AEROSPACE DEFENCE

The Timeless Process of Heat Treatment

2011-01-18T20:24:00.000-08:00

The forerunners of aerospace transistors came along in the late 1950s and 1960s and supplanted thermionic valves for many applications. The improved cost-effectiveness of transistors led to the development of digital aircraft systems throughout the 1960s and 1970s, initially in the military combat aircraft where it was used for Nav/Attack systems.

For many years, the application of electronics to airborne systems was limited to analogue devices and systems with signal levels and voltages generally being related in some linear or predictive way. This type of system was generally prone to heat soak, drift and other non-linearities. The principles of digital computing had been understood for a number of years before the techniques were applied to aircraft. Size was the main barrier.

The first aircraft to be developed in the US using digital techniques was the North American A-5 Vigilante, a US Navy carrier-borne bomber which became operational in the 1960s. The first aircraft to be developed in the UK, intended to use digital techniques on any meaningful scale was the ill-fated TSR 2 which was cancelled by the UK Government in 1965. The technology employed by the TSR 2 was largely based upon solid-state transistors, then in comparative infancy. In the UK, it was not until the development of the Anglo-French Jaguar and the Hawker Siddeley Nimrod in the 1960s that weapon systems began to seriously embody digital computing, albeit on a meagre scale compared to the 1980s.

Since the late 1970s/early 1980s, digital technology has become increasingly used in the control of aircraft systems as well as just for mission related systems. A key driver in this application has been the availability of cost-effective digital data buses such as ARINC 429, Mil-Std-155311 and ARINC 629. This technology, coupled with the availability of cheap microprocessors and more advanced software development tools, has led to the widespread application of avionics technology throughout the aircraft.

This has advanced to the point that virtually no aircraft system - including the toilet system - has been left untouched.

The evolution and increasing use of avionics technology for civil applications of engine controls and flight controls has been since the 1950s. Engine analogue controls were introduced by Ultra in the 1950s which comprised electrical throttle signalling used on aircraft such as the Bristol Britannia. Full

authority digital engine control became commonly used in the 1980s. Digital primary flight control with a mechanical backup has been used on the Airbus A320 and A330/A340 families using side-stick controllers and on the Boeing 777, using a conventional control yoke. Aircraft such as the Dornier 728 family and the A380 appear to be adopting flight control without any mechanical backup, but with electrically signalled backup.

The application of digital techniques to other aircraft systems - utilities systems - began later. Today, avionics technology is firmly embedded in the control of virtually all aircraft systems. Therefore an understanding of the nature of avionics technology is crucial in understanding how the control of aircraft systems is achieved.

The nature of micro-electronic devices

The extent of the explosion in ICs developments can be judged by a ten-fold increase per decade in the number of transistors per chip. Another factor to consider is the increase in the speed of device switching. The speed of operation is referred to as gate delay; gate delay for a thermionic valve is of the order of 1,000 nanoseconds (1 nanosecond is 10-9 or one thousandth of one millionth of a second); transistors are

about ten times quicker at 100 nanoseconds. Silicon chips are faster again at approximately 1 nanosecond). This gives an indication of how powerful these devices are and why they have had such an impact upon our daily life.

Another area of major impact for ICs relates to power consumption. ICs consume minuscule amounts. Consumption is related to the technology type and speed of operation. The quicker the speed of operation then the greater the power required and vice versa. The main areas where avionics component technology have developed are:

Aerospace semiconductors transisitors and capacitors

Manufacturing and reliability progress has increased the use of electronic components in aircraft generally, from aerospace power applications to radar and defence.

Processors, Memory and Data buses

Processors

Digital processor devices became available in the early 1970s as 4-bit devices. By the late 1970s, 8-bit processors had been superceded by 16-bit devices; these led in turn to 32-bit devices such as the Motorola 68000 which have been widely used on the Eurofighter and Boeing 777. The pace of evolution of processor devices does present a significant concern due to the risk of the chips becoming obsolescent, leading to the

prospect of an expensive re-design. Following adverse experiences with its initial ownership of microprocessor based systems, the US Air Force pressed strong standardization initiatives based upon the

MILSTD-1750A microprocessor with a standardized instruction set architecture (ISA) though this found few applications in aircraft systems computing. For these types of application, starting with the adoption of the Motorola 68020 on Eurofighter, the industry is making extensive use of commercially developed microprocessor or microcontroller products.

Memory devices

Memory devices have experienced a similar explosion in capability. Memory devices comprise two main categories: Read-Only Memory (ROM) represents the memory used to host the application software for a particular function; as the term suggests this type of memory may only be read but not written to. A particular version of ROM used frequently was Electrically Programmable Read-Only Memory (EPROM), however this suffered the disadvantage that memory could only be erased by irradiating the device with ultra-violet (UV) light. For the last few years EPROM has been superseded by the more user-friendly Electrically Erasable Programmable Read-Only Memory (E2PROM). This type of memory may be re-programmed electrically with the memory module still resident within the LRU; using this capability it is now possible to reprogram many units in situ on the aircraft via the aircraft digital data buses.

Random-Access Memory (RAM) is read-write memory that is used as program working memory, storing variable data. Early versions required a power backup in case the aircraft power supply was lost. More recent devices are less demanding in this regard.

Digital data buses

The advent of standard digital data buses began in 1974 with the specification by the US Air Force of MIL-STD-1553. The ARINC 429 data bus became the first standard data bus to be specified and widely used for civil aircraft being widely used on the Boeing 757 and 767 and Airbus A300/A310 in the late 1970s and early 1980s. ARINC 429 (A429) is widely used on a range of civil aircraft today.

Italy - A Country With a Lively International Freight Scene

2011-01-18T20:21:00.000-08:00

Italy is a forward-looking country with a dynamic freight transport sector, which supports its imports and exports activity.

The United Kingdom is one of Italy's largest export markets with sales of goods worth just over 9 billion pounds in 2008. Meanwhile, UK sales to Italy were valued at 13 billion pounds in the same year.

So freight forwarding between the two countries is a well oiled machine, and there are many freight companies with expertise in arranging services between Italy and England.

in 2008, Italy was the seventh-largest economy in the world and the fourth-largest in Europe.

After the second world war, Italy changed from being an agriculture based economy which had been very badly affected by the results of the war, into a major industrialised economy and a leader in international trade. The freight services sector in Italy has developed in tandem.

Italy is a highly developed country, and, according to The Economist, has the world's eighth highest quality of life. The country enjoys an especially high standard of living, and is the world's 18th most developed country, higher than Germany, UK and Greece. As a result, Italian consumers are sophisticated and demanding, especially in terms of quality. They therefore have a taste for good quality and market leading imports from the UK, especially in technology and quality consumer goods. Some up-market fashionable UK brands are also in demand in Italy as imports.The client of shipping companies to Italy reflects this.

Despite this, Italy's economy suffers from many problems. After strong growth between 1964-1988,the last ten years' average yearly growth rate has fallen behind the European average. What's more, Italian living standards reflect a considerable north-south divide. The average Gross Domestic Product per capita in Northern Italy may far exceed the EU average, whilst some regions and provinces in Southern Italy are well below the European average. Italy is sometimes called the sick man of Europe. Freight transport options are correspondingly more numerous in the developed north.

The Italian economy is undermined by lack of infrastructure development, market reform programmes and investment in research. Italy still receives financial aid from the EU. To this extent, the freight industry is held back and it is not at the cutting edge in the same way as it is in countries like Sweden.

Italy has fewer global multinational companies than other economies of its size, but there are a large number of small and medium sized businesses, and in the North, there are many companies involved in industrial and machinery production. This has led to a manufacturing industry focused on exports of niche and luxury products. Freight forwarders have been keen to attract custom from these kind of businesses and they make up the vast majority of the customer base of an average Italian shipping company or freight company.

Italy's most important exports and freight cargo by sector are motor vehicles, chemicals, electrical engineering, home appliances, aerospace and defence technologies, firearms, fashion, food processing, sport and luxury vehicles. The automotive industry is the fifth largest automobile producer in Europe. There are thus many international freight transport options for cars and other vehicles.

It is a surprising fact that Italy is the world's 6th highest exporter.

Contributing to this, Italy is an important agricultural exporter. Italy is the largest kiwifruit, grape and artichoke producer in the world. The country also exports and produces more wine than anywhere else in the world.

Italy's closest trade ties are with the other countries of the European Union, with whom it conducts about 60% of its total international trade. Italy's largest European Union, in order of market share, are Germany, France and Spain followed by the UK. So the international freight infrastructure linking these countries is very robust and a freight forwarding will be guaranteed a high level of service.

Setting Up Business in India - What Foreign Companies Must Know

2011-01-18T20:20:00.002-08:00

Foreign companies may set up business in India in any one of the following manners while retaining its status as a foreign company:

Liaison Offices - A foreign company can open a liaison office in India to look after its Indian operations, to promote its business interests, to spread awareness of the company's products and to explore further opportunities. Liaison offices are not allowed to carry on any business or earn any income in India and all expenses are to be borne by remittances from abroad.

Project Offices - The project office is the ideal method for companies to establish a business presence in India, if the object is to have a presence for a limited period of time. It is essentially a branch office set up with the limited purpose for executing a specific project. Foreign companies engaged in turnkey construction or installation normally set up a project office for their operations in India.

Branch Offices - Foreign companies engaged in manufacturing and trading activities outside India may open branch offices for the purpose of:

o Representing the parent company or other foreign companies in various matters in India, like acting as buying and selling agents.
o Conducting research, in which the parent company is engaged, provided the results of this research are made available to Indian companies
o Undertaking export and import trading activities.
o Promoting technical and financial collaborations between Indian and foreign companies.

Trading companies - Foreign companies may invest in trading companies engaged primarily in exports. Such trading companies are treated at par with domestic trading companies in accordance with the trade policy.

The RBI accords automatic approval for foreign equity up to 51 per cent for setting up trading companies engaged primarily in exports. All other proposals, which do not meet the criteria for automatic approval, can be addressed to the Foreign Investment Promotion Board, i.e. "FIPB".
Wholly owned subsidiaries - Foreign companies may set up a wholly owned subsidiary, which is an Indian Company with an independent legal status, distinct from the parent foreign company.
Under the current foreign investment policy, a wholly owned subsidiary can be established either under the automatic route, if the conditions specified therein are complied with (specific high priority industries) or obtain an approval from the FIPB.

Joint venture companies - Foreign companies may set up a joint venture company i.e. in financial collaboration with an Indian business house/company in India, which is an Indian Company with an independent legal status, distinct from the parent foreign company.

Under the current foreign investment policy, a joint venture can be established either under the automatic route, if the conditions specified therein are complied with or obtain an approval from the FIPB.

Foreign companies intending to set up any kind of office mentioned above activities on behalf of the parent company or foreign trading companies in India for promotion of exports from India have to obtain a prior approval of the Reserve Bank by submitting an application in the prescribed form to the Central Office of Reserve Bank. On approval of such cases, permission is granted initially for a period of 3 years, subject to the condition that expenses of such office will be met exclusively out of inward remittances; such offices are not permitted to generate any income in India.

Industrial Policy:

Industrial Policy: Industrial Policy determines items/areas reserved under automatic route of approval by the RBI for Foreign Company to do business in India. Automatic approval is available through the RBI in all items/activities with the exception of a few items which are set out in Press Notes issued by the Government of India.

Besides reserved items/areas reserved by Reserve Bank of India are also notified a "List A" which specifies activities that are not covered by its Automatic Route.

To carry on business in items/areas reserved in List A, proposals are required to be approved by Foreign Investment Promotion Board, Government of India for which an application is required to be made to Secretariat for Industrial Assistance, Ministry of Commerce and Industry, Government of India, New Delhi.

Industrial licensing is mandatory in respect certain industries i.e. Distillation and brewing of alcoholic drinks; Cigars and cigarettes of tobacco and manufactured tobacco substitutes;

Electronic Aerospace and defense equipment of all types; Industrial explosives including detonating fuses, safety fuses, gun powder, nitro cellulose and matches; Hazardous chemicals; Drugs & Pharmaceuticals (according to modified drug policy issued in September '94).

The compulsory licensing provisions do not apply to the small-scale units manufacturing any of the above items reserved for exclusive manufacture in small scale sector.

Specific Industries are exclusively reserved for the public sector i.e. Arms and ammunition and allied items of defense equipment; defence aircraft and warships; Atomic energy; Railway transport.

Foreign Collaboration:

Indian Companies can also enter into Technical Collaboration Agreements with Foreign Collaborators under two routes:

" The automatic route of Reserve Bank " Under approval of Secretariat for Industrial Assistance (SIA), Ministry of Industry, Government of India, New Delhi.

Application for foreign technical collaboration which do not conform to the parameters given in automatic route are required to be made to SIA, Ministry of Industry, Government of India, New Delhi. The extension of Foreign Technical Collaboration Agreements (including those approved by the Reserve Bank) is also required to be approved by SIA.

Nuts and Bolts-1: Registration & Incorporation

The procedure for registration of an industrial undertaking varies; it entirely depends upon whether the item proposed to be manufactured falls within the licensed, de-licensed, or small-scale sector. An application seeking an industrial license must be filed with the Ministry of Industry together with the application seeking NRI investment approval. An application in Form FC/IL - SIA must be submitted to the Ministry of Industry for grant of an industrial license.

Form FC/IL - SIA should comprise information related to the promoter and collaborator, proposed activities, items of manufacture, capital structure, borrowings, investment, foreign exchange inflow, technology transfer, if any. There is no definite time frame as when the approval will be granted, it depends on a case-to-case basis. However, if the information supplied in Form FC / IL - SIA is precise and calls for no clarification from the Government, approval is normally obtained in 4-6 weeks.

In case of an item reserved for manufacture in the small-scale sector unit must get itself registered with the Directorate of Industries/District Industries Centre of the State Government concerned.

Can capital investment made in India be repatriated Capital investment made in India can be fully repatriated along-with the profits after completing certain formalities. Also, returns on the investment can be repatriated in two forms i.e.:

"Dividend - dividend on shares held by foreign investors is fully repatriable subject to certain formalities "Interest - interest earned on bonds or debentures can be repatriated after paying appropriate tax. the profit, earned by the branch doing permitted activities can be remitted after payment of the necessary taxes in India, the branch office should submit an application for remittance to the authorized person along with necessary documents/certificates etc., as prescribed. Direct Tax Issues Tax liability in India is basically determined on two criteria viz. Scope of total income and Residential status of the taxpayer. Company that is registered outside India is treated as a Foreign Company. Taxable income of foreign enterprises determined as per the various provisions contained in the Indian Income-tax Act, wherever a foreign enterprise belongs to a country with which India as entered into an agreement for Avoidance of Double Taxation (AADT), the tax liability determines as per the provision of the relevant AADT.

Rakesh Saxena, Advocate

Death by Airshow: History's Biggest Airshow Disasters

2011-01-18T20:20:00.001-08:00

Cape Town recently hosted South Africa's biggest air show: Africa Aerospace and Defence, at Ysterplaat (near Milnerton). By all accounts, the 3-day show was a resounding success, but not all airshows are that lucky. Over the years there have been a number of airshow disasters, perhaps the most spectacular of which is the Ramstein airshow disaster, which took place in (then) West Germany in 1988.

Considering that 70 people died and 500 had to be treated at hospital, perhaps spectacular is the wrong word: catastrophic is more appropriate. Among those killed were 67 spectators and three pilots. According to Wikipedia, 346 spectators were seriously injured during the explosion and subsequent fire, but scores more were hurt by shrapnel.

An Italian Air Force display team were performing a "pierced heart" formation, which is when two groups of aircraft create a heart shape and a lone plane, flying towards the audience, pierces it. The timing of the accident couldn't have been worse, as the lone plane crashed into the two groups just as they were passing each other.

Once again, according to Wikipedia, the single aircraft crashed onto the runway and the fuselage and resulting fireball of aviation fuel headed straight into the crowd. The universe has a cruel sense of humour as one of the other damaged aircraft crashed into the emergency medical evacuation Black Hawk helicopter, inflicting fatal burns on the pilot. The pilot of the aircraft that hit the helicopter ejected, but his parachute didn't have time to open before he hit the runway and was killed.

It was a bad day that got worse as the emergency medical response was not as good as it should have been. Some of this was caused by a lack of cooperation between German and American military authorities; some was due to inefficiency; and some by the differences in the types of medical equipment used by the separate military paramedics.

Eight years ago, Ukraine suffered an airshow disaster of similar proportions. The Sknyliv airshow disaster occurred when a Ukrainian Falcon crashed during an aerobatics presentation near Lviv, Ukraine. More people were killed than at the Ramstein disaster (over 80) but fewer people were injured (around 100).

The accident occurred when the plane began a rolling manoeuvre; it was in its descent when the left wing clipped the ground. The pilots managed to eject but the plane skated over the ground towards some stationary aircraft before exploding and cart-wheeling into the crowd. The pilots survived.

Wikipedia comes to the rescue again as it says that following the disaster, the Ukrainian president fired the head of the air force, and a military court sentenced both pilots to prison after they were found guilty of failing to follow orders, negligence and violating flight rules. One of the pilots, however, maintains that the crash was due to technical problems and a faulty flight plan.

In 2007, one of America's most famous aerobatics pilots died after his plane crashed at the Vectren Dayton Air Show near Miami, Florida. According to eye-witness accounts, Jim LeRoy was performing a stunt with another aircraft. They were doing loops when LeRoy swooped too close to the ground; he couldn't pull up before he hit the ground and the plane burst into flames. LeRoy suffered major burns and died on the way to the hospital.

Ironically, LeRoy was part of an airshow troupe that called themselves the Masters of Disaster. He was a very experienced pilot and had won several awards for his showmanship. His skills were so much in demand that he was one of the few aerobatic pilots able to earn a full-time living by performing at airshows.

We have to go all the way back to 1952 for the next airshow disaster, which took place at the Farnborough Air Show in Hampshire, England. A BBC article states that a jet fighter "disintegrated" during a low-level fly by. Both engines broke free and fell into the crowd. It was reported that 27 people were killed and 63 injured. Apparently, the plane had just broken the sound barrier before it exploded.

People who have a fear of flying are often patronised by others who tell them that travelling by plane is safer than going by driving. That may be true, but it seems neither is quite as dangerous as being in the crowd at an airshow.

High Temperature Electronic Components

2011-01-18T20:19:00.001-08:00

High temperature electronic components for aerospace and defence include standard products and custom solutions for power management, power conversion and signal conditioning under extreme temperatures and harsh conditions. High reliability products have to be guaranteed from -55°C to +225°C and are sometimes used outside that range, from cryogenic lows to upper extremes.

Aerospace requires energy, weight and cost savings in compact electronic systems. Often mission-critical, high Temperature standard electronic components include DC-DC converters, electric motor drivers solutions, Voltage Regulators, Voltage References, Clock Generators & Timers, Analog -to-Digital Converters, Amplifiers, Power MOSFET's and Drivers, ICs (ASIC) or hybrid multichip assemblies.

From design to simulation, from wafer process to assembly, from characterization to thousands of hours life tests, high temperature electronic components are cutting edge technology. Aircraft components such as fuel pumps, landing gear or brake actuators, flight control actuators all use them. Political, environmental and economical trends for air transport are leading us towards the All Electric Aircraft (AEA). Electrifying aircraft provides opportunities to reduce weight and carbon dioxide emissions and also to reduce maintenance costs. Design of the All Electrical Aircraft has the goal to eliminate as many hydraulic power sources and complicated circuits as possible. The replacement of conventional hydraulic systems will include the replacement of all hydrostatic actuators with Electro-mechanical Actuators EMAs.

Electronics design.

At high temperatures, you start getting into an area where regular solder will melt and insulation will disintegrate. Commercial TTL and CMOS devices have been successfully tested at temperatures above their specified limit.

High-temperature operation is not exclusively a semiconductor problem. Internal heat dissipation is caused by conduction losses. To minimize them, devices with low on-resistance operated at the lowest currents possible and minimum leakage must be used. Because leakage increases with temperature, which in turn increases leakage, the danger of thermal runaway is always present.

UK Aerospace Jobs

2011-01-18T20:18:00.000-08:00

Perhaps no sector reveals the 'reluctant European' streak in British policy-making better than aerospace. Until eclipsed by France in 1991, the United Kingdom boasted the second largest aerospace industry in the OECD, measured in turnover. Moreover, the technical prowess of the industry is the equal of the United States. British industry can claim several firsts in aircraft technology, including the development of the first jet engine, all-metal airframe, and the first jet-powered airliner. Hawker-Siddeley was widely regarded as the European leader in wing design and manufacture and this realisation led to the firm's retention as a subcontractor to Airbus even after the British government pulled out of the consortium in 1970. For all its commercial travails, Rolls-Royce has a sterling reputation for advanced engine designs and it is the only European engine company that is competitive with the US giants, Pratt & Whitney and General Electric, across a range of military and civil products. The problem for successive British governments was to craft policies to enhance the competitive position of the industry and safeguard aircraft jobs for highly skilled personnel. Whether this was best achieved via European efforts was always controversial.

Subcontracting jobs for Boeing or Aircraft Manufacturing jobs?

British aerospace policy, however, was very confused during the 1970s. Part of the problem was that the principal firms of the time, Rolls-Royce and Hawker-Siddeley (later folded into British Aerospace), had divergent views about cooperative arrangements with Europe. Rolls-Royce wanted access to the American manufacturers in order to level its playing field with its engine rivals General Electric and Pratt & Whitney. This desire led to Rolls' feverish pursuit of the engine contract for the Lockheed L-1011 in 1968. The Labour government agreed to provide launch aid for the engine. As it was, Rolls was far too ambitious, both in its belief that development problems would be minimal and that early delivery dates could be achieved. The advanced technology engine, the RB-211, was plagued by technical problems and delivery dates slipped. The contract with Lockheed bankrupted Rolls in 1971.

Airbus Industrie courted BAe for its expertise in wing manufacture. Boeing courted them for the Boeing 757 subcontracting. The UK Department of Trade favoured Boeing, the Foreign Office favoured rejoining the Airbus consortium. A government has to consider (more widely) aerospace jobs in the longer term, maintenance jobs and support. The latter, rejoining Airbus, happened in 1978.

Aero India

2011-01-18T20:17:00.000-08:00

HIGHLIGHTS OF AERO INDIA 2005

1. Retail villages have been planned in the exhibition area and the Air display viewing area. For the convenience of the dignitaries and dear visitors most attractive Indian handicrafts were sold in the kiosks in the Retail villages. Talented craftsmen were benefited as their beautiful products were sold in thousands.

2. Bharat Electronics Limited arranged for all communications and infrastructure support for AERO INDIA 2005. Fax, Mobil phones, Walkie-Talkie, Internet, Public Address System, Closed Circuit TV, Audio Visual Projection in the Conference Halls, Registration Centre, etc., were the contributions of Bharat Electronics Limited.

3. The first Aero India Golf tournament was organised at Karnataka Golf Association, Bangalore. CII takes the credit for arranging these unique features, which was enjoyed by all visitors around the world.

4. Peter Thompson had designed the 18-hole championship course. The clubhouse area is 30,000 square feet. The flood lit driving range was the longest in India.

5. The Pavement on the Runway has been prepared using Falling weight defect meter. Also it is to be noted that Glass grid has been utilised for adding strength. Dense Bitumen concrete using polymer modified Bitumen to PCN 40 was a special feature to it.

6. The Media centre accommodated 250 members. It was located in brand new hanger, which had an indoor space of 4,200 square feet.

7. The Indian Institute of Science, Bangalore adopted Box Technology for execution of subway to interlink exhibition and Domestic areas of AFSY. They have completed the work in a record time.

8. Amongst the 57 speakers 33 were from abroad in the seminar.

9. Very interesting and informative journals, which widely covered aviation, aerospace and defence matters, attracted many dignitaries. Those colourful journals were, Aviation week Group (New York), Aerospace and Maritime International (published from Mumbai), Chanakya Aerospace Defence & Maritime Review (New Delhi), Defence World (New Delhi), Indian Defence Review (New Delhi), Vayu Aerospace Review (New Delhi), Indian Aviation - Civil & Military (Mumbai), Indian Defence Year Book (New Delhi), International Aerospace - Review & Analysis (Mumbai), Intervestnik Publishing House (Russia), S.P. Guide Publications, Private Limited (New Delhi) and Sterling Book House (Mumbai). These Books and Bookstalls enthralled the visitors with informations and critical analysis on defence issues. Every page had abundant valuable data.

10. Indian Companies participated in this show were mostly from Bangalore. Some were from New Delhi.

11. Software companies like Aster Teleservices (P) Ltd., 3rd Floor Sri Amulya Estate, Mahesh Nagar, Hyderabad-1., Autotech Systems (P) Limited, 27, 24th Main Sarakki Lake, 5th Phase, J.P. Nagar, Bangalore - 560 078., BACHAL Software Limited, HAL Estate, Airport lane, Bangalore - 560 017., CADES Digitech (P) Limited, Anchorage, 100 Richmond Circle Road, Bangalore - 560 025., Com Avia Systems Technologies Private Limited., 47 Gangamma Temple Road, Jalahalli Post, Bangalore - 560 013., Connect Electronics Private Limited, 1878 New Thipasandra Main Road, Bangalore - 560 075., Datta patterns (I) Private Limited, New No.19, Old No.16, Aza Gowder Road, West Mambalam, Chennai - 600 033., Datason (B) Private Limited, 1006, A Narayana Reddy Complex, BEML Main Road, New Thippasandra, Bangalore - 560 075., Integrated Digital Systems 4B Sundaram 46P Rafi Ahmed Kidwai Road, Kolkatta - 700 016., Quest, 55 Quest Towers, Whitefield Main Road, Mahadevapura, Bangalore - 560 048., Satyam Computer Serivices Limited, SDC Plot No.45,46,47 Electronic City, Phase-II, KIADB Industrial Area, Bangalore - 560 100., Samtel, 52 community Centre, New friends Coway, New Delhi., Shogi Communications Limited, 803 8th floor Ansal Bhavan, 16 K.G. Marg, New Delhi - 110 001., Sigma Electro Systems, M-83 MIDC, Ambad Nashik-10., Sika interplant systems Limited, 3 Gangadhara Chetty Road, Bangalore - 560 042., Silver Software, Plot-23&24 EPIP, 1st Phase KIADB, Whitefield, Bangalore - 560 066., SLN Technologies Private Limited, 889 4th Cross, 7th Main HAL II Stage, Indiranagar, Bangalore - 560 008., Speak Systems Limited, B-49 Electronic complex, Kushaiguda, Hyderabad - 500 062., Umac Avionics Private Limited, 143 Umac House, 18th A main HAL 2nd Stage, Bangalore - 560 008., United Telecoms Limited, 18A/19 Doddanekundy Industrial Area, Mahadevapura Post, Bangalore - 560 048, etc., had beautiful pavilions in this grand show to reveal their invaluable contributions to Indian Avaiation, Aerospace and Information Technologies. As Bangalore city is studded with popular software Institutes many software technocrats have joined together and formed these companies to serve DRDO, HAL, Navy, Airforce, Missiles, Airborne guided weapon systems UAV, Helicopters and Bharat Electronics.

12. The Alpha Design Technologies (P) Limited, Bangalore develop simulation command, control requirements for Land, Ship borne, airborne systems. They also manufacture Night vision devices, simulators, Radars, communications systems and other Indian defence needs.

13. Amphenol Interconnect India Private Limited, 105 Bhosari Industrial Area, Bhosari Pune manufacturers and markets many varieties of connectors, cable harnesses and antenna products. They serve military and Aerospace, Automotive & Medical, electronics, wireless infrastructure and mobile handsets. They are the leading dealers in Indian defence sector.

14. Apollo computing Laboratories Private Limited has specialised in embedded computing, digital communications wed in defence and aerospace sector. In Agni II, LCA they offered their services.

15. Aster Teleservices Private Limited of Hyderabad have done a yeoman service to Indian defence units with data acquisition and control, smart cards, LC Launcher link, Fibre Optic Technology link, PCI based GPS time synchroniser, Unimux, Hand held cable testers, etc.

16. Airdel (India) Limited with technical collaboration of Aviation developments U.K. has branches at Mumbai, Delhi, Kolkatta, Chennai, Kanpur, Pune and Bangalore. They manufacture and supply fastness and other parts to Aerospace and commercial industry.

17. Avi-Oil India Private Limited supply lubricants, which is the only one approved by centre of military. Airworthiness and Certification, Ministry of Defence. This company is registered with Directorate General of Aeronautical Quality Assurance as an eligible manufacturer of aviation products. It has collaboration with NYCO S.A. of France. Indian Oil Corporation, Balmer Lawrie have joined hands to form this unique lubrication for Indian defence and civil aviation.

18. BACHAL Software Limited has the credit of developing simulators, development and testing of Real-time embedded Avionics software for safety critical and mission critical systems used for Flight control, Flight warning, Transmission, Weapon usage, fuel management etc. They offer their services to DRDO labs, HAL, ADA, Indian Armed forces apart from serving Thales, Rolls Royce, SAGEM, ECE, British Airways, etc..

19. Bijal Petroleum Equipment Corporation which has its Office in 5/210 Ashirwad Industrial Estate, Ram Mandir Road, Gargeon (w), Mumbai - 400 104 extends aviation ground support and fuel handling and testing equipment for aircrafts, helicopter refuelling for Indian defence.

20. To entertain the visitors and to have an aesthetic look some stalls contained fancy items, handicrafts produced by Central Cottage Industries Corporation of India Limited, Cauvery, Karnataka State Arts and Crafts Emporium. Many women visitors both from India and abroad were very much lured by the beauty in each item sold there.

21. Saree is the traditional dress worn by Indian women. Hence a stall for silk zari sarees was there in Aero India - 2005 to divert the attention. Many thousands of well designed sarees were on sale and the women V.I.Ps had an enjoyable time there. Karnataka Soaps & Detergents (P) Limited also displayed their soaps which have a pleasant fragrance.

22. Chandra International, Mumbai are engaged in export and import, switchover trade and represents International companies like ESL Defence, U.K, Douglas SPD, UK, Goodrich, USA and Orbit ACS.

23. ComAvia Systems Technologies (P) Ltd. Bangalore executes services in areas of Avionics integration for Indian higher aircraft programmes for LCA, Jaguar, MiG27, etc., They also build Integration test rigs and other test solutions consisting of data acquisition and simulation over MIL-STD-1553B Bus, ARINC429, Analog, Digital, Serial and other interfaces.

24. Data patterns (I) Private Limited, Chennai has developed airborne, naval, ground and space applications such as mission computer and displays for aircraft, Onboard Computer and fire control systems for missiles, radar subsystems, ATE for aircraft, ground systems space craft and vehicles.

25. For DRDO, Department of Space system, System houses and Aerospace Industry, the Datasol (B) Pvt. Ltd., Bangalore over a very good service in designing, developing and integrating the State of the art modular products in areas of Avionics, Cockpit display products etc. It is an ISO 9001-2000 Company.

26. DRDO has 5000 scientists, 25000 other scientific technical and supporting personnel, and 54 laboratories. Contact Persons are: Dr.D.Banerjee, Phone 91-011-23016640, Brig Umang Kapoor, Director, Phone:91-011-2301-3209, B.C. Srikanta Vice Chairman DRDO.

27. Dynamatic Technologies, Bangalore deal with ailerons, flaps for ITT-36 Jet Trainers; wing and rear fuselage for Lakshya, a high performance UAV; Control surfaces for the Su-30 mki fighter Aircraft like Vertical Fins, stabilisers, Canard, Ventral fins and slats, Ground support equipment for military jets, servo test control equipment for helicopters; Transmission products and electro hydraulics brake actuating systems for Battle Tanks. Fabrication and assembly of airframe structures of Lakshya, Indias Pilotless Target Aircraft, Hall's 155-36 Project. Dynamatic Aerospace will be partnering HAL in the development of Airframe structures for the Sukhoi 30 mki fighter aircraft.

