may add significant value to a user corporation while solving specific export management problems. The idea is to align strategies with finance and logistics organizations and to establish a beachhead with a relatively quick proof of concept that starts automating a defined set of processes and provides payback in several months. Given that the GTM market is still relatively new, TradeBeam has done an impressive job establishing itself as a pioneer.

Part Four of the TradeBeam Keeps on Rounding Out Its GTM Set series.

To broaden its offering, TradeBeam has embarked on a series of careful acquisitions. Its acquisition of SupplySolution has helped TradeBeam produce its collaborative inventory management (CIM) solution blueprint, which shares and communicate parts levels, shipment data, and forecast to anticipate and manage shortages and schedule changes through event driven alerts. In doing so, the solution solves business problems like poor inventory visibility through the networked supply chain, excessive buffer inventories, and costly impact of shortages and schedule changes. TradeBeam also has other acquisitions bundled with its in-house, organic development.. Export management, import management, trade finance, legalization, global trade content, insurance and claims management, letter of credit, and supply chain electronic management are other solution blueprints that TradeBeam has developed or is in the process of releasing. TradeBeam's Letter of Credit Solution Blueprint and SCEM Solution Blueprint are two that are particularly noteworthy because both their core functionality came from acquisitions and lead to significant advances in the field of global trade settlement solutions
TradeBeam aimed to reduce discrepancies and improve efficiencies in the financial supply chain through automated document preparation and collections, managed LC creation, and issuance expiry and draws. Thus it acquired LC Express in 2003, IFR, and eTime Capital in 2002, which has allowed TradeBeam to develop its impressive LC methodology. The transactions were stock and cash deals, where TradeBeam acquired the companies out of bankruptcy. eTime Capital had spent over $45 million (USD) developing solutions for its customers to helped them optimize their cash flow cycle by applying a groundbreaking technology and a differentiated capability linking financial settlement to the global trade logistics business processes through reconciliation, exception management and real-time reporting. These capabilities have meanwhile provided an excellent complement to TradeBeam's global trade business process and document management solution. Automating the overall letters of credit (LC) process to ensure accuracy and reduce the discrepancy rate is not simply a matter of automating LC issuance. The process if far more complicated because automation is a necessary precursor to integrating the entire supply chain. LC are one of the most important payment and financing vehicles for international trade, because they offer security and risk mitigation. However, in exchange for this security, there are additional costs and challenges. For example, up to 70 percent of all LC documents submitted to the bank for payment are rejected upon first presentation because the documentation has been issued incorrectly. This leads to payment delays, additional fees, and in some cases, non-payment of the drawing. Other LC-related challenges are complicated and lengthy application process, delays in conducting the transaction due to the long issuance process, the strict and often complex documentary requirements, associated secondary and penalty fees, and the high susceptibility to errors because multiple parties must produce documentation.

The result was TradeBeam's Letter of Credit Solution Blueprint, which manages existing LC use and relationships for over one hundred and fifty corporate clients. It synchronizes payment terms and critical supporting documents to enable both electronic LC creation and bank presentation. Part of the secret to TradeBeam's success lies in its document management and reconciliation capability that generates documents based on the LC terms, making use of business partner profiles, electronic data transmission, and templates to minimize data entry. Paper and electronic distribution of LC documentation can be made to banks, trading partners, or any service provider. All documents created and managed by TradeBeam are compliant with Uniform Customs and Practice for Documentary Credits (UCP500) and Electronic Uniform Customs and Practice (eUCP).

Tackling the International Supply Chain

Another acquisition took place in early 2004, when TradeBeam, an international global trading solutions provider with over 3,000 customers and users in over 100 countries, acquired SupplySolution. SupplySolution is a Southfield, Michigan-based (US) offers a supply chain execution (SCE) application called i-Supply, which communicates inventory levels and consumption patterns among trading partners. At the time of the acquisition, SupplySolution had in excess of 2,000 paying customers and employed 125 people in offices in the US, Germany, and Australia. TradeBeam acquired SupplySolution to add collaborative inventory management (CIM) capabilities to its GTM product suite.

The acquisition has benefited both companies and their respective customers, given TradeBeam and SupplySolution have similar roadmaps for the management of order, inventory replenishment, compliance, logistics, and payment of the domestic and international movement of goods. Their combined product has helped many common customers avoid deploying multiple point solutions to manage their global supply chains. Effective supply chain management is increasingly vital for global manufacturers' and retailers' success, as enterprises now spend an inordinate amount of time and money managing and directing their suppliers to ensure that critical inventory levels are maintained, and the vital flow of products needed for operation continues. However, the current practice for managing supply chain inventories is still rather reactive and labor intensive, and results in unreliable parts availability, generating typically higher inventory levels or emergency freight. As a result, enterprises are faced with increased inventory carrying costs, higher premium freight charges, decreased customers satisfaction, diminished asset utilization, decreased supplier performance, etc.

To remedy this, TradeBeam offers inventory replenishment products and plans to build and offer other inventory flow management related services over next several months. SupplySolution was a renowned SCE provider, delivering value to manufacturers, distributors, and suppliers through the implementation of the collaborative supply chain application, i-Supply. i-Supply remains one of the most widely used real-time applications for communicating inventory levels and consumption patterns in the automotive industry, in operation at over 2,000 organizations. Under new ownership, i-Supply will be renamed TradeBeam CIM.

The SupplySolution had been highly successful in direct material replenishment applications—a space where many others have failed. Steve Bell, a former general manager of a tier one automotive plant, founded SupplySolution in 1998. The company landed its first pilot customer in July 1999, and in 2001, it contracted some major tier one customers, including Johnson Controls and the largest automotive supplier, Delphi. Since then, it had steadily added other new customers, including the suppliers of its original tier one accounts. All in all, the company landed 35 buyers and 2,000 suppliers in a little more than 3 years since its inception. In 2002, SupplySolution expanded into the life sciences industry, starting with a successful pilot with Stryker Instruments, a manufacturer of specialty surgical and medical products.
TradeBeam's CIM is a collaborative inventory management system, which, in simple terms, provides a means for reducing inventory. It allows an enterprise's suppliers to look inside the inventory database containing information such as stock items, inventory replenishment policies, current stock situation, etc., and replenish its supplies based on predetermined minimum-maximum, or min-max levels. All of this represents outsourcing inventory management in a data processing sense. The product can also enable other processes, such as electronic kanban (to replenish lot size) quantities, since it gives virtually real-time information to suppliers, so that they can deliver as soon as the inventory is consumed instead of shipping against a forecast. In other words, the system provides explicit feedback to the supplier on when and how much inventory to send. One should note that supplier management inefficiencies directly affect tier one manufacturers' bottom lines because purchased parts are possibly the biggest cost driver. On their hand, the biggest complaints of many tier two suppliers are inaccurate forecasts and misleading shipping schedules from their larger trading partners (customers).

Consequently, when user enterprises first implement the TradeBeam CIM system, they would typically start with higher safety stock levels, and then gradually adjust those inventories down, as they build trust with each vendor. Given that production and logistics lead times may vary between parts and suppliers, TradeBeam's CIM is a system that could be configured to provide just-in-time (JIT) replenishment for any part. Further, product life cycles always change. What might make sense this month can be either way too little or way too much the next month; therefore, the system could also help customers maintain appropriate replenishment quantities over time, through its forecasting mechanisms. Over time, some companies have consequently adopted a variety of formulas to best determine lot sizes that are consistent with current rates of demand.

