When President Tom Sincharge spent some real time with the three proposals
to move Yesterday Corp. into e-commerce, he found that each addressed the
company’s needs from a different perspective.
All three warned against simply throwing money at technology for
technology’s sake and recommended that any solution must be able to
grow as the company grows.
But that’s where the similarities ended. Here’s how Sincharge
categorized the differences.
One piece at a time
Arif Cubukcu, president of Beachwood-based Innovative Organization
Systems Ltd. (IOS), suggests that Yesterday Corp. design a sophisticated
system one piece at a time, eventually tying them all together.
That would include a first phase investment in hardware, such as the main
and back-up servers—to run all computer operations and handle the Web
site. That would coincide with development of a Local Area Network so
Yesterday’s employees could share data and software, and installation
of a dedicated Internet connection to support the company Web site and
carry EDI (electronic data interchange) transactions.
After that, Yesterday could add operational and e-commerce
software—Cubukcu cites specific off-the-shelf products that handle
general business functions, such as Gentran, Maccola, Solomon, UA
Accounting and Microsoft Back Office—which would be shared through the
network.
“You want to be able to enter data once and make it available to
anybody who needs it,” explains Cubukcu. “The last thing you
should do is duplicate your efforts.”
A main concern with this approach, warns Cubukcu, is that when you begin
writing code to tie software together, you increase the chance of problems.
“I believe in buying components that are already designed,” he
says. “But it’s a big puzzle and you have to find a way to put
everything together.”
Based on data provided to Cubukcu about Yesterday Corp., he believes it
would also have to invest in about 20 PCs for its three locations—16
for the main offices and two each for the manufacturing facilities.
Eventually, each of its 10 inside salespeople would need a laptop computer,
too.
The main component of the approach Cubukcu recommends is a comprehensive
Web site that would:
- provide customers and prospects with information about Yesterday
Corp. products; - accept orders;
- accept payment or generate an invoice for established clients such
as Grande (see previous article: The Ultimatum).
Eventually, Cubukcu says, the entire operation could be integrated, so a
new order on the Web site generates a shipping label in the warehouse, an
entry in the inventory system, a receivable in the main office and a
detailed report to the sales team. But he considers those to be second
phase.
The first phase—basic hardware, software and setting up the Web
site—would cost $125,000 to $175,000, based on Cubukcu’s
estimates.
“Putting the catalog online is something that can be done
immediately,” he says. “But you haveto leave it open in its
design so that you can expand it to become part of an accounting or
inventory system later.”
To demonstrate the capabilities that Yesterday Corp. would have,
Cubukcu’s team at IOS Ltd. designed a model Web site, which you can
find at yesterdaycorp.cyberorg.com.
The turnkey solution
Mark Geyman, director of marketing for NetForce Development, in
Woodmere Village on Cleveland’s East Side, prefers to reduce the risk
that comes with tying together varied computer applications. To do that, he
recommends installation of a turnkey system that satisfies Yesterday
Corp.’s short-term needs and long-range goals.
After a series of meetings with key management to determine exactly what
those needs and goals are, the first decision is whether to use a PC-based
(Windows) network server or a substantially more costly Unix-based
platform, says NetForce President Lauren Patrick.
Patrick suspects a Unix-based server is probably more powerful than what
Yesterday needs.
A second issue in the turnkey approach is whether to write custom
software—more costly than off-the-shelf products, Geyman says. He
figures Yesterday would be best served in its Internet needs with a product
from Microsoft or Netscape—both affordable and capable of being
customized to a degree.
Next, the company would need to establish a LAN for each of its locations
and connect the LANs with a “virtual private network”—an
Internet-based means of connecting remote locations. Patrick would
recommend using a national Internet Service Provider such as UUNet or Digex
rather than a local provider for the simple reason that sales people or
executives who are traveling will find it easier to connect with the
office.
However, with all of its operations anchored in Northeast Ohio, there are
local providers that could do the job.
Because of Yesterday Corp.’s four-month deadline, the heart of the
turnkey approach would focus on the infrastructure first, then make EDI and
e-commerce the top priorities.
After that, the other applications can be phased in, with the
company’s existing database being converted to fit those packages.
“The best option would be to start with accounting and inventory now,
then bring in sales in six months,” says Patrick “That type of
phased-in approach would allow Yesterday to grow.”
Such a solution would cost between $125,000 and $200,000.
One project and one goal at a time
It’s difficult to anticipate changes or problems that might pop up
in the future, says Joseph LaMantia, vice president of DeCarlo, Paternite
& Associates Inc. in Independence. That’s why he favors tackling
the challenge as a series of small projects.
LaMantia says a quick evaluation of Yesterday’s situation showed the
company was in dire need of information system planning, hardware
infrastructure, networking, data communication, business systems software
(e.g., ERP), EDI, e-commerce and technology integration.
