At the table in the IT department, there were three software solutions.
CEO Joe Manufacturer was desperate.
He tested the solution from the custom-software provider first.
"This solution is too expensive!" he exclaimed.
So, he tested the solution from the packaged-software provider.
"This solution is too generic," he said.
So, he tested the last solution -- a combination of the first two.
"Ahhh, this solution is just right," he said happily.
Although choosing software is not as simple as tasting porridge, you have to admit, Goldilocks was on to something. Manufacturers used to have to choose between rigidly coded packaged software that offered no customization or customized but expensive software built for unique needs. Today, companies can have the best of both worlds. "Software applications that drive the most value [occupy] the space right in the middle called configurable," says Mike Menard, president and founder of GenSight Group, a global business management consultancy based in Doylestown, Pa. "[These solutions] have the power and reliability and the evolution of packaged software mixed together with the ability to provide some level of configuration within the framework of the code to deliver specific values to the target audience." Agreeing with Menard is Robert Mick, vice president of emerging technology, ARC Advisory Group, Dedham, Mass. Mick notes packaged applications are basically ready to go right out of the box with some tweaking on the end-users part. Indeed, today's packaged software is highly configurable, and manufacturers are customizing it in varying degrees. However, it isn't as easy as grabbing something off the shelf and plugging it in -- some thought needs to go into the purchase. "One of the big problems is does it suit your business or your processes or your needs?" says Mick. "And if it doesn't map onto that exactly, what do you do? Do you change your processes to suit it? How far does that go through your business and your overall processes? Does it cause side effects in other places where you don't want to make changes?" To gain perspective,
asked these manufacturers what solutions they are using and why.
OK With Out-Of-The-Box
Taking a solution out of the box and running with it suits some manufacturers just fine. For example, glass and building materials manufacturer Owens Corning, Toledo, Ohio, is using Provia Software Inc.'s warehouse management and yard management software in 25 of its North American and European locations. "We did as little customization as possible, preferring to keep to a standard solution that could be easily upgraded," explains Barry Burnham, team leader, logistics system development and information systems at Owens Corning. "We are running the same code version for all sites, despite the variations in business processes and configuration. "Supportability, cost and the ability to use a standard deployment methodology were key for us." Owens Corning's requirements are sound ones. Any manufacturer using a packaged software solution needs to be able to use it effectively. Software providers should teach customers how to use their products. The ultimate goal: know enough about the program that you no longer need the vendor's help on a day-to-day basis. "We provide our own professional services organization to help clients implement the first site and through that implementation of the first site we are transferring the knowledge and the ownership such that we don't really need to be involved down the road," says Paul A. Crist, vice president of global sales and marketing, Provia. "When Wal-Mart comes down and beats the heck out of one of our customers for some new bar code, shipping paperwork or new packaging, our clients need to be able to react to that demand on their schedule, not on their software vendor's schedule," says Crist.
'Like A Piece Of Clay'
I don't think that a pre-packaged solution can 100% meet your needs -- it never quite matches the way you do business," says Brian Wrage, director of the systems and technology support division of Canon U.S.A. Inc., the Lake Success, N.Y.-based provider of business and consumer imaging equipment and information systems. "Workflow is different, things that you call escalations or tickets are referred to by different names, and it always makes it difficult to form adoption based on those differences." That said, Canon chose a customer-support solution from Mountain View, Calif.-based Remedy because of its apparent ease of customization. "The Remedy Action Request System is a platform that allows [users] to build out or customize the applications they have to meet their business needs," says Andrej Vlahcevic, product marketing, Remedy. Wrage says that his division within Canon did trials with the software and attended classes -- something that he recommends before making a substantial investment into any software application. Once Wrage was convinced that the solution would work, Canon set out to customize it. "We wanted to beat this thing into submission and customize it for our environment," he says. "It truly is a piece of clay that you can tailor to whatever it is you need. The adoption rate is there, the terminology is the same, and the workflow is the same. It works the way we work, and we didn't have to change the way we worked for a software application, which in my experience never is successful." Agreeing with Wrage, Remedy, which also provides custom-built solutions, notes that when a company has a tried-and-true business process that is successful, it would be risky to adapt to a software vendor's process. "The perception is when you do go into a situation with a vendor it is less expensive for you to adapt your processes to their best practices than the other way around," says Vlahcevic. "That is what I think is the quandary for a lot of customers today."
