F. Curtis Barry & Company » Technology

Is There a Wall Between IT and the Rest of the Company?

Curt Barry — Mon, 19 May 2008 20:48:47 +0000

Hereâ€™s the picture: A multichannel company with sales of $20 million has an aging order management system that has been in place for over 20 years. While there are some things that the users like about it, they have basically outgrown the system. They need far better marketing information, e-commerce site to business systems interfaces, forecasting and inventory management, and the ability to deal better with light manufacturing and tracking sets and kits, which are a major part of their business.

The president authorizes a project to investigate replacing the system. Immediately a turf battle ensues. IT is already researching the Internet for the most technically up-to-date IT platform. The usersâ€™ comments are predictable: â€œTheyâ€™ll pick the most expensive, technology-driven system out there regardless of whether it fits our business.â€ There is a proverbial glass wall between the two groups in many companies.

The outcome: After months of no progress, the president shrinks from his responsibility and says, â€œWeâ€™ll keep the current system.â€

Unfortunately, this scene is played out on a daily basis in many companies both large and small. In defense of the IT department, they are often given responsibility for everything from telephone systems, to help desk, to advanced WMS systems, e-commerce systems and e-mail systems. Most often they are under budgeted. Management backs into a percent to net sales that the company can afford to spend. Additionally, the technology is diverse, complex and represents generations of different languages, databases and standards.

But in defense of the users, IT more and more takes a technological point of view rather than a business perspective. By a â€œbusiness perspectiveâ€ I mean that, in many cases, IT no longer knows the companyâ€™s businessâ€”not the mechanical things like how to enter an order. They lack knowledge of the industry overall. And they lack the understanding of how to help you grow and manage your business. Examples include details about what will make your marketing more effective; what do the merchants need to plan, grow and evaluate their merchandise selection; and how to help operations become more efficient. In many companies, IT often looks at application function as secondary to technology. Additionally, they hide behind a lot of technical jargon that pushes users away from them.

And systems software vendor salesmen are no better off. Gone is the day when talented sales and support people really understood the industry. Many barely know their companyâ€™s system, and many canâ€™t even demonstrate their system without the aid of a support analyst.

The result of all this is a collection of negatives.

A technically advanced system or a system that fits the IT standard is selected. It may be a weak system from a business perspective. Technology by itself rarely gives an ROI.

The IT departmentâ€™s lack of a business focus means that users donâ€™t ever make high-level use of the systems in place, because they donâ€™t know what applications and capabilities exist in commercial systems or in previous generations of in-house developed systems.

Another result is that there isnâ€™t a partnership between the user departments and IT, which optimizes the full, untapped potential of IT. The company suffers because the rather large investments in critical applications donâ€™t materialize or they are years off of the projection.

Tear down the wall
You will have to start thinking differently in order to change things.

Is there failure to recognize problems with IT? This amounts to costly neglect. Ask, is IT an expensive utility or a necessity in your company? Your management team and IT need to have a clear understanding of the mission and charter of IT, to provide information systems that assist in company profit and growth.
Is there failure to get IT to realize its role in the future of the business? Put IT management in place that understands the bigger picture of your business and the information that is required to manage and grow it.
Is there failure to make your IT director an equal partner in your strategic planning process? There must be exposure to the companyâ€™s direction and an understanding of where IT plays the crucial role. Get IT buy-in early rather than just handing them a list of requests after many months of meetings.
Is there failure to fully utilize IT resources? Develop internally, or hire, business analysts who are interested and dedicated to maximizing the user communityâ€™s use of the systems.
Is there failure to hold users accountable? Donâ€™t let the users hide behind IT flaws and shortcomings. They should know the business and they need to take responsibility for understanding the applications with which theyâ€™ve been provided.

Outside resources can help your company make this transition. In our consulting assignments, we have successfully assisted companies in making these types of sea changes.

