Distribution software an indispensable tool, now a major force in the industry

BY RICH SCHMITT
Management specialist

As many readers know, I believe that technology does and will increasingly determine a significant amount of the wholesaler’s competitiveness. Where computers were once a luxury to wholesalers, they evolved to a necessity for running a wholesaling business. Now, however, technology seems to be moving into a role of even greater importance. Certainly, this is obvious as contractors choose or disqualify prospective wholesaler-partners based upon the quality of the wholesalers’ web stores. But as we move forward, as global competition becomes even more significant in wholesaling, it may be the effectiveness of a wholesaler’s technology and its ability to integrate with other systems in the supply chain both up and down that determines its success, maybe even its survival.

In the last couple weeks, APAX Partners announced their intent to purchase both Epicore and Activant for an estimated $2B. Epicore and Activant are both significant players in our industry selling ERP systems and other software used by wholesalers. So their competitors, users of their systems and industry observers are speculating, guessing, worrying or feeling relieved over the news. As I write this, there are more questions than answers.

Coincident with all of this, I had the pleasure of attending this year’s TUG meeting in Orlando. TUG is the combined user group for companies using distribution software provided by Infor Global Solutions of Alpharetta, Ga. It was a very productive meeting for all attendees thanks to Gary Brown and his TUG team as well as Infor who sends a significant number of people to the meeting.

Andy Berry, the new vice president and general manager of the Infor Distribution business, was in attendance to announce some recent changes in direction for that business. Literally minutes after he finished his presentation, the attendees were discussing the radically different feeling that they had gotten. First, that Andy was in attendance. Second, his presentation seemed to have more substance than Infor had offered up in recent years. I spoke with one user who commented that he thought it was real change, for the better. He said, “If Infor had a plan in the past, they sure weren’t sharing it with their users.” During the course of the meeting, I got to meet Andy as he introduced himself to each of the service providers in the “trade show” area.

This was another indication that it’s not business as usual in the Infor distribution business. Finally, Andy created a real buzz when he showed a slide that listed his cell phone number and told the attendees to call him if they had problems. Of course, this may not be everyone’s opinion but I think the overall feeling was that there is a real change happening within Infor’s Distribution business.

I asked Andy if he would be willing to talk with The Wholesaler about his business, the distribution software industry and on distribution. We had a chance to talk on, what was according to Andy, one of the few days he was in his office.

Schmitt: Thanks for taking time with me today. I think your last e-mail came from a jet. Do you spend a lot of time traveling?

Berry: Yes, that e-mail was sent as I was traveling back from Europe from a meeting with one of our larger customers. Since I took this job, I have traveled a lot. As we were developing our plans, I wanted to get input from our customers. I think I have visited close to 1,000 customers since I joined Infor. So I have spent a lot of time on the road interacting with customers.

It’s tough on the body but it was the only real way that I could get a sense of what I could do quickly to make the biggest impact. As it turned out, the most important change was to show customers that we care because, forget technology or anything else, what customers really want is a partner. We really hadn’t done the best job of that over the past couple years.

Schmitt: Sometimes asking customers about how things are going can be a humbling experience?

Berry: That was definitely the case. I’ve been to many meetings where the first 15 minutes weren’t pleasant. I listen to customers’ problems, then I tell them what we’re doing to fix those problems and that they can hold me accountable. Most of them have reacted fairly well. So that was a very important process. Finding out, at a very detailed level, what our customers wanted and putting simple solutions in place to get them there.

Schmitt: Beyond letting customers know you care, what are you doing?

Berry: Infor had acquired a lot of software packages with the intention of moving users to a common platform. Over the past several years, we hadn’t made much progress in that direction. We now have a strategy and roadmap for that. We’ve written it down and we’re moving forward. Creating a roadmap is very difficult and we’ve made the decision, going forward, to consolidate ourselves into one brand and one solution set. We are rebranding to Distribution Enterprise and Enterprise i. The difference being that we can deploy Distribution Enterprise on the Unix, Windows and Linux platforms and Enterprise i on the IBM i platform. The user interface will ultimately be the same for both of the brands.

