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How to simplify and integrate for real-time information: from customer order entry to final shipment, you can manage your business in real time and meet difficult customer demands.

SMALL- AND MID-SIZE companies are facing more customer demands than ever. Not only are they increasingly diverse and specialized, but the time frames to execute them seem to be rapidly shrinking. Dealing with that on a good day is not easy. But living in that world using fragmented information systems is an unnecessary handicap.

That's why Supply Chain Management Review, Logistics Management and Modern Materials Handling magazines presented How to Simplify and Integrate for Real-Time Information, a special Webcast sponsored by Oracle.

Gary Forger, editorial director of Modern, was joined by: Keith Inouye, vice president of sales and marketing for consulting and outsourcing service provider Core Services; Frank Prestipino, vice president of global enterprise applications strategy at Oracle; and Mark Sweeney, president of systems integrator Favored Tack, LLC.

Together, they took a closer look at the steps even small-to-medium-sized companies can take to integrate their information systems to meet the needs of today's most demanding customers.

* Gary Forger

Editorial Director

Modern Materials Handling

* Frank Prestipino

VP, Global Enterprise

Applications Strategy

Oracle

* Mark Sweeney

President

Favored Tack, LLC

* Keith Inouye

VP, Sales & Marketing

Core Services

* GARY FORGER: We all know it's not easy to balance limited resources and the expansion of expectations. But as you will hear from our speakers, there are steps that can be taken to first simplify and then integrate information systems in real time. These are important steps to take. The improvements in the flow, availability and decision-making quality of real-time information can deliver measurable ROI as they also improve customer service. Yet, getting to a real-time information system can be a battle on several fronts. It includes not just handling information faster, but handling it from increasingly disbursed sources while scaling to manage the pace of change and growth. Our speakers today have some thoughts about these challenges and on solutions. We'll start with Keith Inouye, vice president of sales and marketing for Core Services, which provides information system consultant and outsourcing services.

* KEITH INOUYE: Thank you, Gary. I'd like to start by reviewing the business challenges of small to mid-size companies. First, business today seems to be driven at light speed because of high customer expectations. Next, revenue goals are now opportunity driven. That requires adaptability to changing business conditions. And where yesterday's competition was local, your biggest competitor today could be located anywhere in the world. Innovation is dynamic and constant. That calls for continuous improvement. Finally, employees who were once specialized now have to wear multiple hats. To compete in that environment, executives in small and mid-size businesses need to have access to accurate real time data to make solid decisions. They also need a flexible system that can change and adapt as their opportunity-driven business climate changes, with an infrastructure that can grow with them in scale as they grow. And naturally for a small and mid-side business, without big budgets and deep pockets, there is an inherent need to drive value at a palatable price. To cap it all off, they need a strategic partner with industry expertise and knowledge to fill the gaps in their employee skill base. That leads to a simple checklist for success. The first item is really selecting a strategic system. To do that, you need to check out references to make sure there's a proven solution for your industry. You want to know whether this will improve your day-to-day business. Will your CEO have better access to pertinent information? Once you've selected a system, you need to select a strategic partner to help you implement the solution. To do that, you really have to check references and make sure they have the industry expertise. Where they are located can also play a key role when it comes to responsiveness and extra attention. Being local helps. Finally, you want a tangible ROI. Look for hard numbers that you and your partner can validate as a team. What you're looking for is value beyond the technology. To recap, a successful solution actually incorporates two equally important components: your vendor solution and your partner. One without the other can be quite meaningless. The two combined can be a powerful combination.

* GARY FORGER: With that in mind, what do you see as the three most important things a small and medium-sized company needs to consider when buying a new business system?

* KEITH INOUYE: First, ask for evidence of the return on investment. That should be in the form of independent studies or even customer references. Next, get unbiased advice regarding the integration of the software and not just interfacing. If there's any integration that is not covered by the vendor's service agreement, you'll have to support that for the life of that system. Finally, make sure the implementation has the full backing of the software vendor. This will mitigate a lot of your risk.

BACK TO BASICS

* GARY FORGER: Frank, why don't you take it from here and give us Oracle's perspective.