We believe that ITâ€”for good or bad (and ineffectiveness is certainly bad)â€”governs the productivity and profitability of this industry. How well is your company tapping its potential?

Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and warehouse consulting company. Helping you understand how to reduce freight costs is just one of the ways we can help your multichannel business.

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10 Critical Mistakes in Selecting Order Management and Warehouse Management Systems

Brian Barry — Thu, 21 Feb 2008 03:37:44 +0000

This past week, I had a call from a multichannel company about why their order management system selection process had failed. In their case, they signed the vendor agreements prematurely only to find out that the bid was incomplete. There weren’t any estimates for modifications, interfaces, conversion and training. As a result they had been pushed by the vendor to get into the implementation queue and work out the details later. Now that the implementation is planned their costs will be 50% higher than originally thought!

Here are the 10 major mistakes that we see companies make:

- Not having the right team in place to select and implement the system;
- Failure to write requirements and develop a gap analysis between vendor applications;
- Limiting the search to a few vendors too early in the process;
- Not conducting a competitive bid process;
- Picking technology over application function;
- Planning too many modifications versus adopting the applicationâ€™s business process;
- Superficial demos that arenâ€™t scripted to critical functionality;
- Incomplete reference checks;
- Signing vendor contracts before the total investment for hardware, software, services and maintenance are identified;
- Not having an intellectual property lawyer review the agreements before signing.

After 23 years of helping clients select and implement order management and warehouse management systems, we have put together a seminar to help shut down these potential problems. The seminar – “Selecting the Right Order Management and Warehouse Management System For Your Business” will be held in Richmond, VA on May 5 and 6, 2008. The seminar will be conducted by Paul Sobota and Brian Barry â€“ two guys who have selected and implemented more order management systems than any other consultants.

Call Jeff Barry at 804-740-8743 or email him at jbarry@fcbco.com for details.

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F. Curtis Barry & Company’s Tocky Lawrence Quoted

Curt Barry — Wed, 30 Jan 2008 21:40:46 +0000

In the feature article, “To Build, Buy or Outsource”, written by Mary Wagner for Internet Retailer Magazine; F. Curtis Barry & Company’s Tocky Lawrence was quoted. The following is that section of the article:

The basics

The e-commerce platform is the technology infrastructure on which an online retail site operates. It supports all the basic functions needed to make a site run.

â€œE-commerce solutions have evolved to include core functionality for navigation, shopping cart checkout, shipping and handling, taxes, and some level of integrating with an order management system, enterprise resource planning system or warehouse system,â€ says Joseph â€œTockyâ€ Lawrence, vice president and partner at retail operations, fulfillment and consulting firm F. Curtis Barry & Co. â€œThen there are Web 2.0 options: rich media with audio and visual tools, customer product reviews, social networking, blogs.â€

That array of options means thereâ€™s no one-size-fits-all answer for retailers out to decide on an e-commerce platform solution, whether outsourced (also known as hosted or on-demand); built from licensed, packaged software; internally-developed; or using some combination of these choices. While the right choice will be different for every web merchant, however, the path leading all of them to that point is universal: they must balance priorities, resources and business demands.

Please visit our website at http://www.fcbco.com to read more multichannel articles that we have personally written and our multichannel consulting services that we have to offer the multichannel industry.

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FCBCO’s Tocky Lawrence Quoted in Internet Retailer Magazine

Curt Barry — Wed, 23 Jan 2008 19:18:21 +0000

To Build, Buy or Outsource – That is the Question written by Mary Wagner

[A portion of the full article]

The Basics

The e-commerce platform is the technology infrastructure on which an online retail site operates. It supports all the basic functions needed to make a site run.

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Sigma Micro LLC appoints Matt Konkle as President

Curt Barry — Wed, 12 Sep 2007 15:06:15 +0000

Indianapolis, IN. (September 12, 2007) – Sigma Micro LLC announced today that Matt Konkle, previously CFO for Sigma Micro, has been appointed President of the company.
Mr. Konkle has served as CFO for Sigma Micro for the past 4 years and takes the helm from Joe Swern who recently stepped down from the position. As President of Sigma Micro, Mr. Konkle will be responsible for leading the company’s strategic direction and overseeing all aspects of worldwide operations.