Also, since many current ERP systems do not properly address the establishment of optimal min-max inventory levels, the CIM solution can provide both the buyer and the supplier with a single source of data for actual consumption, average consumption, and forecasted demand. Buyers could download this information into a Microsoft Excel spreadsheet, manipulate it, and come up with formulas to calculate appropriate min-max levels for their companies. Additionally, customers wanting to anticipate transitory changes in demand, can use the product to support temporary kanban lot sizes. Users can change the lot size for one cycle only, so that the supplier only has to deliver a larger or smaller quantity once, and then receive replenishment messages for the original kanban quantity. Conversely, the system can also allow the buyer to put selected kanbans on temporary hold,. In this instance, as kanbans are consumed they are put on hold, so that the supplier does not replenish them.

Other major features of TradeBeam's CIM include real time change visibility; fulfillment with pull-based processing; collaborative inventory management; direct material replenishment; suggested delivery quantity and timing; and in-transit visibility. It also allows forecasting analysis with min-max goals for capacity evaluation and production scheduling; analysis of patterns of consumption; actual material usage visibility; EDI functionality; advanced repetitive replenishment; in-transit goods management, and quality management support. The solution is available in several languages beside English, including Chinese, German, Italian, and Spanish.

The solution is not required to enable suppliers to respond to the buyers' requirements electronically. Advance shipment notices (ASN), purchase order confirmations, or shipment data, do not need to be sent since it is not a permission system, where the supplier needs the go-ahead prompt to send material. By virtue of being invited to participate in the system by the customer, the supplier is presumably given the upfront go-ahead to replenish inventory to predetermined min-max levels, and unless it informs the customer that it is unable or unwilling to meet the needed material requirements, it is authorized to fulfill to min-max levels on a continuous basis. The system also allows for measuring performance against those min-max levels, sso that involved user parties can address any failure to maintain inventory at the predetermined levels.

Confronting International Regulatory Compliance: Web-based GTM Solution

Since its founding in 2000, TradeBeam has grown rapidly to become a major force in the GTM marketplace. Through a series of strategic acquisitions and the integration work of its management and product development teams, the company has embarked on a mission to bring to a hosted, eventually end-to-end GTM solution to market. This solution aims to link the physical and financial supply chains enabling companies to manage and execute global trade activities from within a single software platform. More than 3,000 enterprises worldwide currently leverage TradeBeam's GTM solution, including such industry giants as Neiman Marcus, Liz Claiborne, General Motors Holden, Delphi Automotive Solutions, and Stryker Instruments. In an effort to expand its product footprint, TradeBeam announced the acquisition of Open Harbor, a leading provider of international trade logistics (ITL) solutions. The terms of the 2004 deal were not disclosed.

Part Two of the TradeBeam Keeps on Rounding Out Its GTM Set series.

With a forecast for positive cash flow in 2005 and no current debt, TradeBeam has the funds to expand sales, marketing, and international operations to further establish its leadership within GTM. In addition to expanding its sales and channel development, the vendor plans to extend product functionality, to areas such as cargo insurance, foreign exchange, customs auditing, and transfer pricing. It also may use its capital resources to pursue additional acquisitions that support its strategy for long-term growth and leadership.

Currently, TradeBeam targets customers in cash sensitive industries. Organizations can quickly realize the value of automating the entire global transaction, from order through to payment. It also helps organizations benefit from moving beyond physical optimization towards improving operations. Improved visibility, security and regulatory compliance, contract compliance, vendor management, speed-to-market, quality of service and risk mitigation are some of the areas it targets. TradeBeam also helps companies achieve financial optimization in terms of accounts receivable reduction, inventory levels reduction, interest costs savings, and promises reduced penalties, write-offs, and overhead.

At the end of 2004, TradeBeam announced that it had successfully completed two deployments of its software in support of the DHS' OSC initiative. DHS is one of the largest international shippers and its OSC initiative is a collaborative effort between the federal government, the business sector, and the maritime industry to develop and share best practices for the safe and expeditious movement of cargo. Its goal is to protect the global supply chain while facilitating the flow of commerce. TradeBeam's solution was implemented in fewer than fifty days across two global trade lanes, and is now providing real-time tracking, monitoring, exception management, and reporting on dozens of physical and financial supply chain events and exception conditions. DHS uses TradeBeam's GTM platform to manage security from the foreign factory to port, for the ocean and land transportation of cargo shipping containers. It uses global trade event tracking for order, logistics, and payment management and the shipping system integrates radio frequency identification (RFID), global positioning system (GPS) fencing, and chemical and biological sensors.

TradeBeam was reportedly selected to be a key participant in DHS' OSC trade lane trials because of its ability to monitor, evaluate, and manage the physical and financial supply chains for inbound international shipments. Its software also detects and responds to potential security issues across an enterprise's global operations. TradeBeam's OSC solution ensures shipment visibility and compliance for import processes that touch multiple systems and supply chain partners. Time-consuming and error-prone manual processes are replaced by an automated collaborative solution that provides supply chain electronic management (SCEM), order management, party screening,
A major funding announcement (see part one) to expand its functional footprint, the deployment its solution for DHS, and the Open Harbor acquisition, further validates TradeBeam's definition of GTM. TradeBeam's aspirations of "managing the entire life cycle of a trade across domestic and international order, logistics, and settlement activities to improve operating efficiencies and working capital" appears to becoming into fruition. Considering the impact and applicability of global trade information across various functions, such as sourcing, network design, logistics, product development, etc., companies should view their entire enterprise platform as a GTM solution. In other words, in order to gain maximum value, companies must integrate GTM functionality across multiple business processes and applications.

TradeBeam also defines global trade as encompassing the life cycle of a global buy-sell transaction comprising of participants (sellers, buyers, freight forwarders, banks, etc.); tasks (compliance check, booking transportation, clearing customs, applying for letters of credit etc.); and documents (sales order, invoice, packing list, letter of credit, bill of lading, etc.). These global trade processes require the concurrent management of the flow of goods, funds, and information.

Therefore, some enterprise applications, such as ITL and GTM, simply to lend themselves well to the hosted model. Due to their widespread nature, they cannot efficiently work the other way. Namely, global import/export "procure-to-pay" or "order-to-cash" processes entail a number of activities, such as sourcing suppliers and customers; processing purchase and sales orders; insuring goods; and issuing and receiving letters of credits (LC). It also involves financing trade; arranging shipping; creating trade documents; ensuing customs compliance for export and import; sending and receiving goods; sending and receiving invoices; reconciliation; and initiating and receiving payment (see figure 1).

On a more granular level, these activities belong to the following sub-processes:

* Order. Plans demand needs, manages bills of materials (BOM), manages product catalogs, checks inventory status, creates purchase orders, checks compliances, manages inventory, manages purchase orders, assesses supply chain management (SCM) risk, acknowledges order, classify goods, calculates landed costs, manages contract, insures goods, and obtains credit insurance

* Finance. Applies and manages LC, manages documents collection, manages open account, requests financing pre- and post-shipment, checks compliance, assesses SCM risk, and arranges foreign exchange

* Ship. Requests booking, books shipment, creates ship notification, creates shipping documents, manages shipping notification, manages shipping guarantee, tracks shipments, manages events, assesses SCM risk, manages customs, clears customs, receives goods, and manages returns

* Settle. Creates and presents invoices, reconciles documents, manages disputes, prepares and presents documents, manages insurance claims, and receives remittance

Given the detail involved in each of these processes, plus the fact that they stretch over many jurisdictions, many of these can only be efficiently fulfilled through a Web-based hosted solution, which prices per transaction. To optimally complete the global trade cycle, a business must automate, track, and provide visibility to the entire GTM process to optimize its supply and distribution chains. Because Web-based services are steadily growing, TradeBeam's model seems to be ideal.

