One Size Does Not Fit All

Just a few years ago, packaged software was all the rage for large manufacturers seeking to automate various business processes such as dealing with customers, processing orders and managing inventories. Now the pendulum is swinging back, and many companies are looking instead to develop their own software because it can be more sharply tailored to key business needs. In most cases, manufacturers that eschew packaged software do so because of the uniqueness of their businesses. "We considered the decision of whether to build or buy," says Pete Lopez, CIO at GE Lighting. Lopez says the company considered a leading customer relationship management package and decided against it. "We looked at the true value of that package, and found that there were 100 things it could do, but not very well. Then we asked what was unique about our business." GE Lighting elected to develop its own "digital cockpit" for its sales staff that responded to its specific business needs. "On the other hand," Lopez says, "we are using a pricing-optimization package from Manugistics that we just couldn't do on our own." Some manufacturers choose to use a hybrid or mix of both homegrown and packaged software to manage the business. TaylorMade-adidas Golf Co., for instance, decided to go with i2 Technologies' software for supply chain, supplier relationship and demand chain management. "We selected i2 as our technology platform," says Mark Leposky, vice president of global operations at the manufacturer of golf balls and custom-built clubs. "We wanted to find a technology platform that did most of our scheduling and planning, and then develop the rest." The golf equipment maker's goal was to be able to deliver a set of high-end, custom-ordered golf clubs to the customer in 24 hours. "There is a certain consumer segment," Leposky says, "that will spend $1,500 to $2,000 for a set of clubs and want to play them tomorrow." While the company's biggest changes to meet that goal came in reworking its processes, the software had to be adapted to support the business changes. Using i2's demand planning package as a basis, TaylorMade-adidas Golf was able to adapt the package to support its revamped demand planning and order fulfillment processes. Regarding custom versus off-the-shelf software, Leposky says: "Twenty percent of what we wanted they didn't have, and they added that functionality." Another manufacturer that found success with custom software is Stratus Technologies Inc., a maker of high-end computer servers. The company used its internal IS staff to create systems for forecasting sales and configuring products. "We spent $2 million on a software package, and it turned out to be a black hole for us, so we decided to cut our losses and develop it in-house," says Joe Graves, director of IT and acting CIO at Stratus, in Maryland, Mass. Adds Mariam Ganem, vice president of worldwide sales operations and channels, "We feel very comfortable doing all our software development inside." Despite all the benefits of homegrown software and the shortcoming of software packages, some manufacturers continue to lean toward the latter. After all, package software tends to be lower cost and generally easier to deal with when it comes time to upgrade. "We want to implement 'vanilla' software packages," says Jim Bolte, vice president of IS at Toyota Motor Manufacturing North America Inc., Erlanger, Ky.