28. Enpro Secan India Ltd., New Delhi markets vapour cycle cooling system for Armoured fighting vehicles, Liquid cooling systems for Radars, Antennas etc., wave guide dryers, ACIDC Brush and Brushless motors, torque motors for Rods, Radars, missiles, etc., fans blowers axial centrifugal battle tanks, XIBC armed vehicles, etc., Heat transfer systems for Aircraft, battle tanks etc., They serve HAL, ADA, ECIL, BEL, DRDO, IAF, Indian Army, BDL, Air India, Thales, Airbus, Eurocopter, MTU, Embracer, LUCAS, Air France, Lufthansa, etc.,

29. Silver Oxide Zing, Nickel, Cadmium batteries for Indian military aircraft, helicopters, torpedoes and missiles are supplied by High Energy Batteries (I) Ltd., Tamilnadu. Contact Person: S.Arunachalam, V.Balasubramaniam, Fax: 91-4339250516, 91-431-2414455.

30. Terra Vista range of products for the 3D Terrain Generation 9.8 marketed by Integrated digital systems, Kolkatta. Those 3D databases are utilised in war gaming, situational aware analysis, flight simulation, training etc.,

31. It was interesting to note that JS Precisions, Bangalore is formed under women Entrepreneurs scheme. Contact person is Mrs. Jayanthi, Fax: 91-080-26637921, Phone: 91-080-266372707. They supply sheet metal, machined and non metallic components for aircraft & aero engines. Locknuts, Gaskets, jig fixtures, Locking washers and the products it supplies to IAF, DRDO, Naval Aviation and HAL. More than 800 precision critical / non critical components are produced by them.

32. Kumaran Industries, Bangalore produces jet engine parts for Aerospace and Aeronautical Industry utilising CNC Technology. Development of precision airframes and aero engines parts for LCA, ADA, ALH, 14 seat passenger aircraft, SARAS (NAL), ADE, Navy and Air force are some of their invaluable contribution to Indian air force. They have obtained recognition from foreign companies too like Magellan, uTGU technologies. Contact Person is Mr.Mohan, Director, Phone: 91-80-23409113, fax 91-80-23381498. Mr.M. Parthasarathy is the technical Director.

33. Maini Precision Products (P) Ltd., Bangalore serves Honeywell USA, Moog Aerospace U.K., WA, Goodrich, USA, Sneema moteurs, France, etc., by producing machined components. Contact person: Shaikendra Pratap Singh, Fax: +91-80-51272500, 91-80-51272400.

34. The Ministry of Indian Defence has licensed Max Aerospace Aviation Ltd., Mumbai to supply and install of Avionics, UAV's, CAV's Aircraft Subsystems, helicopters and Arms. This company takes pride to say that they have been approved by DGCA, HAL, DGAQA and CHEMILAC and it has been registered with IAF. Navy and Indian coast guard. Their maintenance works are also approved by NAVCOM. ADF, VDR and CUR. The works in cockpit Instruments, lighting systems, gyro instruments and airframe components have been with quality and perfection. Contact person: Bharat Malkani, Phone: 91-22-26135545, fax: 91-22-26162613.

35. Merchant Shipping Industry, Indian Army, Navy Coast guard and IAF prefer to use specialised tents for survival of helicopter crew, inflatable lifearts, life Jackets, etc., produced by meridian Inflatables Private Limited, Mumbai. It has 25 years of experience and possesses ISO 9001 Certificate. Contact Person: Maj. Arun Phatak (Retd.) Phone: 91-22-28570369, fax 91-22-28572927.

36. MIDHANI, Hyderabad which has developed 75 alloys with the enormous efforts of their R&D team.

Aero India Exhibition - Aero India 2009

2011-01-17T20:46:00.003-08:00

Aero India Exhibition was started in 1996 by the Ministry of Defence. Aero India is an event where, the latest products and technologies of the aviation industry are popularized and demonstrated, it helps the aviation and aerospace industry to promote and showcase their products and services. It is Asia's cardinal biennial air show held at Yelahanka Air Force base in Bangalore. The Aero India show comprises of displays and exhibits of military and civil aircrafts of key manufactures, vendors and suppliers. Multifarious aircrafts of Indian Air Force are also displayed.

Aero India Exhibition Chronicle

The last three editions revealed some of the most advanced technologies and aviation equipments.

The 4th edition:witnessed presence of 176 companies from 22 countries. The event was attended by about 50 delegations from the United States, Europe, Russia, the Middle East, Asia-Pacific and Africa visited Bangalore for the event. The French delegation was led by the Prime Minister of France, Jean-Pierre Raffarin.

The 5th edition: pulled a paramount crowd of 380 exhibitors belonging to world's leading industries. The show included a total of 80 aircraft including Fighter jets, Light Combat Aircraft, Advanced Light Helicopters, Intermediate Jet Trainers (AJTs), Maritime Surveillance Aircraft and Unmanned Aerial Vehicles (UAVs) displayed their flying skills and capability.

The Indian Air Force (IAF) and the Indian Navy also displayed their various aircraft. There were 32 official military delegations and over 250,000 people who attended this show.The major attractions were the leading fighter, advanced jet trainers and unmanned aerial vehicles from Russia, US, France, Britain, Israeli and India. There were flying performances and static exhibitions of the Russian MiG-29K,Su-30MKI and Il-78 tanker; the American F-15 E, C-130J Super Hercules and P-3C Orion aircraft; the French vintage Mirage 2000 and Falcon 2000; the British Hawk 100, Jaguar and Sea Harriers, and the Indian Dhruv (Advanced Light Helicopter) and Intermediate Jet Trainer (IJT). The event also included aerobatics performance by Sarang- the Indian Air Force's Advanced Light Helicopters. There were also views of Il-78 tanker and Mirage 2000 aircraft performing mid-air refueling and fighter trainers making formation in the clear blue sky.The 6th edition was yet again the centre of dazzling interest around the world and embraced visits by the myriad international delegations. The sizable attractions of the event were the astounding displays by the team of Indian Air Force and the helicopter formation display team. The attractions of the event were the MiG-35 and Lockheed-Martin F-16, as well as the Boeing F/A-18E/F Super Hornet. The Indian industrialist Ratan Tata too took to skies in an F-16. There were also displays by the Surya Kiran and Sarang teams, the Surya Kiran team consists of nine Indian pilots, and displayed actions such as flying as close as 3-5 mts at high speeds and exhibited numnerous formations like the arrow, diamond the hearts. The Sarang team displays maneuvers of Advanced Light Helicopter (ALH).

'Aero India 2009' aerospace exhibition will be organised in Bangalore, India in February 2009. This year, with the formulation of the partnership between FICCI and Farnborough International Ltd, the show will have extensive business focus.

Aircraft Modification - A310 Military Conversions

2011-01-17T20:46:00.001-08:00

As any aircraft is superseded, military conversions can significantly extend their useful lives.

A number of air forces acquired the Airbus A310 as VIP aircraft and troop and/or freight transports. The only one to buy a brand new aircraft was the Royal Thai Air Force, which took delivery of a VIP-configured A310-300 for use by the Royal Flight on 5 November 1991. The Canadian Forces boosted their strategic airlift capability with five ex-Wardair/Canadian Airlines International A310s in 1992/93. Redesignated CC-150 Polaris, the five aircraft were delivered in a 194-seat passenger configuration, but four were subsequently converted by Sogerma in Bordeaux to a passenger/cargo combi layout. This required some 100,000 engineering and production hours, which included a new main deck cargo door, fuselage and flooring reinforcement, a cargo loading system, and a removable bulkhead and smoke curtain to separate cargo and troops. The fifth aircraft remains in a VIP layout. All are operated by 437 Squadron at 8 Wing, Trenton, Ontario, and are used to re-supply Canadian Forces personnel across the world.

Germany's Luftwaffe operates seven CF6-80C2A2-powered A310-300s and is seeking to acquire two more, to bolster its long-range fleet in the face of increasing logistics demands. The creation of a rapid reaction force, a rise in humanitarian operations, and the new tactical training unit in Mexico, are all making additional demands on its resources. Two A310s replaced two Boeing 707s at the end of 1999, and two of the existing A310s were modified to tanker transports in 2003. The Luftwaffe acquired its first three aircraft in May 1991 when the former East Germany carrier Interflug ceased operations, and further enlarged its fleet between November 1996 and November 1998 with four ex-Lufthansa machines. Five are operated in VIP configuration, and two as passenger/cargo combi aircraft.

Two A310-300s are flown by Transport Squadron 3/60 of the French Air Force (Armee de 1'Air) out of Paris Charles de Gaulle Airport. Both have 180 minutes ETOPS (Extended Range Twin Operations) and are used primarily as VIP transports. The A310s were bought from Royal Jordanian in November 1993. The Belgian Air Force obtained two secondhand A310-200s from Singapore Airlines in September 1997 and April 1998, also for use as VIP transports. The Pratt & Whitney-powered aircraft are operated by 21 Squadron on military and government transport duties, as well as international relief flights.

Multi-role aircraft conversions.

With the order book for the A310 diminishing and tailing off, Airbus Industrie is hoping that a more determined incursion into the military market will provide a lifeline for the A310. Recognising that reduced defence spending will demand future multi-role aircraft, which are capable of simultaneously carrying out air-to-air refuelling (AAR) and transport operations, Airbus is offering the A310 in MRTT (Multi-Role Tanker Transport) configuration. With the KC-135 in particular nearing the end of its useful life, the demand for replacement tankers will undoubtedly accelerate, and derivatives of

current wide-body aircraft will offer a more cost-effective solution than building a dedicated aircraft from scratch. In addition to offering greater refuelling capacity than earlier airliners, the A310 would also have an advantage in operating costs and longer airframe life. At a price tag in the region of US $30m for a modified second-hand machine, such an aircraft should prove attractive to potential customers. Australia, Canada and Germany are all believed to be in the market for such an aircraft. Studies have indicated a potential market for 100 military tanker/transport aircraft by 2010, of which half are expected to be MRTTs. A demonstrator was produced by the conversion of a former airline A310-300 (N816PA), which undertook compatibility trials with Royal Air Force aircraft in 1995. No orders had been placed by September 1999.

The A310 MRTT can be converted from existing models or can be new-build aircraft.

R&D Companies and Data Loss

2011-01-17T20:44:00.000-08:00

R&D Companies and Information Technology (IT)

R&D companies, as the acronym suggests, have to engage in a lot of research. A very high level of research is required to come up with a new invention. Therefore, researchers tend to use a lot of data to test the various outcomes and hypothesis. Due to limitations posed by the traditional way of storing data, R&D companies are increasingly storing their valuable data electronically.

R&D companies in the field of medicine tend to painstakingly undertake several experiments. The results of these experiments have to be recorded, evaluated, and maybe even published. While computers can help the researchers to record their findings, Internet can allow the researchers to publish their results with minimal effort.

Since the laptops offer the required mobility while performing research and analysis, most of the researchers in the defence, agriculture, pharmaceutical, defence, aerospace, and biotechnology industries tend to use laptops. Therefore, most of these companies tend to have a dedicated IT department. If the data is mobile, as is the case with laptops, the chances of losing the data are also higher.

If R&D companies are exchanging the research data across the Internet, they also need to be sure that the server is secure because any malicious user can easily misuse the data. More often than not, the data related with R&D is extremely confidential. Therefore, most companies tend to use the latest IT to help them keep their data secure.

Why is R&D Data Important and Valuable?

R&D is a field that requires large amount of investment because of the sheer nature of the industry. In addition, it is not a field that reaps immediate results. Research can take months or years before an appropriate product, equipment, or idea can be developed. Therefore, while the investment is huge, the results may not be apparent. Any data loss or leakage can ruin the entire capital and infrastructure investment.

Companies invest in R&D to stay ahead in the market competition whereas governments invest in R&D to ensure that the country is ahead in technological advancements or for national security. While most companies have to be extremely cautious about their R&D data so as to avoid data or idea leakage lest the competitor steal the idea, the government has to protect the R&D data to ensure that there is no threat to national security.

Protecting the Valuable R&D data

It is imperative to protect the R&D data because of the nature of the data. Most companies create centralised reporting systems so that data can be gathered comprehensively in one place. This minimises the chances of losing your data because the flow of data is restricted.

Some R&D companies do not wish to risk exchanging their data on public networks. Having personalised servers that allow you to exchange data within company in the most secure manner is a very good idea. You can always test the security of these measures and upgrade the security when the need arises.

Data encryption is the most important measure that R&D companies should make use of. Data encryption allows your valuable data to be encrypted before it leaves the secure premises of your office via a network server. Only authorised users with the requisite passwords can gain access to this data. Encrypting the data is the best way to minimise your risk against hackers, data theft, and malicious users.

R&D data is not the kind of data that can be created again once its lost. Therefore, the R&D companies will have to ensure that their valuable data is always backed up appropriately. Using manual backups may not be a good idea because it leaves room for error. Your best bet would be to either use Continuous Data Protection (CDP) or Automated Remote Backups.

CDP technique mirrors the data on two disks. Therefore, even if something happens to one disk, the other disk remains protected. Automated remote backups ensure that your data is automatically backed up and stored in a location that is geographically distant from the primary office site. This ensures that the data remains protected even if a natural or man-made disaster such as terrorist attack occurs at the primary office site.

What to do in the Event of Data Loss?

If all your data protection measures fail, you will need to hire the services of a professional data recovery company. Since the nature of the lost data may be confidential, it would be best if you sign a confidentiality agreement with the company. In addition, make sure that you hire the services of the best company becaus

Project Lifecycle Management Implies Long Term Value; Forget the Total Cost of Ownership Fuss

2010-09-29T21:48:00.000-07:00

Product lifecycle management (PLM) software vendors are consistent in their belief that PLM applications software is well worth the investment because the life cycle costs of new product design and initiation (NPDI) are inherently weighted at the front end. Therefore the better job a company does in managing an efficient process toward NPDI will imply considerable cost savings over time. After a product launch, there are additional and significant gains that can be achieved by properly and efficiently managing the product life cycle through product retirement, but the real nugget for most manufacturers lies in the front-end of the product design and development cycle where an average (over multiple long NPDI industries) of over 80 percent of the costs resides.

Life Cycle Costs Over Time—Efficiency Starts with Design

Current global market forces are driving the need for manufacturers to re-examine their ways of conducting business, and are, in turn, driving PLM applications initiatives. These global market forces include

* Mergers and acquisitions
* Outsourcing and off-shoring
* Globally distributed manufacturing operations
* Broader supply chain networks
* New product market opportunities

At the same time, the recognition of inefficiencies and complexities across comprehensive business processes throughout a companies' design, engineering, manufacturing, marketing, and support organization are driving interest in PLM:

* Market assessment including segmentation and demographics
* Forecast demand and market window
* Conceptual design and product definition
* Detailed design
* Manufacturing release and change management
* Parts selection and sourcing
* Production process planning
* Market rollout
* Aftermarket support
* Portfolio management

The dynamics of these global market forces coupled with existing but inefficient product development business processes are opening the door to increasing PLM software adoption. Manufacturers are achieving better time-to-market improvements from the adoption of NPDI techniques and technology, but there are still bottlenecks during execution of these processes. Global design teams are becoming more commonplace due to mergers and acquisitions and outsourcing, dictating a more dispersed cross-functional team to collaborate on NPDI. Global expansion is also seeding collaborative NPDI activities. At the same time, regulatory requirements and other compliance initiatives are increasing the data capture requirements as new products go to market. Studies show that NPDI cycles are shrinking, indicating that collective PLM targeted processes and technology are paying off.

PLM Payback Is Complex and Subjective, But Real

Demand for PLM and recognition of value can be translated by the fact that key vendors like PTC, Dassault Systems, Agile, MatrixOne, and UGS are experiencing mixed to healthy growth in revenues for both design tools and broader PLM capabilities. PLM vendors, as a group, are meeting or exceeding market growth expectations, and the bar has been set high. The CEO of Compaq was recently quoted as saying that PLM offers "more pure ROI" than any other business application. So where does the value come from? Many of the subjective revenue gains and objective cost reductions lie in

* Improved new product design innovation
* Coordination across multiple product design and development locations
* Improved design quality while reducing design cost
* Reduced product time-to-market cycle times
* Better support for customers located worldwide
* Opportunity recognition via portfolio management
* Improved custom product development
* Enabled patent management
* Improved channel management
* Enabled intellectual property management

The Business Case for PLM Varies by Industry and Timeframe

Each industry has its own view of how PLM can improve efficiency, and what drives the business case for initiating PLM projects. Industries with short NPI and short product life cycles, like electronics and apparel, are "manufacturing" driven. Their focus is on the advantages gained through PLM concept adoption from design to mass production product launch. At the other end of the spectrum, industries like automotive, aerospace and defence (A&D), and pharmaceuticals have long product life cycles and long NPI cycles. They are "program" driven, and stand to gain from PLM initiatives focused on collaborative design, project management, portfolio management, and product retirement.

Total Cost of Ownership (TCO) Models is Overkill

Total cost of ownership (TCO) is a holistic way to view the true costs of IT investment throughout an applications' life cycle. TCO is a way to understand and analyze the costs, efficiencies, and economic impacts associated with procuring, using, and maintaining IT application components over time. In short, it is the "cradle to grave" costs associated to IT investments. TCO of a PLM environment is the total cost of procuring, operating, and maintaining PLM applications including hardware, software, training, peripherals, servers and local area networks (LAN) equipment including hidden and indirect costs like training and support throughout the life cycle of the PLM software assets.

Consulting firms that specialize in TCO assessments for software acquisition embrace a TCO philosophy based on the best practices surrounding application life cycle management including acquisition, deployment, service, and support, as well as revision control. TCO benchmarks exist for detailed analysis of current expenditures related to hardware and software, operations, administration, as well as end user operations and downtime. Topics such as staffing information, outsourcing fees, service desk metrics; dispatched support calls can all be included in a thorough TCO analysis.

PLM, as a strategy, is as much process definition as it is technology. Any TCO analysis examining the costs associated with a PLM application must as well examine the scope and level of best practices you have implemented in your company today as well as in the future. This requires a sharp view of both the "as-is" and "to-be" state of a companies' product design and development cycle.

But this type of analysis can be time consuming, laborious, and expensive and is most likely not warranted if one takes a more simplified approach. A considerably more simple yet logical approach for manufacturers initiating a PLM project involves developing a process flow schematic of product design and development processes, determining estimated or average durations by process, and comparing the reduction of product life cycle design and development time versus the over all product design and development costs. A mere percentage of savings in life cycle time can result in big dollar savings. Hacking off a week or two of product development time, and the resulting ripple effect throughout the product life cycle, can result in considerable savings that far exceed the TCO of a PLM application.

SOURCE:
http://www.technologyevaluation.com/research/articles/project-lifecycle-management-implies-long-term-value-forget-the-total-cost-of-ownership-fuss-18190/

Acquisitive Vendor Expands Its Enterprise Asset Management Potential

2010-09-29T21:46:00.000-07:00

IFS, a Swedish enterprise applications company, has had a mixed record of mergers and acquisitions in the past few years. While at first attempting to diversify, the company has lately opted to consolidate its product offerings, shedding a computer-aided design (CAD) application from its roster. And so it may have been a surprise to some that IFS Defence Ltd., a joint venture between IFS and BAE Systems, acquired Information Science Consultants (B) in July 2007. Its enterprise asset management (EAM) solution already strong, with this latest acquisition, IFS hopes to bolster its reliability-centered maintenance (RCM) capabilities for the aerospace and defense (A&D) industries.

IFS—an EAM Force

But to come back to IFS, its EAM solution is just one component of the broad IFS Applications suite used globally by customers such as the Toronto Transit Commission (TTC), Three Gorges in China, and NuCor Steel in the US, to name but a few asset-intensive ones. IFS Applications provides extended enterprise resource planning (ERP) functionality, including customer relationship management (CRM), supply chain management (SCM), product lifecycle management (PLM), corporate performance management (CPM), EAM, and maintenance, repair, and overhaul (MRO) capabilities. Translating these into major business processes, these solutions for engineering, manufacturing, service management, asset management, and so on, seamlessly work together to enable companies to employ lean enterprise concepts, control costs, manage projects, measure performance, and increase efficiencies in their supply chains.

Amongst its many EAM and MRO parts and parcels, IFS has created an asset lifecycle management (ALM) solution to take control of available asset information from design, engineering, operations, and maintenance, permitting quick information retrieval and informed decisions throughout the entire asset life cycle. A collaborative asset information repository and document management system supports sharing of information for many functional business areas and enterprise processes, such as purchasing, project management, inventory management, operations, and maintenance.

A close partnership with Bentley Systems (which acquired the former IFS Plant Design set of CAD modules in 2004) supports special integration tools for automatic import and export of plant and asset design documents to and from the repository. For example, once data is entered into the common database, it immediately becomes available to the other IFS Applications modules; as a result, information can be recycled, and it remains consistent and updated, never having to be re-entered. Also, the CAD modules provide designers with a drawing tool for process and instrumentation design, while predefined forms and the convenient lookup functionality are further examples of features that benefit all design disciplines. This integration permits instant population of the asset database upon acceptance of a new or updated plant design, along with capabilities to update the design documents to reflect “as built” changes.

To the benefit of its customers, IFS has shown a strong commitment to standards such as those created by the International Electro-technical Commission (IEC), the American National Standards Institute (ANSI), NORSOK (Norsk Sokkels Konkuranseposisjon), and the Swedish pulp and paper industry’s technical—and meticulous—cooperative standards organization, SSG Teknik AB. For instance, SSG’s aim, according to its web site, is “to promote the standardization and development of process and plant technology,” and the administration of connected product and chemical databases.

Thus, many clients (especially a number of pulp and paper mills in Sweden) have reportedly realized significant productivity benefits from IFS’s integrated ALM solution; the implementation methodology handles the entire information flow, from engineering and design through planning and implementing maintenance, including managing related documentation and drawings.

IFS plans to espouse similar standards in other industries, such as chemical, oil and gas, energy, and metals and mining, to further promote the development and adoption of ALM by other forward-thinking customers worldwide. This effort might be helped by the recently announced partnership with Tata Consultancy Services (TCS), which will primarily target the project-driven manufacturing, chemical, energy, utilities, telecommunications, and oil and gas industries, increasing IFS's ability to deliver its EAM and service management functionality to larger enterprises in North America. Readers should keep their eyes open for further developments from TCS, as they become available.

What Else Does IFS Get with iSC?

In addition to the possibility of cross-selling reliability-centered maintenance (RCM) capabilities and expertise to thousands of its existing customers, IFS should benefit from iSC’s focus and expertise in the naval and maritime operations sector. On one hand, the area of RCM technologies is getting increased exposure and investments from a number of vendors, such as Lawson and Infor. This contrasts the usual tendency to leave RCM to small, specialized (or niche) companies such as Meridium or Ivara (see Lean Maintenance—Does It Impact Reliability? Lessons Learned and Best Practices).

On the other hand, the acquisition should entrench IFS's leadership within the defense industry sector, which is now also beginning to invest in IT to streamline operations. Vertical focus has been “the name of the game,” even in the EAM and MRO areas, as illustrated by Mincom’s long focus on and success in the mining sector, or Indus’s (now Ventyx) expertise in some sectors of the utilities industry (for example, nuclear power plants). While this acquisition will add value to IFS's overall defense offering, it is likely to be of particular tactical interest to maritime and naval operations, a domain in which IFS has about one dozen clients.

As for some potential caveats (in addition to the above-mentioned ownership- and responsibility-sharing arrangements between IFS and BAE [that is to say, for IFS Defence]), one should note that iSC’s technology is based on the Microsoft .NET Framework, which is not quite in tune with the IFS Applications’ Java-based architecture on the server side. This could create hurdles for the envisioned integration of the two complementary products and technologies, despite the fact that service-oriented architecture (SOA) should render the platforms moot. The fact is that any product performs best when written in a native uniform environment, as has been the case with IFS Applications.

To be fair, IFS is well versed in Microsoft technologies on the client side, and the IFS Intelligent Desktop initiative and the related IFS Business Analytics product (formerly IFS Smart Client for Excel) are good examples of this. In June 2007, IFS announced the North American launch of the IFS Business Analytics offering, an office business application (OBA) that makes the IFS Applications ERP software accessible to users of the Microsoft Office 2007 system. IFS will have to carefully consider how best to align the functionality of the two products.

There are some indications that two solutions will continue to be offered for the immediate future (though this might be somewhat deceiving, as IFS insists on having only one product; provided the clients pay maintenance, IFS will support their older releases). Logically, there could still be issues regarding support and integration, given that IFS has traditionally been a single product suite company.

SOURCE:
http://www.technologyevaluation.com/research/articles/acquisitive-vendor-expands-its-enterprise-asset-management-potential-19292/

"Once Bitten” Vendor Is Not “Twice Shy” about New Acquisition

2010-09-29T21:45:00.001-07:00

The vendor pioneered component-based enterprise resource planning (ERP) software with IFS Applications—now in its seventh generation—whose component architecture provides solutions that are easier than most to implement, run, and upgrade. IFS Applications is available in 54 countries and 22 languages, and the vendor has over 600,000 users across seven key vertical sectors: manufacturing; automotive; process industries; utilities and telecommunications; construction, contracting, and service management; aerospace and defense (A&D); and retail and wholesale. For information on IFS’s more recent state of affairs, see Two Stalwart Vendors Discuss Mid-market Issues

One of many reasons for the vendor’s stumbling and poor financial performance of yesteryear was its ill-advised acquisitions of several enterprise software companies in the late 1990s. Namely, IFS expanded into the customer relationship management (CRM) arena by acquiring former Israel-based CRM vendor Exactium for its product configuration module. The subsequent sell-off move to Pivotal (now part of CDC Software) in 2000 (see What Is IFS Up To in the CRM Arena?! ) represented IFS’s tacit concession that it had gone beyond its means with its too-ambitious product scope and geographic expansion.

IFS aimed at further expansion in the 1990s: hoping to gain a fast US beachhead by converting its customer base from the Time-Critical Manufacturing (TCM) product to its own enterprise applications, IFS bought US-based ERP vendor Effective Management Systems (EMS). However, customer satisfaction with TCM was (unexpectedly to IFS) high and, therefore, customer loyalty made it difficult to move customers away from TCM. With the majority of TCM customers reluctant to make the transition, and with IFS reluctant to maintain two separate ERP product lines, IFS then agreed to spin off the TCM product line in November 2001. Thus, the current WorkWise organization was created of former EMS staff, and has since focused solely on the TCM product line and its customer base (for more information, see A User-centric WorkWise Customer Conference).

Yet the sell-off at the end of 2004 of IFS’s Brazilian subsidiary; of tangential computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design; and of applications for payroll (see IFS Continues Its Reinvention through Pruning) was a harbinger of today’s stabilized—even “upbeat”—company. After careful soul searching, IFS's then-management decided to stay focused on core competencies instead of extending painstaking efforts to develop peripheral applications for a small fraction of customers in Scandinavia, where the payback would have been highly unlikely.

Although creating a differentiating trait might have been tempting (no other ERP vendor has ever had native CAD applications for piping design), IFS’s CAD customer base was too small for the vendor to justify developing its own CAD applications in the long term, and the company did not have enough specialists outside the Nordic region to sell and support CAD applications globally. Again, this was possibly the best proof that IFS was getting rid of its erstwhile “not invented here” attitude.

Back to the Future?

Consequently, some might not have expected the vendor to consider acquisitions for some time to come. And yet, in July 2007, IFS’s joint venture with BAE Systems, IFS Defence Ltd., bought Information Science Consultants Ltd. (iSC). A privately held company based in Cirencester, UK, iSC specializes in naval maintenance management applications and services; the UK Royal Navy fleet uses iSC’s onboard and onshore unit maintenance management system (UMMS). The company also provides leading expertise in reliability-centered maintenance (RCM) processes and tool sets to a wide range of defense and commercial organizations. At the end of 2006, iSC (in British pounds) generated revenue of £2.4 million, with earnings before interest and tax (EBIT) of £0.5 million on gross assets of £1.8 million. Following the acquisition, iSC will operate as a business unit of IFS Defence.

Market Impact

Before jumping to a “not again!” conclusion, perhaps one should note that this acquisition might be of a somewhat different nature than IFS’s previous unsuccessful ones. Acquisitions of niche specialist companies, done to fill some functional gaps or to assert leadership in a certain vertical or geographic segment, usually make sense or justify themselves quickly. To that end, having originated from the realm of computer maintenance management systems (CMMS) for utilities in the 1980s, IFS has since become one of the leading suppliers of enterprise asset management (EAM) solutions, with a leading market share in the Europe, Middle East and Africa (EMEA) region.

In a nutshell, with iSC, IFS hopes to bolster its reliability-centered maintenance (RCM) capabilities in addition to its already strong EAM; maintenance, repair, and overhaul (MRO); and project-centric manufacturing solutions for the A&D sector. IFS’s A&D customers include the British, the Norwegian, and the US defense organizations, whereas its commercial MRO shops and operators include Finnair, Bristow Helicopters, Aero-Dienst, Hawker Pacific, and Jet Turbine Services, to name a few. IFS also provides solutions to original equipment manufacturers (OEMs), such as General Dynamics, Lockheed Martin, Eurofighter, BAE Systems, Saab, and General Electric (GE) Transportation.

Further along the lines of a different acquisition tack, strong joint ventures that go well beyond the usual press release (PR) announcements and joint marketing and financial arrangements (such as those with BAE and NEC), have recently become the norm for IFS. However, acquisitions are usually done directly by IFS, whereas the iSC acquisition is unusual for its being conducted by the IFS Defence joint venture. This route was apparently chosen owing to IFS Defence’s specialization in the A&D sector.

Historically, iSC has been mainly involved in consulting (the company is a custom software developer and consulting firm, and it supports customers' implementations of its software solutions), whereas IFS has primarily been a software product provider. Though conducting the acquisition via IFS Defence mitigates the financial risk for IFS and provides a better, consulting-oriented, cultural fit, some concerns might involve the ownership of the product and whether it will be rolled out globally to IFS’s customers beyond the defense sector.

New Asset Maintenance Appeal?

EAM and MRO seem to be of increasing interest to customers, and consequently to vendors, as can be seen by many vendors’ and venture capitalists’ (VCs’) deliberate investments in these areas. For instance, IBM recently invested a good chunk of change to acquire the former MRO software, despite the giant’s reluctance to be an enterprise application provider per se (in that it has long preferred and continues to partner for applications, providing mainly the underlying platform and infrastructure).

Also recently, Vista Equity Partners combined its individual EAM and field service investments, the formerly public Indus International, with the former Mobile Data Solutions Incorporated (MDSI) to create the new company Ventyx. The investment of Francisco Partners in the formerly public Mincom; Infor’s acquisition of the formerly public Datastream (see The Impact of the “Assembler Strategy” in the Enterprise Applications Field); Consona’s acquisition of Relevant Business Systems (see Smaller Vendors Can Still Provide Relevant Business Systems; Part Four: MRO and Spare Parts Management); and Lawson Software’s merger with Intentia (a former Swedish competitor of IFS with strong EAM and MRO offerings; see EAM versus CMMS: What's Right for Your Company?) should all speak volumes about the maintenance market’s attractiveness.