TradeBeam Keeps on Rounding Out Its GTM Set

At the end of 2004, TradeBeam Holdings, Inc., a leading provider of global trade management (GTM) solutions that streamline global trading processes for enterprises and their partners, announced that it has acquired the assets of Open Harbor, a leading provider of international trade logistics (ITL) solutions. TradeBeam solutions include import and export compliance and global trade finance solutions like open account and letter of credit (LC) management, but also inventory management, shipment tracking, and supply chain electronic management (SCEM). The vendor has over 3,000 customers with users in over 100 countries worldwide. Terms of the deal were not disclosed.

Founded in 1999, Open Harbor possessed deep expertise in trade compliance, including a comprehensive centralized repository of global trade content (harmonization engine) containing millions of trade rules from more than sixty countries, in a one-to-one relationship manner. The company was considered a leading player in the landed cost management arena. Customers leveraged its technology and experience to gain crucial accurate pricing for international orders based on an aggregate of product cost, shipping costs, and fees charged by exporting and importing countries. However, the failure of Open Harbor, however, was not caused by lack of market demand and opportunities, but unfortunately by poor management.

Almost any business process, particularly GTM practices need to have access to trade experts that can interpret and apply trade regulations to improve operational and financial performance and Open Harbor was no exception. TradeBeam, on the other had focused more on the application side of trade management, such as creating shipment tracking, insurance, event management, and other applications central to the actual movement of goods.

Nowadays even small shippers can leverage import/export software through third parties. Specialized software and managed service providers working behind the scenes make it possible for carriers and freight forwarders to offer selected services to their customers, such as landed-cost calculators, product classification, and document preparation, often on a fee-per-transaction basis. For example, international shipping and freight companies DHL and FedEx partnered with Open Harbor and NextLinx respectively. NextLinx, database carries nearly 20,000 HTS product classifications and more than 40 landed cost components for 100 countries, accounting for about 95 percent of the entire world's trade.

TradeBeam believes that Open Harbor brings a logical extension to its current offering, because customers will now have enhanced access to the latest global trade content of more than sixty countries, as well as landed cost management functions. The move continues the strategic expansion of TradeBeam's product footprint, which covers the entire life cycle of global trade across order, logistics, and financial settlement activities—all to improve operating efficiencies and working capital. This should also provide a complimentary vertical focus, since Open Harbor had developed solutions and attracted clients in the hi-tech and automotive markets.

As seen by this move by TradeBeam, the GTM space is consolidating and point solution providers are disappearing. The leaders seem understand that to truly improve global trade, one must be able to manage both the physical and financial supply chain. Across the entire trade transaction export/import compliance, document management, SCEM, security and contract issues must be managed along side purchase order processing, LC management, pre- and post-shipment financing, reconciliation, invoice presentment, foreign exchange, and insurance management.

Product integration between TradeBeam and Open Harbor should be complete by the second half of 2005, with TradeBeam pledging to maintain uninterrupted service and support to a key group of Open Harbor clients during immediate transition phase and post contract execution. TradeBeam has also been communicating with Open Harbor's customers to understand their specific circumstances, the scope of their projects, and to jointly agree on terms to work together to ensure business goals are aligned for both companies.

Software Giants Make Courting A Small Guy Their 'Business One' Priority Part Four: Challenges and User Recommendations

This note concerns the launch of SAP Business One by SAP AG (NYSE:SAP), the pairing of SAP and the Tax and Business Services (TBS) unit of American Express, and the delivery of 13 new mid-market solutions designed specifically for companies with $50 to $500 million in annual revenues by PeopleSoft Inc. (NASDAQ: PSFT). For details of these announcements see Part One.

Still, the ride to SAP's and Oracle's SMB success will not go that smoothly, given that managing two different products may go outside of these vendors' strongholds so far.

The challenge of recruiting new partners and of getting them up to speed with new, still relatively unknown, albeit simple products, is imminent. Also, likely market confusion (not to mention channel confusion and/or conflict due to emotional ties to a certain product line) may aggravate already existing confusion about the huge flagship product portfolios. For example, while NetLedger remains separate from Oracle, the demarcation line where one company begins and the other ends is quite blurred. Also, how far the Oracle Small Business Suite will scale upward as a business grows also remains unclear. With no intermediate solution to grow into, Oracle E-Business Suite remains the only alternative, which might often be a too steep undertaking. In addition to the expenses of educating the market and its channel, one should expect higher R&D expenses and possible product delivery delays due to added new product and integration issues.

Thus, we believe the SAP Business One and NetLedger initiatives will still take a couple years to materialize in earnest. The best near-term opportunity for SAP and Oracle will be to sell to existing large customers for deployment in smaller subsidiaries and divisions, since these products provide viable options for staying with a single vendor corporate-wide. Some mid-market vendors with impressive global reach and localized products, immaculate vertical focus and knowledgeable channel, offering a very flexible modern product, very well attuned for local regulatory requirements of several dozen countries and supporting well over 30 languages, such as Scala (see Scala Shows Far More Than A Bit Of A Backbone) and Systems Union/SunSystems, have long devised predatory strategies at the large company subsidiary market and SAP and Oracle will need to move quickly to shore up their own installed base.

SAP and Oracle customers should begin to consider SAP Business One and NetLedger as software solutions for smaller, autonomous business units based on the integration benefit. With the current and/or upcoming more comprehensive CRM solution, these products will compete well against the aggressive newcomer Microsoft CRM product.

However, SAP Business One or NetLedger will not suit manufacturers as they lack MRP (manufacturing resource planning) and strong field service, and many other manufacturing-oriented modules, which will again require the higher-priced and more complex mySAP All-In-One or Oracle E-Business Suite. This might only defeat the purpose, and it might not help much in preempting the intrusion of some competitors that specialize in plant-level manufacturing systems (e.g., QAD, Ross, Agilisys, SSA GT, SYSPRO, etc.). The basic functionality will consequently need to evolve substantially in order for these low-end versions to compete in the broader market. While SAP is not planning to develop manufacturing functionality for SAP Business One, it however, encourages current partners to team with SAP to create MRP offering for smaller companies. The first manufacturing solutions from independent software vendors (ISVs) for SAP Business One are expected towards the end of 2003.

Much other work-in-progress is still outstanding, e.g., Business One requires customized integration with third-party accounting systems, but the connectors, which would speed up the integration of those applications, are not yet available. However, SAP has already llaunched its SDK (software Development Kit) for all previous versions of SAP Business One (6.01, 6.02). For new version 6.2, there is a new generation SDK (including user interface functionality, and tools for accelerated development). This version is being tested by partners and is expected to be released for general use at the beginning of July
A mobile client is also currently not available in the US, and thus are traveling salespeople still unable to remotely access the software. Again, SAP claims a mobile client is being developed by partners to cover common remote tasks like contact management, warehouse management and CRM capabilities. First remote devices will be available by the end of 2003, while remote synchronization is planned for Q1 2004. Finally, while Business One includes an embedded e-mail server, it does not integrate with large e-mail products such as Microsoft Exchange/Outlook and Lotus Notes. SAP is well aware of the need for these enhancements, and integrated e-mail is also planned for Q1 2004.