Schmitt: Will Distribution Enterprise and Enterprise i be based on your SX.enterprise and A+ software respectively.

Berry: Exactly. Five years down the road, we think that both functional bases will become one manageable code set. ?A year or 18 months down the road, the same user interface will sit over top of both products. So from a business and process perspective, you won’t know what platform you are running on. From an IT perspective, the heritage of SX.enterprise and A+ are behind the scenes.

Schmitt: Wow, that sounds like a huge undertaking.

Berry: Yes, I have 12 products in the business unit with some older heritage systems. So we’ve made the hard decision that, going forward, we are investing in the 2 brands. We will move customers onto those platforms when they are ready. Over the next three to six months, we will be publishing roadmaps for each heritage product that show customers when an upgrade moves them to the new platform. We have 25 additional developers in the budget which is evidence that Infor is committed to the strategy. Further, we just announced the offer to purchase another company, Lawson Software Inc., in March.

Schmitt: Infor is not the only company with legacy products, so this is an industry-wide problem. Why did it take so long to get a plan in place?

Berry: It’s actually a very difficult process behind the scenes. Software companies are afraid that an unpopular plan will cost them customers which impacts revenue streams. From a technology standpoint, we haven’t had the ability to pull forward the best of each of the products without rewriting a lot of code.

Schmitt: What’s changed?

Berry: The game changer is a piece of software that we developed named, ION. ION is a graphical modeler for describing business processes or technical workflows. Pulling the packages together was the strategy but now we have the technology to do it.

Additionally, we are moving to a more transparent and open approach. For example, we will continue to operate in the Progress environment but we are will also be supporting SQL and Oracle environments. We are also exposing APIs to customers so, where our products are not a fit, they can use best of breed products. For example, if a company is happily using SAP financials, we want to be able to provide distribution solutions that will work with SAP or other packages that suit their needs.

Finally, we’re moving the business logic out of the GUI, so many changes that once required costly modifications will be customizations.

Schmitt: Speaking of acquisitions, any thoughts on the APAX deal to buy Epicore and Activant?

Berry: We know that the market is consolidating and believe that, in the end, there will three or four global companies. A lot depends upon what APAX does and they haven’t disclosed their plans yet. We think it is a great opportunity for us since much of their focus for the next six months will need to be on getting organized and operating in a way that will provide an acceptable return to APAX. At the same time we will be focused on our strategy and customers.

Schmitt: Cloud-based solutions are getting a lot of press. Where is Infor headed?

Berry: By the end of the year we will be moving to Progress Version 11 which provides the technology needed for multi-tenant databases. When you tie that to our Web GUI, we are able to provide cloud-based solutions to those customers who are interested in them.

Schmitt: Any thoughts on where distribution is headed?

Berry: There are a lot of forces at play, globalization will continue to change the game, margins will continue to get tighter and the customers’ needs will be driven by their experiences outside the industry like Amazon. We think this will cause the distributor to focus on sales productivity and automation and on inventory management and sourcing. In the next five years, I expect to see continued consolidation among wholesalers and major changes in the way business is conducted.

Schmitt: One last question — did I hear correctly that you gave out your cell phone number to 600 people? How is that working out?

Berry: I also gave out my e-mail address and I am sitting with four e-mails in my inbox from the TUG meeting. I find that most people don’t abuse it. Sometimes there will be a problem and they just don’t know who to call. In a lot of cases, I can get them connected to the right people to get their problem solved.

I enjoyed my conversation with Andy. He seems genuinely excited about the changes that he is driving at Infor. I especially respect his personal contact with his customers and prospects because in software and in wholesaling nobody knows what the customer wants better than the customer.

Rich Schmitt is president of Schmitt Consulting Group Inc., a management consulting firm focused on improving the profitability of distribution and manufacturing clients. Rich is also the co-owner of Schmitt ProfitTools Inc. (SPI), a business producing print, CD-ROM, web and palm-based catalogs as well as pricing management and analysis software for wholesalers. Go to www.go-spi.com for more information.