The enterprise applications leaders SAP and Oracle have also been extending their own EAM offerings. While Oracle has such capabilities in both its original Oracle E-Business Suite (EBS) and JD Edwards lines, SAP recently (at its EAM-centric user event) explained how SAP Enterprise Services Architecture (SAP ESA) should enable it to weave together native product enhancements and third-party partner solutions to satisfy two critical user needs: 1) innovation through composite applications to enable revenue growth, and 2) productivity and efficiency improvement through platform consolidation and standardization to drive bottom-line (profit) growth. User enterprises seem to have been interested lately in certain areas of asset management, including EAM process efficiency improvement; maintenance effectiveness and reliability; EAM applications usability and information access; and improvement in return on investment (ROI) from EAM projects.

In fact, Lawson Software recently conducted an internal global online study on nearly 200 companies (representing the utilities, manufacturing, mining, process manufacturing, and transportation sectors). The study concluded that concerns about plant safety, demand for asset availability, and environmental awareness or corporate social responsibility (CSR) and legislation (see "Evergreen”—Environmental Regulations for High-tech and Electronics, Chemical, and Oil and Gas Industries) are encouraging manufacturers to move to preventive and predictive maintenance strategies.

In other words, in the past, plant uptime and safety have primarily been internal plant issues (concerns about keeping the plant running and operators safe). But now, however, because of the CSR and environmental issues (for example, improving energy management and emission-reduction monitoring), such issues are more a strategic and external business matter. That is, an integrated EAM solution should ensure that a company’s assets operate efficiently within environmental guidelines.

For instance, a preventive maintenance program can help to lengthen the life span of spare parts and assets, save natural resources, and reduce waste. Some really advanced EAM adopters are now even viewing maintenance as a profit opportunity, and not just as a cost burden (or a necessary evil). Indeed, these users have begun to understand that RCM methods might increase the reliability and availability of a plant, which in turn might lead to more throughput (see Reliability-driven Maintenance—Closing the CMMS “Value Gap”?). Additionally, preventive maintenance and condition-monitoring techniques also extend the lives of the assets, thereby saving on capital expenditure

SOURCE:
http://www.technologyevaluation.com/research/articles/once-bitten-vendor-is-not-twice-shy-about-new-acquisition-19291/

Project Lifecycle Management Implies Long Term Value; Forget the Total Cost of Ownership Fuss

2010-09-29T21:40:00.000-07:00

Acquisitive Vendor Expands Its Enterprise Asset Management Potential

2010-09-15T06:23:00.002-07:00

IFS, a Swedish enterprise applications company, has had a mixed record of mergers and acquisitions in the past few years. While at first attempting to diversify, the company has lately opted to consolidate its product offerings, shedding a computer-aided design (CAD) application from its roster. And so it may have been a surprise to some that IFS Defence Ltd., a joint venture between IFS and BAE Systems, acquired Information Science Consultants (B) in July 2007. Its enterprise asset management (EAM) solution already strong, with this latest acquisition, IFS hopes to bolster its reliability-centered maintenance (RCM) capabilities for the aerospace and defense (A&D) industries.

IFS—an EAM Force

But to come back to IFS, its EAM solution is just one component of the broad IFS Applications suite used globally by customers such as the Toronto Transit Commission (TTC), Three Gorges in China, and NuCor Steel in the US, to name but a few asset-intensive ones. IFS Applications provides extended enterprise resource planning (ERP) functionality, including customer relationship management (CRM), supply chain management (SCM), product lifecycle management (PLM), corporate performance management (CPM), EAM, and maintenance, repair, and overhaul (MRO) capabilities. Translating these into major business processes, these solutions for engineering, manufacturing, service management, asset management, and so on, seamlessly work together to enable companies to employ lean enterprise concepts, control costs, manage projects, measure performance, and increase efficiencies in their supply chains.

Amongst its many EAM and MRO parts and parcels, IFS has created an asset lifecycle management (ALM) solution to take control of available asset information from design, engineering, operations, and maintenance, permitting quick information retrieval and informed decisions throughout the entire asset life cycle. A collaborative asset information repository and document management system supports sharing of information for many functional business areas and enterprise processes, such as purchasing, project management, inventory management, operations, and maintenance.

A close partnership with Bentley Systems (which acquired the former IFS Plant Design set of CAD modules in 2004) supports special integration tools for automatic import and export of plant and asset design documents to and from the repository. For example, once data is entered into the common database, it immediately becomes available to the other IFS Applications modules; as a result, information can be recycled, and it remains consistent and updated, never having to be re-entered. Also, the CAD modules provide designers with a drawing tool for process and instrumentation design, while predefined forms and the convenient lookup functionality are further examples of features that benefit all design disciplines. This integration permits instant population of the asset database upon acceptance of a new or updated plant design, along with capabilities to update the design documents to reflect “as built” changes.

To the benefit of its customers, IFS has shown a strong commitment to standards such as those created by the International Electro-technical Commission (IEC), the American National Standards Institute (ANSI), NORSOK (Norsk Sokkels Konkuranseposisjon), and the Swedish pulp and paper industry’s technical—and meticulous—cooperative standards organization, SSG Teknik AB. For instance, SSG’s aim, according to its web site, is “to promote the standardization and development of process and plant technology,” and the administration of connected product and chemical databases.

Thus, many clients (especially a number of pulp and paper mills in Sweden) have reportedly realized significant productivity benefits from IFS’s integrated ALM solution; the implementation methodology handles the entire information flow, from engineering and design through planning and implementing maintenance, including managing related documentation and drawings.

IFS plans to espouse similar standards in other industries, such as chemical, oil and gas, energy, and metals and mining, to further promote the development and adoption of ALM by other forward-thinking customers worldwide. This effort might be helped by the recently announced partnership with Tata Consultancy Services (TCS), which will primarily target the project-driven manufacturing, chemical, energy, utilities, telecommunications, and oil and gas industries, increasing IFS's ability to deliver its EAM and service management functionality to larger enterprises in North America. Readers should keep their eyes open for further developments from TCS, as they become available.

What Else Does IFS Get with iSC?

In addition to the possibility of cross-selling reliability-centered maintenance (RCM) capabilities and expertise to thousands of its existing customers, IFS should benefit from iSC’s focus and expertise in the naval and maritime operations sector. On one hand, the area of RCM technologies is getting increased exposure and investments from a number of vendors, such as Lawson and Infor. This contrasts the usual tendency to leave RCM to small, specialized (or niche) companies such as Meridium or Ivara (see Lean Maintenance—Does It Impact Reliability? Lessons Learned and Best Practices).

On the other hand, the acquisition should entrench IFS's leadership within the defense industry sector, which is now also beginning to invest in IT to streamline operations. Vertical focus has been “the name of the game,” even in the EAM and MRO areas, as illustrated by Mincom’s long focus on and success in the mining sector, or Indus’s (now Ventyx) expertise in some sectors of the utilities industry (for example, nuclear power plants). While this acquisition will add value to IFS's overall defense offering, it is likely to be of particular tactical interest to maritime and naval operations, a domain in which IFS has about one dozen clients.

As for some potential caveats (in addition to the above-mentioned ownership- and responsibility-sharing arrangements between IFS and BAE [that is to say, for IFS Defence]), one should note that iSC’s technology is based on the Microsoft .NET Framework, which is not quite in tune with the IFS Applications’ Java-based architecture on the server side. This could create hurdles for the envisioned integration of the two complementary products and technologies, despite the fact that service-oriented architecture (SOA) should render the platforms moot. The fact is that any product performs best when written in a native uniform environment, as has been the case with IFS Applications.

To be fair, IFS is well versed in Microsoft technologies on the client side, and the IFS Intelligent Desktop initiative and the related IFS Business Analytics product (formerly IFS Smart Client for Excel) are good examples of this. In June 2007, IFS announced the North American launch of the IFS Business Analytics offering, an office business application (OBA) that makes the IFS Applications ERP software accessible to users of the Microsoft Office 2007 system. IFS will have to carefully consider how best to align the functionality of the two products.

There are some indications that two solutions will continue to be offered for the immediate future (though this might be somewhat deceiving, as IFS insists on having only one product; provided the clients pay maintenance, IFS will support their older releases). Logically, there could still be issues regarding support and integration, given that IFS has traditionally been a single product suite company.

User Recommendations

It is difficult to argue against any vendor’s striving toward sharper vertical focus, and the market should appreciate IFS’s attempts to become more focused on the defense market. Especially impressive is the fact that IFS will continue to invest in existing customers, products, and technology, while concurrently targeting leadership positions in well-defined markets. Existing iSC customers should certainly treat the event as “business as usual,” and feel even more comfortable about their IT investment now being in the hands of a more established company. Naval and maritime businesses using IFS’s back-office applications that need to connect their plant maintenance, engineering, and procurement departments should explore how they can benefit from iSC’s RCM expertise.

Both current and prospective customers from non-defense sectors should evaluate IFS Defence’s potential to combine functional enhancements as a way to add value to their existing applications; but likewise, they should bear in mind that other ERP, EAM, MRO, or RCM vendors might also currently offer mature and functional products. IFS and IFS Defence should clarify their current ability to support users’ short- and long-term EAM, MRO, or RCM initiatives, as well as to provide a clarified product road map, given the two technologies’ likely parallel tracks for some time to come.

Past experience has shown that true product and organizational integration takes time and is very seldom painless. Currently, it is not crystal clear as to who is standing behind the commitment to long-term support of the iSC products now provided by the joint venture—whether it is one of the parent companies (either IFS or BAE), both of the parent companies, or just IFS Defence. Therefore, new customers should make sure that IFS or IFS Defence offers a single contract and is held accountable for all disparate components in its product offerings.

SOURCE:
http://www.technologyevaluation.com/research/articles/acquisitive-vendor-expands-its-enterprise-asset-management-potential-19292/

Once Bitten” Vendor Is Not “Twice Shy” about New Acquisition

2010-09-15T06:23:00.001-07:00

Much has been said lately by Technology Evaluation Centers (TEC) and other market observers about the ongoing turnaround success of IFS (OMX STO: IFS), the global enterprise applications company. Founded in 1983 in Sweden, the company can now boast approximately $300 million (USD) in revenues and 2,650 employees worldwide.

The vendor pioneered component-based enterprise resource planning (ERP) software with IFS Applications—now in its seventh generation—whose component architecture provides solutions that are easier than most to implement, run, and upgrade. IFS Applications is available in 54 countries and 22 languages, and the vendor has over 600,000 users across seven key vertical sectors: manufacturing; automotive; process industries; utilities and telecommunications; construction, contracting, and service management; aerospace and defense (A&D); and retail and wholesale. For information on IFS’s more recent state of affairs, see Two Stalwart Vendors Discuss Mid-market Issues

One of many reasons for the vendor’s stumbling and poor financial performance of yesteryear was its ill-advised acquisitions of several enterprise software companies in the late 1990s. Namely, IFS expanded into the customer relationship management (CRM) arena by acquiring former Israel-based CRM vendor Exactium for its product configuration module. The subsequent sell-off move to Pivotal (now part of CDC Software) in 2000 (see What Is IFS Up To in the CRM Arena?! ) represented IFS’s tacit concession that it had gone beyond its means with its too-ambitious product scope and geographic expansion.

IFS aimed at further expansion in the 1990s: hoping to gain a fast US beachhead by converting its customer base from the Time-Critical Manufacturing (TCM) product to its own enterprise applications, IFS bought US-based ERP vendor Effective Management Systems (EMS). However, customer satisfaction with TCM was (unexpectedly to IFS) high and, therefore, customer loyalty made it difficult to move customers away from TCM. With the majority of TCM customers reluctant to make the transition, and with IFS reluctant to maintain two separate ERP product lines, IFS then agreed to spin off the TCM product line in November 2001. Thus, the current WorkWise organization was created of former EMS staff, and has since focused solely on the TCM product line and its customer base (for more information, see A User-centric WorkWise Customer Conference).

Yet the sell-off at the end of 2004 of IFS’s Brazilian subsidiary; of tangential computer-aided design (CAD) applications for process, electrical, piping, and instrumentation design; and of applications for payroll (see IFS Continues Its Reinvention through Pruning) was a harbinger of today’s stabilized—even “upbeat”—company. After careful soul searching, IFS's then-management decided to stay focused on core competencies instead of extending painstaking efforts to develop peripheral applications for a small fraction of customers in Scandinavia, where the payback would have been highly unlikely.

Although creating a differentiating trait might have been tempting (no other ERP vendor has ever had native CAD applications for piping design), IFS’s CAD customer base was too small for the vendor to justify developing its own CAD applications in the long term, and the company did not have enough specialists outside the Nordic region to sell and support CAD applications globally. Again, this was possibly the best proof that IFS was getting rid of its erstwhile “not invented here” attitude.

Back to the Future?

Consequently, some might not have expected the vendor to consider acquisitions for some time to come. And yet, in July 2007, IFS’s joint venture with BAE Systems, IFS Defence Ltd., bought Information Science Consultants Ltd. (iSC). A privately held company based in Cirencester, UK, iSC specializes in naval maintenance management applications and services; the UK Royal Navy fleet uses iSC’s onboard and onshore unit maintenance management system (UMMS). The company also provides leading expertise in reliability-centered maintenance (RCM) processes and tool sets to a wide range of defense and commercial organizations. At the end of 2006, iSC (in British pounds) generated revenue of £2.4 million, with earnings before interest and tax (EBIT) of £0.5 million on gross assets of £1.8 million. Following the acquisition, iSC will operate as a business unit of IFS Defence.

Market Impact

Before jumping to a “not again!” conclusion, perhaps one should note that this acquisition might be of a somewhat different nature than IFS’s previous unsuccessful ones. Acquisitions of niche specialist companies, done to fill some functional gaps or to assert leadership in a certain vertical or geographic segment, usually make sense or justify themselves quickly. To that end, having originated from the realm of computer maintenance management systems (CMMS) for utilities in the 1980s, IFS has since become one of the leading suppliers of enterprise asset management (EAM) solutions, with a leading market share in the Europe, Middle East and Africa (EMEA) region.

In a nutshell, with iSC, IFS hopes to bolster its reliability-centered maintenance (RCM) capabilities in addition to its already strong EAM; maintenance, repair, and overhaul (MRO); and project-centric manufacturing solutions for the A&D sector. IFS’s A&D customers include the British, the Norwegian, and the US defense organizations, whereas its commercial MRO shops and operators include Finnair, Bristow Helicopters, Aero-Dienst, Hawker Pacific, and Jet Turbine Services, to name a few. IFS also provides solutions to original equipment manufacturers (OEMs), such as General Dynamics, Lockheed Martin, Eurofighter, BAE Systems, Saab, and General Electric (GE) Transportation.

Further along the lines of a different acquisition tack, strong joint ventures that go well beyond the usual press release (PR) announcements and joint marketing and financial arrangements (such as those with BAE and NEC), have recently become the norm for IFS. However, acquisitions are usually done directly by IFS, whereas the iSC acquisition is unusual for its being conducted by the IFS Defence joint venture. This route was apparently chosen owing to IFS Defence’s specialization in the A&D sector.

Historically, iSC has been mainly involved in consulting (the company is a custom software developer and consulting firm, and it supports customers' implementations of its software solutions), whereas IFS has primarily been a software product provider. Though conducting the acquisition via IFS Defence mitigates the financial risk for IFS and provides a better, consulting-oriented, cultural fit, some concerns might involve the ownership of the product and whether it will be rolled out globally to IFS’s customers beyond the defense sector.

New Asset Maintenance Appeal?

EAM and MRO seem to be of increasing interest to customers, and consequently to vendors, as can be seen by many vendors’ and venture capitalists’ (VCs’) deliberate investments in these areas. For instance, IBM recently invested a good chunk of change to acquire the former MRO software, despite the giant’s reluctance to be an enterprise application provider per se (in that it has long preferred and continues to partner for applications, providing mainly the underlying platform and infrastructure).

Also recently, Vista Equity Partners combined its individual EAM and field service investments, the formerly public Indus International, with the former Mobile Data Solutions Incorporated (MDSI) to create the new company Ventyx. The investment of Francisco Partners in the formerly public Mincom; Infor’s acquisition of the formerly public Datastream (see The Impact of the “Assembler Strategy” in the Enterprise Applications Field); Consona’s acquisition of Relevant Business Systems (see Smaller Vendors Can Still Provide Relevant Business Systems; Part Four: MRO and Spare Parts Management); and Lawson Software’s merger with Intentia (a former Swedish competitor of IFS with strong EAM and MRO offerings; see EAM versus CMMS: What's Right for Your Company?) should all speak volumes about the maintenance market’s attractiveness.

The enterprise applications leaders SAP and Oracle have also been extending their own EAM offerings. While Oracle has such capabilities in both its original Oracle E-Business Suite (EBS) and JD Edwards lines, SAP recently (at its EAM-centric user event) explained how SAP Enterprise Services Architecture (SAP ESA) should enable it to weave together native product enhancements and third-party partner solutions to satisfy two critical user needs: 1) innovation through composite applications to enable revenue growth, and 2) productivity and efficiency improvement through platform consolidation and standardization to drive bottom-line (profit) growth. User enterprises seem to have been interested lately in certain areas of asset management, including EAM process efficiency improvement; maintenance effectiveness and reliability; EAM applications usability and information access; and improvement in return on investment (ROI) from EAM projects.

In fact, Lawson Software recently conducted an internal global online study on nearly 200 companies (representing the utilities, manufacturing, mining, process manufacturing, and transportation sectors). The study concluded that concerns about plant safety, demand for asset availability, and environmental awareness or corporate social responsibility (CSR) and legislation (see "Evergreen”—Environmental Regulations for High-tech and Electronics, Chemical, and Oil and Gas Industries) are encouraging manufacturers to move to preventive and predictive maintenance strategies.

In other words, in the past, plant uptime and safety have primarily been internal plant issues (concerns about keeping the plant running and operators safe). But now, however, because of the CSR and environmental issues (for example, improving energy management and emission-reduction monitoring), such issues are more a strategic and external business matter. That is, an integrated EAM solution should ensure that a company’s assets operate efficiently within environmental guidelines.

For instance, a preventive maintenance program can help to lengthen the life span of spare parts and assets, save natural resources, and reduce waste. Some really advanced EAM adopters are now even viewing maintenance as a profit opportunity, and not just as a cost burden (or a necessary evil). Indeed, these users have begun to understand that RCM methods might increase the reliability and availability of a plant, which in turn might lead to more throughput (see Reliability-driven Maintenance—Closing the CMMS “Value Gap”?). Additionally, preventive maintenance and condition-monitoring techniques also extend the lives of the assets, thereby saving on capital expenditure.

SOURCE:
http://www.technologyevaluation.com/research/articles/once-bitten-vendor-is-not-twice-shy-about-new-acquisition-19291/

Project Lifecycle Management Implies Long Term Value; Forget the Total Cost of Ownership Fuss

2010-09-15T06:22:00.000-07:00

Product lifecycle management (PLM) software vendors are consistent in their belief that PLM applications software is well worth the investment because the life cycle costs of new product design and initiation (NPDI) are inherently weighted at the front end. Therefore the better job a company does in managing an efficient process toward NPDI will imply considerable cost savings over time. After a product launch, there are additional and significant gains that can be achieved by properly and efficiently managing the product life cycle through product retirement, but the real nugget for most manufacturers lies in the front-end of the product design and development cycle where an average (over multiple long NPDI industries) of over 80 percent of the costs resides.

Life Cycle Costs Over Time—Efficiency Starts with Design

Current global market forces are driving the need for manufacturers to re-examine their ways of conducting business, and are, in turn, driving PLM applications initiatives. These global market forces include

* Mergers and acquisitions
* Outsourcing and off-shoring
* Globally distributed manufacturing operations
* Broader supply chain networks
* New product market opportunities

At the same time, the recognition of inefficiencies and complexities across comprehensive business processes throughout a companies' design, engineering, manufacturing, marketing, and support organization are driving interest in PLM:

* Market assessment including segmentation and demographics
* Forecast demand and market window
* Conceptual design and product definition
* Detailed design
* Manufacturing release and change management
* Parts selection and sourcing
* Production process planning
* Market rollout
* Aftermarket support
* Portfolio management

The dynamics of these global market forces coupled with existing but inefficient product development business processes are opening the door to increasing PLM software adoption. Manufacturers are achieving better time-to-market improvements from the adoption of NPDI techniques and technology, but there are still bottlenecks during execution of these processes. Global design teams are becoming more commonplace due to mergers and acquisitions and outsourcing, dictating a more dispersed cross-functional team to collaborate on NPDI. Global expansion is also seeding collaborative NPDI activities. At the same time, regulatory requirements and other compliance initiatives are increasing the data capture requirements as new products go to market. Studies show that NPDI cycles are shrinking, indicating that collective PLM targeted processes and technology are paying off.

PLM Payback Is Complex and Subjective, But Real

Demand for PLM and recognition of value can be translated by the fact that key vendors like PTC, Dassault Systems, Agile, MatrixOne, and UGS are experiencing mixed to healthy growth in revenues for both design tools and broader PLM capabilities. PLM vendors, as a group, are meeting or exceeding market growth expectations, and the bar has been set high. The CEO of Compaq was recently quoted as saying that PLM offers "more pure ROI" than any other business application. So where does the value come from? Many of the subjective revenue gains and objective cost reductions lie in

* Improved new product design innovation
* Coordination across multiple product design and development locations
* Improved design quality while reducing design cost
* Reduced product time-to-market cycle times
* Better support for customers located worldwide
* Opportunity recognition via portfolio management
* Improved custom product development
* Enabled patent management
* Improved channel management
* Enabled intellectual property management

The Business Case for PLM Varies by Industry and Timeframe

Each industry has its own view of how PLM can improve efficiency, and what drives the business case for initiating PLM projects. Industries with short NPI and short product life cycles, like electronics and apparel, are "manufacturing" driven. Their focus is on the advantages gained through PLM concept adoption from design to mass production product launch. At the other end of the spectrum, industries like automotive, aerospace and defence (A&D), and pharmaceuticals have long product life cycles and long NPI cycles. They are "program" driven, and stand to gain from PLM initiatives focused on collaborative design, project management, portfolio management, and product retirement.

Total Cost of Ownership (TCO) Models is Overkill

Total cost of ownership (TCO) is a holistic way to view the true costs of IT investment throughout an applications' life cycle. TCO is a way to understand and analyze the costs, efficiencies, and economic impacts associated with procuring, using, and maintaining IT application components over time. In short, it is the "cradle to grave" costs associated to IT investments. TCO of a PLM environment is the total cost of procuring, operating, and maintaining PLM applications including hardware, software, training, peripherals, servers and local area networks (LAN) equipment including hidden and indirect costs like training and support throughout the life cycle of the PLM software assets.

Consulting firms that specialize in TCO assessments for software acquisition embrace a TCO philosophy based on the best practices surrounding application life cycle management including acquisition, deployment, service, and support, as well as revision control. TCO benchmarks exist for detailed analysis of current expenditures related to hardware and software, operations, administration, as well as end user operations and downtime. Topics such as staffing information, outsourcing fees, service desk metrics; dispatched support calls can all be included in a thorough TCO analysis.

PLM, as a strategy, is as much process definition as it is technology. Any TCO analysis examining the costs associated with a PLM application must as well examine the scope and level of best practices you have implemented in your company today as well as in the future. This requires a sharp view of both the "as-is" and "to-be" state of a companies' product design and development cycle.

But this type of analysis can be time consuming, laborious, and expensive and is most likely not warranted if one takes a more simplified approach. A considerably more simple yet logical approach for manufacturers initiating a PLM project involves developing a process flow schematic of product design and development processes, determining estimated or average durations by process, and comparing the reduction of product life cycle design and development time versus the over all product design and development costs. A mere percentage of savings in life cycle time can result in big dollar savings. Hacking off a week or two of product development time, and the resulting ripple effect throughout the product life cycle, can result in considerable savings that far exceed the TCO of a PLM application

SOURCE:
http://www.technologyevaluation.com/research/articles/project-lifecycle-management-implies-long-term-value-forget-the-total-cost-of-ownership-fuss-18190/

Is Baan Showing Signs of Life After Death?

2010-09-15T06:20:00.000-07:00

Baan, once a high flying Dutch ERP vendor has won its first new contract since being acquired by Invensys plc, a large British automating equipment provider; Baan is part of the Invensys Software Systems Division. Baan has won a major 3,000-user, multi-million pound order from the Defence Aviation Repair Agency (DARA). Part of British Ministry of Defence, DARA is the largest government-owned Aerospace and Defence facility in Europe.

DARA claims to have selected Baan because its solutions offered the best business fit for DARA's complex supply chain and production requirements. In particular, Baan's approach will enable DARA to accelerate the mapping of its new, best-in-class business processes onto the Baan software. The order comprises Baan Enterprise Resource Planning, Supply Chain Management, BaanFrontOffice, e-commerce and Baan Enterprise Knowledge Management, which combine to provide a comprehensive enterprise management and e-fulfillment solution. DARA hopes to reduce costs and significantly improve production turnaround time by increasing the visibility of design, product and maintenance information across the organization's multiple divisions and sites.

Bruce Henderson, Chief Executive of Invensys Software Systems Division, said: "Because of its product quality, it was clear that customers would return to Baan as soon as its future was assured. This is the first demonstration of that belief and we are confident that there will be many more contracts in the coming months."

Andy Hamilton, Corporate Development Director for DARA, said: "We chose the Baan package after an exhaustive 15 month evaluation period, not simply on the grounds of its unrivalled functionality in the Aerospace and Defence market, but also because of the attractiveness of Baan's e-commerce strategy and complete e-suite of products."

Market Impact

While "one swallow does not make summer", the news is, nevertheless, a sign of encouragement - particularly for Baan's existing customer base. Invensys, as a profit-driven company, has in the initial stages primarily addressed the issue of realigning Baan's financial structure to support its diminished revenue streams. Despite its assured future under Invensys' roof, Baan's negative publicity, personnel departures and channel shakeout, as well as the uncertain future product direction, have begun to take its toll on customers' loyalty and patience. There has long been an open season on disconcerted customers of struggling ERP vendors, Baan being the most prominent. Many more viable vendors have, with different levels of candidness, developed strategies of preying on dissatisfied and apprehensive organizations where those doomed systems were implemented (For more information, see Baan Defectors - Is This Only Tip of an Iceberg?).

However, Invensys has recently made some more determined steps with a view to stem the tide of defecting customers and to possibly start winning new deals. The blessing in disguise was that throughout the entire tumultuous period, and despite all the negative publicity and personnel departures, Baan has maintained its core development organization in the Netherlands. Also, the initial restructuring effort within Invensys, has spared much of the core development team and focused instead on sales, marketing, services, and administration. Another positive sign for the entire Baan Suite was the fact that Invensys has become one of its biggest users. Baan has therefore become a corporate strategy, which may well mean that Invensys is committed to the enhancement of the functionality and underlying technology. Since the acquisition, Baan stepped up plans to deliver on its Internet strategy with the upcoming release of a new Internet/HTML client, which is slated for delivery with BaanERP release 5.2.

Invensys has also allayed speculations regarding Baan's CRM product future by appointing Robert Karulf as Baan's Aurum CRM division leader. Finally, the company has recently launched an advertising campaign in some prominent magazines like Newsweek where it touts that "there has never been a better time to become one of our customers". The ad also reads "Our software is at the very cutting edge of technology and supports every facet of business processes including manufacturing, distribution and transportation, E-Enterprise, E-Fulfillment, supply chain and CRM no less. And, of course, we can guarantee absolute integration across your business processes".

While it may be too early to predict the future of the Baan product at this stage and while the market may not fall for the typical 'fluffy' marketing rhetoric, we believe that Invensys stands a chance of salvaging, and possibly expanding its customer base. It should, however, without any delay, further address customers' concerns by unequivocally stating a more detailed product strategy and the timeframe for its delivery.

The fact remains that Baan still has a competitive product within some industries, despite its dismal enhancements during the above-mentioned difficult period and a dubious history of functional consistency and integration across the entire product portfolio. But core product functionality and technology are only a small part of the selection process, with ever diminishing significance. While the acquisition may have allayed the viability issue, the company's channels, both direct and indirect, to sell and support its products were all but decimated during the last two years, and particularly recently, before and during the acquisition. Failure to rebuild these channels may annul all the above-mentioned steps in the right direction.

SOURCE:
http://www.technologyevaluation.com/research/articles/is-baan-showing-signs-of-life-after-death-16168/

IFS Glows Amidst The Mid-Market Gloom

2010-09-15T06:19:00.000-07:00

On August 24, IFS AB (XSSE:IFS), a Swedish mid-market enterprise applications vendor, reported upbeat results for the second quarter of fiscal 2001 amidst a prevailing gloom within the Tier 2 & 3 vendors. After four consecutive losing quarters, IFS was pleased to report Q2 2001 profits of ~$2 million after net financial items, compared with a loss of ~$10 million for the corresponding period in 2000 (See Figure 1). Total revenue increased by 62% to ~$84 million, compared with ~$52 million for Q2 2000. License revenue was up a whopping 82% to ~$40 million, compared with ~$22 million a year ago.

Figure 1.

This positions IFS as the fifth largest ERP provider during the second quarter in terms of license sales, while the company occupied the first position in terms of the fastest total and license revenue growth, stealing thereby the thunder from recently ebullient SAP and PeopleSoft. More important, the growth has been almost completely organic, as no significant acquisitions were made during the past 12 months.

Furthermore, IFS North America reported earnings of ~$2 million and is now IFS' largest market with 35% of total sales. The contract won from General Electric was the largest in the company's history and was of multifaceted paramount importance. GE Engine Services (GEES) has selected IFS software to run its 60 worldwide Maintenance, Repair, and Overhaul (MRO) facilities. GE will also market the application to airline and independent MRO providers. The multi-million dollar agreement will start with a deployment for 4,500 users. GE will then market the application to commercial airline maintenance facilities.

Also recently, an agreement has been signed concerning deeper technological and commercial collaboration with ABB. ABB has also acquired 3.7% of IFS, which represents 1.8% of the voting rights, through a direct share issue valued at roughly $10 million. The investment by ABB New Ventures strengthens an existing technical and commercial alliance between ABB and IFS. For more than a year, IFS has been developing ways to integrate its business software with ABB's Industrial IT platform. ABB signed an agreement with IFS in January to resell IFS Applications components. In the long term, cross licensing of system components between the companies might decrease research and development costs for both partners.

Bengt Nilsson, president and CEO of IFS, said, "The positive earnings trend is a result of strong license sales, especially during the second quarter. The market for business applications has grown 10%. Thanks to a strong product, we have succeeded in taking market share and increasing sales despite tight cost controls and fewer personnel. The orders from General Electric and General Dynamics and the partnership alliance agreements with General Electric and ABB are vital steps in our strategy to become a market leader in selected segments and thereby improve margins in the long term. We are pleased by the confidence shown in IFS and by the help from our partners in increasing our market share."

Towards the end of 2000, IFS initiated an action plan to strengthen the board, management, financing, profitability, and cash flow, which has been implemented. It is expected to have positive effects in the form of cost reduction in excess of ~$18 million during the current year compared with the cost level during the fourth quarter of 2000. However, the measures to reduce costs and improve cash flow have yet to produce their full effect and will be intensified and scrutinized during the remainder of the year. In its outlook for the rest of the year, IFS expects continued cost containment rationalization coupled with further growth to result in improved earnings for the rest of 2001. To that end, the product development will be more sharply focused on refining functionality, particularly within specific industry segments that are of strategic interest for IFS and its premium partners.

Market Impact

IFS' results should give hope to its embattled peers that it is possible to spar with the bigger players provided you have an appropriate approach. The company has realized and addressed the seriousness of its protracted poor financial performance, by focusing on profitability/positive cash flow, balanced growth through more reliance on growth and product enhancements through strategic partnerships, and product development costs tied to new sales. Sharp execution should continue be the name of the game. One should expect better financial performance in the future given the curbing of R&D expense and increased fiscal discipline, along with a healthy growth in the US and Latin America owing to IFS' expertise in certain vertical niches (see User Recommendations).