When Custom Works
When it comes to certain software requirements, such as training tools, custom-built solutions make sense. This is true for Harvey Industries Inc., Waltham, Mass.-based manufacturer of windows and doors that has 27 branches in eight states. "When I started looking at some of the packaged [solutions], I found that for my industry, which is business and remodeling products, there were a lot of packaged programs put out by big suppliers that treated a lot of the same materials I treated, but with a marketing slant," explains Marian Stewart, training manager, Harvey Industries. "I looked at what my needs were, and I needed to be able to put some arms around the content my people were getting. I needed to be able to direct the training in some kind of sequenced curriculum so it wasn't by chance that I pulled a module that had what I needed. We didn't want to just customize the content, we wanted to get our arms around the curriculum." To do so, Stewart chose PixelMEDIA Inc., Portsmouth, N.H., to build the training software. While building a custom solution is more time consuming, the results are worth it, according to Stewart. During the construction, she realized that there were inconsistencies within the company. By building the training program from scratch, she and Pixel were able to get everybody on the same page in terms of terminology and processes. According to Thomas Obrey, Pixel's COO and co-founder, the company doesn't always build custom solutions for clients. "We make a decision from an economic and investment standpoint whether it makes sense to customize or integrate a shelf application or actually build something from scratch, which is what we did for Harvey because of the uniqueness of their needs."
Cost At The Core
For every solution -- custom or packaged -- there is a price and an argument for that price. "I think there is a time and a place for both [custom and packaged solutions], but I believe the bang for the buck, especially aesthetics and functionality and long-term investment protection, is custom applications," says Obrey. "I think if we were to really sit down with the return on investment numbers and the true hard and soft money costs for developing these applications, they would be pretty similar." According to Obrey, the hard costs on a packaged application include servers, maintenance and licensing agreements. The soft costs include time to train, become proficient and audit and develop materials. Disagreeing with Obrey is Michael Frichol, general manager of manufacturing industry solutions for Microsoft Business Solutions, a provider of customizable applications and services for small and mid-sized businesses. "The other spin to that story is that if you look at the typical businesses out there, they are not in the software business. So the question for them is 'Do they really want to get into the software business by essentially writing their own business software?'" Frichol asks. As for the costs outlined by Obrey, Frichol offers a rebuttal. According to Frichol, maintenance costs for a custom system are higher than a packaged system because nobody is sharing the cost. Additionally, "What you find with companies with custom applications is that these applications live for 10-15 years, and it's difficult to upgrade, difficult to maintain [and the companies] are dependent on the people that wrote it. When these people leave, they find themselves in a trap." To protect oneself from abandonment, ARC's Mick offers this advice: Have a way to retain the intellectual property that you build into the application. "If the company that you're using chooses not to go forward or goes out of business, you can take a lot of that intellectual property that you created and can move it forward, versus re-implementing everything," explains Mick.
It is safe to say that manufacturers use multiple solutions. What isn't safe is lack of integration for those solutions. "I think that one of the reasons that integration has become a hot topic with manufacturing companies is because it is really necessary for them to be able to compete effectively, to utilize all of that information and to drive cost out of the product life cycle," says Jeff Sullivan, principal consultant, EDS Solutions Consulting, Business Acceleration Services. ARC's Mick adds that there are a few companies, such as Microsoft, IBM and SAP AG, that are providing platforms that are easier to use, making applications that are more network aware and are more easily distributed or integrated. As for Microsoft, the .Net platform, a technology and protocol for Web services that enables users to integrate functionality from multiple sources, allows companies to use multiple vendors, according to Frichol. According to Sullivan, it is important for companies to look at integration in the context of the entire solution set rather than application specific. "What we do is take a step back and look at it from an enterprise perspective and see how that fits within the entire architecture of the business," Sullivan says. To do so, Sullivan suggests that organizations keep in mind what metrics they are looking at improving, look at the ROI and at ownership. And again, make sure all the processes are in line and have a strategy for deployment, rather than doing it on a project-by-project basis. "I think in these times people do things tactically and throw strategy away," says Sullivan. "It's OK to do a tactical project, but you still need to do that tactical project within the context of an overall enterprise strategy."