“As CFO of Sigma Micro, we have been able to rely on Matt as a key member of our leadership team and he has been instrumental in the development and implementation of our growth strategies,” says Al Langsenkamp, Chairman and CEO of Sigma Holdings, Inc. “These are exciting times for our company and I have full confidence that as President, Matt will drive Sigma Micro to become the market leader in the direct retail space.”

Mr. Konkle also served as CFO for Sigma Communications, LLC a Sigma Holdings portfolio company acquired by PlantCML in April 2007. Prior to Sigma Micro, he most recently served as Director of Finance for Aprimo, Inc., an Indianapolis-based developer of enterprise marketing management software. Before Aprimo, he served as Financial Reporting Manager for Lilly Industries, Inc., where he was responsible for all SEC reporting. Mr. Konkle began his career with Ernst & Young LLP as a member of the Entrepreneurial Services Group, serving a client base of dynamic, high-growth technology companies.

Mr. Konkle holds an MBA in Strategic Management and Entrepreneurship from the University of Chicago Graduate School of Business and a Bachelors degree in Business Administration from Indiana University.

About Sigma Micro
Sigma Micro, LLC is a leading provider of .Net enterprise applications solutions for multi-channel retailers. Headquartered in Indianapolis, Indiana, Sigma Micro was founded in 1982 and is privately held. Sigma Micro, LLC also has development arms in India with offices in Cochin and Chandigarh, India. The company’s clients include notable retailers such as Sears, L’Oreal, Land’s End, Eastbay, and Drysdales. For more information contact Jeff Dahltorp (jsdahltorp@sigma-micro.com) or visit the website www.sigma-micro.com.

Contact:
Jeff Dahltorp
Sigma Micro, LLC.
jsdahltorp@sigma-micro.com
317-713-8703

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MICROS-Retail to Incorporate eOne E-commerce Solutions

Curt Barry — Wed, 05 Sep 2007 20:09:48 +0000

Retail technology provider Datavantage/CommercialWare, a subsidiary of MICROS Systems, Inc., will integrate solutions from e-commerce solutions provider eOne Group into the renamed MICROS Retail later this year.

Datavantage/CommercialWare has just acquired a 51% interest in eOne Group, which will allow MICROS Retail to offer extensive e-commerce applications to its users in addition to the currently available Datavantage/Commercial suite of retail solutions.

We believe that this good acquisition is an excellent move, both for the MICROS Retail suite of applications and for CommercialWare customers. eOne can give most direct marketers a high percentage of the functionality that they need at a cost-competitive price. eOne will be sold as a fully integrated product with CommercialWare and as a standalone e-commerce solution for non-MICROS customers. For those who don’t have experience with eOne, it’s far more sophisticated than the elementary storefronts and shopping carts that most order management software providers offer.

This acquisition is part of the long-term push by software vendors that we mention in our article â€œERP Software and the Multichannel World,â€ which describes how order management vendors are developing ERP suites of applications. Escalate Retail (acquiring Blue Martini), Sigma Micro and Junction Solutions have developed or purchased e-commerce solutions prior to this acquisition by MICROS Retail; software-as-a-service provider PCS is developing its own e-commerce solution.

–

Curt Barry is president of F. Curtis Barry & Co., a fulfillment consulting company assisting multichannel businesses with order management and inventory management systems evaluation and implementation; online at: http://www.fcbco.com.