During 2000, IFS invested heavily in product development to complete the new version of its business applications, IFS Applications 2001. The product release should keep the company abreast with the latest market trends, as it boasts all the traditional ERP functionality and much more. In fall of 2000, when the product was launched, the 'hot items' were new e-procurement, customer relationship management (CRM), flow manufacturing, portal, and wireless capabilities. Furthermore, at the beginning of 2001, IFS announced an enhanced advanced planning & scheduling (APS) system featuring new Web-based "portlets" to provide improved demand forecasting visibility across the supply chain. In March, it launched its new eMarkets solution that should provide support for both private and public exchanges (marketplaces). Last but not least, in April, the company announced IFS Engage, a portal-based packaged solution for medium-size manufacturers. Engage helps manufacturers relatively quickly extend their existing ERP applications into e-Business, e-CRM, and extended SCM in a manageable, incremental fashion. The first modules currently available through IFS Engage are CRM, collaborative planning, vendor-managed inventory (VMI), collaborative project management, and subcontracting, with many others envisioned for the future.

While IFS has been well-known for providing ERP applications to medium-to-large organizations, that make complex, highly engineered products, with project-based manufacturing processes and asset intensive operations, it has long been trying to crack the U.S. Aerospace and Defense (A&D) industry. To that end, the GE contract might bear much more importance to IFS than a mere bruising of the bigger guys' egos (and even replacing an incumbent Tier 1 vendor in case). The intense scrutiny that the company of GE's stature has put IFS through in making its selection, should provide an increased confidence in IFS for the rest of high-profile prospects in all other IFS' target markets.

The magnitude of the deal can be seen in GE's decision to resell the software as a co-branded product to their commercial aircraft engine customers and prospects, where it has been considered the world's leading supplier. IFS thereby gets the chance to gain valuable exposure and to prove its ability to engage companies in a private trade exchange (PTX), possibly via IFS eMarkets solution. IFS' recognition should be bolstered with the GE deal as also seen in very recent wins at Derco Aerospace, UK Defence Logistics Organisation (DLO) and General Dynamics, in the great part owing to its strong MRO functionality. IFS has thereby encroached upon the stronghold of vendors like Western Data Systems (WDS), Epicor Software, Mincom, SAP, Oracle, Cincom Systems, MRO Software, and Ramco Systems. Moreover, deals from likes of GE could also allay many concerns regarding IFS Applications scalability, which has also plagued it in the past within the higher-end of the market.

SOURCE:
http://www.technologyevaluation.com/research/articles/ifs-glows-amidst-the-mid-market-gloom-16481/

Manugistics Indulges In The Open M&A Season

2010-08-25T23:02:00.000-07:00

In May during the enVISION2002 annual user conference, Manugistics Group, Inc. (NASDAQ: MANU), one of the leading global supply chain management (SCM) software providers, announced it had acquired the assets and business of privately-held ERP provider Western Data Systems (WDS), www.westdata.com, with headquarters in Calabasas, CA, and with over 20 years of presence in the Defense industry providing plant-level transaction execution for manufacturing and Maintenance, Repair, and Overhaul (MRO) operations. The acquisition has a potential to create one of the largest Aerospace and Defense (A&D) installed client bases in the industry, and to enhance a strong solution set for optimizing the complex Service and Parts Management (S&PM) processes of these asset-intensive organizations. WDS, with revenues last year of $28 million, is a prominent provider of application software and services to A&D organizations, with more than 135 organizations and 33,000 concurrent users worldwide.

"Once Bitten” Vendor Is Not “Twice Shy” about New Acquisition

2010-08-25T22:59:00.001-07:00

One Year Later at Deltek: More of the Same

2010-05-01T05:30:00.000-07:00

To be fair, estimating is another key program management disciplne, which Deltek does via third-party solutions. Regarding estimating partners for EPM, Deltek works with several vendors, including Galorath, ProPricer, and PRICE Systems. Users can basically import comma-separated values (CSV) files from those estimating systems into Deltek Cobra. While Deltek works with all of the above-mentioned estimating vendors, it doesn’t yet have formalized partnerships with any of them, and doesn’t turn to one more than any other.

The “See Problems Before They Do,” “Share Program Information,” and “Trust the Data” Themes

As Deltek has built its EPM business and listened to its customers’ top priorities, it has focused its attention on building a technology roadmap that delivers features such as early warning indicators, automated reporting, “anywhere, anytime” access via the Web, and process controls to build consistency within the organization. The vendor continues to invest in EPM, and one recent highlight would be Deltek wInsight 6.4, the tool for EVM reporting and collaboration, which was released in late May, 2008.

The release included enhancements such as early warning indicators that provide a proactive view of project performance to avoid costly budget and schedule overruns. In addition, wInsight 6.4 added two new “trip wire” metrics for the United States (US) Office of Secretary of Defense (OSD): the Baseline Execution Index (BEI) and the Critical Path Length Index (CPLI). These indices are used to measure and forecast programs’ progress and are utilized by the US Defense Contract Management Agency (DCMA) for compliance audits.

The product also included faster US Office of Management and Budget (OMB) Part 300 reporting capabilities and simplified data integration. The latter was enabled via a United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Extensible Markup Language (XML) data interchange to communicate EVM data to clients more easily.

Acquisition Further Bolsters EVM Leadership

As the second major move in the EPM space, in September 2008 Deltek announced the acquisition of MPM, Planview’s former EVM solution. Deltek received both software and key employees with this acquisition.

Prior to this acquisition, the two dominant EVM applications in the market were Planview MPM and Deltek Cobra. Now, Deltek becomes the industry-standard solution in the marketplace for EVM, since acquiring MPM effectively allowed the vendor to corner this market niche. This acquisition indeed extends Deltek’s leadership position as the largest and most comprehensive EVM provider.

Deltek MPM is an EVM application widely used by government contractors and agencies, including 8 of the top 10 aerospace and defense (A&D) contractors, to meet the complex compliance requirements of the US Federal Government. The solution competes directly with Artemis CostView and Dekker, and is used primarily by government contractors to comply with the ANSI 748-98A standards for earned value reporting.

Managing Trees versus Managing Grass

2010-05-01T05:27:00.000-07:00

created for retail, footwear, and apparel; TradeStone Software names its solution Merchandise Lifecycle Management (MLM) (instead of PLM) and focuses on helping retailers to design and develop private label merchandise. No matter how vendors describe their solutions, it seems certain that now PLM manages not only “trees” but also “grass.”

Here’s what I mean: A tree is much more complicated than a blade of grass in terms of its physical structure. Not only that, but a certain size of land surface accommodating ten trees is able to grow a thousand times the amount (if not more) of grass. This situation is similar to the difference between the industries (such as aerospace and automotive) in which the PLM methodology originated, and the industries (such as fashion and retail) in which the PLM methodology has received increasing attention during the past few years.

Product Structure: Complicated versus Simple

A tree has numerous branches and leaves. So do products such as airplanes, automobiles, and industrial equipment; its branches and leaves are called components and parts. Actually, managing a complicated product structure is one of the major reasons why people started to adopt product data management (PDM) systems—the predecessor of PLM. On the contrary, within the fashion and retail sectors, products are more like grass. Their structure is usually flat and simple.

Product Variety: Small versus Large

A tree requires many more resources (quantities of soil, space, sunlight, water, etc.) than a blade of grass does. It is also true that a complicated product requires more resources than a simple product. As a result, companies that produce “trees,”such as General Motors, may develop and manage only a handful of different products. But companies that produce “grass,” such as Spain-based apparel company Zara, may introduce up to 11,000 different styles in a single season.

The Data Explosion

2009-12-04T05:46:00.002-08:00

Traffic on the World Wide Web continues to grow. Traffic on your SmallSmartFast devices continues to grow.

Ok, I admit it. I bought the cell phone that takes pictures. I didn't know if it was useful; but being a technophile, I went for it. And rapidly it all came to me! I tried on a new cool jacket ... I crooned over it ... but for that much money, I wasn't sure. Should I really buy this? Enter the pic in my cell phone! We chicks have our honor guard. You know those close friends who will tell you the truth—eyes roll- what did you do to your hair- friend. So I took my picture and sent it. Hey take a look at me in this—what do you think? Real time feedback! And that got me to thinking about my business. Do you like this location, equipment, etc.? Attach you message, the pictures, pricing, etc. ... we are on our way.

The network is alive with the sound of convergence ... not a new song, but it got us thinking about the explosion of traffic on these various platforms across GPS and the Internet.

These patterns we are quite familiar with—but wireless seems to be spinning out around the world.
Global trade is increasing the number of shipments by 7 to 8 percent each year. Embedded within this process is also the need to trace, track, and secure these shipments. Hybrid devices are already in use and their deployment is growing. Containers in Hong Kong, Oakland bound, are bonded with active RFID and GPS devices that secure and track the shipment all the way to the customer. Smart Secure Trade Lanes has over one hundred global participants with all the major ports participating. This initiative is enabled by Savi's global RFID-enabled network, which can read both passive and active data and is already deployed around the world.

Industry Vertical Alone Does Not Define the Supply Chain

2009-11-25T04:00:00.000-08:00

Software vendors are now offering functionality specifically designed for various industries. And when selecting a supply chain planning (SCP) solution, it’s obviously important to take these solutions into account. However, this alone does not guarantee the best-fit solution for your business; it’s equally important to ensure that the solution is designed to address your specific supply chain issues.

Related Topic: Supply Chain Management (SCM)

Related Keywords: supply chain planning, push-pull environment, SCM, inventory deployment, Infor, SCP, process manufacturing, supply chain management, supply chain solutions, procurement opportunity analysis

BRAIN May Still Be Needed In The Automotive Industry

2009-11-07T06:07:00.000-08:00

Sharp industry focus and domain expertise, product interconnectivity, and quick and inexpensive e-commerce enablement have been BRAIN's bargaining chips in the game against the likes of a German fellow giant SAP. The pressures of the '90s on automotive suppliers to streamline manufacturing operations in order to reduce inventory and costs in general, and to increase the overall speed of production, have only been increased recently with the economic slump. Many ERP systems have consequently added new functionality to meet these needs, such as bar-code labels printing for both parts and containers, and advanced shipping notices (ASNs).

BRAIN continues to compete with its two automotive-focused ERP packages, which are Xpert Manufacturing System, which runs on IBM's iServer (formerly AS/400) platform, and TRANS4M, which runs on UNIX and Windows NT server platforms.

BRAIN's parent company, BRAIN International AG, is headquartered in Breisach, Germany and was formed a few years ago from the merger of German ERP software developers BIW and Rembold + Holzer. BRAIN gained the TRANS4M solution when it acquired a US-based CMI-Competitive Solutions in September 1999 with a view to become the leading provider of ERP solutions to the North American automotive industry. The two products differ in their fit to different types of automotive suppliers, in addition to platform support. Xpert is better suited to mixed-mode manufacturing requirements (with EDI being an integrated component of materials requirement planning - MRP), whereas TRANS4M should appeal to manufacturers with a lean/repetitive production environment (with its work-in-progress (WIP) visibility, pay-point operations, multiple backflush methods, and other industry endemic functionality).

Having long been offering two automotive sector-focused ERP systems has allowed BRAIN International to meanwhile also garner Web-based software capabilities and domain expertise in supply chain communication. The automotive industry has unique characteristics that make it highly conducive to Internet-based supply chain optimization and collaboration. A car's complex bill of materials (BOM) results in many entities being involved in its making. Information transparency and supply chain integration are, therefore, the name of the game.

E-business technology, while not causing these requirements, is at least providing for their enablement. To that end, BRAIN has also been offering a suite of automotive-focused supply chain communication applications that integrate with multiple ERP systems. The platform agnosticism stems both from the need for stronger market competitiveness and from the homogenous back-office population within the customer base. While many existing customers run on one of BRAIN's ERP solutions, many others have legacy systems or systems from another vendor that they are not planning to replace any time soon.

As a result BRAIN has developed its e-Automotive Suite of B2B communication and collaboration applications, which also includes SupplyWEB Enterprise, a Web-based system for communicating procurement, shipment, payment, supplier performance, and many other types of information, catering thereby for almost every type of communication an automotive company has with its suppliers.

While extensible mark-up language (XML) holds great promise, the automotive industry has invested heavily in electronic data interchange (EDI) and will not dispense with an investment in something that has been working well. Perhaps, new e-commerce business processes such as MRO (maintenance, repair, and overhaul) components procurement will adopt XML right away, while in other cases, EDI might simply be moved onto the Internet. SupplyWEB therefore eliminates the need for all of the company's suppliers to install and maintain expensive and complex EDI connectivity. While sophisticated suppliers may still use their EDI investment, smaller suppliers' communication needs can be handled via SupplyWEB. As a matter of fact, the company deploying SupplyWEB may be under the impression that all its suppliers have EEDI, as BRAIN leverages the Internet as the means to help lower-tier, small suppliers get beyond manual re-keying of EDI transmissions.

Enterprise Resource Planning (ERP) Solutions – Alex Hankewicz

2009-10-26T05:20:00.000-07:00

Enterprise Resource Planning (ERP) Solutions – Alex Hankewicz

For over 20 years, this global software firm has provided a completely integrated modular product that covers nearly 20 industry verticals, ranging in such technically diverse industries as aerospace, energy, telecommunications, and process manufacturing (e.g., pharmaceuticals). The true genius of this system lies within the simplicity of the product’s design. The product was developed over several years of client usage and has continued to evolve.

The current seventh generation of the component-based software, IFS Applications 7, is entirely based on service-oriented component architecture (SOCA). The system has such robust features that many of the modules are being deployed as “best-of-breed” solutions in numerous customer locations. One of the ways that IFS stands out from the rest is through the use of open-source application programming interfaces (APIs), where the software modules can integrate with open source products. In conclusion, this vendor may not get the press or hype that some of its more famous competitors do, but it can stand up to—and in many instances can surpass—them, in terms of delivering fit, form, and functionality due to the product’s scalability.

Who Are White Papers Aimed at Anyway—The Technical Professional or the Poor Soul Who Got Stuck With the Job

2009-10-05T06:31:00.000-07:00

But whose job is it to do all of this anyway? It’s often assumed that someone in IT (a technical professional) will be responsible for it. Other assumed targets are the Chief Executive Officer (CEO), the Chief Technical Officer (CTO), and sometimes even the Chief Financial Officer (CFO)—depending on the type of enterprise software that is required. But believe it or not, most often the person that is handed the title of software selection “Project Manager” or “Project Champion” is just an ordinary Joe—(or Jane to be politically correct)—a department manager or project coordinator who knows the organization’s business processes like the back of their hand. While he (or she) may not have any particular technical expertise, he may certainly be able to add value to the project by knowing the business. So, why not; who better to handle this type of job, than someone like that?

Which brings me to the point of my story…

I found myself involved in a “blog debate” recently regarding the topic of white papers and the use of the word “solution” to describe enterprise software. My take on the word “solution” was that it is often misused or abused by software vendors trying to market their product. I wasn’t surprised to see that others were not inclined to agree with my point of view.

The point I was trying to make was not to come up with a better word to describe enterprise software or systems, but to simply suggest that the word “solution” be used only when warranted:

“Sure, white papers are used for a sales purpose, but if the terminology isn’t used properly or the vendor is heavier on the sell rather than providing useful information, then they lose their impact of what makes them valuable to the customer in the first place.”

In the end, I offered up an alternative by suggesting the word “tool”, to which I received the following reply:

“In technology circles, the word “tool” has a very specific meaning relating to software development. Since the majority of white papers produced today fall into the technology camp, the use of the word tool in a business white paper could be misconstrued when read by technical professionals.”

If you’re not sure where I’m going with all this, just keep reading; it’ll begin to make a little more sense shortly.

Let’s start by looking at two examples of how the word “solution” could be used.

Example 1—CORRECTLY using the word “solution”

An apparel manufacturing company was looking for a new way to increase its productivity and reduce its costs. After many months of searching, it decided to purchase an enterprise resource planning (ERP) system, which could take care of billing, purchasing, inventory control, production planning, and much more. By implementing this type of unified system, the company was able to eliminate the need to keep several of its legacy systems throughout the organization—therefore making its new ERP system a true overall “solution” to its problem.

In this example, the software system was implemented on its own—with no other additional requirements. Considering it a “solution” is therefore legitimate.

Example 2—INCORRECTLY using the word “solution”

A financial institution was looking for a more robust way to backup its data. In order to do so, it would require an enterprise backup system in addition to a variety of other tools. This complete backup solution would be comprised of a backup client agent, backup servers, the storage media—as well as the hardware to support such media, and the infrastructure that would link it all together. The backup policies—such as retention, scheduling, and offsite storage would also have to be considered a part of this final solution.

So, what is a backup solution exactly? Is it the software on its own that enables you to backup and restore a file? Or is it all of these things together that makes it possible to recover data ranging from a single file to full system recovery?

In this example, the chosen backup software and additional technical components are considered the “tools”, whereas the “solution” is the sum of all the parts.

Is it not true that all these “tools” together were what created the “solution” to the financial institution’s backup problem?

So, getting back to my original point at the start of this blog post—who is reading these white papers anyway?

White papers cover a wide variety of topics—from hardware to software, from middleware to legacy systems, from IP telephony to decryption, encryption, and so on. It’s a smorgasbord of technical issues and conclusions.

In the grand scheme of things…

…everything that goes into an enterprise software implementation can be considered a tool—aimed at providing an organization with a “solution” to some kind of problem.

…everything that goes into the development of software can be considered a tool—aimed at creating a marketable product.

So whether it’s C-level manager, a software selection project manager, or a technical professional who’s reading the white paper, it doesn’t really matter; tools are tools.

Deltek’s Second Bite at the IPO Cherry (Part IV)

2009-09-04T09:02:00.000-07:00

the relatively recently launched Deltek Vision 5 [evaluate this product] and Deltek Costpoint 6 [evaluate this product] suites. It also tackled the related potential opportunities for Deltek. For one, key up- and cross-sell opportunities should come from:

* Additional modules, especially from the newly minted Deltek EPM [evaluate this product] suite: The majority of new Deltek customers initially purchase a single module or a select few modules of the suite (e.g., project management, financials, human resources [HR] or timesheets) and add more modules a few years after implementing the initial modules; and
* Migration from entry-level and/or legacy products to Costpoint or Vision: Deltek GCS Premier [evaluate this product] is a low-cost entry-level application suite designed for smaller contracting firms. As GCS customers outgrow these systems, there is opportunity for migration onto Costpoint. Similarly, we expect legacy Deltek FMS, Sema4 and Advantage customers to migrate onto Vision or Costpoint (depending on industry), as their scalability requirements exceed system capabilities. These legacy products were designed for small professional services firms.

As for focused geographic expansion, due to largely offering products that support only English, Deltek’s initial focus will logically be on English-speaking countries such as Canada, the UK, Australia and New Zealand. International geographies have so far represented only a few percentiles of total revenue, but the company plans to generate 20 percent from international markets over the next three to five years, mostly via expansion into the UK and Australia/New Zealand.

Deltek has identified nearly 40,000 mid market consulting and architecture, engineering & construction (A/E/C) firms in Canada, the United Kingdom (UK), Australia and New Zealand as potential customers. The vendor is also targeting the construction industry in the Middle East.

To that end, Deltek’s international sales and consulting staff have recently expanded in part with a completed integration of Welcom International into Deltek in 2006. The company also established 24×5 support in the UK in 2007, while 24×7 support is now available for all customers. The UK staff has more than tripled since 2006 with additional support from direct sales hires underway.

In addition, the Canadian staff has more than doubled since 2006, while the Australia and New Zealand presence is expanding through the reseller focus. We should look for a number of international marketing campaigns in 2008 and beyond.

Becoming More Partner-Friendly

Deltek has lately also been expanding its alliance network and ecosystem in various ways, starting with expanding indirect sales channels. For a value proposition by product, Deltek Vision’s value add reseller (VAR) partners can provide broader coverage, particularly to access the big opportunity market of companies with less than 50 employees. Vision VARs can also provide localized implementation and/or support, while the independent software vendor (ISV) partners can fill certain functionality gaps and/or extend the solution into complementary areas.

On the other hand, the lower-end of the architecture, enginering & construction (A/E/C) and professional service markets has been served with Deltek Vision Small Business Edition (since June 2006) while mid-sized to large firms have been targeted with Vision 5. In both cases the latest cutting-edge enhancements like the above-mentioned Visualization are used for project management. Nearly 2,400 project-focused firms are Vision clients today, whereby the product recorded a nearly 50 percent growth rate in client base in 2007. The Deltek Vision partner network was also doubled in last couple of years.

Focus has always been a Deltek’s friend over the years, so it has been a conscious decision to target the current verticals where the vendor has a presence with Vision and not expand into a myriad of others. Deltek only moves into new verticals when it has the organizational commitment and resources to fully engage the new vertical.

Recently, the vendor has made the decision to focus heavily on the consulting market for Vision (where it already has about 200 customers), which includes Management Consulting and IT Consulting. Deltek Vision Consulting Edition seems well suited to succeed in this space given its strong resource planning capabilities.

On the Deltek EPM suite’s indirect channel side, resellers can deliver access to opportunities not targeted by the Deltek’s direct sales team (e.g., federal agencies, smaller businesses, etc.). VAR’s can also improve consulting bandwidth constraints in that regard. Deltek is actively recruiting additional partners within the UK for the Deltek Vision and EPM products, and also strengthening its international partner network for Canada and the Asia-Pacific region.

The company’s commitment to market penetration via recruiting partners can be best seen via a recent slew of press releases in that regard on its corporate Web site. Deltek is also keen on expanding relationships with complementary technology partners such as Microsoft, Primavera, IBM/Cognos, Oracle/BEA Systems, Actuate Corporation, etc.

Last but not least, the vendor is implementing new partner programs to support domestic and international partners. What should help in that regard is the recent appointment of Taylor Macdonald as Vice President (VP) of Worldwide Channels and Sales Alliances, given his deep partnering experience while at Sage Software.

Competition Cannot Be Undermined

Deltek claims to have not noticed an increase in competition from SAP or Oracle lately. Deltek believes that SAP does not seem to be committed to this space from a product roadmap perspective, whereas Oracle still does not recognize the project-focused space operationally within its entire mushrooming organization.

Indeed, Oracle still has products’ rationalization issues (i.e., to cobble solutions together from former Peoplesoft, Oracle E-Business Suite [EBS], Siebel and JD Edwards to offer a full “fused” suite). Neither Oracle nor SAP reportedly has a fully dedicated sales force targeted exclusively to the project-focused marketplace.

Yet, fierce competition can come not only from SAP or Oracle, but also from many Tier Two enterprise resource planning (ERP) vendors with a focus in the aerospace & defense (A&D) industry. As also pointed out in the Enterprise Systems Spectator’s blog post, Deltek has strong project management and project accounting functionality, but it lacks integrated product data management (PDM) integration, complex engineer-to-order (ETO) manufacturing and the field service/repair features that A&D clients typically require.

In other words, for many prospects, it is still not a complete project-based manufacturing solution, where project manufacturing and ETO-oriented products like IFS Applications, Epicor Vantage, or Consona Encompix and Relevant INFIMACS II can better fit the picture, to name only some (for a more comprehensive competitive landscape, see Part II of this blog series).

Staying Away From On-demand, For Now

One potential stumbling block could come from the company not yet having any plans to roll out “on-demand” versions of its software, which would allow customers to download its applications over the Internet, and which is a backbone of businesses such as Salesforce.com and NetSuite.

Software as a Service (SaaS) vendors such as Salesforce.com, ADP and RightNow compete only in Deltek’s peripheral customer relationship management (CRM) and HR businesses, and pose little threat to the company’s core project management and financial application businesses today. Still, there is a risk that they gain traction in the enterprise applications market over time, as on-demand ERP offerings evolve, and on demand adoption increases.

SAP Business ByDesign, Oracle CRM On-Demand and Microsoft Dynamics CRM On-Demand are some high-profile recently launched and/or improved on-demand offerings, which these mighty vendors plan to market and sell more aggressively in the near to mid term.

While the resonance for on-demand has been pretty low with Deltek customers, especially in the conservative government contractors market, the existence of on-demand ISVs like OpenAir might indicate the SaaS deployment model’s viability at least in the professional services market.

It bears noting, however, that Deltek does offer its software in a traditional single-tenant hosted model through various partners, and they have gained some traction offering their solutions through this model.

Improving Brand Awareness

There are indications that Deltek is a leading brand in the core government contracting and A/E/C industries. Deltek plans to continue improving brand awareness through a targeted marketing campaign that will include: local customer forums, focused trade shows and advertising in relevant trade magazines.

I believe that this is the right marketing approach (on a micro-level) for this conservative market segment, and is likely to continue improving awareness of the Deltek offering in the foreseeable future. Improving awareness will facilitate migration onto the Deltek platforms from legacy manual or point project management systems, given the benefits of Deltek products and services and the inability for service firms to manage growth using manual and legacy point systems.

Still, in the bigger scheme of things, time will only tell whether Deltek will be right in seemingly resisting any radical change on positioning/messaging and believing that doing the right thing by customers is enough in the market. Sometimes it simply isn’t — e.g., the US is very much a Hollywood culture, and if you don’t have a slick recognizable catch phrase (e.g., “Just do it!”) or can quickly spit out a clear differentiating message in 10 seconds or so, you will not advance in the long run amid the bigger brand names.

The debate will thus go on whether Deltek’s conservative marketing approach was the right one over the past three years or so. This would be the result of a product-centric marketing strategy that is more concerned with project-oriented feature/functionality, without an apparent enlightenment to evolve the original project-centric messaging that was described in Part I of this blog series.

Every vendor must reinvent itself into something new/interesting every few years at a minimum. Deltek’s continual focus on things like EVM or project portfolio management (PPM) without any sizzle might begin to sound a bit flat after a while, at least in the global market.

But we may find out soon. Namely, in only a few days, during the Deltek Insight ‘08 annual user conference, the vendor might come out with a number of new refreshing messages and themes.

Deltek’s Second Bite at the IPO Cherry (Part I)

2009-09-04T09:01:00.001-07:00

In the last decade or so of covering the enterprise applications market, I’ve witnessed so many products and vendors disappearing and reappearing under a different name, ownership, etc., but it is for the first time now, at the end of 2007 that I saw basically the same vendor go public for the second time (and in a 10 year timespan). Namely, Deltek (evaluate its flagship product), the leading provider of enterprise applications software designed specifically for project-focused businesses (those with business processes revolving around the engagement, execution and delivery of projects), has done it again. Its common shares begun trading November 1, 2007 on the NASDAQ Global Select Market under the trading symbol “PROJ”. Previously, the company, which was founded in 1983, used to be publicly traded under the symbol “DLTK” from 1997 till late 2002/early 2003, when it was de-listed and went private again (for the time being).

I don’t intend to bore you with the financial figures (about the number of shares offered, its current share value, market capitalization, etc.), since many wire alerts have repeatedly already done so. What is more interesting here is Deltek chief executive officer (CEO), Kevin Parker’s statements that the company — which, as mentioned above, was taken public 10 years ago before being taken private about five years later by the founding deLaski family — launched its second initial public offering (IPO) as a means to boost recognition of the Deltek brand. Parker believes that it is an important time to have a broader audience, and the company is thus focusing on expanding globally. Proceeds from the offering will be used to pay down debt, which Parker said will give the company greater ability to reinvest in the company.

In his recent blog post, Ray Wang of Forrester Research is quite positive and upbeat about the IPO, and fully agrees with Parker’s ideas and justifications. Myself, I often tend to mostly agree with Ray, with the difference that one should always mention some caveats too (and please, can anyone show me a single company without some challenges?). On the other hand, a report that preceded the Deltek IPO by a few months (i.e., it was posted after Deltek’s pre-IPO S-1 filing with the U.S. Securities and Exchange Commission [SEC] ) was quite negative, berating the S-1 filing (especially the “Description of business” part) as sounding so outdated (so 1990-ish), and without any references to the contemporary trends like Service Oriented Architecture (SOA), Software as a Service (SaaS)/On-Demand, Web 2.0, etc. Also, the article opines that the heydays of the Professional Service Automation (PSA) market (one in which Deltek competes) are far behind us (I might agree with the fact that the PSA acronym might be a “goner”, but not really the market opportunity – certainly not in a services economy).

Sure, for one, it is very likely that many passages from the Deltek’s 1997 S-1 filing were leveraged 10 years later too (after all, most products are still the same and serve the same customers). In fact, it is quite likely that the justifications for the IPO back in 1997 sound quite similar to those of Parker’s today (e.g., expansion, improved brand recognition, visibility, and whatnot). Deltek had indeed made a number of acquisitions previously as a public company and had reached the US$ 100 million mark by 2002. The de-listing at the end of 2002 was justified by the fact that being public was just too much of a hassle and unneeded expense for the C-level executives (due to the just introduced Sarbanes-Oxley Act [SOX]-compliance then, etc.) without much real benefit. This was particularly true in terms of the (lack of) freedom to make decisions (i.e., the market nervousness often stifles the CEO to make bold and risky moves). Thus, why should anyone believe that this time the IPO will work much better than before, especially given the timing of poor stock performance across the board? Is there anything fundamentally different at Deltek now compared to 10 or five years ago?

To answer that question, let’s first go back to the beginnings of Deltek. Founded in 1983, Deltek started as a supplier of accounting systems to the US Federal government. The vendor has since certainly gained the lion’s market share within the government contractors that are located within 250 miles of Washington DC (the so called DC beltway). These are businesses of all sizes that sell services to the US Department of Defense (DoD) and like agencies, and are thus audited by the Defense Contract Auditing Agency (DCAA). During the 1990s, Deltek evolved to become a niche vendor of project-based enterprise systems, primarily to the architectural, engineering, and construction industries, in addition to government contractors. While its flagship enterprise resource planning (ERP) product Deltek Costpoint (for larger customers, evaluate this product) was released in 1995, in 1998 Deltek acquired former Harper & Shuman, Inc. (in which year it exceeded 5,000 customers and US$50 million in revenue). In 2000, the company acquired former A/E Management, Inc. and Semaphore, Inc. and released Deltek GCS Premier (for small government contractors, evaluate this product), while 2002 saw the first release of Deltek Vision for professional service companies (evaluate this product). In 2003, the company reached the US$100 million revenue mark and was taken private.

First time I attempted to analyze Deltek was in the early 2000s, and that was not an easy task at all (to put it mildly) — the glorified family run software company had a number of disparate and seemingly incoherent solutions, some of which were just point solutions and/or were on legacy technologies (e.g., many were not Web-enabled at the time) and had little presence outside North America . The vendor did not seem much interested in explaining to analysts and market observers its strategy at the time anyway, other than referring to itself as a financial information/management solution for the government sector. It all radically changed in early 2003, when Deltek engaged a seasoned marketer Judith Rothrock (previously with Lawson Software [evaluate its flagship product], an occasional competitor to Deltek, and Hyperion [now Oracle Hyperion, evaluate this product]).

She helped Deltek craft the differentiation message from the all too common “Widget world” and “ERP for manufacturing” arena that was the matter of course by then, and to accordingly start promoting “the ERP vendor of choice for Project-Based Businesses” mantra (which continues today too). In other words, most ERP systems still handle defined, high-volume repetitive unit production cycles, and unit-centric business processes. Also, in this widget world, there is hardly any estimate of completion accounting, hardly any interim basis for revenue recognition, and traditional supply chain management (SCM) principles apply. Conversely, in the “Project world”, businesses have to:

* Plan and Forecast Detailed Activities by Project;
* Manage the Overall Project Lifecycle;
* View Key Business Drivers by Project;
* Calculate Revenue, Billings and Indirect Rate Allocations by Project;
* Analyze Profitability and Job Performance at all Levels of the Enterprise by Project; and
* Manage Key Metrics and Trending by Project.