As for the upper mid-market, the Tier 1 vendors' offerings remain complex applications, and the Internet architecture and new intuitive interface can mitigate that only so much. This perception of complexity remains ammunition that the incumbent Tier 2 & 3 vendors will continue to exploit in order to hinder bigger brethren's attempt to penetrate their traditional stronghold. Furthermore, not all powerful functionality (e.g., SRM or PLM) is readily available for these pre-configured solutions, which may be a serious drawback when competing against the solid Tier 2 vendors which have long offered their entire suites without any disparity between solutions for bigger and smaller customers (e.g., J.D. Edwards, Intentia, IFS, or Epicor). The "Accelerated Solutions" while enabling large vendors and their channel to offer a fixed price and fixed time implementation program in modular way, may sometimes not necessarily offer total extended-ERP functional scope but still only a part thereof. By the time the customer puts together modules to build a full collaborative enterprise system for a mid-market company, and then adds up the multiple implementation time and cost, all the touted benefits might have been annulled in some instances when incumbent mid-market vendors cover all the bases with their well-entrenched offering.

Therefore, it may still take some serious doing to produce a real magic bullet to attract vast majority of midsize enterprises, since at this stage, many might fail to find a compelling rationale for an SME to go for PeopleSoft or Oracle as opposed to, e.g., Lawson, Epicor or Infinium (now part of SSA GT) in service industries, or an army of channel-focused manufacturing-oriented smaller ERP vendors. While fixed time and cost solutions delivered packaged from pristine laboratories do have their appeal, SMEs are becoming increasingly savvy to ask for more than just these implementations perceived as cookie-cutter approach. Therefore, PeopleSoft and its peers will have to repeatedly prove it has not taken a cookie cutter approach, as each of its solutions is preconfigured to reduce cost and complexity, but also allows for available extensions based on each customer's need.

This combination might make a differentiating trait, and since the vendors have also developed industry or process templates for each solution, these could keep cost, complexity and risk down. Despite the challenges, Tier 1 vendors have raised the bar in providing solutions for smaller enterprises, and Tier 2 and Tier 3 vendors should be in for a tough battle to defend their turf, especially as they are concurrently trying to expand and modernize their products with ever diminishing resources and wary prospects. SAP has stated that it intends to grow its small and midsize business from the current ~ 7% of license revenue to 15% by 2005, and that means finding and closing thousands of new customers. PeopleSoft and Oracle too are undeniably tenacious and persistent fighters able to endure the long hauls, although Microsoft, Sage ad ACCPAC would not be pushovers in that regard either.

Software Giants Make Courting A Small Guy Their 'Business One' Priority Part Three: Market Impact Continued

This note concerns the launch of SAP Business One by SAP AG (NYSE:SAP), the pairing of SAP and the Tax and Business Services (TBS) unit of American Express, and the delivery of 13 new mid-market solutions designed specifically for companies with $50 to $500 million in annual revenues by PeopleSoft Inc. (NASDAQ: PSFT). For details of these announcements see Part One.

The fact that the mid-market and the SMB segment are the next frontiers and a promised land for all the enterprise vendors, small and large alike, has long not been news. Still, the willingness of smaller IT departments to go for more sophisticated technology beyond the all-too-common dispersed islands of information on Excel spreadsheets, Access-based reports and queries, or even managers' pocket paper-pads and post-it notes, does not guarantee any vendor an easy ride. That has been proven by a number of trials-and-errors, and consequent strategy reiterations that the larger enterprise vendors have espoused during last several years.

As well known and much publicized, the major factors of success in business applications for the mid market segment have traditionally been price, speed of implementation, vertical focus, product scalability and scope expandability, and a single point of contact. Therefore, all the Tier 1 vendors discussed in Part Two seem to have captured (or at least tackled) most of these, partly owing to finally breaking its product in more manageable components (which provides for faster phased implementations and system agility) and Internet-enabling it (which provides for easier deployability and user interface intuitiveness). Their solutions within ERP, CRM, SCM, portals. Product lifecycle management (PLM), and supplier relationship management (SRM) functionality provide a wide scope of features, and very few smaller vendors can provide tightly integrated applications of this magnitude under one umbrella.

Furthermore, these vendors have the strongest product technology in terms of scalability, and support for almost all industry relevant platforms and/or middleware standards, with Web service standards like eXtensible Markup Language (XML), Simple Object Access Protocol (SOAP) and Universal Description, Discovery, and Integration (UDDI) being already embedded within their latest product releases. These facts, bundled with their corporate viability and mind share, have encouraged many small companies to opt for their offering, which has not been quite conceivable until very recently.

Software Giants Make Courting A Small Guy Their 'Business One' Priority Part Two: Market Impact

This note concerns the launch of SAP Business One by SAP AG (NYSE:SAP), the pairing of SAP and the Tax and Business Services (TBS) unit of American Express, and the delivery of 13 new mid-market solutions designed specifically for companies with $50 to $500 million in annual revenues by PeopleSoft Inc. (NASDAQ: PSFT). For details of these announcements see Part One.

The fact that the mid-market and the SMB segment are the next frontiers and a promised land for all the enterprise vendors, small and large alike, has long not been news. Still, the willingness of smaller IT departments to go for more sophisticated technology beyond the all-too-common dispersed islands of information on Excel spreadsheets, Access-based reports and queries, or even managers' pocket paper-pads and post-it notes, does not guarantee any vendor an easy ride. That has been proven by a number of trials-and-errors, and consequent strategy reiterations that the larger enterprise vendors have espoused during last several years.

Look also for a continued evolution of these applications, since over the last several years the market has seen a plethora of fixed-scope and fixed-price applications, pre-packaged vertical solutions, attractive support programs and hosting services with catchy names (e.g., �Fast Forward', �Select', �Accelerated', �On Board', �Genesis', etc.), all aimed at making it faster, simpler and cheaper for enterprises under a few hundreds $ million to use them. However, all of these typically have also implied some form of trade-off in the name of expediency. The features forsaken will have been functionality, customizability, platform options, solution scalability or extensibility.

Unfortunately for both vendors and users, small and mid-size enterprises, like their bigger brethren, generally operate in a dynamic, competitive environment and have global, multi-site operations that are either wholly owned or that function in a complex supply chain relationship. Consequently, all these companies need some level of support for advanced collaborative functionality, scalability, supply chain management (SCM), CRM, e-commerce/e-sourcing, and distributed computing environments. And they have to accomplish these feats with less (or completely without) IT staff and a much more limited budget compared to their bigger counterparts. For these reasons, the first generations of Tier 1 vendors' offerings for smaller enterprises have had only a limited success.

Still, a patient man may win the day, and the likes of SAP, PeopleSoft and Oracle will likely get it eventually right through their deep pockets-backed perseverance, their brand recognition, and repeated modifications and fine-tuning of their strategy to win the less chartered lower-end of the market. The latest above tacks should be regarded as prudent moves, although indisputably belated. Nonetheless, these moves should confirm these vendors' commitment to smaller customers through the renewed focus and better-attuned offering. A less known fact might be that almost two-third of all SAP's installations are enterprises with less than $500 million in revenues; PeopleSoft too deserves commendation for achieving its notable mid-market milestones (i.e., ~25% of all its customers are mid-market, whereby lately at least one out of every three new PeopleSoft customers reportedly also comes from this segment). For that reason, these moves should slowly alleviate the market perception of these solutions being overkill for smaller enterprises.