* FRANK PRESTIPINO: There are some basic issues that come up time and again over the years. Meeting compliance regulations in a timely manner is one. Having visibility into cash forecasts and avoiding accounting surprises is another. Manufacturers still have problems providing accurate delivery promises to customers and still get stuck with excess or inadequate stock. In the purchasing world, wrong goods still get purchased. And in order management, we still see lost orders, invoicing problems and price and discounting errors. In today's economy, these mistakes are no longer forgiven. Technology was supposed to make us more efficient. But most companies have ended up with a number of fragmented processes and information systems that the poor IT guys have to try and keep together. The systems may work, but we're not getting what we need out of them to grow a business. So how do we arrest this fragmentation? And how do we get visibility so that order-entry folks know what's really in the warehouse when a customer calls for an order? We believe you have to go back to the core processes within your organization that interact with your suppliers and your customers and ask whether you have the people, systems and data you need to respond. That's the starting point.

* GARY FORGER: So, if you fix the core processes on the inside, you start to look better on the outside?

* FRANK PRESTIPINO: That's right. You might start by asking: what's the one thing that will help us make better business decisions? Usually, that's information about your customers, suppliers and processes. The ultimate goal is to get the same information that comes to everybody from the same source. That's what integration is all about.

* GARY FORGER: Can you talk about simplifying systems?

* FRANK PRESTIPINO: You have to translate your business priorities into business applications that can provide accurate information to everyone who needs it, whenever they need it and wherever they need it. You get there when you replace redundant business systems with an integrated solution. You also want to implement solutions with a rapid return on investment for your business. The days of the two-year implementation are over.

* GARY FORGER: Do you think small and medium-sized businesses have an urgency to upgrade their information systems today?

* FRANK PRESTIPINO: Sure. Just look at the market dynamics today. You used to know your competitors. Today, thanks to the Internet, competition can come from anywhere in the world. Deregulation is a factor. And then there's outsourcing, which is forcing all of us to become more productive. Add them all up and you're going to fall short if your systems can't keep pace.

* GARY FORGER: What changes does a company need to make apart from technology to provide better customer service?

* FRANK PRESTIPINO: This may surprise you, but it starts with people. You need a culture that wants to share information. That's a big change for many businesses, where an elite group knows what's going on and everybody else knows only what they're supposed to know.

* GARY FORGER: But what can smaller businesses do, since they often have limited budgets and small IT shops?

* FRANK PRESTIPINO: There are many answers today, One is to use a pre-configured solution with rapid implementation tools. Now, I know pre-configuration scares some people. But pre-configuration means you don't have to reinvent a business process because someone has already made a decision around what works. The other tool is to use a hosted or on-demand service. That gets you out of the IT business and provides predictable costs, since the contracts are typically for two or three years.

FOUR-MONTH ROI

* GARY FORGER: Excellent. Let's now hear from Mark Sweeney, who is president and founder of Favored Tack LLC, a systems integrator. Mark is also an end user of an integrated information system.

* MARK SWEENEY: Thanks, Gary. I'd like to pick up as a customer that went through the integration process when we replaced an existing system. One advantage we had is that we were a fairly young company. We weren't encumbered by a lot of legacy systems or a lot of legacy thinking. Our business goal was that we had to be proficient at our core business and strategic skills. That was everything from project management to getting the bills out in a timely basis. Next, the concept of an integrated solution was nice. We didn't think buying a bunch of point solutions was the right way to build the company. Next, we wanted to automate. And I mean really get down deep and change our practices so that we had less dependency on non-revenue type labor, which in our case was back office people. If we had to start adding bodies to do our billing or to do your reconciliation at the end of the month that was just really cutting into our bottom-line. We put everyone through the "why" test. If someone couldn't tell me why they did things a certain way, that was an opportunity for us to streamline a process. Finally, we really wanted to make our customers happy. That was our goal here. To do all of that, we needed a system that could make the back office as seamless as possible. For instance, as billable tasks were done, we wanted them to queue automatically in the billing cycle. We wanted a system that could automatically produce month-end reports and could alert customers who were 30-days late. Those were all things that traditionally labor had to do. We also realized that when we lost someone in the back office, like an accountant or an HR person, that a lot of the knowledge that we use as an organization walked right out the door with them. And if the system could augment that labor or replace that labor totally, we felt that was really a different kind of company. Our goal then was to put more science and less magic into that.