The other important messaging idea Rothrock provided was to simplify a marketing messaging/positioning rationale for Deltek’s three major product lines, which previously were not only impossible to understand externally, but that even had internal sales channel conflict. By creating an “at a glance” x/y axis grid that graphically depicted the solution targets based on two distinct client parameters: 1) business size/complexity and 2) technology requirements, the world finally “got” what Deltek was all about. All other (sometimes confusing) point and/or legacy solutions (e.g., Deltek CRM Proposals, evaluate this product) have been subordinated to one of the three major product lines.

These major products were (and still are):

1. Deltek Costpoint (evaluate this product) is the company’s most comprehensive enterprise management software solution specifically designed to meet the unique needs of sophisticated project-driven organizations and automate mission-critical business processes. Looking at its functional footprint — business development, project management, financial management, human resource (HR) management, operations, manufacturing, earned value management (EVM), and corporate performance management (CPM) — this product suite would likely not impress much at first glance (except for the recently added critical EVM functionality).

However, the Java 2 Enterprise Edition (J2EE)-based product suite aims to deliver the entire project lifecycle value by enabling businesses to 1) Win more business (via capabilities like client and contact management, opportunity forecasting and management, services estimating, and proposal automation), then 2) Execute (via capabilities like EVM, financial & project accounting, resource management, and project management), and finally 3) Improve Performance (via capabilities like corporate and project budgeting, risk management, real-time business metrics, and performance reports).

This is where the “rubber meets the road”, given that Costpoint also addresses today’s additional challenges for such large project-based enterprises. These are to ensure compliance, improve cash flow, secure data, enhance efficiency, etc. While more details on how Costpoint can accommodate these challenges will be discussed later on, it suffices to say here that Deltek’s Strength is compliance, in terms of DCAA-, Federal Acquisition Requirements (FAR)- and Cost Accounting Standards (CAS)-compliant structures and features. Given the sheer number of Deltek’s customers, its software would possibly be the “most audited software in the world” by government agencies.

2. Deltek Vision (evaluate this product), on the other hand brings together most of critical business processes for the successful operation of the professional services firms engaged primarily in private sector work. The “youngster” Microsoft .NET-based suite (rewritten based on best-of-breed functionality of other legacy brethren products, like Deltek Sema4, Deltek Advantage or Deltek FMS), aims to improve business performance, streamline operations, and help win new business. To that end, it combines financial management, time and expense (T&E) management, billing, project management, resource planning and management, document management, client relationship management, and proposal and marketing automation, all into one integrated solution.

The gist of Deltek Vision’s value proposition is to empower project-based professional services businesses to maximize profitability by reducing budget overruns and increasing resource utilization. As a good example how Vision can significantly impact a professional services firm’s bottom line — a 2 percent increase in utilization of 60 billable resources, each billed at US$85 per hour, increase the bottom line by nearly US$200,000. Conversely, without such capabilities, firms face challenges of constant budget overruns and poor resource utilization across projects.

3. Deltek GCS Premier (evaluate this product) is the Microsoft Windows-based, enterprise accounting solution currently marketed to small to mid-sized businesses (with up to 80 employees or so) focused on earning revenue from government contracts. This product was released in March 2000, and, in addition to its Windows-based interface, features flexible, component-based software construction achieved with Microsoft Visual Basic and ActiveX controls. GCS Premier was designed specifically to ensure that Deltek’s legacy System1 (DOS-based) customers could easily migrate to GCS without the necessity of data conversion while preserving System1’s critical processing programs, complex reports and other time-tested legacy programs.

This product group’s positioning and rationalization strategy certainly helped me produce my first series of articles on Deltek in early 2004. In 2005, the Deltek founders sold the majority (75 percent) of ownership to New Mountain Capital LLC., which then brought Kevin Parker (formerly chief financial officer [CFO] of PeopleSoft, now Oracle PeopleSoft evaluate this product) as new President and CEO. Immediately after, Deltek acquired former Wind2 and thus exceeded 10,000 customers and US$150 million in revenue. Fast forward to nowadays, the company has over 12,000 customers worldwide, is quite profitable and with strong growth (with the 2006 revenues of US$225 million). Over 1,000 employees now work in 13 offices worldwide. Following the IPO, New Mountain’s stake will be roughly 53 percent, according to a regulatory filing with the SEC.

Given that Deltek has never been associated with the terms like “flashy”, “glitzy”, “cool” (or so), and given that it has not been very proactively informing the market about its moves and intentions from 2005 on, some observers might have begun to think of Deltek as sounding tired, stagnant and non-differentiatable. Certainly we haven’t seen much new or interesting on the marketing front, since that noteworthy repositioning time in 2003. I think the apex was when Deltek’s then enlightened marketing engine churned out such cheeky gems as challenging the likes of the Big 3 ERP leaders at the time, by taking the entire back page of the June 6, 2003 Wall Street Journal business section with a signed “come to us” letter authored by Ken deLaski, the former Deltek CEO and President.

One Year Later at Deltek: More of the Same (And Then Some More) – Part II

2009-09-04T08:59:00.000-07:00

explained Deltek’s ebullience despite a hostile and depressed environment. The continued cash-generating operation has been complemented by in-house developments, acquisitions, and partnerships.

The previous blog post also talked about the recent developments (and anticipated future developments) at Deltek’s Professional Service line of business, which is largely represented by Deltek Vision [evaluate this product]. Parts II & III will analyze the recent developments (and anticipated future developments) at Deltek’s remaining lines of business.

Government Contracting (GovCon) Market

Deltek has invested in a lot of research and development (R&D) in the GovCon market recently, with two major product announcements being the availability of the new release of Deltek GCS Premier [evaluate this product] and the release of the Deltek Performance Management (DPM) suite. GCS Premier 5.0 was a huge release for Deltek because the goal behind the launch was to put to bed perceptions that its competitors (most frequently Microsoft Dynamics and its network of partners) have been putting in the marketplace for a while.

Namely, GCS Premier has long featured an old technology foundation (with a “welcome to the 1980s” look-and-feel), and the market perception has been that Deltek is not really committed to improving the product. Deltek’s presumed strategy was to force GCS users to upgrade to the upper-range Deltek Costpoint [evaluate this product] suite. These assumptions could not be further from the truth, and the 5.0 release is proof.

Generally available from late August 2008, GCS Premier 5.0 delivers significant enhancements to the renowned and widespread project accounting solution for small-to-medium-sized government contractors. The release is focused on producing enhancements to the following three important areas:

1. Ease of use
2. Improved invoicing
3. United States (US) Defense Contract Auditing Agency (DCAA)-mandated compliance reporting.

GCS Premier 5.0 delivers a new user interface (UI) with a more versatile and contemporary look-and-feel, and bolstered billing capabilities that make invoicing faster and easier. The latter capability is accomplished by the addition of flexible invoicing to the billing process (Microsoft Office Excel-based) and the first installment of billing functionality improvements.

In addition to completely changing the product’s UI to make it more intuitive and modern, Deltek also updated reporting schedules and formats that reduce customers’ reporting workload. The release also added additional compliance reporting capabilities such as Incurred Cost Submission (ICS) reports, and important integration with Microsoft Office for billing. Some GCS Premier clients that have upgraded to the 5.0 version have reportedly seen billing times go from a few hours to 90 seconds (which should translate in a much better cash flow).

The familiar workflow graphics that GCS customers have traditionally liked remain in this new version. However GCS 5.0 also adds greater navigational ease with the new UI that features the Explorer-Tab-Icon combination, and that puts users almost instantly anywhere they need to go (a couple of clicks away from anywhere).

Incidentally, Deltek believes its decision to invest in GCS Premier was a wise one: it has been among the best-selling software packages within Deltek over the last year or so given the number of small government contractors that continue to enter the market. With Obama’s potential spending plans, GCS is likely to continue to have a strong run.

Furthermore, Deltek continues to invest in GCS Premier. In keeping with a performance management theme you will see below, the company is planning on releasing Executive Dashboards in 2009 and new reporting capabilities that will leverage all of the key data in GCS to allow government contractors to make better business decisions.

Nothing Without Business Performance Management

DPM was released in the late summer of 2008, and it was an important release for Deltek because – as we all know – analytics, dashboards, and business performance management (BPM) are all the rage these days. While companies could always do reporting within Deltek Costpoint, DPM puts the power of analytics into the hands of the end-users and out of the hands of the information technology (IT) department.

The idea was to empower all employees with self-service access to the information they need to make more informed decisions on a daily basis. DPM is based around IBM Cognos 8 business intelligence (BI) technology and includes 50 pre-built reports that are further configurable, 13 ICS schedules, 181 Sarbanes-Oxley Act (SOX) control screens, and has a standardized look-and-feel and drill-thru capabilities.

The offering is integrated and compatible with Deltek Costpoint 6.0 and 6.1 and with the Deltek Time & Expense 8.0 and 8.1 products. Sales of Costpoint and Cognos have evidently been so strong that Deltek was named Cognos’ original equipment manufacturer (OEM) partner of the year at Cognos’ recent conference.

For the future, Deltek’s major focus within the GovCon line of business is on the Costpoint side, specifically completely converting it to a Java 2 Enterprise Edition (J2EE) architecture (from the original Gupta/Centura blueprint) and continuing to invest in executive dashboards and scorecards for improved usability. Namely, the current Costpoint 6.1 release’s focus has been on enterprise-class scalability and performance, support for SOX via Segregation of Duties (SoD), auditing and other internal controls, and support for earned value management (EVM) via Deltek Cobra integration. Last but not least, there are improved GovCon project accounting capabilities via support for the Accounting Classification Reference Number (ACRN) Bills, Wide Area Work Flow (WAWF) Interface, and Award Fee Revenue.

Another important GovCon focus is on expanding the capabilities of Deltek GovWin, Deltek’s business development/capture management solution for government contracting. In this tough economy, responding to the right bids and winning business are more important processes than ever. With this upcoming release, GovWin will manage the complete business development lifecycle, from opportunity identification and management, to contract award.

The product follows this specialized sales lifecycle from gathering and tracking competitive, market and human intelligence to opportunity identification and management, pursuit decision management (bid/no bid), capture planning and proposal management. The release will also allow users instant access and search of all documents and information from competitive information to pricing and estimating information to existing contracts and proposals.

Deltek Enterprise Project Management (EPM) Portfolio

The Deltek EPM product portfolio has also been a top seller for Deltek over the last year or so. Compliance and tight project controls are paramount during these economic times, and the US government has stepped up enforcement and project auditing. According to the proverb “might makes right,” Deltek’s customers like government agencies’ contractors, systems integrators, aerospace & defense (A&D) manufacturers, and capital investment architecture, engineering & construction (A/E/C) companies have no choice but to comply.

Deltek is also gaining traction inside government agencies themselves who use Deltek EPM solutions to better manage their programs. Therefore, these companies badly need the likes of Deltek as they strive to do more with less while eliminating inconsistent project management practices and meeting a plethora of mushrooming compliance requirements. The overwhelming set of requirements could include:

* The Office of Management and Budget (OMB) 300;
* Defense Federal Acquisition Regulation Supplement (or DFARS);
* British Standard (BS) 6079;
* SOX;
* The US Department of Defense (DOD) 5000 2R, Part 11; and
* The American National Standards Institute (ANSI) 748-98A.

Particularly, having the EVM capability is no longer optional when dealing with the abovementioned federal agencies. Impacts from failure to comply and missed schedules can be devastating. For example, how would you feel about losing EVM accreditation and having up to 10 percent of supplier payments withheld by the agency for failure to adequately implement and maintain a validated EVM system?

Making matters even worse, the requirements from US agencies like Environmental Protection Agency (EPA), Department of Energy (DoE), National Aeronautics and Space Administration (NASA), General Services Administration (GSA), and Federal Aviation Administration (FAA) are continuing to expand into ever smaller projects (in terms of the contract value thresholds) with ever more reporting requirements. The ability to manage earned value is no longer just a nice thing to do (to impress the “big brother”), but is being rigorously enforced. There are the indications that the government is also considering lowering the dollar thresholds for all the projects where EVM is mandated.

The Deltek EPM solution set [evaluate some of these products] accordingly incorporates all aspects needed to manage project performance. From material management, time collection and cost accounting (within enterprise resource planning [ERP] systems like Costpoint) to cost management, EVM, scheduling, and risk management. This information rolls into analytic reporting and then down into dashboards for easy viewing via the Deltek WelcomHome project collaboration software.

The final part of this blog series will analyze the recent developments (and anticipated future developments) at the Deltek EPM line of business. Your views, comments and opinions, particular experiences with the aforementioned products, etc., are welcome in the meantime.

One Year Later at Deltek: More of the Same (And Then Some More) – Part I

2009-09-04T08:55:00.000-07:00

Time and again during my decade or so of covering the enterprise applications market as an industry analyst I have witnessed what difference a year can make. And boy, would 2008 be such a year!

A year ago or so, I concluded an in-depth four-part series on Deltek (NASDAQ: PROJ), whose executives were recently happy to tell me that 2008 was not that terrible a year for the company. Quite the contrary, Deltek feels comfortable as a company even in these troubled economic times.

This comfort persists because the company’s balance sheet is remarkably healthy, and even with software license revenues less than the company expected in the last reported fiscal quarter (Q3 2008), Deltek remains profitable and generates cash. Maintenance renewal rates remain high, and profit margins have remained strong across the business.

The other reason Deltek feels comfortable is because it is one of the best-positioned enterprise software companies to weather this economy from a vertical industry focus perspective. Government contracting investment is going at full speed ahead because the budgets that were set during the Bush administration will be spent in 2009. It won’t be until 2010 and beyond that the vendor might feel major effects from the changing US administration, and the changes it expects to see are positive for the company as well.

Ready for Both “Old” and “New” Deals

Namely, government spending will likely increase on President Obama’s watch, and even if he invests more in domestic projects than in defense, there will still be contractors that need well-tuned project accounting software to remain compliant with a growing set of stringent requirements.

All in all, Deltek’s GovCon line of business (which stands for government contractors; more details on Deltek’s major product lines will come later) should be strong. Sales of Deltek GCS Premier [evaluate this product] and Deltek Costpoint [evaluate this product] were strong last quarter and are expected to remain so going forward.

The Deltek EPM (Enterprise Project Management) suite [evaluate this product set] led by earned value management (EVM) applications Deltek Cobra and Deltek MPM (recently acquired from Planview) should also be a big seller given the expected strong government spending. In this tight environment, the US government has increased the number of auditors looking into programs’ performances making the EPM suite even more important in this day and age.

On the professional services side, where Deltek Vision [evaluate this product] is the flagship solution, there is certainly some near-term weakness, and we could see that reflected in Deltek’s license revenue numbers. The blessing in disguise might be that the weakness should be a postponement of certain deals rather than their cancellation.

Some Architecture, Engineering & Construction (A/E/C) and associated consulting firms are a bit conservative at the moment and are not investing in their businesses in the near-term until they see how the credit markets shake out. However, these companies need software and will be buyers in the future.

Within the A/E/C customer base, Deltek fortunately has minimal exposure to the embattled residential real-estate market as well. Many of Deltek’s A/E/C customers design things like roads, bridges, and hospitals; i.e. infrastructure projects that tend not to be de-prioritized even in tough times. Indeed, if Obama comes through on his promise to invest in the crumbling US infrastructure because he believes it is in need of a major overhaul (which it is!), Deltek seems to be well positioned to support those A/E/C firms that will no doubt get pulled into helping with those major programs across the US.

Thus, Deltek gladly joins Agresso, Meridian Systems, and Skire in their belief that this new “New Deal” of sorts should drive a lot of new business for project-based software companies. And, since Deltek is an established US-based company with a large presence across the US (in terms of sales offices and reseller partners, especially within the “DC beltway”), I’d expect it to fare even better than, say, Agresso in its core vertical markets as the new “New Deal” takes shape.

Furthermore, Deltek made no dramatic cost-cutting statements as did many other vendors. The company has never been about making earth-shattering moves in either direction, but rather remaining on the course of measured growth and profitability, and on protecting its market share in the project-based industry segments. Deltek has always run a lean operation and that seems to be serving it well in the “stick to your knitting” times that we are in right now.

Latest News from Each of Deltek’s Lines of Business

During the Deltek Insight 2008 annual user conference in May 2008, the vendor made a number of product-related announcements. Hardly anything there was jawdropping, but then again, Deltek is not about making tectonic moves. The challenges, as mentioned in my abovementioned blog series still exist, especially with the soft A/E/C market (which represents a sizable proportion of Deltek’s revenues).

On the other hand, the vendor can counter this market softness with growth opportunities including penetrating existing verticals, cross-selling and up-selling in existing accounts, expanding its product portfolio, entering new project-based vertical market segments (like management consulting, business consulting, and IT service consulting), and international expansion. One thing is for sure: Deltek remains committed to its products’ enhancements and is prudently keeping abreast of the technical developments.

Professional Services Market

The current Deltek Vision 5.1 product release focuses largely on business performance management (BPM) and localization capabilities. It features Microsoft SQL Server Analysis Services (SSAS) online analytic processing (OLAP) cubes for Microsoft Excel-based analytics, the ability to produce global and local financial statements, and mobile customer relationship management (CRM) capabilities. Currently, the most important new development in the Vision world was the Consulting Edition that Deltek released around the time of the Insight 2008 conference.

Using the core Vision engine as a base, the edition was a configured version of the software that resonated with the consulting market right out of the box. The offering included features like an emphasis on resource management reporting (i.e., employee-centric metrics like utilization or quarterly revenue per partner), renamed fields to consulting-specific terminology (e.g., “engagements” versus “projects,” “solutions” and “offerings” versus “regions” and “offices,” “industries” versus “business units,” or “methodologies” versus “project tasks”), and functionality enhancements for important areas like Human Capital Management (HCM).

Deltek offers quite a bit of HCM functionality in the current release of Deltek Vision, especially around resource management (i.e., staff management, salary history, and human resource [HR] reporting), career development, performance management (i.e. employee performance reviews), employee recruitment and on-boarding workflows, report generation for metrics like equal employment opportunity (EEO) reports, and recruitment. If the product doesn’t offer what a customer needs, the customer can always use the Vision Xtend framework (to be explained shortly) to build the desired functionality through user-defined fields.

As for future developments, while the Consulting Edition really helped to jumpstart Deltek’s focus on the consulting market (the vendor has always had clients therein, but this release showed a formal committment to the market), the most important initiative in the Vision world is the upcoming release of Deltek Vision 6.0. The product is slated for release around the March/April 2009 timeframe, and promises a number of important improvements that are hoped to really push Vision in a new direction along the technology, usability, and globalization lines. Two of the most notable enhancements are:

1. Globalization improvements such as the automation of complex multinational tax calculations, localized reporting to meet international financial reporting standards (IFRS), and building a more secure environment for intercompany and multicurrency transactions. There will be support for multiple languages, while Microsoft SQL Server Reporting Services (SSRS) will be used for standard reporting (in previous versions reporting was provided via the partnership with Actuate Corporation). Thus, Vision 6.0 will set the stage for Deltek’s much needed international expansion efforts when the time is right; and
2. Microsoft Smart Client and .NET Framework improvements that should change the usability paradigm of the application (including Silverlight). Users will have much more flexibility to configure how they want to view application data through smart grids, integration with Microsoft Office Communicator , and interactive dashboards. Perhaps most importantly, the improvements make it even easier for partners to build on top of Vision and/or build extensions to it.

These capabilities might mean that Deltek Vision can become (should traditionally conservative Deltek choose to fully embrace this avant-garde strategy), a platform that others can build around. This would be similar to what Salesforce.com (through its AppeXchange directory that is built on the Force.com on-demand platform) and NetSuite’s SuiteFlex on-demand platform offer (of course, with the difference of Deltek Vision being a traditional on-premise platform).

The idea behind the “Smart Grids” feature is to empower the user as much as possible to take advantage of the vast data that resides inside the system. While Vision users have always been able to view data record by record or in tables, Smart Grids leverage Microsoft Smart Client technology (Deltek has reached the highest tier of Microsoft partners and is closely tied with the giant) to filter a grid of data in any manner required, and to directly export the filtered data to Excel for further analysis. The prior pedestrian way of getting information to Excel was to go into a report within Vision and then export to Excel from the list report.

Extending Deltek Vision

For its part, Vision Xtend, which was introduced back in 2005 within Deltek Vision 3.0, is an extensible technology foundation built using the Microsoft .NET framework. On top of a configurable Vision core, Xtend provides service-oriented architecture (SOA) and Web Services capabilities for drag-and-drop-like customization, workflow configuration, and integration, with the intent to extend and adapt Vision to meet unique requirements. With added integration to Microsoft Office (to streamline processes) and with mobile devices (for anytime, anywhere access) users and partners are able to deliver tailored Vision-based solutions.

Although not a new concept, Deltek featured Vision Xtend in some Insight 2008 presentations mainly because its team used the tool to configure the aforementioned Vision Consulting Edition. Hence, the vendor could demonstrate the value of Xtend to customers. However, Deltek continues to add capabilities such as new application programming interfaces (API’s) to the framework so that users can extend it further for a variety of functions. More will be added to Vision Xtend in Deltek Vision 6.0.

Future developments, beyond Vision 6.0, will revolve around business intelligence (BI) in terms of expanded role–based user interface (UI) and/or dashboards, and expanded Microsoft SharePoint integration. The HCM functionality will also be high on the priority list. As for functionality in the pipeline, more robust recruiting, employee-self service (ESS), and benefits administration functionalities are all on the roadmap.

The upcoming two parts of this blog series will analyze the recent developments (and anticipated future developments) at Deltek’s remaining lines of business. Your views, comments, opinions, etc. are welcome in the meantime.

Manufacturing Systems with an IQ: Beating the Odds, Mightily – Part 1

2009-09-04T08:54:00.000-07:00

Some time in mid-2005 TEC published a six part article on IQMS, a relatively small and obscure enterprise resource planning (ERP) vendor based in Paso Robles, California (US), with offices across North America (i.e., in Chicago, Canada, and Mexico), Europe (i.e., Sweden and with recently announced indirect presence in the UK) and Asia (i.e., China and Taiwan). Some readers were likely wondering why I “made so much mileage” out of a seemingly unimportant vendor of fewer than 70 employees and with only a few hundred customers at the time.

Well, I might have been somewhat vindicated in early 2009, when IQMS announced that it closed 2008 with double-digit profitability and a 10 percent increase in new customer accounts. Even as manufacturing markets have tightened and doom-and-gloom sentiments have pervaded the globe, IQMS has accumulated revenue gains for several years. Namely, in 2005 and 2006, the company grew by about 25 percent each year (which was a multiple of the industry’s average growth), demonstrating its value proposition to selected manufacturing industries worldwide, including medical devices, automotive, aerospace, plastics, and consumer packaged goods (e.g., appliances, electronics, computers/business machines).

IQMS (whose name alludes to “manufacturing systems with an intelligence quotient [IQ]”) was incorporated in 1989 and has been privately held ever since without any venture capital (VC) money involved. Having been based in California and founded (and still majority-owned) by a married couple, IQMS somewhat resembles its bigger fellow ERP peer, QAD. But the differences between the two vendors are also apparent starting with QAD being publicly held for over a decade. QAD is also a much larger vendor, with typically larger customers (although overlapping and possibly competing with IQMS in many similar industries and regions), and has an incomparably better global presence.

For its part, IQMS boasts a 98 percent customer retention rate and continuous profitability and growth, which traits have not always characterized QAD. Currently, IQMS has a total of over 500 corporate customers at over 1,000 locations in 4 continents and 11 countries. These user companies range from a single site with only 5 users to companies with 10 sites and an unlimited number of users.

IQMS focuses on small-to-medium enterprises (SMEs) in make-to-order (MTO) and make-to-stock (MTS) operations in the discrete manufacturing, repetitive manufacturing, and process manufacturing environments. These companies tend to embrace lean manufacturing (and overall “lean business”) principles and thus require low-maintenance and cost-effective (but fully functional) ERP systems. To that end, perpetual licensing provides the rights to all future upgrades and includes database licensing too.

Master of Its Own Destiny (and Its Own Domain)

Being privately held and not burdened with the stifling demands of private equity firms, venture funds, or public shareholders has proven to be a blessing for IQMS. Namely, not only has IQMS stayed away from the disturbance of the ongoing vendor consolidation bonanza, but it has also been able to control its own destiny and make independent decisions about product development. IQMS customers are also intimately involved in product development via annual user meetings, an online user group, and participation in focused development teams.

In keeping with growth and its commitment to delivering leading-edge solutions, IQMS added employees to every department in 2008 (with a total head count now well over 100), and created new work units including the Automation and Oracle Data Services groups. These groups are focused exclusively on system advancements, customer satisfaction, and bridging shop floor equipment directly into functional ERP applications.

For instance, IQMS’ Automation Group’s charter is to expand the interface capabilities of IQMS’ flagship EnterpriseIQ ERP [evaluate this product] system with manufacturing equipment on the shop floor. The newly formed group, comprised of engineers and programmers, has as its goal working with existing IQMS customers to create greater efficiency and automation between shop floor hardware and ERP software. This integration is expected to result in leaner manufacturing operations.

The IQMS Automation Group was launched with several custom programmable logic controller (PLC) interfacing projects developed with customers’ input at a number of customer beta sites. Implementations included capabilities such as:

* two-way communication with PLCs to control and initiate conveyor systems, vertical lifts, scanners, palletizers, photo-eye sensors, and other pieces of equipment;
* two-way communication with stretch wrap machines via relay/digital input boards to automate final packaging of customer product;
* automated first-in-first-out (FIFO) pick/store warehouse applications for forklifts; and
* directly interfacing with work centers to automatically report scrap and production.

“Not Invented Here” Attitude

One of the key tenets of IQMS’ success has been a laser-sharp vertical industry focus, of which I have always been a big proponent, in general. Namely, when the company started in 1989, it initially catered solely to injection molding manufacturers. This focus has allowed IQMS developers to focus deeply on the requirements of this esoteric market segment and really gain subject-matter expertise on the idiosyncratic problems and issues of those customers.

Namely, if a system doesn’t understand and support tricky requirements such as family molds or multiple cavitations running at the same time, it will cost the customer dearly in terms of system customizations, lowered efficiency, and heavy-lifting maintenance. Since 1989, IQMS has judiciously expanded its focus to SME companies in related industries such as automotive suppliers, packaging manufacturers, and medical device makers.

But other tenets of IQMS’ success have seemingly been at odds with conventional wisdom and the practices of vendors of IQMS’ size and means. Namely, IQMS’ niche focus has driven the company to try to address as many of the needs of its target customers as possible. As a result, the EnterpriseIQ suite has (surprisingly to a first-time observer) a pretty wide footprint of functionality (coming from such a small vendor with limited means).

To be concrete, the suite natively provides extended-ERP applications such as enterprise asset management (EAM), customer relationship management (CRM), electronic data interchange (EDI), and warehouse management system (WMS). As if these capabilities were not impressive enough, then how about adding the abovementioned intrinsic shop-floor equipment automation and monitoring, time-clock, and quality management system (QMS) functionalities?

These features mean that all these modules run on a single database and feature out-of-the-box integration with a consistent user interface (UI) or look-and-feel. Furthermore, we are talking about real-time transactions here, rather than delayed (and thus after the fact) batch processing (e.g. data transfers) and necessary interfaces when “alien” third-party applications are involved.

Many IQMS customers have indeed benefited from an EnterpriseIQ production management application called RealTime Machine Monitoring. This application connects each work center to the EnterpriseIQ database, allowing users to follow jobs as they move through production. Because production data feeds directly into the ERP database, job status is automatically updated down to the minute. The system also supports graphical scheduling screens and reports that can be used by stationary and remote users to assess job status, track downtime, and view quality data. Pager and public announcement (PA) system alerts are also available for the plant.

Single-source Strategy

Now, there is certainly nothing wrong with the “single source,” “one-stop-shop,” and “a single-throat-to-choke” strategy. Smaller manufacturing companies especially appreciate a strategic business application that integrates financial management, human resources management system (HRMS), manufacturing systems, and other corporate software functions into a single system.

However, such homogeneous offerings are yet to be offered even by vendors that are incomparably larger. Even the market leader SAP has recently given up on its traditional “not invented here” attitude (think of the Business Objects or Visiprise acquisitions), but not tiny IQMS.

In fact, IQMS’ management strongly believes that the company has not only survived but also thrived by serving a few targeted industries with a full-function system. The system has been developed organically (in-house and with no acquisitions) to fulfill most (if not even all) of customers’ needs, while also providing a hands-off system (in terms of minimal ongoing maintenance) but with a decent technical performance.

Believe it or not, IQMS professes a strategy of being the single source for virtually everything a customer might need beyond software development and programming. Namely, “single source” also refers to sales and implementation services, training, and customer service and technical support. With some minor exceptions in optional fringe functionality (i.e., embedded Crystal Reports, Global Software for financial reporting and spreadsheet automation, Actify CAD Viewer, or CLEO for EDI communications), IQMS touts no need for using third-party applications for core-competency modules, and no third-party implementation providers.

For example, in the automotive industry, EDI is a major component in a supplier’s ability to deliver exactly what customers want. To that end, the IQMS EDI Translator module is embedded within the EnterpriseIQ system, which operates entirely within a single database, so that customers have no need for pesky third-party hardware interfaces. Incoming EDI files are automatically translated into the ERP system, thus instantly updating all of the pertinent records, while outgoing files are automatically transferred back to customers and suppliers. Since there is no need for manual data entry, suppliers (IQMS customers) can be confident that they are disseminating accurate, timely information across their supply chains.

With third-party EDI systems, which transfer EDI data via dedicated modems, automotive suppliers not only face hefty costs, but also often have trouble finding and correcting any problems associated with orders. Some IQMS customers talk about their inability (even over 80 percent of the time) to respond fast enough to EDI errors because the data transfer was slow. This problem would ironically be magnified with some accounts that are geographically close to the plant. Namely, if the customer’s plant is only 40 minutes away or so, shipping errors will be arriving at the customer’s plant before the shipping department could catch them.

This native EDI module allows a much greater degree of integration for processes such as outsourcing (subcontractor) management, where products may move through multiple nodes in the supply chain. IQMS provides visibility to this material moving within the supply chain, relying on advanced shipment notices (ASN) in its EDI capabilities to track the movement.

I Mean, Single-source in Every Aspect

When it comes to sales and implementation services, IQMS Sales and Professional Services provides complete project management and implementation services in North America (and through resellers/partners in Europe and the Far East). The involved IQMS employees are APICS-certified, which helps to deliver a typical implementation in three to six months time. IQMS claims that 95 percent of its customers meet their target “go live” date, with implementations taking on average less than 40 percent of software spending.

As for training, in February 2009 IQMS introduced Virtual Training Classes that supplement other training options offered by IQMS, including classroom training, on-site facility training, single-customer Internet-based training, and free online videos. Virtual training classes bring together the best of two worlds (class training and the online user forums), in one convenient place. Finally, the multilingual customer service and technical support includes expected channels such as the telephone, the Internet, e-mail, and online user groups.

The Changing PLM User Landscape

2009-09-04T08:53:00.000-07:00

Product lifecycle management (PLM) originated decades ago in the discrete manufacturing area, and for quite a long period of time remained mainly as a solution for the upscale market in industries such as aerospace and automotive. However, recently PLM has become more approachable for smaller-sized businesses in more industries. It is not difficult to have this impression when you see increasing versions of PLM solutions targeting small and medium business (SMB) and mushrooming solutions such as PLM for consumer packaged goods (CPG), PLM for fashion, PLM for retail, and so on.