Software Giants Make Courting A Small Guy Their 'Business One' Priority

On March 27, SAP AG (NYSE: SAP), the leading provider of enterprise applications, announced the launch of the US version of SAP Business One, a new solution that should promote the company's capability to a new segment of the small and midsize business (SMB) market. At the same time, in a major pairing of two of the most trusted names in their respective technology and business services fields, SAP also announced that the Tax and Business Services (TBS) unit of American Express would distribute and provide support services for SAP Business One. Together, the two companies will also reportedly develop specialized vertical-industry editions of SAP Business One and establish a new distribution and support service model to meet the needs of small and midsize firms.

Not waiting for the grass to grow underneath its feet, and further refining its offering, on April 14, after building on more than six years of its the mid-market feats, PeopleSoft Inc. (NASDAQ: PSFT), one of the leading business applications providers, delivered 13 new mid-market solutions designed specifically for companies with $50 to $500 million in annual revenues. Preconfigured to automate mid-market business processes, PeopleSoft Mid-Market Solutions include an unlimited user license for PeopleSoft applications, training, and implementation services -- all for a fixed price. The solutions address a supposedly growing demand from mid-sized organizations to integrate critical business processes, and provide the flexibility to implement one module at a time.
SAP claims that, while many small and midsize firms have invested in multiple software applications, several report that they lack the ability to access the information they need, when they need it to make critical decisions, and they report a pressing need for easy access to real-time information. SAP Business One was thus designed to address these problems in an affordable, easy-to-implement solution. The solution aims at helping small and midsize businesses streamline their operational and managerial processes by providing strong and fully integrated financial and sales management capabilities. SAP Business One supports companies with as few as ten and as many as several hundred employees, and can also reportedly be implemented in as little as one week.

The solution's award-winning Drag & Relate data navigation system provides users with intuitive data access simply by highlighting and dragging pieces of information on the screen. In addition to the touted easy-to-use intuitive interface with Drag & Relate capabilities, the product features strong integration with desktop applications, since users can drag information between different data sources and link them on the desktop. The product also features integrated sales force automation (SFA) system for pipeline tracking, opportunity management, strategic selling, and contact management. Key functionalities also include comprehensive financial management, with multi-currency, budgeting, and bank reconciliation; a well-rounded inventory management system, with kitting and multi-level price lists; and a comprehensive reporting module that allows easy access to any data. The solution supports the Microsoft SQL Server database and the Microsoft Windows operating system. Its open architecture has reportedly allowed integration with the flagship mySAP Business Suite giving companies the adaptability to scale their applications with the growth of their business.

In addition to the US, SAP Business One is currently available in twelve countries and fourteen languages. Part of SAP Solutions for Small and Mid-size Businesses (formerly SAP Smart Business Solutions), SAP Business One has more than 1,300 customers worldwide. The new product in the US has for some time been successfully sold in the lower-end of the European SMB market, since it provides small and medium businesses with an integrated family of enterprise applications tailored to the specific needs of sales-driven companies. As mentioned earlier, it addresses the core operational needs of SMBs, such as accounting and banking, financials, sales force automation (SFA), purchasing and selling, logistics and product trees, as well as reporting and analysis.

It also provides analytical tools to gain insight into an organization's operations, online alerts for collaborative event tracking and problem solving, and customizable reports that give companies the information they need in a format that allows them to brand their business. The solution is not a reconfigured or �dumbed-down' version of its larger sibling mySAP Business Suite, but is rather based on TopManage, a product developed and marketed by former Israeli software company TopManage Financial Solutions LTD, which SAP acquired in March 2002 and integrated into its business unit for the SMB market, which was formed at about the same time.and which supports the further development of Smart Business Solutions from SAP and its partners and assist SAP partners in delivering customized, industry-specific solutions.

Since SAP's Solutions for Small and Mid-size Businesses division aims to provide the full spectrum of SMBs with affordable, easy-to-implement and scalable solutions to meet their business and technical needs, in addition to SAP Business One, designed for smaller companies with less complex business processes, SAP also offers to its partners mySAP All-in-One, turnkey solutions to meet the industry-specific needs of more sophisticated companies. For "sophisticated" or the upper echelon SMBs with a high need for individualization and industry-specific functionality, SAP is globally expanding its existing strategy of offering industry-specific SMB solutions. These are based on flagship mySAP Business Suite (recently supplanted mySAP.com) product and are tailored, configured and complemented by SAP channel partners, and are available on a fixed-price, fixed implementation time basis.

SouthWare Excellence Series: Making Excellence Easier Part Five: Competitive Analysis and User Recommendations

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

SouthWare competes in the middle-market, which is defined as companies with revenues in the $5 million to $250 million (USD) range. Its historic strength in the distribution market places it in competition against three product classes: distribution-specific products (FACTS�, SX Enterprise�, and TakeStock� all part of the Infor family of products, and CommerceCenter� from Profit 21), general accounting products with distribution capabilities (Great Plains�, Navision�, and to some extent Solomon� from Microsoft Business Solutions, MAS 500� from Best Software), and finally manufacturing products that also compete in the distribution space (e.g., Syspro� from Syspro).

Service management can be thought of as activities supporting both manufacturing and distribution functions and, as such, SouthWare will find itself in competition against the same distribution products as well as to a lesser extent manufacturing products.

SouthWare's strength and weakness are its size. As a relatively small company it can react very quickly when required. This is particularly true when it comes to correcting software glitches. While the size of the company itself is not necessarily a competitive weakness, SouthWare does not support a large number of resellers and this can lead to geographical challenges in that there are gaps in coverage of certain market areas. SouthWare's strongest resellers actually compete anywhere there is a business opportunity. Unfortunately some users may not feel comfortable being supported by someone that is not in the same geographical region.

Some people may consider Acucobol, SouthWare's development environment to be a weakness, particularly given Microsoft's success in convincing people that everything in the mid-market should be allied with Windows. This may be a viable concern for larger companies with their own IT staff that may not have any past experience with Acucobol, but it certainly should be of lesser concern to smaller organizations that will naturally rely more extensively on their reseller to provide the required technical expertise.

SouthWare has always required that its resellers offer a full range of services, including technical support. While the absolute number of resellers may be less than its larger competitors, SouthWare resellers in general offer a more complete range of services and support.

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

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

Service Management Series

This is a complete service management system that is comprised of four specific applications to help companies manage service contracts, track service histories and required preventive maintenance for each piece of equipment under service contract, daily planning and dispatch, and service invoicing.

* Contract Management: Tracks each service contract, including earned and unearned income, contract pricing, route scheduling, meter usage, renewal tracking, contract proposal, and addendum generation.

* Service Orders: Handles both recurring and on-demand service calls, technician scheduling, complete time and cost tracking, and all dispatch functions. This application also interfaces with SouthWare's Return Authorization application to track returns for credit, repair, exchange, and warranty work for both items sold as well as customer-owned equipment.

* Equipment Servicing: Maintains equipment service information including service histories, metered usage, location, status, preventive maintenance schedules, parts lists for each piece of equipment under service, skills required for servicing, and extensive warranty information, including on-line customer access for warranty inquiries, service requests, equipment service history, and notification of equipment relocation.