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Middle East as Outsourcing Hot Spot

Curt Barry — Wed, 29 Aug 2007 20:48:24 +0000

We’ll just go out on a limb and guess that the Middle East is not the first part of the world that comes to readers’ minds as an up-and-coming hot spot for outsourcing. Middle East these days is likely to make U.S. readers think first of war in Iraq or Afghanistan or fighting in Israel and Lebanon. But an article written on August 21, 2007 in The Wall Street Journal suggests that some major outsourcing services companies Satyam Computer Services, Wipro, Tata Consultancy Services, are beginning to set up centers in the Middle East and North Africa, and that the trend is serious.

What’s up? The WSJ article cites rising costs in India, increasing need in the Middle East and Europe, and the flow of oil money in the region as some of the reasons for the shift in resources. Advantages of the new locations also include a more central time zone relative to North America, Europe, and Asia; geographic proximity to Europe; a multilingual labor force; and greater demand for Arabic speakers.

The Middle East and Africa Group of the technical and customer support professional association HDI hosted a regional conference in Cairo in May. The group is predicting a 30% annual increase in call center jobs in the regions it covers. Just this week (August 26-29) the 13th Middle East Technology Show, hosted by the Jordan Computer Society, with the support of the Jordanian Ministry of Information and Communications Technology took place in Amman, with initial estimates of 30,000 attendees. That’s a lot of interest in technology.

And consider the Global Peace Index study recently released by the Economist Intelligence Unit (May 2007). The study used two dozen separate data indicators to describe the stability of the countries surveyed in terms of the potential for violence to occur in each:

“The 24 indicators include internal and external factors such as levels of violence within a country, organized crime, the number of people in prison, and military expenditure.”

Using those criteria, Norway is number one of the 121 countries surveyed, with the highest stability index. The United States ranks 96th, just ahead of Iran but below Oman, Qatar, the United Arab Emirates, Tunisia, Ghana, Kuwait, Libya, Jordan, Egypt, Syria, Saudi Arabia, Turkey, and Yemen.

Thinking out of the box is usually touted as a positive, creative activity. Thinking in stereotypes basically obliterates your capacity to think creatively. So here’s a creative proposition: Maybe the Middle East and North Africa aren’t so unstable after all. Maybe those areas will provide attractive opportunities for investment over the next few years.

No matter what the trend may be, or who’s doing business where, what do you think?

–

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Consulting Services for Private Equity or Venture Capital Acquisitions and Investments Part 1

Bob Betke — Tue, 21 Aug 2007 13:14:07 +0000

By Bob Betke

Begin by finding a company that provides due diligence services to potential investors in the multichannel retail arena to investigate the feasibility of, or provide support for, mergers, acquisitions, and/or investment opportunities. My firm, F. Curtis Barry & Company, has been working in this market for many years. Our perspective is one of operational consultants for multichannel retail businesses â€”companies that operate some combination of direct-to-customer sales (catalog and e-commerce), retail (brick-and-mortar), and/or wholesale channels.

Investment decisions should be based on the best information available. A mistake in the initial evaluation process can be costly in the long run, even fatal, to successful investment. Most investment activity is based on the belief that improvements can be made to a business that will warrant the expenses incurred. An operational assessment evaluates a businessâ€™s potential, pinpoints ways to reduce current operating costs, identifies inherent risks, and estimates the costs that would be required to make improvements.

The financial aspects of a potential investment rightly receive the most emphasis. However, many other areas, if not addressed, can have a negative effect on the overall financial picture. F. Curtis Barry & Company applies its multichannel business expertise to focus on that part of the due diligence process relating to the operations of the target enterprise. In the context of the multichannel retail industry, the term â€œoperationsâ€ refers all activities related to fulfilling customersâ€™ orders and meeting their expectations. This includes merchandising, marketing, information technology, warehouse operations, and call (contact) center functions.

We conduct an operational assessment as part of due diligence to evaluate investment potential, determine the necessary costs to make improvements, and identify any inherent risks. As required, F. Curtis Barry & Company also provides operational evaluation of completed investments to support the improvement process.