On the user side, based on statistics from TEC’sPLM Evaluation Center, it seems that users are willing to take the same direction – compared with 2007, more smaller-sized business users are considering PLM in 2008. At the same time, more potential users are from industries that traditional PLM doesn’t fit well.

Every day, various users come to TEC’s Evaluation Centers seeking information to support their software selection. Each year, in the PLM Evaluation Center, there are thousands of organizations submitting information about their PLM initiatives and receiving selection suggestions. Analyzing these PLM initiatives leads to many interesting findings. “The PLM user landscape is changing” is one of them. I’ll explain two factors that are highly related to the changes in the PLM field I mentioned above.

The Share of Small Business Users Is Increasing

The number of employees is chosen to represent the size of the business recorded in the PLM Evaluation Center. Although all categories have positive count changes (figure 1), the first category – “fewer than 200 employees” occupies almost a half of the whole, and its 5 percent share growth (figure 2) shows that small organizations (those with fewer than 200 employees) are significantly increasing their considerations of PLM.

Fugure 1: Year-over-year initiative count change.

Figure 2: Shares of number of employees

More PLM Initiatives Come from ‘Unlikely’ Industries

Although the main industries in 2007 remain in the same positions in 2008, most of them show share decreases (figure 3). In total, the top 5 industries account for 39.9 percent of initiatives from all industries in 2007 and 38.1 percent in 2008. The 1.8 percent decrease seems small but considering that the sample sizes are several thousands per year, I feel that it represents a trend.

Figure 3: Shares of the top 5 industries

On the other hand, some industries that are seemingly unlikely to adopt PLM show increasing interests in this methodology (figure 4). Although service providers, financial institutions, and real estate all occupy small slices of the whole pie, their share increases are significant. I wonder whether users from these ‘unlikely’ industries will be able to find suitable PLM solutions to meet their business requirements at the moment. At least these users show the needs of managing the lifecycle of their products, which may not have a traditional bill of materials (BOM) structure, or even not be tangible goods.

Figure 4: Shares of the fastest growing industries

Will Servigistics Click on More Service Cylinders? – Part 1

2009-09-04T08:50:00.000-07:00

The old adage “he who lives by the sword will die by the sword” might have been best witnessed in the life and demise of erstwhile public software company Click Commerce based in Chicago, Illinois (US). With its roots in the partner relationship management (PRM) or demand channel (chain) management (DCM) space, the company had first gobbled up a number of struggling PRM/DCM peers in the early 2000s. These mergers coincided with a time when there was a growing realization that the niche PRM market was not sustainable on its own.

Namely, the pundits saw the possible PRM future only as a part of a broader customer relationship management (CRM) suite or an even broader enterprise resource planning (ERP) suite. Following up on these PRM acquisitions and some internal development of the quote-to-order (Q2O), content management, and master data management (MDM)/product information management (PIM) capabilities, Click Commerce eventually rounded out its Channel Management division sometime in 2005.

But then, still somewhat puzzling to many, the company decided to aggressively break out of the channel management niche and address a broader problem set that would, presumably, also result in more revenue. While I could see some synergies in integrating, say, the original e-commerce sell-side suite with acquired supply chain fulfillment solutions to build a supply chain process platform for distributed order management (DOM) in a multi-channel manner (something similar has been successfully achieved by Sterling Commerce), for the life of me, I could never figure out Click Commerce’s overall strategy.

The company presented to me once in 2005 and even showed a busy slide that contained about 60 boxes on it representing what the vendor offered at the time. Needless to say, I was totally confused and lost trying to make sense out of how, e.g., healthcare and research solutions or contracting service workforce might dovetail into the above supply chain selling and fulfillment solutions (that had also meanwhile added spare parts planning and optimization, sourcing, and reverse logistics capabilities). The overall strategy lacked coherency, and did not have many common threads.

I did not necessarily think that the company was dead in the water, and Click Commerce has indeed managed to scrape out an existence. Click Commerce was a combination (à la shopping mall) of a plethora of disparate applications with at least some decent maintenance revenue from an impressive roster of blue chip customers. I’d liken the company to another erstwhile fellow Chicago vendor, SSA Global – a collector vendor with no clear heritage, vertical focus, and so on.

For instance, Click Commerce’s Service Network Solutions (SNS) division provided software solutions to help service professionals manage the complexity of aftermarket service and logistics networks. Customers include Fortune 1000 companies in manufacturing, high technology, and aerospace and defense (A&D) industries. For its part, the Research and Healthcare Solutions (RHS) divisions provided automated research administration and compliance software to leading academic medical centers and research institutions in North America.

“Retooling” Has Not Worked Either

In any case, as the bottom line, Click Commerce was not a growth company in my opinion. Making matters worse, in 2006 the company was acquired by the large tool manufacturer Illinois Tool Works, Inc. (NYSE:ITW). At the time, I voiced my concerns in the fourth and fifth parts of my five-part series on the company. Not surprisingly, the honeymoon did not last long, since about 18 months from the acquisition, ITW started publicly shopping Click Commerce around for sale.

As usual, there’s no simple, or single, answer to what might have gone wrong there. From my perspective, though, I think that widget manufacturing-oriented ITW didn’t really anticipate or ever understand how a software business operates. ITW is a strong company with excellent business practices across manufacturing sectors and geographies.

But the executives that the manufacturer had assigned for Click Commerce to report to, and the executives that it hired to run Click, weren’t willing to make the hard choices and investments necessary to grow the business. In the end, it was a mismatch; ITW likes to hold businesses and make them more efficient, whereas business software is more of a grow (profitably)-or-die industry that doesn’t fit ITW’s business model.

Caught (and Carved) by a “Fish” VC

Consequently, the end of Click Commerce as we once knew took place in early May of 2009 when private equity firm Marlin Equity Partners announced that it had acquired three software operating units from Requisite Technology, Inc. (formerly doing business as Click Commerce, Inc.), a subsidiary of ITW. The transaction included the abovementioned SNS and RHS businesses, the Contract Service and Management (CSM) business, and the rights to the Click Commerce, Inc. name.

The SNS and RHS businesses were initially meant to become standalone platforms, whereas the CSM business has been integrated with Emptoris, another Marlin portfolio company. Dave Barboro, formerly General Manager of SNS, initially continued as President of SNS, while Nick Stier, formerly Senior Vice President of RHS, was named President of RHS. Ironically, Click Commerce has now been stripped of its name and pruned down to its original channel management business, under a new brand name (Requisite Technology, a name of the MDM/PIM provider that Click Commerce acquired in 2005) and with an uncertain business outlook and owner.

For its part, CSM provides one of the market’s most widely used contingent and professional services procurement solutions. Emptoris, a notable provider of supply and contract management solutions, has acquired substantially all of the assets of the CSM group. I was recently briefed by Emptoris on its recent acquisition and future moves, and those will be reported in a separate article.

For now, it suffices to say that Emptoris could possibly exist by itself, although it is in a market in which it is hard to drive consistently high gross margins. In the meantime, you can read Emptoris’ repartee to Jason Busch’s skeptical blog entry immediately after the acquisition announcement.

Servigistics Was “Hooked” Too

In early July, after the CSM spin-off, Click Commerce asked me for a briefing on the eve of another major announcement. Somewhat unsuspecting, I expected the discussion to be about the future moves of the remaining parts under Marlin. To my surprise, an executive and acquaintance from Servigistics, a provider of strategic service management (SSM) software, greeted me too during the usual pleasantries and introductions.

Lo and behold, Servigistics and Click Commerce’s SNS division, both recently acquired by Marlin Equity, have been merged to form a new company to solve the planning, optimization, execution, and analytics challenges associated with delivering post-sale service. The new company, with combined revenues of nearly US$100 million, will be headquartered in Atlanta, Georgia (US) and will retain the Servigistics name.

One question that struck my mind at once was why Marlin had bought the rights to the Click Commerce name and assigned Barboro as president of SNS in May 2009, only to change course a few weeks later. Namely, Eric Hinkle, chief executive officer (CEO) of Servigistics, will continue as CEO of the new combined company.

Will Servigistics Click on More Service Cylinders? – Part 2

2009-09-04T03:26:00.000-07:00

erstwhile public software company Click Commerce based in Chicago, Illinois, United States (US). At the end, the article mentioned the July 2009 merger of Servigistics and Click Commerce’s Service Network Services (SNS) division.

The private equity firm Marlin Equity Partners acquired both entities recently with the idea of forming a new combined company to solve the planning, optimization, execution, and analytics challenges associated with delivering post-sale service. The new company, with estimated combined revenue of nearly $100 million (USD), will be headquartered in Atlanta, Georgia (US) and retain the Servigistics name and its chief executive officer (CEO).

(Over-the-top) Ringing Endorsements

The merger’s press release and Servigistics’ Web page dedicated to the event are replete with ringing endorsements and quotes from two of AMR Research’s renowned analysts and some customers. Both in his blog post and in Servigistics’ press release, Bruce Richardson, chief research officer (CRO) at AMR Research said:

“The combination of Click Commerce SNS and Servigistics brings together the pioneer in service parts planning with the leader in strategic service management. This pairing also brings strong vertical expertise. Click Commerce SNS dominated aerospace and defense, while Servigistics owned high tech. Together the two will be a strong force in the emerging opportunities in life sciences, consumer goods, retail and logistics.”

The new and upcoming Servigistics’ service lifecycle management (SLM) solution is envisioned to enable asset-intensive service organizations, such as manufacturers, to optimize many more components of the complex SLM process. This process includes contract and warranty management (for managing, determining, and tracking entitlements); workforce management (for staffing, training, scheduling and dispatching field technicians); service parts management, warehouse management (for receiving, stocking, deployment and delivery of parts); knowledge management (KM) for gathering, organizing and delivering information); sourcing; repair and returns (reverse logistics); and service analytics.

I was a bit surprised by AMR Research’s atypically unreserved endorsement that didn’t really mention any caveats. Although I will admit that the newly combined company is now the clear market leader in terms of the eventual product footprint, total install base, and geographic coverage, I have some reservations.

The new company has about 240 employees (most of which are experts in service-based rather than more common product-based environments), who will serve a global client base of more than 240 marquee companies across motor vehicles, aerospace and defense (A&D), heavy equipment, high tech, consumer and industrial products, and utilities. New Servigistics will have operations worldwide, including regional headquarters in Tokyo (Japan); Bristol, United Kingdom (UK); Gurgaon (India); and field offices in Austin, Texas (US); Warwick, UK; Rochester, New York (US); Irvine, California (US); McLean, Virginia (US); and Chicago, Illinois (US).

As erstwhile Click Commerce that was analyzed in Part 1, “old” Servigistics had also embarked on a journey to break out of the spare parts management niche and address a broader problem set that, presumably, would bring about more revenue. But Servigistics has been much more focused on the aftermarket service arena only.

Initially being only a service parts planning and optimization provider, via a number of focused acquisitions and internal development, Servigistics has developed its strategic service management (SSM) suite, which currently also entails service labor planning and scheduling, KM, and service parts pricing. The value of aftermarket services to business has never been greater. The service market is attractive, especially in a bad economy where companies try to make more revenue by delighting customers via service.

While I can question both old and new Servigistics’ tactics and execution, this unchanged (continued) strategy is one of only two choices available to any specialist vendor. The other is to become a niche specialist and rely on other mega-vendors to provide the broader infrastructure and ecosystem within which the point product can operate (and to eventually be assimilated by some ecosystem provider).

But while Servigistics has shown much focus and a great command of the services-based industry, those achievements have come at a price of depending too much on the venture capital (VC) community (or being over-leveraged in VC lingo via several rounds of financing). The company’s grand vision to create a platform for service businesses has unfortunately not really translated into the hoped-for customer uptake and adequately increased revenues.

The lion’s share of the old Servigistics customers (about 80 of over 100 before the merger) was still from the “mother” spare parts planning solution. If one discounts the customers inherited via previous acquisitions, the customer uptake via the consequent cross- and up-selling of parts pricing and workforce management solutions has been somewhat thin. In my recent three-part series on the vendor’s impressive Service Knowledge Management (SKM) solution, I pointed out that Servigistics had yet to sign its very first SKM customer.

The situation remains similar even under new Servigistics: about 120 out of 240 customers are still spare parts management customers. What are indeed the chances that the newly added and even more disparate products and technologies will sell like hotcakes in this economy?

Servigistics claims that both the acquisition of former ProfitScience and of Transdecisions have been profitable. Pricing makes up almost 30 percent of the company’s revenues now. The workforce management business has already been profitable for Servigistics as well, and is expected to take off this year and next.

For the above reasons, it is likely that Servigistics could not get any more money from its former primary investor Bain Capital, who was apparently more interested in some sort of exit strategy, I guess. After squandering a mind-boggling amount of money on his unsuccessful 2008 presidential Republican primary campaign, is Mitt Romney is back to his prior money-making savvy (or at least protecting money) in his brainchild business? But I digress…

Counter-ringing “Endorsement” from an Archrival

Therefore, in an (expected) sharp contrast to AMR Research, MCA Solutions, which has for now decided to remain a spare parts planning and optimization specialist (and thus a much smaller, albeit arguably more focused, company), immediately came up with its own damning blog post. Sure, MCA has an ax to grind here, but one cannot argue with some of the facts put forth in the blog post. Especially intriguing is the following excerpt:

“…this is not a merger of two companies but rather an acquisition of two financially distressed organizations by an opportunistic private equity firm. Marlin Equity Partners is a well-run company whose transaction approach, according to their Web site, is to buy underperforming business divisions or product lines, and companies in various forms of distress - a label which can certainly be applied to Servigistics and Click SNS (Service Network Solutions).

Consider the following: Click SNS includes a number of acquired companies, most notably LPA, which was a pioneer in the service parts planning space in the 90s. Since it was renamed Xelus in 2001, the core company underwent four changes of ownership, cobbled together a variety of dated technologies, and saw a significant reduction in market share…”

These factors could be a bad omen in the long run. Anyone who has had experience with private equities that buy “distressed” companies expects the ensuing “nip and tuck” measures to be severe. Marlin’s goal is to make profit, and in a down market we might assume what exactly that might mean.

The remaining combined Servigistics and SNS sales team will be eager to close deals and be aggressive. If no immediate success in meeting quotas takes place, some demoralization and departures are likely to ensue.

Anther issue with Marlin, using construction industry terminology, is that the company has traditionally been regarded in the VC community as a “flipper” rather than a “builder.” To be fair, with its other asset, Solarsoft, which dates back to 2006 with the initial acquisition of former UK-based ERP vendor XKO and the 2007 acquisition of the Canadian ERP vendor CMS, Marlin claims to have invested in the merger for long-term growth. Solarsoft’s team experience and install base provides a platform for future investment, with more recent acquisitions of VantagePoint Systems and Chelford Group plc, again in Canada and the UK respectively.

In fact, Servigistics points out that Click Commerce SNS was a profitable division before it was acquired, purely based on its maintenance revenue. Servigistics was also reportedly a profitable company. The combined entity is already profitable, without initial headcount reductions, and has a revenue growth plan for 2009.

Servigistcs also points out that Marlin does not only buy distressed assets. If you look at the company’s Web site, it specifically calls out different types of purchases, of which distressed assets is one. However, the site specifically classifies Click Commerce as a “corporate divestiture of a non-core asset” (and I don’t think anyone can argue that ITW considered software as its core competency, as mentioned in Part 1). Servigistics is classified as a “recapitalization.”

Furthermore, in its history, Marlin has acquired 26 companies, and has exited only three of these. This hardly qualifies it as a “flipper.” But some VC insiders point to the “leopard can never change its spots” adage (or in Marlin’s case, “fish can never change its scales”). In other words, is Marlin really committed to its assets in the long run, or is this approach just because of the current buyer’s environment (rather than a seller’s environment)?

An unnamed venture capitalist who is always hungry for good deals just told me that his company passed on these two companies (Servigistics and SNS), just as it passed on almost everything else that Marlin or Infor buy. Make no mistake, that company gets one of the first looks at everything that goes down in the enterprise resource planning (ERP) and customer relationship management (CRM) space (customer service is part of CRM), and only passes on those that are either of too low quality for its standards to buy or those that get bought (at a higher premium) by Oracle, Microsoft, or SAP.

Servigistics acknowledges that many bidders looked at the company. Marlin came in and made a preemptive bid to get Servigistics, which looks pretty smart given that it also had Click Commerce. Servigistics vehemently denies the claims that it was a low-quality asset. Furthermore, the company wonders why ERP vendors and other VCs have passed on purchasing its competitors.

The Platform of the Future: ERP or SSM/SLM?

But even if these comments by MCA and an unnamed VC firm can be dismissed as some sort of “sour grapes,” another legitimate question would be: how viable is a standalone SLM platform in the market? The above VC executive admitted to me that he too loves the service market, but just because Servigistics sticks an SSM or SLM moniker on several disconnected ERP, SCM, workforce management, and whatnot products, this doesn’t necessarily mean that Servigistics is the thought-leader in the service market.

One of this VC company’s assets is also building a customer service and support suite with leading case management, KM, and agent-customer collaboration tools like chat, remote diagnostics, etc. The company claims not to be able to find a place for Servigistics and SNS products in what it is trying to assemble.

Claiming a SSM/SLM platform leadership might be in vain if not many folks decide to play that game. In other words, for me to claim that I am the best “hrkljush” player in my neck of woods might be a correct statement, but who cares about this imaginary archaic and esoteric game!?

Sure, I’ve previously clearly repeated that service is not archaic and esoteric, but the point here is whether any prospective company in need of service-oriented solutions will look for an all-in-one SLM solution per se, or maybe would start by evaluating the service capabilities of their incumbent ERP provider? Maybe they would even look for the primary ERP vendor’s recommendation for a specialist solution in its ecosystem?

In fact, critical enterprise asset management (EAM) and asset diagnostics capabilities are still missing from Servigistics’ portfolio. Guess what: many ERP vendors have quite strong EAM capabilities, integrated to other back-office capabilities. Think of SAP, Oracle, IFS, IBM, Infor, and Lawson Software, to name only some. Thus, a winning platform might come rather from Oracle, SAP, or any other transactional service management vendor, and not a group of currently largely disconnected point service solutions.

I am not sure whether Servigistics’ all-in-one strategic service suite is the best way to go, in light of SAP and Oracle’s platforms. But also, in addition to MCA Solutions, some other point service solutions are doing fine these days. A great example would be Click Software in the realm of field workforce optimization, with great reference customers such as the Beijing Olympics, Montreal, Quebec (Canada)’s Gaz Metropolitain utility, Vodafone UK, and Best Buy’s Geek Squad scheduling.

Moreover, Vendavo has lately been doing well in parts pricing, promotions, and deal management. All the three above-mentioned companies are in SAP’s Industry Value Network (IVN) ecosystem, and might well be acquired by SAP down the track. Even though I am aware of MCA, Vendavo, and Click Commerce integration and joint selling plans, I am not aware of a customer buying these products together.

At the end of the day, Servigistics is selling an ERP add-on into the Oracle, SAP, and Infor market. This is not a viable long-term proposition, as it is only a matter of time before any best-of-breed company is eliminated by those giants, as this area is clearly an extension of what the ERP giants are doing.

Also, if Servigistics could have been sold to SAP or Oracle it would have been, since these two giants pay the most for any company they deem important. However, both Oracle and SAP likely felt that this is an area that they cover already with respective products and ecosystems, and just need to improve their own offerings to shut Servigistics out.

The final part of this blog series will analyze Servigistics’ positions in individual service niches and conclude with some final thoughts (better than Jerry Springer’s, I hope). In the meantime, please send us your comments, opinions, etc. on Servigistics’ strategy. We would certainly be interested in your experiences with any of the above-mentioned SLM software categories (if you are an existing user) or in your general interest in evaluating these solutions as prospective customers

What’s in a Name? or Enterprise Systems’ Reincarnations (Part I)

2009-06-19T15:04:00.001-07:00

Well, the ERP Graveyard blog might sometimes be slightly deceiving, since not all enterprise resource planning (ERP) products necessarily die there. Some of them might even be resurected under a different name and ownership.

To that end, Infor might even seem like old news today. It’s been five years since its formation (no pun intended here, given its subsequent acquisition of former Formation Systems, with the Infor Optima PLM product as a result). Also, many articles have meanwhile been written on our web site about Infor’s collection/arsenal of once all but deceased ERP products, such as:

* Infor ERP LX (formerly SSA BPCS),
* Infor ERP LN (formerly Baan),
* Infor ERP System21 (formerly Geac System21 and JBA System21),
* Infor ERP Visual (formerly Lilly Visual),
* Infor ERP XA (formerly MAPICS XA),
* Infor ERP SyteLine (formerly MAPICS SyteLine, Frontstep SyteLine and Symix SyteLine),
* Infor ERP Adage (formerly SCT Adage),
* Infor ERP SX.enterprise (formerly NX-Trend),
* Infor ERP FACTS (formerly Aperum) and
* Infor ERP TRANS4M (formerly BRAIN Trans4m).

However, 2007 has seen the emergence of two brand new names in the space — Consona Corporation and Solarsoft Business Solutions. In March 2007, M2M Holdings Inc. changed its name to Consona Corporation. The current Chief Executive Officer (CEO), Jeff Tognoni , and the curent financial backer, Battery Ventures, started M2M Holdings back in 2003 with their purchase of former Made2Manage Systems. Over the past three years, the company has added nine more-or-less known ERP and CRM companies to the business and has more than tripled in size. This expansion, in addition to the confusion in the marketplace associated with the difference between M2M Holdings and the Made2Manage ERP solution per se, has spurred the company to find a clearer way to be able to discuss and market its various product lines.

So, the company put a team together that would find a name that is “not only memorable, unique and available, but also whose meaning will better reflect what the company is trying to do as a corporation” -— and that name is Consona. According to the company’s communication sent to industry analysts at the time:

“…the new name, Consona, was derived from the concept of consonance, which describes the perfect alignment of elements within a single entity. When you picture consonance, you might imagine puzzle pieces clicking together, a well-executed play on the football field, or the faultless harmony of an orchestra. We think our new name represents why we are unique as a software and services provider because it summarizes the aspects of our strategy that remain central to each line of business within the company—including high-fit software, unsurpassed customer care, and efficient, profitable operations”.

While some competitors might have mockingly said “Well, was the Vowana or Vowela name already taken?”, both M2M Holdings (the predecessor firm) and Consona Corporation today have proven their business model, if one is to judge by growth and profitability. Consona’a acquisition strategy is based on the following three aims:

1. To capture specific industry expertise and technology (i.e., new vertical segments and/or new software or services to fill out the solution in any particular segment/market);
2. To apply its operating model of driving down costs while driving up quality, service, and growth; and
3. To expand international distribution capability.

Indeed, one would be hard pressed to find any of Consona’s acquisitions so far that could be qualified as a failure or an acquisition without a sound rationale. True, some acquired vendors might have been distressed or in a rut, somewhat stalled (financially or in terms of a mind share) and needing a shot in the arm or so prior to being acquired by Consona, but hardly anyone can now dispute the future viability of the solution per se.

In fact, although the former owners of some of the acquired vendors might be gone today (some were not even that interested in running the business before the acquisition and wanted an exit strategy), it is not really the case with critical product managers or developers. I recently met with AXIS and Cimnet (parts of Consona) and have vicariously learned that the staff at both places have been with the company an average of 16 years, plus, the founder of Cimnet is still there, now as a managing director of the division.

Therefore, Consona is today an enterprise-class application software and services provider for both small-to-medium enterprises (SME) and Global 2000 businesses. The customer size and industry depend on the solutions from the Consona portfolio, which currently consists of eight ERP product lines in manufacturing sectors and two customer relationship management (CRM) product lines for the professional services and manufacturing realms. The holding company has over 4,500 customers and about 700 employees, and is headquartered in Indianapolis, Indiana, United States (US), with over 40 locations across the Americas, Europe, Asia-Pacific (including India) and the Middle East. Two private equity groups, Battery Ventures and Thoma Cressey Bravo, jointly own Consona.

As for the current company’s organization and integration of disparate parts, the holding company consists of three divisions, whereby each division has a defined target market with dedicated products and services, a general manager with full profit & loss (P&L) responsibility, and dedicated teams for sales, product management, product development, professional services, support and education. Shared corporate services include administrative things like finance & accounting, human resources (HR), information technology (IT) department and marketing. Consona executives provide management oversight on development, services, support and education, whereas centralized functional organizations bring economy of scale and process efficiency to all functions. These divisions are:

1. Consona Industry Solutions, with five business units:

* DTR, a Consona business unit, with the product: DTR Plastics ERP, acquired in August 2004, a Consona industry solution for plastics processors with up to $50 million in revenues;
* Cimnet Systems, a Consona business unit, with products like Paradigm ERP [evaluate this product], iQuote, Engenix, Navipoint, CIM Factory, and BPO Services. These are all Consona industry solutions acquired in December 2005 for international printed circuit boards (PCB) manufacturers with up to $2 billion in revenues;
* Encompix, a Consona business unit with the ERP product Encompix [evaluate this product], a Consona industry solution acquired in March 2006, for project-based engineer-to-order (ETO) manufacturers with up to $200 million in revenues;
* AXIS, a Consona business unit with the product AXIOM, a Consona industry solution acquired in January 2006, for metals, wire and cable manufacturers ranging from small businesses to Global 2000 corporations; and
* Relevant, a Consona business unit with the ERP product INFIMACS II (a.k.a. Relevant [evaluate this product]), a Consona industry solution for aerospace and defense [A&D] manufacturers up to $1 billion in revenues.

2. Consona CRM, with two CRM solutions:

* Onyx, a Consona CRM solution [evaluate this product], acquired in August 2006 for service, sales and marketing organizations in the mid- to upper- SME to Global 2000 range of sizes and within the financial services, healthcare, government, professional services, and high-tech sectors; and
* Knova, a Consona CRM solution, acquired in March 2007 for service and support organizations in the mid- to upper- SME to Global 2000 range of sizes within the high-tech (hardware and software), telecom and complex equipment (medical and manufacturing) sectors.

3. Consona ERP, with three products:

* Made2Manage, a Consona ERP solution [evaluate this product] acquired in August 2003 for discrete “to-order” and mixed-mode manufacturers with up to $50 million in revenues;
* Intuitive, a Consona ERP solution [evaluate this product] acquired in July 2006 also for discrete “to-order” and mixed-mode manufacturers with up to $50 million in revenues; and
* SupplyWorks, a Consona on-demand/software as a service (SaaS) supply chain management (SCM) solution, acquired in July 2006 for supplier collaboration and supply chain visibility (SCV) and for automotive, transportation, machinery, instrumentation and high-tech companies with up to 4 billion in revenues.

Consona’s branding strategy is in fact similar to Johnson & Johnson (i.e., Band-Aid, Aveeno, Acuvue, Tylenol, etc.), with each product line marketed, sold and operationally supported separately, but also identified by the master brand. In other words, the only thing that is new is the Consona name, as it is still the same company with the same strategy and vision, as well as with the same owners, management team and personnel working in the existing office locations. And most importantly, the firm pledges to actively sell, support, maintain, and enhance its various product lines/brands.

The Consona Industry Solutions unit’s future direction seems most straightforward — each product continues to be, on a separate track, enhanced to compete within its defendable vertical niche (whereby some of these products are the leaders in their respective sector). True, there might be some sharing of best practices, given that some products are on same technologies (i.e., DTR, AXIS and Encompix are on the Progress OpenEdge development platform) or some products might leverage functionalities of the others (e.g., some products might benefit from the CRM, project-based accounting or analytics functionality of the other), but there are no strong indications of that taking place yet in earnest.

However, the ERP and CRM units have recently had their respective products’ enhancements and there might still be some temptation for converging the products, and these will be analyzed in depth in forthcoming research article on our web site and newsletter. For now, it suffices to say that Consona ERP has over 2,500 customers, who are small to midsize discrete “to-order”, make-to-stock (MTS) or mixed-mode manufacturers that are also Microsoft technology users.

Because Made2Manage and Intuitive fall under the same Consona ERP umbrella, users can choose between the best of each solution: 1) Made2Manage’s mature customer service and functionality (albeit on an outgoing technology — Microsoft Visual FoxPro [VFP]) and 2) Intuitive’s technological progressiveness. Both focus on a narrow sector of the manufacturing marketplace and both have a decent amount of pertinent functionality. Although former competitors in theory, the two ERP solutions have rarely competed due to Intuitive’s strengths in the MTS and repetitive environments versus Made2Manage’s made-to-order (MTO)/assemble-to-order (ATO)/job shop stronghold.

These subtle nuances and personality of each product will be differentiators for prospective customers to choose one of the two. Thus, the future direction is to continue building the two ERP products without building a converged product and, consequently, with no forced upgrades for customers. Intuitive will be the international product owing to its multi-national, multi-site capabilities and modern technology. Intuitive 8.1 continues the product’s leadership in .NET-managed code software. It includes the more compelling, fully integrated Intuitive user interface (UI), and it fully supports the Microsoft .NET Framework.

The Part II of this topic will analyze Solarsoft, and how all these consolidating companies might operate now in a somewhat changed climate owing to deflated venture capital (VC) inverstors’ sentiments and lesser availability of private equity. Your views, comments and opinions, etc. are, as usual, welcome in the meantime.

Tracing Food Quality and Safety, or We Are What We Eat, After All (Part I)

2009-06-19T15:03:00.001-07:00

Besides the ongoing (seemingly never-ending) presidential campaign and celebrity scandals/gossip, food safety is very much in the news. Indeed, incidents of outbreaks, contamination, product recalls and whatnot flood TV channels as breaking news every now and then. Consumers, governments and the various members of the food supply chain are rightly concerned about food safety, and there has been increasing pressure for food and consumer product goods (CPG) supply chain traceability, in a pervasive manner.

Consumers and governments (both becoming ever-more educated and informed on one side, but still confused on the other side) are concerned about the safety of the food supply and protecting the public. While demanding more product choice and delivery speed, consumers have been voicing fears over food safety in the wake of recent salmonella outbreaks (remember the contaminated spinach or major chocolate recall cases?), cases of pet deaths due to poisonous imported pet food, lead-tainted imported children’s toys, anti-freeze tainted imported toothpaste, and so on…

The ever-longer and global food supply chain (often called “from farm to fork”) includes crop farmers/growers (utilizing fertilizers and pesticides), feed processors, livestock farmers (that might feed and treat animals accordingly [or not]), manufacturers (primary and value-add food processors), packaging and labeling sites, distributors, retailers, and food service companies (restaurants and cafeterias).

These supply chain member companies have to be concerned about the consumer safety issues, plus the potential negative and even fatal impact on their brands and businesses. For instance, high-and-mighty retailers customarily want ever higher service levels from suppliers (without any negative publicity), while the overall industry itself wants to protect “brand” value and reduce recall costs.

Olin Thompson, a former regular TEC contributor (e.g., see the Food Safety, Government Regulations, and Brand Protection article), editor at Food Engineering Magazine and currently Vice President (VP) of Industry Strategy at Lawson Software, tells us that all this media attention on food safety has had a real effect on any potential impact of a food safety incident. Increased public awareness actually helps minimize any potential negative impact on the consumer. People are more aware of the danger and the attention of the media helps communicate and alert the public. For the food supply chain, that is good news.

However, the media has also increased the negative impact on the reputation of supplier companies and brands that have a problem. One food safety incident, communicated through the media, can have a fatal impact on a brand or even a company. Food industry executives are painfully aware of their obligations to the public and to their shareholders when it comes to food safety.

Under European Union (EU) Regulation 178/2002 – Article 18, “traceability” is defined as the ability to trace and follow a food, feed, and food producing animal substance through all stages of production, processing and distribution. This has imposed major challenges on the food and beverage (F&B) industries, impacting all food and feed business operators including primary producers.