* Service Invoicing: Invoicing application for service management series. Includes recurring and contract billing as well as actual service calls.

is a comprehensive tool for developing browser-based access to corporate data and processes for customers (including shopping carts), vendors, and employees. Live or off-line access is supported. The following are standard SouthWare functions.

* Order shopping cart is saved until order is submitted.

* Provides default pricing as well as customer-specific pricing.

* Catalog lookup. This is where SouthWare's use of catalog technology makes it very easy to set up a storefront.

* Automatically create customer for new sale.

* Easy add, change, or delete line items.

* Numerous options to show item pictures, notes, and discount from list price.

* Optionally supports SSL encryption for secure transmission of data.

Since NetLink is a framework for building an on-line business community, virtually anything that is possible within standard SouthWare can be accomplished with a browser. Sample supported requests include

* Sales orders submitted from customers and employees.

* Customer request for account balance and related details.

* Employee request for customer-related information.

* Customer requests for service (resulting in the creation of a service order).

* Requests for marketing materials.

* Changes of address or phone number.

* Request for invoice or purchase order details.

* Review of product history.

* Vendor review of open purchase orders.

* Review of shipped status of open sales orders.

* Review of product catalog and pricing.

* Dispatch status of open service calls.

* Internal review of current financial statements.

* Access to employee personnel information.
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SouthWare Excellence Series: Making Excellence Easier Part Three: Application Analysis

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

Detailed Application Analysis

ExcelReport�

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

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

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

* Which areas of the business need attention?

* Are we making progress toward our goals?

* Are we able to fulfill customers' orders?

* Are we shipping orders on time?

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

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

* How much are errors and complaints costing us?

* What do our customers think about us?

* Are we hitting our financial goals?

* Which vendors are giving us good service?

* What are the recent events involving this customer?

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

* How solid are our vendor relationships?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Excellence Series, and every other business management system for that matter, is not all-powerful, but it does offer advanced functionality in several areas and outstanding business management support.

One Product for Large and Small Manufacturers: Challenges and User Recommendations

Despite its indisputably astute offering for a few selected high-volume industries, and its growth and expansion over the past few years of economic uncertainty, IQMS is not without challenges. For one, while this privately-held Paso Robles, California (US) company is focused to keep pace with trends in technology and customer requirements in its target niche, too narrow a focus comes with its liabilities.

Part Six of the IQMS Prospers by Helping Enterprises Work Smarter series.

IQMS' irrefutably small size may create a perception of negative viability when many believe "bigger is the better". On one hand, the time for comfortable stealth selling through word-of-mouth is running out, and IQMS has to find greener pastures in order to grow and be able to enhance its offering. The North American and European plastic processors markets are slowly, but surely becoming saturated. While there are few suitable products beside EnterpriseIQ, there are competitors including DTR International's TMM (now part of Made2Manage Systems), SYSPRO, and Matrikon.

The realities of plastic manufactures can present challenges for IQMS. The products of plastic manufacturers tend to be high-volume, labor intensive and manufacturers do not have huge expenditure for research and development (R&D). Moreover, they are in a great part under pressure to supply giant, heavy-handed retailers like Wal-Mart or Target with ever cheaper goods, and do so by exploiting opening manufacturing facilities in remote geographic regions with much cheaper labor. Given all of this, IQMS should make sure that its product is fit for serving these markets too. Some of its domestic customers have already shifted markets and introduced new products. They have also honed their use of plastics molding technology and automation by adopting a so-called triad plan for positioning, where productive capacity is divided in diverse global regions based on several factors, but particularly according to high, moderate, and low labor cost regions.

Yet, penetrating blossoming markets like China will be difficult because of limited financial resources, nascent distributor relationships, and low visibility and brand recognition. IQMS might likely lose some deals because of its current inability to support prospects in many remote markets; its recent forays in Asia notwithstanding. Yet, it remains a good practice for manufacturers that are selecting solutions to factor in costs, the financial viability of the vendor, local support, and many other criteria even if it may not favor IQMS at this stage, despite its superior functional offering.
IQMS has made notable strides into tier one and tier two automotive suppliers and appliance manufacturing sectors by leveraging its functional capabilities to garner a number of germane functional nuggets for these sectors, in part through the AIAG membership. For example, integrated electronic data interchange (EDI) (including XML), serialized label generation, customer, and supplier release control management and cumulative order tracking, just-in-time (JIT) production traits, and specific shipping requirements, including container management, pool/master bills of lading, and integrated communications such as XML. Its offering of QS-9000 tools with integrated preventive maintenance, document management and quality tracking and reporting, and others will also be welcomed by the automotive suppliers.

In addition to these, appliance manufacturers will appreciate consignment inventory management including remote location visibility via Web-based tools, including stocking level management and invoicing on consumption, and usage reporting. Still, in these sectors, IQMS does not have the status of "incumbent" as it does in the plastics, and will face fierce competition from a slew of competitors of all sizes with much higher visibility, global presence, and resources. Its mid-market competitors include QAD, Infor Global Solutions, MAPICS, Intuitive Manufacturing Systems, Microsoft Business Solutions, Epicor, and SSA Global.

IQMS' total reliance on the Oracle database and its exclusion of all other databases presents prospects with another dilemma. Typically, discerning customers expect and like comparative choices. Likewise some companies of IQMS' target market will have already made a significant investment in Microsoft technology and will be reluctant to bring in a new database design. Although IQMS mitigates this problem by providing a single and total source of implementation and as part of the standard, and ongoing maintenance agreement, will be responsible for support services, user perceptions and often religious-like attraction to certain technologies cannot be ignored.

Thus IQMS may have an "identity crisis." By targeting smaller enterprises with technologies and a well-rounded product, will, in an odd way, label IQMS with being "too much of a good thing" because its product appears more amenable to the upper-end of the market. Namely, the tight integrated nature of the EnterpriseIQ and its high interdependence between modules, which cannot be that easily decoupled or turned on or off might be too overwhelming for some prospects that might not need many of the core EnterpriseIQ modules.

Also, given that some transactions within the system are not easily reversible after a user has made an error (a second transaction at a later date might be necessary to clean things up), the training and proficiency of users becomes critical. This might be a deterring factor despite its relative ease of use and the favorable ratio of software license fees versus implementation costs of 2:1. This may also mean that the IQMS' user-based license fee is not aggressively priced, as the vendor does not want to undersell its powerful capabilities. IQMS does, however, take full advantage of the built-in Oracle database rollback features, which ensures that a power failure or something catastrophic does not leave rogue entries in the database tables, if the transaction could not be completed.

For reasons of simplicity, some prospects may prefer a less functional and less tightly integrated product. They may reach for a more flexible and customizable competitive solution on the more familiar Microsoft technology—particularly if the solution has stronger multinational capabilities. Also, many global prospects still have notable mixed-mode manufacturing environments in addition to their geographically dispersed plants that handle a significant number of complex products and require certain, non-repetitive job shop/ETO manufacturing and inventory management functionalities. Here, IQMS may not be nearly as competitive as in clear-cut repetitive environments.

Furthermore, often, buying a completely integrated solution is not an option when companies have either an accounting or project-management system at a plant, which they will not simply rip-and-replace. Thus, prospects might prod IQMS' flexibility to integrate into legacy and other third-party applications, and how it keeps up with new versions or upgrades to both solutions. This may not be the vendor's forte, given it best performs when dealing within the EnterpriseIQ's Oracle-based domain. IQMS thus has to "beef up" and become more flexible or it has to better advertise its product's interconnectivity, employee-facing portal solutions, supply chain execution (SCE), and e-collaboration and product lifecycle management (PLM) offering. While a comprehensive PLM strategy (see The Many Faces of PLM) might be a tall order for IQMS to deliver on its own, its sporadic projects integrating EnterpriseIQ with the product data management (PDM) providers should be parlayed into more strategic alliances.