Pre-acquisition Due Diligence: A Checklist

F. Curtis Barry & Company helps potential investors conduct multichannel acquisition due diligence evaluations of the operational areas related to warehouses and contact centers and their related facilities, systems, staffing and processes. The following are considered:

1. Determine Cost Per Order and Measures of Productivity
In order to evaluate the effectiveness of the operation under study, we develop a calculation of the cost per order. The cost per order is a good benchmark to determine how productive an operation really is. It can include direct and indirect labor, facility costs, and packaging materials for the warehouse, with the addition of other specific costs for the contact center. Comparing the companyâ€™s cost per order to that of others in the industry or to past internal trending costs gives a good picture of which direction the business is headed and also how it stacks up against the competition.

Because factors such as wage rates and productivity levels affect costs, they must also be considered in an assessment. In order to reduce potential bias and misinformation caused by varying wage rates when comparing cost-per-order benchmarks, we also suggest that true measures of productivity using some unit of measurable work and the corresponding man hours involved be included. True productivity measures of warehouse and contact centers can give a good picture of how the operation really compares to others and whether there is any room for improvement.

We always recommend external benchmarking as a starting point for comparing operations, but the real key is to research true internal productivity measures comparing actual activity over a time period against some level of standard of performance expectation. This internal measure is as important as the external one, in that it points out trends as well as opportunities for further study based on changes in performance or failures to meet expectations.

2. Evaluate the Facilities
A second area for evaluation is physical facilities. Analyzing how efficiently a facility is used and determining its true operating capacity help in evaluating potential improvements and the businessâ€™s ability to meet the demands of growth. Both the contact center and the warehouse should be evaluated in terms of how well the space is utilized and how effective the overall layout appears. A review of the flow of materials through the warehouse can tell a lot about efficiencies and future opportunities for change. The level of automation employed and its appropriateness to the business is another indicator of performance.

The operational assessment should also consider how many facilities are needed and what functions they should perform. The way work is being completed at existing facilities and comparisons of the processes and practices used to industry best practices may identify areas for potential improvement that can yield major savings.

3. Identify Future Growth Needs
Can the target company meet future growth demands? Due diligence can discover pressures that will be placed on facilities, staffing, systems, etc., so investors can make sure no major problems will arise through supporting future growth.

4. Assess Customer Service Capabilities
Most Pre-acquisition evaluations should also include customer service levels. A good hard look at service level standards and actual performance against these standards is a critical piece of an overall assessment of how well a company is performing. Metrics such as order turnaround time, call abandonment rates, e-mail response times, and returns processing order accuracy are all measures of how well a multichannel business is actually doing.

5. Review Business Systems & Software
In order to rate the operating level of a potential investment, F. Curtis Barry & Company explores the infrastructure system support available to the business being considered. A review of the software and the corresponding functionality provided is a good measure of the ability of the business to support current needs, and more importantly, its ability to support future changes. A system that is inflexible or does not meet current operating needs is a warning flag that indicates significant investment in time and money might be required to match business needs and implement the assumptions of productivity improvements and cost reductions. The rapidly changing nature of the multichannel world, especially the e-commerce channel, makes flexibility mandatory. Make sure you are investing in a platform and software for order, inventory and warehouse management systems that can meet tomorrowâ€™s needs.

6. Evaluate Inventory Details
The largest single asset of multichannel businesses is inventory. Accordingly, we review basic inventory measures such as turns and ageing in order to gauge how well inventory is being managed. We suggest a review of the top 10% and bottom 10% of SKU sales to measure how effective the forecasting process is. We also review any liquidation practices along with a measure of cost recovery.

7. Meet with the Staff
The final process in evaluating a business is a relatively soft one, but still critical: The staff should be interviewed to gauge the work culture. Unless the business is going to be closed or moved, it is unlikely that the current culture will be easily changed. Talking with employees at all levels of the operation, allows us to determine what degree, if any, of difficulty an investor might encounter when implementing required changes. Donâ€™t underestimate the importance of the human factor in the evaluation process and in determining the value or potential of an organization.