The regulation relies on a “one up, one down” approach, meaning systems and procedures must be in place to identify from whom and to whom these products have been supplied. Both EU food law and the Anti Bioterrorism Act in the United States (US) from 2002 consider traceability as being able to trace a product one step backwards and one step forwards.

Further, the revised General Product Safety Directive (GPSD) (2001/95/EC) ensures that food products can be traced all the way to their point of production. Last but not least, International Standards Organization (ISO) Regulation no. 8402 defines it as the ability to trace the history, application or location of an entity by means of recorded identifications.

Thompson suggests that the food supply chain needs to be concerned about the following “Four P’s”:

1. Prevent — The best defense is a good offense. The food supply chain has long worked hard to insure the safety of their products. The application of quality control systems, sanitation procedures, common Good Manufacturing Practices (cGMPs) and compliance to various government and industry food safety regulations are a constant in the industry. Food companies must continue to invest in improvements in food safety in an effort to improve on their record;
2. Prepare — Regardless of their efforts to prevent a food safety incident, the food supply chain understands that they must be ready if an incident does occur. Preparing for an incident means being ready to efficiently and effectively determine the nature of any problem and recall any potentially harmful product, no matter where in the food supply chain it currently resides, even on the consumer’s shelf;
3. Proactively respond — When an incident occurs, well-run companies will be able to respond quickly. They will proactively communicate with the public to minimize any impact on the consumer but also to minimize any potential negative impact on their brand and company. They will be able to quickly locate affected product(s) and determine the cause of the incident; and
4. Prove — Regulatory bodies and major players in the food supply chain are asking the various members of the food supply chain to prove to them that they are preventing, preparing and able to proactively respond to food safety incidents. In addition, conscientious and forward thinking food companies are rehearsing (so-called mock recalls) to insure that they are ready and able to proactively respond in the event of an actual incident.

In this uncertain world, even the best of automated traceability systems will not eliminate problems caused by food contamination, outbreaks of disease or even accidental mishandling of food products. Accurate transparent traceability, however, effectively reduces risk exposure by enabling food producers to identify, isolate and correct the problem quickly and efficiently. As a result, public health is protected, consumers are reassured, and the financial impact of such incidents can be minimized.

But who gets the blame when a food safety incident occurs? All members of the food supply chain are not treated equally. No matter where in the food supply chain an incident occurs, the media attention will be focused on any consumer brand or retailer associated with the problem. Companies who have branded products are especially at risk: the stronger the brand, the more negative the impact. The media will write more about a well-known brand, people will remember the incident longer with a renowned brand.

These companies are more at risk when it comes to an impact on their business and shareholder values than others. Since the impact can be so great, these companies should consider preparing for problems anywhere in the supply chain, taking responsibility for the tracking and tracing data needed to proactively respond to a problem. Anywhere in the supply chain, from farm to fork, a food safety incident can have a major impact on a company’s brand and even its very existence.

Are all food companies and types of food at equal risk? No, some types of products are naturally more vulnerable than others. Meats (beef, poultry, pork, etc.) including seafood (fish and aquaculture) are most prone to problems due to extreme perishability, contamination and disease spreading risk, followed by fruits and vegetables (including animal feed) and dairy products.

An interesting (and likely lesser-known) fact: as a percentage of incident per servings, bean sprouts are the most dangerous food we eat, since they are grown in a warm and damp environment, just like a petri dish.

Some highly processed foods are of course less vulnerable. To be fair, there are many CPG companies that already have traceability systems in place, and moreover, there are lots of paper-based systems that may be adequate here.

Opportunity (Besides Costs) for Visionary Companies

One school of thought is that food traceability regulations could bring about opportunity besides costs (and a pain in the neck), especially since early 2007, when the EU legislation started requiring traceability of food and beverage (F&B) products. Sure, consumers will not pay for traceability costs, but the legislation does provide opportunities for manufacturers generally to address end-to-end supply chain visibility, plant data collection and so on, and get better real-time performance measurements in place. F&B manufacturers have a choice: doing nothing, doing the minimum to comply, or exploiting traceability legislation to address many supply chain issues.

For one, accessing emerging market entries such as China and a number of developing countries highlight new challenges and risks for food safety for exports and imports. As seen by the abovementioned negative examples, the Chinese food and CPG industries and industry regulators are not yet able to keep up with the requirements and standards of other countries and their retailers, especially in the US and EU.

Lack of proven traceability in the food value chain can be used to put up trade barriers and deny market access. The banning of Norwegian salmon in Russia, British beef in continental Europe (and elsewhere), Indian grapes in the EU market, and American beef in Japan are just a few examples. GrapeNet, a governmental initiative in India, was set up in response to the ban to assure access to the EU market.

A few years ago, the American beef industry – reportedly a two billion US dollar industry – was shut down practically overnight for two years because of Japan’s refusal to accept imported beef products from the US due to health fears. Arguably, with no mechanism for proving to the Japanese authorities that its product was safe, and with no solution to
do so, the trade route was shut-off.

But other countries like New Zealand and South Africa benefited from the situation when the price of beef rocketed. Not only did they deliver the right information (assurances) to the market, they also took advantage of the opportunity and increased their market share.

Therefore, growing consumer demand for information and accompanying brand differentiation makes tracing capability a golden opportunity to build business differentiators. If a company can utilize value-added traceability capabilities to demonstrate its role in the product lifecycle and back up premium product claims (e.g., origin, organic, fair trade, free from, etc.), it will be in a position to offer value-added information about the product and enhance brand equity, reputation and margins.

Moreover, if a food incident does occur, the companies involved who are in possession of a traceability system can much more quickly take responsibility or prove their innocence, thereby saving money and face. Some forward thinking companies use traceability to create evidence or require their approved suppliers to prove that certain things happened in the production process.

One example could be a farmer that is able to document that no hormones, pesticides or antibiotics were used in their product. The ability to prove these attributes builds trust and consumer confidence in the brand. Smart F&B manufacturers will use product safety as competitive advantage to promote their abilities to retailers.

As a recap, there are basically three key requirements for traceability systems, whereby manufacturers must be able to:

* identify batches of all ingredients and products;
* have information on when and where they are moved or transformed; and
* have a system that links that data.

Possible Solutions

There are numerous existing and emerging supply chain management (SCM) solutions, at several levels, which F&B (and other manufacturers for that matter) can apply without reinventing the wheel. Radio Frequency Identification (RFID) technology, for instance, has undergone considerable testing, and constantly improved support software from the major enterprise resource planning (ERP) and SCM vendors will assure its use. It is also the case that issues around traceability have been publicized and resolved for years, e.g., in the pharmaceuticals and aerospace and defense (A&D) sectors.

In fact, it might be strange that the food and beverage (F&B) segment is only now catching up with traceability, considering the “we are what we eat” adage. One reason thereof could lie in the fact that inside even the most modern food companies we will still find several information technology (IT) systems supporting the needs of different parts of the organization. Many will be using an ERP solution like Lawson M3 (formerly Intentia Movex) to manage most of the needs of the business.

Still, many other disparate systems are required such as product lifecycle management (PLM), enterprise asset management (EAM), manufacturing execution systems (MES)/laboratory information management systems (LIMS), warehousing management systems (WMS), supplier specifications, Hazard Analysis and Critical Control Point (HACCP) systems or other departmental solutions.

All these point solutions might be doing a terrific job, but probably with a minimal level of integration, and little transparency of information or easy access to all related information on a lot or batch from the complete set of information held inside the company. As a worst case scenario, some companies still using basic paperwork for key pieces of traceability information.

That’s to say that, in the past, food manufacturers, processors, distributors and retailers had to typically turn to a variety of point IT solutions to solve specific, and usually localized, business problems. Businesses have since become more complex and data more voluminous, and companies are thus increasingly turning to integrated enterprise software systems to tie together their main business processes and transactions.

But, as said earlier on, in most companies and certainly at the supply chain (or partial supply chain) level, islands of key information still exist, including details from the LIMS system, data from the MES area, and information from the transporter. The back-office ERP system could never possibly hold all of this information.

Also, much energy has been invested in technology for “capturing” data (e.g., RFID, bar coding, and LIMS) rather than a method for “sharing” information. However, a new generation of Web browser-based traceability applications are being developed that enable this detailed interrogation of the data supplied by “capture” systems.

Part II of this blog post will introduce the Lawson M3 Trace Engine as one such stand-alone solution. Your views, comments, opinions, etc. about the abovementioned food safety issues are welcome in the meantime.

Deltek’s Second Bite at the IPO Cherry (Part II)

2009-06-19T15:01:00.003-07:00

Well, a few months after Part I of this blog post was published, which focused on Deltek’s pre-New Mountain Capital private equity investment era, the time has finally come for us to analyze why being again publicly traded should (or should not) work better for Deltek this time. If one is to judge merely by the most recent financial figures, it would appear to be working well, but my focus here is on some lingering “softer” issues too.

So, when the new management team took the helm at Deltek in mid 2005, it realized that many good things had happened over the previous two decades at the company, but that one can never be too complacent. Indeed, room for improvements existed in many regards, or at least some challenges could always be turned into opportunities.

Sure, in many project-oriented sectors, such as Accounting & Auditing, Aerospace & Defense (A&D), Architecture/Engineering/Construction (A/E/C), Government Agencies, Government Contracting, Engineering/Environmental, Legal Services, Non-profits, IT & Computer Consulting, Professional Services and Systems Integration (SI), Deltek had penetrated vertical markets with over 100 firms as customers.

While the supremacy within the government contractors has long been established via the Deltek Costpoint [evaluate this product] and Deltek GCS Premier [evaluate this product] products, the “newcomer” Deltek Vision [evaluate this product] product has yet to make such inroads in the sectors like Media Services, Printing and Publishing, Property Management, Research, Advertising & Public Relations, Construction, Contract Manufacturing, Healthcare Services and so on.

In other words, Deltek still needs to expand beyond its above-listed primary industries despite the fact that endorsements like those that 80 percent of the Engineering News Record (ENR) Magazine’s Top 500 Design Firms are Deltek customers and 67 percent of Top 100 Federal Contractors are Deltek customers (according to the Washington Technology magazine) continue to speak volumes.

Also, the “project-centric”, “project-plus” or “choice of project-based businesses” mantras might have meanwhile run their course (at least as automatic guarantees of success), especially in light of mounting competitive products. These start from large generic enterprise resource planning (ERP) providers like SAP, Oracle or Lawson, via traditional mid-market ERP providers like Epicor, Microsoft Dynamics and Agresso, to entry level solutions like those from Axium or Microsoft Office Project. In addition, there are point-solution providers like Primavera and Artemis and industry-specific players like Maconomy, Meridian Systems and BST Global.

After thorough analyses and considerations, Deltek decided to tackle both existing and new customers as well as new markets by further penetrating current vertical segments, entering new verticals and via a geographic expansion. But before that could take place in earnest, Deltek also spotted an opportunity of some “greener pastures” in terms of offering new products (capabilities) and expanding their functional footprint, both by pursuing strategic acquisitions and organically developing new products.

To the end of significantly expanding its product portfolio and thus delivering the industry’s most robust Enterprise Project Management (EPM) solution through strategic acquisitions, Deltek has since early 2006 conducted three well thought-out acquisitions. It started with Welcom in March 2006, which was the leader in the realms of project portfolio management (PPM) and earned value management (EVM) with established products like Open Plan and Cobra. The company had about 250 renowned clients, including General Dynamics, Lockheed Martin, Boeing and BAE, to bolster Deltek’s already formidable client roster in the A&D sector.

The second acquisition was of C/S Solutions Inc. in July 2006, which remains the leader in EVM analytics with an equally established product called wInsight. The company had about 500 clients, including virtually every A&D contractor and government agency, such as NASA, the United States (US) Department of Defense (DoD), Department of Homeland Security (DHS), Department of Energy (DoE) and Federal Aviation Administration (FAA). Deltek bought C/S Solutions because it is the standard for how these government agencies view earned value data.

Last but not least, the AIM (Applied Integration Management) consultancy was acquired in April 2007 as a leading provider of EVM/EPM consulting. AIM had high-profile A&D customers including Lockheed Martin, Northrop Grumman, and Raytheon and some others in the Engineering & Construction sector. Deltek made this acquisition to make sure that EVM experts implemented Deltek EVM solutions to offer the best combination of technology and expertise in the marketplace.

Prior to these additions, the traditional explanations about why Deltek would win against the generic ERP providers had meanwhile gradually lost an edge. Indeed, many of the above-mentioned large ERP providers have lately taken steps to support the unique needs of project-based organizations (where they traditionally fell short) as well as to address the issues of lower total cost of ownership (TCO), ease of deployment and higher return on investment (ROI).

They have done this with more available out-of-the-box functionality for specific project-based business needs that, in turn, results in significantly fewer customizations than “one size fits all” products. They have also made forays into governance via built-in process controls, to challenge Deltek’s “Most audited software in the world” theme. In addition, the inflow of incumbent lower-end and mid-market products has neutralized Deltek’s justification that high-end generic ERP solutions are also too costly to own and operate.

Therefore, Deltek rightfully realized that its mastery in EVM and PPM should provide it with another quantum leap over the competition. More on the concept of EVM can be found in the IT-Director and ZDNet’s respective posts, as well as in TEC’s earlier article titled Enterprise Management Software Vendor Welcomes Additions . In essence, EVM is a system for project planning and control used by the US federal government to:

* Objectively measure a project’s progress;
* Forecast its completion date and final cost; and
* Provide schedule and budget variances along the way.

In other words, EVM takes a snapshot view of where exactly a project is against where it should (was planned) to be, but at a far more complex level and with more variables than standard time-based project management (scheduling) tools. EVM also allows project status to be understood with more precision. Namely, whereas many systems tend to just look at how well task fulfillment is going against the plan schedule, EVM looks at more variables, including actual time and budget spent to a specific point (i.e., the BTC [budget to completed] or EAC [estimated at complete] metrics) of the project and actual future resource availability against the planned values.

The recently minted Deltek EPM (Enterprise Project Management) suite [evaluate this product] enables firms to comply with the EVM methodology of project costing and management. Earned value and risk management are increasingly becoming regulatory requirements within the American National Standards Institute (ANSI 748) the US Government Office of Management & Budget (OMB 300) mandates.

Recently, the US federal government mandated that contractors comply with EVM methodology and have begun auditing for compliance. In fact, as of mid 2006, earned value contract requirements thresholds have been lowered to $20 million (from previously $70 million for research & development [R&D] projects and from $300 million for projects involving production) for some agencies.

In plain English, while ”Big Brother” might be generous in awarding funds for defense projects, it also wants the ability to conduct an audit at any time and discern the health of the project both in terms of time and money spent (with the prerogative to pull the plug when deemed appropriate).

To the end of being ready for auditors on short notice, the Deltek Briefing Wizard tool (coming from C/S Solutions) lets the user select a range of EVM metrics and key performance indicators (KPI’s) that should be of interest to the auditor, and then the product quickly spits out a Microsoft PowerPoint slide deck. Seeing this product demo has been the most impressive for me, at least for not expecting this kind of “coolness” from traditionally conservative Deltek.

Therefore, I would imagine a healthy uptake on the EPM suite (and its parts) amongst Deltek’s large government contractor installed based, given the need for compliance with these new, non-negotiable federal mandates that make those “gravy train” contracts a matter of the remote past. The average selling price for an EPM suite ranges from $50,000 to $75,000 and anyone can do the math (given several thousand of “low hanging fruit” existing Deltek customers).

The Deltek EPM suite includes a slew of EVM and PPM tools designed to compliment the core Deltek application suites. The individual EPM products cover the realm of project management (i.e., the WelcomPortfolio, WelcomRisk, Risk+, Open Plan, Cobra and WelcomHome tools) and analytics (i.e., the wInsight, C/S Glue, Briefing Wizard, Connect Modules and Web & Dasboard tools).

Today’s increased project complexity significantly increases risk to costs, schedules, and resources across the entire project lifecycle, which consists of the Visualizing, Identifying, Defining, Initiating, Planning, Executing, Controlling and Closing project phases. Without an effective project management set of tools, according to certain Standish Group and Deloitte Consulting stats, project companies face:

* Project cost overruns: commonly 150-200 percent over budget;
* A shrinking resource pool: tens of thousands of project management professionals leaving or retiring in the next several years; and
* Schedule overruns: often averaging 52 percent.

To address these challenges, Deltek now offers solutions for every above-mentioned stage of the project lifecycle to plan, manage and execute projects to completion. To that end, the unified Deltek EPM suite integrates all critical project management processes, by combining:

* Portfolio Analysis, which spans from Visualizing to Planning project phases and is covered by the Deltek WelcomPorfolio product;
* Risk Management, which spans from Visualizing to Controlling project phases and is covered by the Deltek WelcomRisk, Open Plan and Risk+ products;
* Planning & Scheduling, which spans from Defining to Closing project phases and is covered by the Deltek Cobra and ProjectConnect products;
* Cost & Earned Value Management, which spans from Defining to Closing project phases and is covered by the Deltek Open Plan product; and
* Collaboration, which spans throughout all the project phases and is covered by the Deltek WelcomHome and wInsight portal-like products.

Project-oriented businesses of all size have to be concerned about understanding the entire project management life cycle. Whether a firm has one project or a dozen or 100 to conduct, having all the components that define EPM will be increasingly critical for it to manage the projects and equally important, to position itself for growth.

Deltek EPM was devised to ensure that users are doing the right projects, the projects that best fit their goals, and then to help them manage those projects to maximize the payback. That’s to say that such solutions also help companies maximize the resources deployed on a project while also ensuring a reasonable profit is generated while working on the project. This is particularly true if it all can be done within a single, unified enterprise solution to avoid multiple project risks.

To that end, full visibility of portfolio and project performance KPIs should eliminate surprises, while risks can be minimized through quantitative and qualitative risk analysis (e.g., risk registers, histograms, completion probability tables, cost probability tables, etc.). Additionally, integrated earned value data gathering, analysis and reporting reduces compliance risks, while cost overruns can be eliminated through more accurate schedules and resource management. Finally, a scaleable multi-user/project platform should standardize best practices and drive enterprise value, visibility, project velocity and repeatability.

Let’s see how it all could and should work on a high level. First of all, the output of risk identification and assessment directly affects cost and scheduling. At the highest level, portfolio analysis should use all of the metrics from cost, schedule, and risk to see the bigger portfolio picture and make informed decisions about the project mix (picking the right, profitable projects only).

The underlying cost and schedule data provide the detailed data that make up the metrics and KPI’s, while a risk management solution should feed from planning and scheduling utilizing the project plan to identify risks against the work breakdown schedule (WBS). Wrapping this all up would provide project collaboration portals allowing all the project stakeholders (Project Managers, Team Members, Customers, Contractors, etc.) to keep them informed about the projects they are involved in.

Again, it is important to understand everything above within the context of EVM and related analytics (to analyze multiple, interrelated project variances), whereby Deltek’s related solutions help clients control costs, measure earned value, and comply with a plethora of federally mandated reporting requirements (i.e., ANSI/EIA-748-A-1998, DOD EVMIG [Earned Value Management Implementation Guide], SOX Section 404, OMB Circular # A-11 Part 7 [Section 300], etc.).

In that regard, Deltek Cobra, after importing project schedules, baselines and WBS, helps with project cost management, change management and forecasting. The solution features integration not only with the Open Plan sibling product, but also with the Microsoft Project/Project Server and Primavera project scheduling products.

These new products certainly can create opportunities for Deltek to capture new customers and new markets, and Deltek intends to do that via further penetrating current verticals, entering new verticals and expanding geographically. The most apparent case for further penetration of existing verticals would be within government contracting, where the expanded EPM product line (through the above strategic acquisitions) present significant up-sell opportunities to current customers.

Part III of this blog post will wrap up Deltek’s opportunities, which in great part stem from the latest developments to its traditional breadwinning products, and also analyze some still outstanding challenges for the upbeat vendor. Your comments, opinions, suggestions, etc. are welcome in the meantime.

It’s the Aftermarket Service, Stupid! (Part I)

2009-06-19T15:01:00.001-07:00

Regardless of the economic environment (and sentiments), I always think of the opportunity within the aftermarket service and support as a profitable, high-margin and customer-captive business, and yet, still underserved. General Electric (GE) would be the proverbial example of a company that has focused on aftermarket opportunities, going so far as to call itself a “services” company as opposed to a “products” company.

GE indeed, starting with Jack Welch’s long chief executive officer (CEO) tenure, has been widely reported to have significantly increased both its total revenue and profitability by focusing on services opportunities in addition to developing world-class products.

The manufacturing corporate giant has certainly proven the value of serving the product aftermarket, which has recently been purported in a quantifiable manner by many pundits as a high margin business. For instance, AMR Research reported recently that businesses earn 45 percent of gross profits from the aftermarket, yet it is only 24 percent of their revenues, while a recent article in Harvard Business Review claims that we all spend US$1 trillion every year on assets we already own.

A related software category term was mentioned in TEC’s 2003 article titled Service Lifecycle Management - Tapping into the Value of the Product Aftermarket. Namely, Service Lifecycle Management (SLM) is a business initiative focused on servicing a company’s products, and the customers that bought them, after the product has been sold. Simply put, SLM focuses on making more money from the product after the initial sale. But it is more than that — it is also a way to become a strategic part of the customer’s business after the sale is completed.

In another Harvard Business Review article titled Winning in the Aftermarket from May 2006, MCA Solutions’ co-founders, Dr. Morris Cohen and Dr. Vipul Agrawal, shared their insights on opportunities to increase corporate profitability through better management of the service business. The “Six Steps for Managing Service Networks” outlined therein explain how all service-oriented companies (not to be confused with “service-oriented architecture [SOA]”!) can take advantage of these opportunities.

Industry leaders like Cisco Systems have reportedly been leveraging MCA’s Service Planning and Optimization (SPO™) suite [evaluate this product] to do just that, and have benefited from reduced service parts inventory, improved service levels and greater profit.

Servigistics, one of the leaders in the nascent SLM software category, refers to it as “strategic service management”, which entails service parts planning & optimization, service labor planning & scheduling and service parts pricing. The focus of today’s blog post is the realm of service parts planning & optimization.

TEC’s 2006 article titled Enterprises May Be Overlooking Profits from After-sales Service concurs with this particular opportunity. Namely, if service parts (including their availability and pricing) and service personnel management are well managed, manufacturers can significantly improve their profits from service operations. This will in turn lead to significant overall profit margins.

This brings us again to MCA Solutions, a privately held company headquartered in Philadelphia, Pennsylvania, the United States (US). Besides Servigistics, MCA Solutions has become a “usual suspect” in most big-ticket service parts planning and optimization evaluations.

The above-mentioned MCA’s award-winning SPO software suite has helped a number of aerospace and defense (A&D), high-tech and capital equipment companies of all sizes transform their service supply chains into bottom-line business drivers, by reducing (excess and obsolete) inventory, lowering support costs and improving service levels to maximize customer satisfaction. These, in turn, often result with higher revenue and increased equipment availability.

Outside the service parts planning & optimization market, the “MCA” name can be confused for a record label, museum of contemporary art, and whatnot, but the company’s brand recognition in its target market needs not much bolstering. Virtually anyone dealing with service parts planning and optimization knows that MCA stands for Morris Cohen & Associates.

Dr. Morris Cohen is the Matsushita (Panasonic) professor of manufacturing and logistics at the Wharton School of the University of Pennsylvania, and co-director of Wharton’s Fishman-Davidson Center for Operations Management. Dr. Cohen has spent three decades researching, planning, and designing advanced value chain systems and working with customers such as IBM, Cisco, Applied Materials, Intel, General Motors, and the United States (US) Navy.

In 1999, he co-founded MCA Solutions to bring the intellectual capital of service value chain optimization from the classroom into the technology marketplace (i.e., the real world). Another MCA co-founder, Dr. Agrawal, was a student of Dr. Cohen’s at Wharton before becoming assistant professor in the operations management department at the Stern School of Business at New York University. Today, Dr. Cohen serves as chairman of MCA’s board, while Dr. Agrawal is MCA’s executive vice president of products.

The mere concept of inventory optimization sounds quite simple: one has to balance the risk of stockouts (i.e., missed sales opportunities translated into poor customer service) with the (often hefty) investment (and tied up capital and cash) in inventory (safety stocks). This becomes sort of a “damned if you do, damned if you don’t” situation.

But the situation becomes much more complicated when one has to take into consideration multi-echelon distribution channels that entail hundreds or thousands of possible part locations worldwide, and even hundred thousand parts/stock-keeping units (SKU’s). The multi-echelon term refers to the supply chain hierarchy that spreads from the top upstream inventory point (e.g., a central distribution center [DC]) downstream several layers to the farthest node in the service chain (e.g., a regional warehouse or even a field service van).

It is thus a small wonder that MCA (and virtually every other optimization peer vendor) stems from the academia and its software’s concept is based on rocket science-like planning & optimization algorithms. In 2001, MCA released the first commercially available software for multi-echelon inventory planning for service parts.

As I have learned thus far from talking to the likes of MCA and Servigistics, these vendors remain quite cautious (if not outright secretive) about mentioning client’s names (especially if the client is involved in the product co-development) and about discussing their planning algorithms at a deeper level (not that many ordinary folks would understand these either, but, hey, the competition might listen in!).

Indeed, the planning and optimization models that these vendors tout can really be too overwhelming and hard to comprehend for ordinary mortals. For instance, in a single location with typical service parts, there can be deployed a few different methods of inventory planning, such as:

* Each part location is planned separately;
* With a so-called demand accommodation approach (mastered by Servigistics), which determines what parts to stock, then calculates demand satisfaction levels, to finally segment parts and locations into these different fulfillment (customer service) levels; and
* Overall optimization (arguably mastered by both MCA and Servigistics), as to achieve an overall desired service level across selected parts and locations.

Reportedly, the optimization approach can result in inventory about 30-40 percent lower than individual part location and 20 to 30 percent lower than the demand accommodation approach with much less planning and labor.

Warning: each prospective customer should check well which of these models would be the most appropriate for their business and ask the vendors to simulate real-life scenarios to them with germane data. Another warning: even then the recommended results from these packages might initially seem counterintuitive, with the rationale being difficult to explain. Nonetheless, MCA’s very first customer (I suspect it is Cisco) still successfully uses MCA SPO to manage a multi-billion dollar service parts inventory base, with 250,000 active parts across over a thousand service parts locations over several echelons.

Moreover, in some industries like aerospace & defense (A&D), stockouts are often prohibitively costly (i.e., planes are grounded due to missing critical parts), while, on the other hand, a mission-critical spare part can cost an arm-and-a-leg. There, the whopping investment in safety stocks has to be balanced rather against the risk of the part failure.

To that end, in 2003, MCA partnered with a well-known aerospace company to develop the first commercial software for planning based on service parts availability. Availability-based planning means that the system looks at the availability of all of the critical parts to support a piece of a complex equipment (installation), as opposed to independently planning for fulfillment rates of individual parts and locations.

With the same customer, MCA introduced software that managed multi-indentured and multi-echelon spare parts forecasting and planning, which was needed to support stringent “performance-based logistics (PBL)” programs that have been mandated by the US Department of Defense (DoD).

In 2004, MCA introduced risk-based tactical planning which takes a probabilistic approach to forecasting and applies it to the management and prioritization of service (work) orders. By prioritizing based on the risk of stockouts (i.e., the part’s criticality vs. its cost and the lead time to replenish it), the system ensures that supply is used optimally to meet spare parts service objectives, thus increasing service performance while making the planner more productive, too.

For more details on these principles see TEC’s earlier article titled Lucrative but ‘Risky’ Aftermarket Business—Service and Replacement Parts SCM. Also, TEC, with a courtesy of ChainLink Research, has featured Dr. Cohen’s article along similar lines entitled Service Supply Chain Strategies to Increase Corporate Profitability.

Owing to an expansion both in terms of both new geographic markets and customers, and to some deep strategic partnerships, MCA recently reported 2007 revenue growth in excess of 70 percent, and increased expansion into new verticals, including medical, capital equipment and commercial aerospace manufacturing. Boeing, Cisco, Lockheed Martin, the US Navy, Sysmex and Briggs & Stratton are just a sampling of the big-name companies currently using MCA SPO.

In additions, some successful SPO implementations have led to new service initiatives within many of these organizations in 2007, including strategic consulting engagements which enabled companies to derive even more value from their service businesses. Namely, MCA recently launched a strategic value-added consulting offering to help companies structure and understand the cost impact of their PBL and service level agreement (SLA) initiatives. Such lucrative consulting engagements entail network design and optimization, transportation analysis and full-time equivalent manpower planning.

Part II of this blog topic will analyze MCA’s most recent events and competitive situation. In the meantime, please send us your comments, opinions, etc. We would certainly be interested in your experiences with this software category (if you are an existing user) or in your general interest to evaluate these solutions as prospective customers.

What Does the “P” in PLM Really Mean?

2009-06-19T15:00:00.001-07:00

What does the “P” in PLM really mean? The question seems ambiguous since PLM may refer to many different things (such as an airport, a university, a railway company, etc.). Okay, so let me clarify what I mean. The PLM I’m talking about here is product lifecycle management. Now, the answer seems quite simple. However, my purpose is not to trick you with this silly question, but to explore the true meaning of “product” under the PLM setting.

So, what is a product in the light of product lifecycle management?

To answer this question, I found something really helpful from the definition of product (business) on Wikipedia:

In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are purchased as raw materials and sold as finished goods.

This defines the term “product” from three different perspectives and reflects the evolution (in a reverse order) of adopting PLM methodology in business practices, which I’ll describe below.

“In manufacturing, products are purchased as raw materials and sold as finished goods.”

Undoubtedly, PLM was cradled in the manufacturing sector. From the manufacturing point of view, a product is something that has either an assembly structure, a recipe, or both. The major purposes of PLM are to help determine what raw materials are needed and how to convert these raw materials into finished goods. The added value that a manufacturer creates is associated with the physical or chemical changes from raw material to finished goods; the task of PLM is to facilitate these changes.

“In retailing, products are called merchandise.”

More recently, people started to realize the benefits of utilizing PLM outside of the manufacturing domain. The retail industry is one such example. The reason retailers have adopted PLM is because product information is a critical component when it comes to making decisions on what to buy, who to buy from, and how to sell. Some PLM vendors now provide well-tuned solutions for retailers to manage their merchandise from a life cycle standpoint.

“In marketing, a product is anything that can be offered to a market that might satisfy a want or need.”

Will PLM keep expanding to other areas? It seems likely. From a marketing perspective, service is also included in a broader definition of product. A service also has a life cycle, and managing the life cycle of a service has similarities with managing the life cycle of a product—although they too have their differences. The intangible nature of services makes the development, production and delivery of services (not all kinds of services but at least a few of them) easier to take place in the digital world than those of tangible products (e.g., even surgeries can be done through the Internet now). This might provide a hint that managing services from their birth to death using PLM principles is not only advisable, but also has the potential to reach a new height that PLM has not achieved in the manufacturing sector.

Hence, the meaning of “product” within “product lifecycle management” is changing over time with the process of more industries adopting the PLM methodology. In fact, as long as you offer something that “might satisfy a want or need”, you should think about the life cycle of your offering.

So, I hope you have a better idea about what the “P” in PLM really means.

Now, I am going to throw you another question. As I write this blog, I’m facing an Acer monitor. It has a model number and a serial number. The model number represents all Acer monitors that have exactly the same product structure and specifications; the serial number specifically refers to the one monitor in front of me. Which number (the product as a model or the product as a concrete piece) should be managed within a PLM system?