When EDI Goes Native, Everything Falls in Sync with IQMS

IQMS, a small, privately-held company operating out of Paso Robles, California (US) has marked itself differently from other enterprise resource planning (ERP) vendors by offering native modules where other vendors only provide third-party solutions. Generally, embedded third-party solutions are leerily regarded, especially by small and medium enterprises because third-party batch interfaces tend to be cumbersome. IQMs' use of native modules is, therefore, a welcome achievement.

Part Five of the IQMS Prospers by Helping Enterprises Work Smarter series.

However, while its native modules provide a "single view of the truth", there is more to this best-of-breed versus integrated suite dilemma than data synchronization. Being electronic data interchange (EDI) capable has, for some high-volume industries like automotive suppliers, become a required, though far from pleasant task. It is made even more dangerous with the amount of work needed to ensure that incoming and outgoing messages are handled accurately. EDI solutions from traditional value-added network (VAN) providers like GXS, Sterling Commerce, or Inovis provide the fundamental translation process, converting incoming files, such as schedule releases and forecasts, into something readable and understandable. Simultaneously, it converts outbound data, like invoices and ASNs into acceptable formats for receipt by the supplier.

Still, this readable data is only partly good for ERP systems, since the real action is in merging the new data with existing information that is already being processed within the ERP system. The ensuing challenge is to make sense of the daily, constant flood of EDI messages. In high volume environments, this can consist of hundreds of records affecting the releases and forecasts of hundreds of parts. It becomes infeasible to manually enter this data into the system, and therefore, an additional interface must be developed and tested. Yet, unlike an interface that updates or synchronizes inventory levels or product quality information, this interface has to do more than statically map data. It typically involves the extensive use of business rules and logic established between every customer and supplier. That is to say, the highly personal nature of the data means that no two interfaces are exactly alike, further complicating the matter.

Thus, resources must be extensively used on both sides of the table—the enterprise software vendor supplying the interface must write and test custom code, and the user must test and re-test thoroughly until the interface is working consistently. This is taxing not to mention expensive, especially for SMEs with limited IT staff and resources. However, with an intrinsic EDI system within an ERP product, the third-party software costs are virtually non-existent. Moreover, the time it takes to build the custom interface is drastically reduced, since those building the interface are working from within the ERP system, and have inherent knowledge of data structures and business logic.

Consequently it is amazing that the small ERP vendor, IQMS, such a module. Its native IQ EDI module supports ANSI X12, EDIFACT, and Odette file formats. Taking into account the importance of emerging technologies (see EDI versus XML—Woorking in Tandem Rather Than Competing?), IQ EDI is XML-enabled and supports file transfer protocol (FTP) for the transmission and receipt of files. The system generates and processes virtually all commonly required transaction sets. For inbound X12 format, and DELFOR (a delivery schedule message from a buyer to a supplier about product requirements) and DELJIT (delivery just-in-time message which relays the precise delivery sequence of a JIT schedule) EDIFACT transactions, the system supports remittance advice (820); planning/release schedule (830); purchase orders (850); change orders (860); shipping schedule (862); order status report (870); receiving advice (861); functional acknowledgement (997); cash application (824); and text message (864). For outbound transactions, it supports invoicing (810); planning/release schedule (830); shipments (ASN) (856); order acknowledgement (855); and vendor shipping schedule (865). Functional acknowledgement (997) for X12 and DESADV (dispatch advice message)—a message specifying details for goods dispatched or ready for dispatch under agreed conditions—is also supported.
Further, due to inherent integration with the rest of the EnterpriseIQ ERP suite, outbound transactions are sent directly from the system, that also includes template-mapping tools. Moreover, the need for third-party translators—which are a default for the vast majority of ERP systems requiring third-party EDI solutions—is eliminated. Demonstrating its industry savvy, the suite is based on the AIAG supply chain business practices and a number of flexibility business rules generate exceptions. For example, flags and reports can be sent when there are dramatic quantity changes in EDI transactions or to identify when user-defined limits (set either as a range or a percent) on quantity increase or decrease has been hit. Logically, the orders that comply with the rules are passed through to the sales module, while the orders that do not comply, get flagged.

Finally, rules can be setup either for each EDI transaction code number or for each customer. IQ EDI is an integrated component within EntepriseEQ, supporting the capability to translate files that are downloaded directly from a Web site or through the traditional EDI mailbox setup with a VAN provider. One should note, however, that IQMS does not provide communication nor maintain the mailbox. This is one instance where a third-party communications system (i.e., VAN) is required to perform this service.

Nonetheless, adding to its list of EDI accomplishments, IQMS successfully completed the EDI certification process for Honda North America, whose extensive testing and certification process ensures that suppliers meet the automaker's exact specifications for JIT manufacturing with seamless communication and data integration. To that end, IQMS completed the multistep test procedure with its EnterpriseIQ ERP software in less than six month
finishing in november.

Benefits of a Single Database Solution: Improved Enterprise Quality Management from IQMS

Embedded third-party solutions in enterprise applications often deter small and medium enterprise (SME) customers. However, enterprise resource planning vendor, IQMS (www.iqms.com) has a value proposition that differentiates itself by gladly touting the benefits of a single database/single vendor software solution. Here, the one database rule creates ease of use, implementation, and maintenance, and real-time transactions because there are no unwieldy batch interfaces from third-party software. Reports also become easier to write in a cohesive environment.
To illustrate, let us try to understand the typical flow of information through EnterpriseIQ. It may start with the creation of a bill of material (BOM), which defines how items are manufactured, and includes prescribed raw materials, tools, production times, packaging, work center types, instructions, etc. Then, the Quotation module allows users to examine costs and profit margins on new or existing manufacturing configurations. The structure is similar to that of BOM, but users can run unlimited "what-if" scenarios and, when satisfied, they can fairly easily roll over a satisfactory quote to a BOM without reentering the data.

Later, actual sales orders—which are the actual demand that consumes the forecasted, hypothetical demand—will drive the creation of work orders. If parts are already in inventory, they can be shipped immediately. If not, then a work order will be generated through the optional Update Schedule facility. This option analyzes both the demand and supply and then builds work orders that meet demand.

Then, the IQ RealTime Production Monitoring gives users a view of production as happens. The work-in-progress (WIP) information in EnterpriseIQ can be updated as often as every fifteen seconds, and users can see how long a machine has been running, its total cycles, or whether is has gone down during the run. Unnecessary down time can be reduced when job status is identified because operators can be alerted when to prepare material for the next order. Additionally, one can record any bad parts when they occur and the system will automatically recalculate the number of parts left to produce. Consequently, corrective decisions can be made regarding stopping and starting production runs based on the scrap.

In addition to determining quotes and monitoring, users can also automatically create production shift reports. The application fills in the data for total cycles, good parts, and production hours for the user, making both reporting and verification easier. The final step closes the manufacturing loop. Daily production of the work centers is documented and the subsequent reports tell EnterpriseIQ exactly what raw materials were consumed and what was manufactured. This puts finished goods into inventory and can backflush raw materials used to make those parts.

