Like any other technology company BGSoft faces the uphill task of growing 40 % every year if it has to keep the analysts happy and retain its stock price. It is a key player in the ERP market and its customers are primarily Fortune 1000 companies who can afford the investments and fuel the growth that BGSoft is aiming at. Suddenly Scott realizes that most of the big companies have already adopted ERP and their next best bet is to look for mid size companies. If there are no more deer left in the forest then one has to go after the rabbits. Hunting for rabbits needs the same effort and results in lesser meat per win. Can BGSoff continue to grow at the same rate?
Now there is an unusual call from Craig, CEO of Pierco one of BGSoft's largest customers. Thanks to a new Director, his Board has asked him to justify the investment that he has made in ERP. Call it by whatever name or any flavor of the latest technology jargon, the Board wants to know the impact on two important measures - top line and bottom line. The story now takes a very interesting turn, turning away from the routine issues of features, schedules, budgets, bugs, staffing and project management that are characteristic of any ERP company. The primary issue then becomes delivering true business value that customers can get from IT solutions rather than implementing software from leading vendors on fancy technologies. Once again, it is worthwhile to mention - Top line and Bottom line - what comes in from the customers and what is retained for the shareholders. Get this right or get out of here is the message for all CEOs. BGSoft now sees a paradigm shift - they need to sell value and not just software.
ERP implementations are typically seen as automating data flow across different functions in an organization. True, it enables to break walls within but sadly the rules of the game continue to remain unchanged, defeating the purpose of better information flow. Technology is necessary, but not sufficient is the core theme of this book.
In the process of helping Craig to find justification for his investment in BGSoft' ERP, we get a deep inside view of Pierco's operations. Excess inventory, production bottlenecks and plenty of infighting between functions who are expected to work towards common goals. Performance measures continue to aim at locally optimal solutions ignoring the final impact on customer service.
Scott is quick to introduce the concepts of TOC- Drum-Buffer Rope method and Buffer management in Pierco. This releases forty percent capacity but causes an unexpected problem- plenty of inventory. TOC concept is then extended to distribution and soon across the entire operations of Pierco. Inventory is kept close to the plant and shipments to warehouses are based on replenishment of actual sales. The entire process shifts from "Push" to "Pull". The results are dramatic. Craig is celebrating!
Craig calls on Scott and Maggie with a proposal to extend the solution to all his vendors and clients. Internet technologies would help. He is keen to focus on his business and not worry about software, hardware, upgrades and the hassles of the IT function. If KPI could help him, he is willing to part with half a percent of his revenues for the services to begin with and then it would jump to one percent a year.
Focus on results for the business, and keep the software simple. Do not allow the tendency of adding feature after feature to complicate the ERP. Extend the solution across the entire supply chain to service the end customer as one logical entity. The top line and bottom line would head north, is a very clear message from this book.
Computer software providers, especially the ones that specialize in handling the data needs of organizations, are prime examples of these volatile companies. In the nineties we witnessed their growth from small businesses into multi-billion dollar giants. No wonder investors were attracted.
In 1998 it was easy for such companies to raise as much money as they wanted. But now, investment funds have dried up. Why? And more importantly, is there a way to reverse the trend? This book gives the answers.