This question is about the granularity of information that PLM systems deal with—and as such, affects what “product” means to a PLM system. The granularity may range from coarse to fine, including product line, product model, model variation, and individual product (serial number). Thus, the objects being managed in different PLM systems may vary.

An appropriate granularity depends on industry, regulation, company strategy, and customer requirements. In the engineer-to-order (ETO) industry, the one-of-a-kind product is designed specifically for one customer therefore the granularity will be very fine; while in the consumer packaged goods (CPG) industry, it is not necessary for a PLM system to manage the toothbrush that you are using.

Regulation also plays an important role in determining granularity level. Some products (such as aircrafts or medical equipment) that are subject to strict safety regulations need fine granularity in order to maintain the traceability for individual parts. In short, the coarser the granularity, the more “efficiently” you can manage the product life cycle, but there are risks of losing effectiveness due to the lack of details.

In our monitor case, I would say that managing this product at the model level in the PLM system is both efficient and effective. The serial number is also meaningful in terms of quality control and customer service. Well, this could be handled by the ERP system. After all, PLM doesn’t do everything!

The New and the Noteworthy: 2008 Vendor Wrap-up

2009-06-19T14:59:00.002-07:00

2008 seemed to be the year for mergers and acquisitions (M&As) in the world of enterprise software—with companies like Oracle picking up Primavera Software’s project and portfolio management (PPM) offering, and Symantec grabbing up MessageLab’s messaging and web security offering. But it was also a year for some software firms to see their latest solutions shine.

With 2008 nearing its end, Technology Evaluation Center’s (TEC’s) research analyst team takes a brief look at 10 of the newest vendors to join its research roster, as well as some of the more noteworthy enterprise software solutions to hit the market this past year.

IFS
Visibility
Global Shop Solutions
Flexi
Targit
Oco
PTC
Ramco Systems
Saba
Callidus Software

Enterprise Resource Planning (ERP) Solutions – Alex Hankewicz

IFS – For over 20 years, this global software firm has provided a completely integrated modular product that covers nearly 20 industry verticals, ranging in such technically diverse industries as aerospace, energy, telecommunications, and process manufacturing (e.g., pharmaceuticals). The true genius of this system lies within the simplicity of the product’s design. The product was developed over several years of client usage and has continued to evolve.

The current seventh generation of the component-based software, IFS Applications 7, is entirely based on service-oriented component architecture (SOCA). The system has such robust features that many of the modules are being deployed as “best-of-breed” solutions in numerous customer locations. One of the ways that IFS stands out from the rest is through the use of open-source application programming interfaces (APIs), where the software modules can integrate with open source products. In conclusion, this vendor may not get the press or hype that some of its more famous competitors do, but it can stand up to—and in many instances can surpass—them, in terms of delivering fit, form, and functionality due to the product’s scalability.

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Visibility – Recently, I was given an opportunity to review two versions of this Boston, (US)-based vendor’s ERP package in both the engineer-to-order (ETO) and mixed-mode industry versions. I was pleasantly surprised that, given the breadth and scope of both the technical and highly regulated nature of the industries that use this software, the capabilities of the solution were nothing short of remarkable. After asking the vendor to demonstrate nearly 800 individual criteria, I was unable to find one instance where the software did not perform as Visibility indicated it could. The company has a significant client base in both North America and Western Europe—in particular, the United Kingdom (UK). Visibility.net is a fully integrated ERP solution, making use of the .NET framework, providing a common user interface and a single integrated platform with excellent functionality. At the end of the day, when you’re looking to acquire an ERP system that has excellent functionality, a solid base of customers, knowledgeable people that stand behind the product, and a reputation of unparalleled customer service, then I recommend Visibility as a solid vendor worthy of your consideration.

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Global Shop Solutions – This Texas, (US)-based vendor has served up ERP “Texas style”, with a robust, solid, and dependable solution. Just like the people in Texas, the system reflects a grass-roots philosophy—“build from the bottom up.” This is also reflected in its adherence to core manufacturing principles—namely, eliminating waste and redundancy. If I may say, it is reminiscent of straight-shooting Texas folk who’ve been known to say “just get on with it and get the job done.” The same no–nonsense approach is reflected in each of the vendor’s product offerings that serve the ETO, mixed-mode, and discrete manufacturing spaces. Unlike another Texan export with a global presence—and I don’t mean oil—Global Shop Solutions means what it says and says what it means. With an install base in the US, Europe, Asia, and “down under” in Australia, it offers one of the lowest total costs of ownership (TCO) in the industry. If you’re looking for a product that is feature-/function-rich and scalable, then consider Global Shop Solutions as an attractive vendor offering.

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ERP Solutions – Leslie Satenstein

Flexi – Earlier this year, I certified Flexi’s financial suite of software packages. As an IT professional with more then 20 years of application development experience, including C++ programming and providing system architecture design support to three Canadian banks and one credit union, when I read that Flexi, founded in 1991, wrote its software in C++ and that it was geared to banking, credit union, and insurance fields, my interest was piqued.

Common concerns that a banker has are the reputation of the company and the expectation of it being around for the long run. Flexi’s products are “banker approved”—and added to the fact that the software was written in C++, it matches my interests regarding technical operations.

We sometimes fail to realize that smaller banks can easily process three million transactions a day, and often it behooves a financial software application to be robust, accurate, and capable of efficiently handling batch processing of large volumes of transaction data.

What does a financial services industry expect from a family of products? Well, it should be easy to use, have built-in security with access controls, be Certified Public Accountant (CPA)-approved in the US and Certified Accountant (CA)-approved in Canada. The Flexi product has all this, and furthermore, auditors like Flexi’s “SOX-Smart” built-ins and its functionality for compliance with Financial Accounting Standards Board No. 52 (FASB52), International Financial Reporting Standards (IFRS), and Generally Accepted Accounting Principles (GAAP).

Financial software should also allow for easy maintenance. FlexiFinancials meets this criterion, and at the same time gives me that warm-fuzzy feeling that it is topmost in its marketplace. Certifying this suite of products was a thrill, because all the things I wanted to see in a financial services package were demonstrated and built-in. FlexiFinancials is the financial service industries “kitchen sink.”

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Business Intelligence (BI) Software – Leslie Satenstein

Targit – This experienced Danish BI vendor offers solutions for the small to medium business (SMB) marketplace. I got to know the company and its product prior to doing the certification during a pleasant chat with Ruben Knudsen and Ulrik Pedersen, both Country Managers for Targit’s U.S. and Canadian operations. I learned that in good times and bad, Targit has managed to keep its staff. This loyalty has paid off in spades, with a staff that is outstandingly knowledgeable in BI and a product that is virtually error-free. It contains all the functionality needed to compete against the big guys by offering a standard suite of applications and additionally by providing the client with a “roll-your-own” capability.

On the web site is a very large list of customers and case studies—as well as video testimonials from some of its clients. Although many of its customers are based in Europe, there are a great many from around the world, including Australia, North America, South America, and Africa. A partial list of industries or applications for which they have solutions include aerospace, human resources (HR), woodworking millwork, retail, glass manufacturing, heavy machine manufacturing, health care, petroleum, food, and more. End-user training at Targit can be done on-site or at one of its offices. I personally would enjoy taking the Tampa Florida classes in late January, early February. Golf, anyone?

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Oco – Oco is named after George O’Connor, who founded the company in 1999. Oco does not provide your typical BI online analytical processing (OLAP) software, but provides BI solutions. That said, with Oco there are no development tools for the client; the client is provided with a collection of approximately 120 solutions, covering all the major and secondary areas that are of interest to any company that has ERP software.

I had pleasant discussions with Jacques Hebert, Oco’s business analyst, and Kristin Hambelton, from Oco’s sales and marketing department, about the company history and why they took that “canned” solution approach. They felt that the biggest drawback to SMBs new to BI was the heavy upfront costs of getting started, and the support licensing fees. Oco’s approach was to provide a system with reports, dashboards, graphics, drill-down capability, maps, and import and export tools as an on-demand BI solution. Typically, the vendor’s software-as-a-service (SaaS) offering allows the client to be up and running in less than twelve weeks. In fact, unless there is some exception, it offers to implement a new system for a client in less then twelve weeks and at a fixed cost.

From Oco’s experience, most organizations set up to handle their most pressing BI needs. If these are already in the “canned” assortment of applications that are provided by Oco, then the implementation times will be dramatically cut. Of the software that Oco provides, all headings, field titles, etc, are software lookups, not hard-coded into the program(s) so that one program serves many customers. All the offerings are supported from one single image system. This means that any tweaking, enhancing, or bug fixing is done on the server, and gets implemented for all.

Oco’s most satisfied customer is Welsh’s, producer and distributor of grape juice and other products. Welsh’s obtained a full return on investment (ROI) within the first month following “go live.”

Oco BI solutions are experiencing great acceptance in the SMB marketplace, due to the guaranteed fixed-cost implementation fee.

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Product Lifecycle Management (PLM) – Kurt (Yu) Chen

Parametric Technology Corporation (PTC) – Founded in 1985 and headquartered in Needham, Massachusetts (US), PTC develops, markets, and supports PLM software solutions and related services that help manufacturers improve the competitiveness of their products and product development processes.

PTC offers a suite of mechanical computer-aided design (CAD) tools and a range of web-based collaboration technologies, enable manufacturing companies to create virtual computer-based products (digital products), collaborate on designs within the enterprise and throughout the extended supply chain, and control the digital product information throughout the product lifecycle.

The year 2008 saw some really good news from PTC. By achieving 14 percent GAAP year-over-year revenue growth, PTC passed the $1 billion (USD) mark for fiscal year 2008 (FY08). In July 2008, the company was selected by EADS (a global leader in aerospace, defense, and related services) to harmonize enterprise PLM solutions across all EADS business divisions as part of that company’s PHENIX initiative. This was probably the biggest contract in PTC history.

Looking ahead to the year 2009, I would expect PTC to keep growing both organically and by acquisitions. The recent small acquisition of Synapsis Technology shows the company’s intent in green product design and environmental regulatory compliance solutions. In 2009, SMBs may expect more offerings from PTC. Besides these, expansions in computer-aided engineering (CAE) and publishing are likely to take place.

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Human Resource Management Systems (HRMS) - Sherry Fox

Ramco Systems – Many of the HR issues that businesses face today are common points of interest for HR (and related software) vendors. As such, software products are designed to address these issues by helping organizations properly manage new talent recruitment, employee productivity tracking, workforce or succession planning and modeling, and baby boomer retirements. While other companies like Ramco have a similar aim, Ramco’s solution has an added feature that most HR solution providers are just beginning to get a handle on—analytics.

This past October, I had the opportunity to certify Ramco’s Enterprise Series human capital management (HCM) solution. In order to be “TEC Certified,” vendors have to meet specific and stringent requirements set forth by our analysts. Overall, the certification with Ramco went very well. There wasn’t one aspect of HCM that it did not know about or demonstrate to us through its solution.

During the certification, 200 criteria/functionalities were validated. I found that the menus were well organized, with common functionalities grouped together. Horizontal scrolling was used when an entry required more data than what a line could contain. Data screens were user-friendly and easily searchable, and their general layout was very clean and uncluttered—making them easy to read.

As a global provider of enterprise software and services since 1989, Ramco has delivered its solutions to customers in 35 countries worldwide. Its HCM practice, while relatively new, tackles old challenges, including analytics, by focusing on strategic workforce management issues that to date have not been supported well with technology or analytics in the HCM space.

Ramco’s HCM solution provides unique technology and analytics platforms, and predictive tools that help with employee retention and productivity. Together, these capabilities provide the ability for organizations to have the right data and tools at the right time. In my opinion, Ramco’s Enterprise Series HCM solution passed TEC’s certification with flying colors.

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Learning Management Systems (LMS) – Sherry Fox

Saba – Since 1997, Saba has been a global provider of strategic people management solutions and services. Saba’s products are used by over 1,300 organizations and over 17 million users worldwide. Its unified solutions provide HCM solutions that cover learning, collaboration, performance, compensation, and talent management.
This past summer, my colleague and I were fortunate enough to have Saba’s director of product marketing speak with us to demonstrate Saba’s suite of enterprise software offerings—including its learning suite. During our discussion, we received an overview of the company, as well as a look at its unique strategies for training clients on how to use its software.

When Saba clients purchase one of Saba’s products, they receive the regular user training offered by most software vendors. Saba, however, goes one step further by offering its clients the ability to enroll in Saba University’s learning programs. These learning programs are geared towards clients, new users, experienced users looking for additional training, project managers, and business owners. I think it says a lot about a company when it’s willing to go that extra mile for its clients and users; and just imagine how empowered they must be after completing their training.

Saba’s learning suite itself has a very rich set of functionalities and is very user-friendly. From what I saw during the product demo, learning how to use the software would be relatively easily—given its layout and menu structure. However, by getting first-hand training through Saba University’s unique learning program, attendees can leave the course with the assurance that they have the skills necessary to use the software application to its full potential. Saba—in my opinion—gets an “A” (for awesome).

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Enterprise Incentive Management (EIM) – Sherry Fox

Callidus Software – Callidus Software was founded in San Jose, California (US) in 1996. It provides service to more than 180 companies—including those in industries such as banking, pharmaceuticals, telecom, and insurance—and to over 1.9 million salespeople worldwide.

In 2002, Callidus released its TrueComp 2.0 sales performance management (SPM) solution, which was aimed at addressing the many challenges faced by compensation administrators around the world—including the management of quotas and territories. Since its inception in 2002, TrueComp has gone through several releases. Its latest version is TrueComp 5.2.

Earlier this year, I had the pleasure of speaking with Jock Breitwieser, Callidus’ director of public and analyst relations. After seeing TrueComp up close and personal, I was truly impressed by its capabilities—and truly blown away by its graphics. Its robust sales performance and incentive optimization functionality includes analytics, quota management, and territory optimization. Such functionality enables users to project the impact of new compensation rules using side-by-side comparisons.

Essentially, TrueComp allows compensation managers the ability to create business rules and calculate payments. And with its ability to automatically calculate compensation benefits, the solution can help minimize management costs and eliminate the possibility of overpayments. It’s is robust enough to manage the most complex compensation plans, but it’s also simple enough to administer without having to heavily rely on the IT department. TrueComp is available through SaaS delivery and can be easily integrated with key sales systems.

While Callidus is currently providing software and services to larger enterprises, one of its goals for 2009 is to expand into the mid market and small to medium enterprises (SMEs).

One last service that I just have to mention is Callidus’ TrueConnect Customer Community. This is an online community forum, where people can meet to exchange their expertise, ideas, and give advice. There are currently 240 members from 21 different countries using TrueConnect (which, incidentally, represents approximately 46 percent of Callidus’ customer base). It’s a great way to keep clients connected and ultimately helps Callidus improve upon what they are already pretty darn good at—EIM.

The Power of Knowledge — Knowledge is Power (Part 2)

2009-06-19T14:59:00.001-07:00

Part 1 of this blog series introduced the need for knowledge management (KM) software applications as part of a more comprehensive and strategic service management (SSM) suite. One such broad SSM suite has been offered by Servigistics.

Servigistics’ Service Knowledge Management (SKM) solution, the newest module within Servigistics SSM, is designed to meet the requirements of the technical service organizations that manage complex problem resolution. The crucial issue is that technicians, dealers, agents, partners, and customers need in-depth knowledge to solve complex problems.

Diagnosing issues in these complex environments (e.g., motor vehicles, aerospace & defense [A&D], medical equipment, appliances/white goods, high tech) requires interaction and a comprehensive understanding of the essential diagnostic variables. As a good example, medical doctors have been provided with a framework that allows them to be masters of the diagnostic method because of their years of diagnostic training. As a trained diagnostician, the doctor is able to capture the essential diagnostic information from the patient and match it against prior treatment experiences.

However, in the world of technical support services, a formal diagnostic framework does not usually exist, since technicians and support personnel do not commonly receive standardized training in how to diagnose a technical problem. The SKM solution’s role is thus to help in the field as newer technicians will be less experienced while the experienced ones are about to retire in droves. In addition, loyalty has been down lately so future technicians will likely not obtain that same experiential knowledge. Moreover, fewer people are going into field service these days.

So, What Can We Do?

One solution is to leverage (collect, retain, and reuse) documents, experience, and expertise within a knowledge repository (base), with powerful retrieval methods (search algorithms) to provide information and resolutions via streamlined access to this stored experience. To that end (which is much easier said than done), Servigistics’ approach enables a single repository to serve as a knowledge store and as a source for interactions through many channels (Web, call center agent, and wireless) and in multiple languages simultaneously.

The SKM’s Knowledge Advisor (described later) can be set up to provide a way for the knowledge base to be queried in many languages. By translating the words in the domain model, this would allow a user to type in his or her searches in one of the languages and he or she would be walked through the same guided-search process. Although not all of the solutions might be translated into the user’s language of choice, Servigistics’ analysis has shown that the most critical factor is that the users be able to search for the “right” answer in their native language.

The SKM solution combines interactive diagnostics with so-called Text2Data processing to gather information along with Knowledge Studio and Knowledge Advisor in a single application. The retrieval engine has been provided by Kaidara in an original equipment manufacturer (OEM) fashion.

Assembling and maintaining a KM solution relies upon the service organization’s ability to manage relevant content and tag the content in a way that the target user base can find it when needed. In this regard, Servigistics has broken deployment of the system into the following four distinct steps, with appropriate products to address these specific areas:

1. Gathering History — Most KM deployments fail due to lack of content and lack of a defined process to author and populate the knowledge base. SKM is able to analyze and capture accurate and succinct problem-resolution pairs from disparate historical files to pre-populate and jump-start a problem resolution project.

Volumes of product data and information are generally plentiful in both structured data (database rows, fields, tables, etc.) and unstructured content (forms, documents, pictures, etc). Nonetheless, this data and content is not useful for reuse until it is normalized, validated, and tagged for retrieval.

The aforementioned Text2Data capability provides an automated means to gather, analyze, and categorize text documents or database records and transform them into a usable form. Text2Data processes a set of input records that generate output that describes each of the records. The input records are generally a set of text documents that are relevant to the target knowledge domain or a database table containing rows of information, such as call records, service requests, trouble tickets, and service bulletins.

This means that materials in various formats (i.e., structured and unstructured) can be incorporated into the system, thus adding value to content and future searches. The results from Text2Data processing identify important concepts within the data and converge upon a normalized set of solutions.

This convergence of product data into solutions provides a solid “starter” set of content and may be run iteratively throughout the SKM lifecycle to provide additional content. In other words, the system has a “self-learning” capability (i.e., to create new resolution cases based on history of symptoms, questions, solutions, etc.).

2. Organizing Knowledge — The abovementioned Knowledge Studio module creates a structured representation of content and maps the content to a standard vocabulary, which is commonly referred to as a domain model. The domain model is an abstract image of the application area in which the system operates, and it provides the vocabulary by which objects, states, actions, and relations can be described. It offers a structured representation of the attributes, their types, and the values that can be used to represent information pertinent to the domain.

Knowledge Studio provides the basis for representing, accessing, and handling information, in order to drive the interactive diagnostics. Since all representation schemes are based on the domain model, consistency is always ensured.

The Studio enables administrators and authors to efficiently tag solutions and add new metadata to the model (via translation, synonyms, acronyms, attribute tagging, etc.). Moreover, the domain model approach eliminates the need for any static (hard-coded) decision-tree maintenance, so all of the interactive diagnostics are dynamically automated from the domain model itself.

3. Distributing Knowledge — The cornerstone of the SKM offering and the means to realize the full potential of interactive diagnostics is called Servigistics Knowledge Advisor. The solution functions much like emulating the most experienced technical support agent’s thought process in dealing with customer problems. The Advisor interacts with the user in a natural language and flexible manner, similar to that of skilled technicians.

The goal of Knowledge Advisor is to help the user find the “right solution” to his or her specific problem, from anywhere (via intranet or Internet) in the shortest possible time with the greatest possible accuracy. The user does not want to receive a “no solution found” notice, nor does he or she conversely want to be told that there are “150 possible solutions to your problem.”

Different Strokes for Different Folks

Within the flexibility theme, SKM offers multiple search interfaces dependent upon the users’ experience (novice vs. advanced) and the context of what problem they are looking to solve. Critical to the success or failure of any system is the “look and feel” of the user interface (UI).

The approach adopted by Servigistics is to provide a flexible UI design framework that can accommodate the specific requirements of any user level. The tools to modify the system’s interface are delivered with the system, including a comprehensive set of instructions. The modes of user interaction with the system are as follows:

* In a Guided Search mode, users can describe their problems in their own words and Knowledge Advisor dynamically generates the most relevant questions to quickly address the problem at hand. Through this process, the user is walked through a natural question and answer (Q&A) dialogue to results. Even if a user is not able to answer a question from the Advisor, he or she can skip it and the Advisor will simply narrow the results by asking a different question. This approach is fully automated and requires no pre-programming to execute;
* In a Text Search mode, regardless of how a problem or question is stated in Knowledge Advisor, the system reads every word input and has the intelligence to understand the context of the words (i.e., it can account for the use of synonyms, acronyms, abbreviations, misspellings and lexical patterns). For example, words that are searched can include the “exact” word matches or perhaps if a user enters a code number, Knowledge Advisor would be able to detect if the code entry matches, e.g., the pattern of a product model number or an error code pattern; and
* Finally, if an experienced Knowledge Advisor agent uses the system, he or she can bypass the Guided Search and drill down through the system to quickly find the “right” solution with Expert Search. This search method directly exposes the metadata of the domain model, allowing the user to query the specific metadata areas directly and even change the weight of the areas.

4. Maintaining Knowledge — While building the knowledge base is the starting block for the SKM system’s instance, maintaining the content relevancy and verifying data tagging are the keys to the long-term viability of the system. To that end, Servigistics includes within the SKM system a set of tools and features to ensure that the knowledge stored in the system is not only easily imported but is also accurate and relevant to solving intricate technical issues.

The Knowledge Advisor module provides a means for authors, knowledge administrators, and subject matter experts to add or edit existing problem resolutions in the knowledge base. The authoring tools are designed to safeguard entry of duplicate solutions, and may be set for access and/or editing per role.

Furthermore, through Knowledge Studio, the administrator may set up workflows for authors to use in Knowledge Advisor. For example, when an author enters a new solution, the system may require a review and authorization process by several “subject matter experts”, whose role is to ensure that the information entered into the knowledge base is accurate, complete, and up-to-date with the latest support practices being used.

In some cases the reviewers might include product managers, marketing managers, or regulatory and legal personnel. The workflow process ensures that each solution is reviewed automatically, approved in a timely fashion and each step of the process is time- and date-stamped with version control.

Last but not least, the structured approach to knowledge provides advanced reporting and analytic capabilities, since the Servigistics Knowledge Analytics module has tools that report on supply/demand for both metadata and content (that can be segmented on the data’s structure). These capabilities provide administrators with decision support for maintaining retrievable and relevant content.

Knowledge Analytics generates reports that reflect how people are using the system, what types of searches they are making, and captures feedback on the user’s impressions and rating their success using the system. For example, a “gap” analysis report would identify “holes” in the product coverage of possible solutions. The Analytics module also provides administrators with reporting views to create custom reports on user, content, tagging, or session data.

Any Potential Benefits from These Whizbang Thingies?

As mentioned in Part 1, some Servigistics case studies have proven that SKM can reduce troubleshooting time by solving issues once and making the resolutions available across the service organization. It is sort of like a collective unconscious aligning everyone in the service operation.

In addition, the solution can decrease the number of service calls by empowering customers, technicians, partners, and dealers to more reliably and accurately find their solutions through self-service. Furthermore, it can improve product reliability by identifying and tracking quality issues (e.g., the number of uses per solution).

For example, a France-based home appliance manufacturer found that in less than six months, SKM improved first call resolution from less than 20 percent to over 50 percent. In addition, Level 1 agent training was reportedly reduced from eight weeks to four weeks, while operating costs were cut by five percent.

For global companies preparing for the loss of valuable workers due to retirement, it should be encouraging to know that their collective knowledge and experience won’t be lost. Instead, this know-how can be collected, automated and accessed by everyone in the service operation.

In other words, in operations that face the potential loss of intellectual capital through retirement, the SKM can reduce service employee ramp-up time by providing a diagnosis framework. So, instead of viewing this upcoming workforce transition as a problem, best-in-class companies can use it as an opportunity to manage service as a profit center rather than a cost of doing business.

One Year Later at Deltek: More of the Same (And Then Some More) – Part III

2009-06-19T14:56:00.000-07:00

Part I of this blog series explained Deltek’s ebullience despite a hostile and depressed environment, and also analyzed the recent developments (and anticipated future developments) at Deltek’s Professional Service line of business, which is largely represented by Deltek Vision [evaluate this product]. Part II then analyzed the recent developments (and anticipated future developments) at Deltek’s Government Contractors (GovCon) line of business, which is represented by Deltek Costpoint [evaluate this product] and Deltek GCS Premier [evaluate this product].

This final part will focus on Deltek’s Enterprise Project Management (EPM) line of business, which helps companies deal with the ever-growing reporting regulations being imposed by government agencies.

The Deltek EPM product portfolio [evaluate these products] offers the following three primary disciplines of program controls for government contractors:

1. Planning & Scheduling via Deltek Open Plan;
2. Cost and earned value management (EVM) via Deltek Cobra and Deltek MPM (to be explained soon); and
3. Risk Management via Deltek WelcomRisk.

To be fair, estimating is another key program management disciplne, which Deltek does via third-party solutions. Regarding estimating partners for EPM, Deltek works with several vendors, including Galorath, ProPricer, and PRICE Systems. Users can basically import comma-separated values (CSV) files from those estimating systems into Deltek Cobra. While Deltek works with all of the above-mentioned estimating vendors, it doesn’t yet have formalized partnerships with any of them, and doesn’t turn to one more than any other.

The “See Problems Before They Do,” “Share Program Information,” and “Trust the Data” Themes

As Deltek has built its EPM business and listened to its customers’ top priorities, it has focused its attention on building a technology roadmap that delivers features such as early warning indicators, automated reporting, “anywhere, anytime” access via the Web, and process controls to build consistency within the organization. The vendor continues to invest in EPM, and one recent highlight would be Deltek wInsight 6.4, the tool for EVM reporting and collaboration, which was released in late May, 2008.

The release included enhancements such as early warning indicators that provide a proactive view of project performance to avoid costly budget and schedule overruns. In addition, wInsight 6.4 added two new “trip wire” metrics for the United States (US) Office of Secretary of Defense (OSD): the Baseline Execution Index (BEI) and the Critical Path Length Index (CPLI). These indices are used to measure and forecast programs’ progress and are utilized by the US Defense Contract Management Agency (DCMA) for compliance audits.

The product also included faster US Office of Management and Budget (OMB) Part 300 reporting capabilities and simplified data integration. The latter was enabled via a United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) Extensible Markup Language (XML) data interchange to communicate EVM data to clients more easily.

Acquisition Further Bolsters EVM Leadership

As the second major move in the EPM space, in September 2008 Deltek announced the acquisition of MPM, Planview’s former EVM solution. Deltek received both software and key employees with this acquisition.

Prior to this acquisition, the two dominant EVM applications in the market were Planview MPM and Deltek Cobra. Now, Deltek becomes the industry-standard solution in the marketplace for EVM, since acquiring MPM effectively allowed the vendor to corner this market niche. This acquisition indeed extends Deltek’s leadership position as the largest and most comprehensive EVM provider.

Deltek MPM is an EVM application widely used by government contractors and agencies, including 8 of the top 10 aerospace and defense (A&D) contractors, to meet the complex compliance requirements of the US Federal Government. The solution competes directly with Artemis CostView and Dekker, and is used primarily by government contractors to comply with the ANSI 748-98A standards for earned value reporting.

Accordingly, MPM takes initial program budgets to an integrated baseline review (IBR) and then allows users to monitor and report on program performance. MPM produces 48 standard (”canned”) reports required by the government such as contract performance format (CPR): Format 1-4 and NASA Form 533: Monthly Contractor Financial Management Report. On a high level, the product’s key capabilities are the following: program overview and initial setup, work breakdown structure (WBS), estimating, what-if analysis, planning & status reviewing, graphic drill-down, Microsoft Project integration, and reporting capabilities in terms of sample reports.

Why This Acquisition?

I think Deltek made the MPM acquisition for two reasons. For one, as mentioned earlier on, the purchase solidifies Deltek’s standing as the leading EVM vendor in the world. These numbers are only estimates, but it is my belief that MPM and Cobra’s combined install base gives Deltek about 70 percent of the market share for EVM applications.

MPM’s former parent Planview is focused on the information information technology (IT) governance side of the project portfolio management (PPM) market and felt that selling its EVM solution to Deltek would re-focus the company on what it is good at, and gives it additional resources to focus on the strategy. For Deltek, the vendor gets a solution that fits into its EVM product set, which was the second reason it made this move.

Namely, MPM gives Deltek an EVM solution that complements the overall EPM portfolio. MPM is a great fit for organizations that have decentralized EVM processes where EVM is managed on individual programs.

It is a desktop application that is relatively easy to use, intuitive, quick to implement, and requires few IT resources. In that sense, while it will be sold to and used by the largest companies in the world (Northrop Grumman Corporation and Raytheon Company are MPM customers), it is an ideal fit for small to midsize government contractors that want to get up and running on EVM quickly.

The application is capable of handling only one project at a time (although it can store multiple projects). For instance, WBS can only be done on a project-by-project basis, since there is no concept for centralized enterprise project structure (EPS). There is a summary level WBS with roll-up assignments of WBS to owners (or contract account managers [CAMs]). The product also does not offer some critical reports such as the Functional Cost Hour Report (DD Form 1921-1 Part 1) and OMB 300.

Thus, MPM is not focused on enterprise-level deals due to lack of enterprise functionality, and this is where Cobra plays. Deltek Cobra, though it is also used by small companies, is a great solution for organizations that manage EVM on a centralized enterprise-basis, and these tend to be larger firms. For companies like Lockheed Martin that have centralized EVM functions, the scalability and “roll-up” capabilities of Cobra make it a better solution than MPM for centralized EVM management.

Since MPM has been used by hundreds of customers, and it is a tight fit for small to medium sized government contractors that need to implement EVM on a program-by-program basis, Deltek will not be sun-setting the product and will continue to support/sell MPM to customers. As the vendor assesses the EVM needs of its customers and prospects, it will sell Cobra or MPM depending on how EVM is managed inside relevant customer organizations.

Due to MPM’s architecture, it is not difficult to push/pull data to and from the application. In that sense, EVM data can be transferred between MPM and GCS Premier, Costpoint, and Vision. However, Deltek is exploring deeper integration plans and will reveal those to the market as they are developed.

What Might the Future Bring?

For the future, Deltek’s ambitious goal within the EPM suite is to unify all the various applications it owns on one common technology. Since a few years ago, when it first acquired a number of functional point solutions from multiple sources on various technologies (and with little to no integration at all), Deltek has made great strides in this area. But the vendor wants to eventually offer an Integrated Program Management framework from a single vendor, on a single technology, and with a strong application integration framework to interact with any outside systems, not just to Deltek’s (where it is already integrated today).

Deltek is well down this path already, although serious work remains. For example, Deltek Cobra’s upcoming release, as an EVM solution targeted to large government contractors (that need to standardize on EVM practices across multiple programs within their complex organizations), will likely feature Microsoft .NET Framework-based more scalable architecture.

The upcoming CAM dashboard would be another exciting innovation, since on major programs, CAMs act as specialists for specific components of that program. But at this stage, I am only at liberty to hint that this functionality should greatly enhance (dare I say revolutionize?) the way A&D firms manage program performance. In the meantime, we will have to stay tuned for more product’s details and the official availability announcement by Deltek.