Because work orders are based on how BOMs are setup, precise and near real-time information is important to get work orders right. Also, inventory and open orders play a major role in determining what must be produced, purchased, and inventoried. The IQ Preventative Maintenance module can play a crucial role in this. It is an intrinsic part of the core EnterpriseIQ system that tracks machines, tools, auxiliary equipment, quality inspection gages, building maintenance, maintenance, repair, and overhaul (MRO) inventory, etc., and prevents reliance on schedules based on out of service machines and tools. The module also tracks maintenance intervals based on equipment usage, including the number of cycles on tools, hours or cycles on machines, or daily for other equipment. It also automatically generates work orders for maintenance where necessary, which can be preventive, repair, and emergency work orders. Moreover, IQ Preventative Maintenance has direct links to labor reporting, inventory, accounting, and purchasing applications, and provides up-to-date financial information on maintenance work.

Also helping to achieve real-time information is IQ WebDirect, a Web-based customer and supplier self-service portal technology, which enhances supply chain communications, improves customer and supplier relations, and reduces customer and supplier service costs. It runs on an Apache server (included) with an Oracle database (although IQMS recommends a separate Web server it there are more than five concurrent users of the module). WebDirect also has full security control features and allows 24x7 access to data. The portal allows customers to add, edit, or change orders; to check order status, inventory availability, shipments, invoicing, vendor managed inventory (VMI) entry (based on flexible rules), and to publish reports. On the other hand, suppliers can check purchase order information, inventory, receiving, invoicing, cash payments, and published reports. Similar portal solutions for the user enterprise's internal employees are still in the works, though.

Solving Enterprise Problems: The Fully-integrated Solution of IQMS

Superficially, there appears to be little to distinguish IQMS (www.iqms.com), a small, quiet, privately-held company, from other lower-end enterprise application competitors. Its global presence, annual revenue, profile, and even its products may appear to have features akin, if not alike to its competitors. However, along with targeting a niche market of repetitive manufacturing, particularly for the injection plastics molding/extruding and rubber industries, this Paso Robles, California (US) company has other notable features. In particular, what may be true distinguishing is that IQMS offers applications and services typically expected from much larger, tier one vendors—often going beyond. Namely, the product is so complete that it does not involve third-party products (other than some reporting facilities). Its natively-built features go beyond the customer relationship management (CRM) or HR/Payroll capabilities, which are often found in other products, but only as third party solutions that are embedded, standard configurations leaving customers oblivious to modules' origins.

Part three of the IQMS Prospers by Helping Enterprises Work Smarter series

So how many other ERP vendors, including the largest ones, have natively built-in, real-time production monitoring, electronic data interchange (EDI), and complete quality management systems? Well, almost none when it comes to integrating ERP and manufacturing execution systems (MES). MES, as defined by the Manufacturing Enterprise Systems Association (MESA International) is essentially any system that uses current and accurate data, triggers, and reports on plant activities as events occur. From electronic production management systems to shop-floor data capture, an MES manages operations from the point-of-order-release to manufacturing, to point-of-product-delivery to finished goods. The potential of integrating and providing all elements of a complete manufacturing solution, at least from a same source, if not as a single computing platform, has always been tempting, and potentially lucrative. However, it has never been delivered, not even by the once mighty Invensys. The company that once had Baan, Marcam, Avantis, and Wonderware, and their respective ERP and MES products under its roof, never delivered the software together. (see The Name and Ownership Change Roulette Wheel for Marcam Stops at SSA Global—Part Three: Last-Ditch Effort by Invensys). For a detailed discussion of what integration means to manufacturers, see Manufacturer's Nirvana—Real-Time Actionable Information.

Thus, IQMS might be unique, not only within its mid-market realm, but in the entire ERP arena. By providing the powerful IQ RealTime Production Monitoring module, it ensures plant efficiency by identifying poor machine performance before problems occur. The module provides automatic production tracking by wiring hardware directly to production machines. A special user touch screen to simplify data entry can be created for shop floor personnel to provide a virtually real-time data flow to and from the shop floor. Thus it brings production and ERP information together and informs both office and plant personnel about what is exactly happening on the plant floor through color-coded screens. For example, yellow would indicate that a machine is down, while green would mean it is in production.

Captured real-time information can include cycle times, machine efficiency, and scrap percentage. The machine operator can enter timely production; backflush raw materials; print labels; change cavitation as necessary and "on the fly"; assign labor; record rejects with user-defined codes; enter downtime with user-defined codes; and view internal or external documents. With this last example, part production, setup control, material staging, quality control, overall plant performance etc. can be seen. All of these information chunks increase data integrity and reduce transaction costs, given that complete access to ERP functionality automatically updates the production schedule and generates production reports. Without such a module, gathering actual production information is a time consuming, tedious, and highly subjective task. The reconciliation of the actual data on the floor with the planned data in ERP is often delayed for days, if not weeks, resulting in no actionable information.

Why Service Matters: Enterprise Solutions, Market Differentiation, and IQMS

IQMS (www.iqms.com), a privately-held company located in Paso Robles, California (US), has experienced a period of growth over the past few years when other companies have experienced decline. Its flagship product, EnterpriseIQ is one of the industry's leading enterprise resource planning (ERP) solutions for repetitive manufacturing environments, particularly suited for injection plastics molding/extruding and rubber industries. With its products, the company experienced a 12 percent growth globally in 2003 when 700 new licensed users reportedly joined its client base. Closing the year with a 15 percent increase in revenue, IQMS responded to this increase by expanded its US Midwest office, offering additional training and sales support to clients.

Part Two of IQMS Prospers by Helping Enterprises Work Smarter series

At first glance, IQMS resembles many of its peers from the lower-end of the enterprise applications market, not only in terms of its budding global presence, annual revenues, and install size figures, but also in terms of its industry-specific software that reduces implementation and training costs. For example, an average EnterpriseIQ implementation typically only takes between three and six months. However, despite the like corporate profile and product similarity, IQMS has a comprehensive, one-source delivery and service where all of its product development, training, implementation, and support are provided by its own employees, rather than third party providers. These employees are American Production & Inventory Control Society (APICS) certified and have extensive implementation and proven project management experience. They also have strong manufacturing and accounting backgrounds. This, in addition to its implementation methodology that balances on-site consulting, classroom training, and Internet-based training, are notable differentiating traits.

IQMS also has an upfront nature that makes it stand-out from its peers. Its maintenance contracts include all product upgrades and technical support, without any hidden costs. This, combined with IQMS' great reputation for customer support, highlights the company's open lines of communication. Customers are almost never put on hold or have to go through an annoyingly long automated process. Rather, calls are answered by a knowledgeable person, not a recording. The vendor happily lets anyone talk to any of its satisfied customers within selected industries of focus and that have had similar issues as the prospective customer. IQMS also proclaims its confidence by offering a one-year, money-back guarantee.

Still, although indisputably impressive, one could dig up similar value propositions from other players in the market. Also, on the surface, the product has many pedestrian functional and technological capabilities. For example, it has a Microsoft Windows-based platform for the client side and networks features familiar user-friendly interface with familiar navigation that involves easy jumps between tightly integrated modules and drill-down capabilities. The database resides on the server that performs operations on that data at the request of clients. Data is then transmitted over the network and users access the information from clients/workstations; ultimately, its a process that uses very little code. Furthermore, the front-end Delphi graphical interface allows users to manipulate or search for data, while Microsoft Terminal Server (MTS) and Citrix Metaframe clients are used for wide-area network (WAN) links.