“When we came in and looked at them, we saw they didn’t have a
strong MIS staff. No one understood technology, no one understood how to
leverage technology for a solution, there was no consistent IS budget and
no strategic plan,” he says. “The company was reactive, not
proactive and considered Information Services a less important area in the
company.”
Yesterday’s executive management, he continues, had “no
understanding between EDI and e-commerce.”
In a typical project-by-project approach, the company starts with an
extensive self-analysis (with help from consultants) to determine short-
and long-term needs—not just what a CEO or board of directors thinks
the company needs. That’s a two- to-four week process, followed by
joint development sessions between consultants and management to write a
long-range plan, or Information Systems Strategy Plan (ISSP).
According to DPAI Senior Consultant Brett Rabung, the resulting document
contains many smaller projects over a period of one to three years. In a
case like Yesterday’s, those individual projects eventually add up to
satisfy a company’s larger goals.
Explains Maher Atwah, DPAI’s technical manager, “As an entire
project, it’s too hard, but once you break it down project by project
and goal by goal, it’s easy to accomplish.”
This approach also calls for a Web site, which becomes the center of all
communications. DPAI general manager Don Snyder says that probably means
starting with a basic Web site that advertises Yesterday’s products,
tells a bit about the company and allows customers to place and pay for
orders. Over time, a private portion o
f the site could be developed for use
by only those with access codes, to share private and timely information
between locations, with traveling employees, and with customers and the
external sales force.
Operations could be tied together gradually by implementing a phased
modular ERP system, starting with a manufacturing module, says LaMantia.
While this could result in a very expensive solution, it allows a company
to add other modules—such as accounting and sales packages—as it
can afford to make that type of investment.
An immediate goal, explains LaMantia, is to integrate EDI capabilities into
current infrastructure. In Yesterday’s case, that allows the company
to retain Grande as a customer. Such a project includes training
Yesterday’s work force about the differences between EDI and
e-commerce.
The final part of a phased-in approach is to plot the next stage of
technology integration, and consider any changes in the way a company may
do business to satisfy its customers’ technological needs.
Such an approach, according to LaMantia’s estimate, would cost between
$50,000 and $125,000 for the first stage—EDI and e-commerce—plus
another $10,000 to $20,000 for development of a comprehensive Information
Systems Strategic Plan.
The board decides
After Sincharge finished his presentation, two board members suggested
Yesterday scrap the entire project and take its chances by losing Grande as
a customer. Another demanded Yesterday choose the least expensive plan and
build a skeleton system that only satisfied Grande.
There was agreement all around that Sincharge’s original plan was
simply too large and expensive to implement all at once. “We looked at
the hard figures and realized that we couldn’t just jump headfirst
into this,” Sincharge says. “It wasn’t cost
effective.”
Instead, the board decided the company needed to analyze its complete
needs, develop an ISSP and move forward with the project in stages,
beginning with Grande’s EDI demands and installing a new network
system and Web site. After that, says Sincharge, Yesterday would integrate
software with greater interconnectability and develop an intranet.
“We really wanted an efficient long-term solution, even if it cost
more money up front. We didn’t want to put all our efforts into a
short-term solution only to find that we had to start from scratch the next
time we had a new idea, he explains. “We figured if we did it this
way, as we grew we’d save money on the back end as we started to see a
return on our investment. Bottom line, we went with a plan we could
swallow.”
The company also called a recruiting firm to help hire an MIS director to
oversee the company’s network needs.
In early January, Yesterday took its EDI capabilities live, satisfying
Grande and keeping it as a customer.
EDI vs. e-commerce
EDI is a method of ordering and payment through dedicated software
programs specific to each customer. It is the favored means of exchanging
money among large corporations, because it is secure and the ultimate in
customer focused: It’s customized to fit each company’s own
operating needs.
E-commerce, on the other hand, provides a one-stop electronic commercial
outlet for multiple customers who log on and conduct business through a Web
site. While security is no longer an issue, perception of security remains
a barrier for some. While e-commerce aims for convenience to customers,
it’s a one-size-fits-all solution designed by the seller rather than
the buyer.
Action points
- Don’t get overwhelmed; it starts with a phone call.
- Prepare to make an investment. It costs money, but returns are easy to come by.
- Staff up. You’ll need to hire a dedicated in-house information systems specialist or pay an outside firm for ongoing help. Don’t try sneak responsibility for information systems into the job description of an employee in another department.
- Plan for the long-term before buying for the short-term.
- Consider what technology might be used for:
- Exchange of money
- Customer service
- Inventory control
- Data collection and analysis
- Increased internal communication
- Joint venturing
- Sales and marketing
- Training and staff development
- Prioritize needs and address them in order.
- Let the business needs drive technology decisions-not the other way around.