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Catalyst/RPE: a manufacturing blockbuster?

Judging from all the talk we hear these days about consolidation and scaled-down expectations, most of the big software opportunities have been thoroughly exploited; it's no longer possible for a small, modestly-funded start-up to launch a blockbuster product. But has the frontier really closed? We don't think so--and a few times every year, somebody drops by with a product that stakes out some new entrepreneurial territory. The latest example is a newly-launched product called Catalyst/RPE, which addresses a fairly exotic niche--quality assurance managers in process manufacturing companies. Yes, that sounds like a yawn, but don't skip ahead quite yet. "Process manufacturing" turns out to be a fancy name for making products like chemicals, glass, plastics, paper, steel, textiles, semiconductor chips, and even dog biscuits and soup. All of this stuff tends to emerge from a "process" that involves blending and treating (as opposed to assembly work). Obviously, process manufacturing is a big business; one estimate suggests there are at least 100,000 process-based factories just in the U.S., and most of them are good-sized enterprises. You don't start a semiconductor plant in the garage.

It also turns out that process manufacturing tends to be a low-margin business (raw materials often account for 80% or more of factory costs) and that scrap rates can easily run in the 10%-15% range, especially for short-run processes. Cooking up a batch of exotic plastic isn't much different from baking a cake without a tested recipe--even for an expert; it usually takes a lot of experiments to fine tune the process. Which brings us to Catalyst/RPE (the acronym stands for "robust process engineering"). Developed by a modest little Massachusetts start-up, Catalyst is a Macintosh-based program that designs and solves process experiments. In February, just before the program shipped, Catalyst Inc. president Richard Wolfson gave us a demo, using an example of colored fiber manufacturing. Drawing on existing data about fiber quality standards and current yields, the program suggests a few experiments-- raise the temperature, add a few minutes to cooking time, lower the pH, etc.--and then analyzes the results. Working from this new data, Catalyst/RPE computes new values that should put most of the factory's yield well within acceptable quality standards. This isn't the first time Wolfson has taken a shot at a software category outside the PC mainstream. Back in 1982, he rolled out an equally unlikely product: Harvard Project Manager, a product that's generally credited with establishing project management as a viable software category on personal computers. (Wolfson sold Harvard Software to Software Publishing Corp. in 1985.)

What fascinates us about Wolfson's current venture is that he has identified a product concept with potentially enormous payback to customers and a market of enormous size. By cutting scrap rates, Wolfson says it's distinctly possible that Catalyst/RPE can double or even triple the profitability of a process manufacturing company that is suffering quality problems. Even sophisticated QA engineers, he adds, can probably use the program to design better experiments than they could with calculators and generic statistics programs. As for market size--well, it's worth remembering that the Fortune 500 are primarily industrial companies, and the productivity improvements that really matter to senior management take place on the factory floor, not among droves of paper-pushers.

Of course, we don't know if Catalyst/RPE will turn out to be another Harvard Project Manager or perhaps even the Lotus 1-2-3 of process manufacturing. It's possible, of course, that the product has a subtle but fatal flaw, or that the founders have made some shot-in-the-foot mistake in their marketing or finance plans.

But for the moment, Catalyst Inc. seems to be off to a good start-- without shelf space in Egghead or a million-dollar media blitz (the company did hire a public relations consultant earlier this year, but he quit to work for an insurance company and hasn't been replaced). Wolfson says he's already closed at least a half-dozen "real revenue sales" at prices ranging from $10,000 to "mid five figures," and some of these early customers have begun to see the kind of paybacks Wolfson hoped to achieve. And the company is already working on even bigger deals, with prospects like Dupont and Motorola. It's hard to come up with a blockbuster new idea," says Wolfson. "But people do it."

Richard Wolfson, president, Catalyst Inc., 410 Great Rd., Littleton, Mass. 01460; 508/486-9800.
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Title Annotation:Catalyst Inc.'s software package for quality assurance managers in process manufacturing companies
Date:Aug 20, 1990
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