In Part 2, I will discuss Post-acquisition Due Diligence and what to consider in an Implementation Plan.

About the Author
Bob Betke is a vice president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in assisting multichannel businesses with pre-acquisition and post-acquisition due diligence. Learn more online at: http://www.fcbco.com

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e-Commerce Platforms and Solutions

Jeff Barry — Mon, 25 Jun 2007 19:29:35 +0000

By Tocky Lawrence

Any company choosing an e-commerce platform is faced with a bewildering number of choices. Determining which of these solutions best fits your needs is no longer as simple as having your local Internet provider develop a Web page with navigation and some type of shopping-cart functionality.

E-commerce solutions have evolved to include core functionality for navigation, shopping cart, checkout, shipping and handling, and taxes and some level of integration to an order management system (OMS), an enterprise resource planning (ERP) system, or a warehouse management system (WMS). Then there are the Web 2.0 options: rich media with audio and visual tools, customer product reviews, social networking, blogs. Newer technology also provides functionality for options such as mouse-over (move the mouse over an image and the description will display without the user’s having to click on the image), drag and drop (simply drag the item to the shopping cart without leaving the current page), and one-page checkout.

Given this array of possibilities, how do you determine the best e-commerce platform for your business? Here are a few guidelines:

Read the full platform and solutions article on our website

F. Curtis Barry & Co. â€“ we are catalog consultants working with multichannel businesses to improve warehouse operations through the assessment and implementation of warehouse management systems and careful benchmarking of strategic metrics.

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Current Trends of the Multichannel Industry

Jeff Barry — Mon, 25 Jun 2007 19:23:49 +0000

Trends donâ€™t always hang around for longâ€”by definition theyâ€™re always changing. But right now, summer 2007, we can see some major industry trends that bear watching in the next few months.

1. Direct-to-customer online sales are approaching an average of 50% of total sales for multichannel merchants, but Internet customer retention rates are still significantly less than catalog retention rates, which average 50%.

2. Catalogs are an expensive vehicle for sales, and only going to become more expensive, now that the USPS rate increase has gone into effect (increases could be as much as $400Kâ€“$500K/year for a $10 million cataloger). Although itâ€™s difficult to predict exactly the effects of the increase, you can expect decreasing catalog sizes and prospecting, while more product goes to the Internet.

3. Peak season will be even later. Hereâ€™s how much itâ€™s changed in a decade: In 1995, peak sales week was mid-October, and holiday operations essentially shut down by the second week in December. Last year, peak sales day was December 1, and merchants were still shipping product on December 23. Technology has made the difference, and shoppers have fallen in step with the possibilities.

4. Labor. Labor. Labor. Fifty percent or more of the cost of an order is split between fulfillment center and contact center costs, and 50% of those costs go to direct labor. As many markets experience full employment, labor costs rise, to the extent that labor availability now frequently drives site selection for DCs and contact centers. And at the same time, absolute productivity is decreasing.

5. Transportation costs increase annually. Inbound transportation costs account for 2% to 4% of gross sales; outbound costs for 5% to 8% of net sales. Shippers have continued to manipulate their pricing structures, so merchants must negotiate dimensional shipping charges, fuel surcharges, home delivery charges, and more. For more information visit our Freight Rate Analysis services page.

5. IT spending is increasing, with core IT systems costing 2% to 3% of net sales. Internet-related spending accounts for up to 5% to 10% of sales for more experimental companies.

How does this list fit with your experience? We would be interested to hearâ€”post a comment. Or if you have specific questions, call Jeff Barry at (804) 740-8743, or e-mail him at jbarry@fcbco.com.

F. Curtis Barry & Co., an operations and fulfillment consulting firm, uses best practices to recommend and implement order management systems for multichannel businesses.

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F. Curtis Barry & Company » Technology

Is There a Wall Between IT and the Rest of the Company?

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