* GARY FORGER: What were the results?

* MARK SWEENEY: A lot! For one, our costs are running about 34 percent less than our previous set up. That's a significant chunk of capital that's now back into cash flow, Because we used a pre-configured solution, we were able to implement in weeks and not months and with just one person. We also had a lot of practice tests and that really allowed us to get comfortable with the software before we were up and running. When it was done, the question we asked was, if this is the way it went for us, why isn't everybody doing it this way?

* GARY FORGER: Based on your experience, what's a realistic timeframe for an ROI in today's world?

* MARK SWEENEY: We look for an ROI in 6 to 12 months. Six months is better. In this case, we actually saw real savings in just four months. The key is that we got our financial guys involved and made sure the ROI was tangible. If a vendor can't show you a real ROI, then that's not someone you want to deal with.

* GARY FORGER: Let's build on that. How do you go about getting hard numbers? And what should you actually measure here?

* FRANK PRESTIPINO: You need to find someone who's done it and learn from their experience. Another approach is to compare how you measure to benchmarks from the leaders in your industry who are roughly your size and capability.

* GARY FORGER: But can a software provider help you with that?

* FRANK PRESTIPINO: Not necessarily. But if you're in a specific industry, you know there are certain efficiencies that your peers are operating with. And if you're not effectively operating with those, you can use those as a target to determine whether or not a computer system will elevate you to that next level.

* GARY FORGER: When it comes to supply chain management systems, one of our viewers wants to know what are the most important factors that companies should be using to evaluate software?

* FRANK PRESTIPINO: First, you need to come up with the areas you need to improve to advance your business. The second thing is the integration. Everyone says they have fully-integrated systems. But you need to drill down to the next level and ask what does that really mean? For instance, if there are gaps in the integration, who's responsible for maintaining those after the consultants go home. A third is the platform. It needs to be open with the ability to scale so you can grow without worry.

USING THE DATA

* GARY FORGER: How can we use existing data to drive better visibility in the supply chain?

* FRANK PRESTIPINO: One thing you can do is take advantage of the underlying technology to summarize and present information to a user through a portal. No matter what system you have in the back, you can put a portal on the front end.

* GARY FORGER: Okay. Let's say you have a great planning process. How do you monitor users to make sure they're entering accurate information and are using the data to drive decisions?

* FRANK PRESTIPINO: Well, your interactions in the company will become different. You will now have visibility into what people are spending their time on. One of the things we find, frankly, is that when you do start to get a culture of information, people come up with great ideas for fixing things because they now have visibility into things they had no idea about. They will become part of the process.

* GARY FORGER: When it comes to total cost of ownership, how can you compare one proposal to another?

* MARK SWEENEY: Total cost of ownership is going to vary, based on a company's situation. We looked first at the cost of the software and whether we paid a lump sum or financed that cost. With hardware, we looked at the cost of managing the hardware ourselves versus a managed solution. Training is another consideration. Finally, there's the hidden cost of maintaining the integration in a bunch of point solutions. That's a soft area, but you really have to take that into consideration.

* GARY FORGER: Can we use six sigma and lean manufacturing principles along with the software to drive continuous improvement?

* MARK SWEENEY: Absolutely. In fact, another good question to ask up front is whether the system you're planning to implement will support six sigma and lean manufacturing.

* GARY FORGER: If I'm implementing a new system, where do I draw the fine between customizing the application versus changing the business processes?

* MARK SWEENEY: We asked that question when we went through our implementation. Our rule of thumb was simple. We would only customize if there was a specific business process that we had to maintain. That might be a government filing regulation, or a customer service requirement, like Wal-Mart telling you that something has to be done a certain way. If you can stay away from customization, your ROI happens a lot quicker.

* GARY FORGER: We're out of time. I want to thank our audience today. And I want to thank our speakers, Keith Inouye of Core Services, Frank Prestipino with Oracle, and Mark Sweeney of Favored Tack. I'm Gary Forger of Modern Materials Handling.
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Author:Forger, Gary
Publication:Logistics Management (Highlands Ranch, Co.)
Article Type:Interview
Date:May 1, 2005
Words:2688
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