Is there light at the end of the tunnel?

Man, we have been at it recently. I have posted earlier on the somewhat precarious state of the business I manage. I have also posted many times about the challenges we have faced implementing our new software platform.

Well, things are starting to look up. We are starting to see the benefits of all the actions we have taken to reorganize the business into a leaner, more efficient operation.

Yes, there are quite a few less people in building these days. I would not be truthful if I said this hasn’t had an impact on things. It has. But, by and large, everyone has gotten on board with the Plan. I have to mend some fences. Sometimes I sit in my low-rent ivory tower and do not take others feelings into consideration enough when proposing sweeping changes to their work life. Shame on me. That can be fixed. Another lesson learned.

I think the November numbers will really tell the tale, but we can see improvements in the categories we addressed.

One thing that has brightened my week was that I found myself actually doing my job for the last week. Not one overwhelming crisis, though there were plenty of underwhelming ones. I actually spent more time at my desk than in a conference room for the first time in months. 

I have even regained hope that we can at last corral the raging beast of a software platform. I must give credit to the vendor. We have had on-site visits twice in the last two weeks. We moved to a new version of the software almost without a hitch with the vendor’s “A Team” looking right over our shoulders as we went live.

We launched our new and improved website last Tuesday. This site is perhaps the cornerstone of our rebuilding efforts and it looks like it will more than live up to our expectations. Once again, the vendor put their senior web developer in our building for the go-live. Couldn’t be more pleased with the result.

It is safe to say that we have had to re-engineer almost all of our business processes, in large part due to the way the ERP system operates. This may sound like a “software straightjacket”, but the reality is that we had pretty much done the same thing when we were using our old system.

Change is a bitch. Change for the sake of change is stupid. Change to take advantage of an entirely new set of tools and circumstances is smart. I think that once we accept that, we can start living up to our potential.

Failure to Implement

I have a love / hate relationship with Three Letter Acronyms (TLA’s). I fear I sometimes have the annoying habit of using them as a sort of insider shorthand that is meant to show just how hip and up to date I am. So I’ll offer a mea culpa right from the start.

I was introduced to a new one last week during a conversation with our accountant and business advisor. I was using him as a sounding board for the ideas we have to improve the business.

He said that the businesses that thrive during adversity are not the smartest or the fastest or the best capitalized. The ones that thrive created ideas and initiatives and implemented them. He called the problem FTI. His personal opinion was that understanding that problem was a life changer for him.

FTI = Failure to Implement

I have sat in (and run) meetings with well intentioned people brainstorming ideas that might improve the business. I have watched everyone earnestly nod their heads and agree in principle. I have watched the meeting end without a committed course of action. I have seen nothing happen. Kinda harkens back to that Charles Darwin quote, eh?

When I first heard him say it, I thought he said “FDI”. Actually, that works too:

FDI = Freakin’ Do It

Yes, that has been one of our problems. I think we have laid out a course of action with clear goals and benchmarks. Managers will be given a set of tools that can monitor their KPI’s. I think I also made it clear that I will be monitoring them, too.

KPI = Key Performance Indicator

Another TLA now rears its ugly head.

FUD = Fear, Uncertainly and Doubt

For the moment, we think we have overcome that nasty problem, but as an old used car salesman, I am well aware of buyer’s remorse. We were set back a week in our already short implementation schedule because we needed not one, but two additional meetings to get my Board to agree to the Plan.

Now the ball is firmly in my court. Yesterday, I gathered the Department Heads for a meeting where we outlined the Plan. I was gratified to see that for the most part, everyone at least sounded like they were on board. I was even more pleased when one of the owners put in an appearance and offered her support to what we are trying to do.

As much as I would love to expound in detail about what our Plan is, I fear that a bit of discretion is appropriate. So, I will offer my final TLA in this post. From now on, it won’t be BAU.

BAU = Business as Usual

Adapt or die

I started a Board meeting last week with a quote from Charles Darwin:

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change”

We talk about how solid our market position is, how our 60 plus year old brand is the strongest of anyone that is in our space. We talk about how smart we are, technically savvy and employing tools and techniques that companies much larger than us use.

We don’t talk much about adaptability. We have been a victim of our own success. We built this company to grow (and grow and grow) and that has served us well. Unfortunately, we have learned that we walk a pretty fine line with that philosophy.

If growth stops or reverses, our house of cards begins to collapse pretty quickly. We are suddenly bleeding red ink profusely. I have also whined here about the challenges we have faced with our new software platform. The truth is that as senior management fought the daily battle of just getting this application to run our business, our outlook became so tightly focused on the day to day operations, we just couldn’t see the forest for the trees. Some pretty obvious signs of trouble were overlooked. We are in the shit.

For the last three weeks or so, I have been sequestered in a conference room with my team, trying to figure out just what we have to do to stay solvent. We quickly agreed that if we can survive the next six months, we have a better than good chance of thriving in the second half of 2010.

The crazy melting pot of channels that is our company has made it an incredible challenge to generate concise financial data. We are still a relatively small company, but we have big company problems. Problems like our retail stores running an entirely different software platform that doesn’t even talk to our primary system. Problems like being more than a direct marketer with elements of manufacturing and production. The one win we definitely have so far from the new software platform is that we have finally started generating reasonable financial statements in a timely manner. Yes, the retail stores are still out there on an island, but if the vendor can ever get its act together, that will be solved, too. (Sigh. They just pushed us for the third time on an upgrade)

Armed with some reasonable data, we set about creating a six month projection of all aspects of the business. I am working at this company for close to thirty years and we have never taken this close a look at our short term future.

We created six month projections of:

–Demand by Channel

–Expenses

–Cash Flow

–Accounts Receivable

–Accounts Payable

–Inventory

The initial picture was pretty ugly, but it gave us a baseline from which we could do many (many…many…many) what-if scenarios.

The result was a first. We were able to offer the Board a plan of action that required some pretty serious changes in our business. After painting the bleak picture of the baseline, we showed how we could whittle down expenses and raise revenues. With another first, the Board has basically signed off on the Plan.

Now to execute. Generating the numbers was hard enough….

Don’t let this happen to you!

There is an old adage that says “That what does not kill you, makes you strong”. Well, if we can make it through this time, we will be incredibly strong. That’s the truth. I would have preferred that we could learn some valuable lessons without being in the almost continual crises mode we have seen the last few months, but it sure is a motivator.

It would be great to look at the troubles we have and have an epiphany “Look, there it is! Change this and all our problems will be solved!” No such luck. It has only been through a grueling self-examination have we come up with a course of action that might just save us.

There are some things that are obvious. We chose a mission critical software platform that promised an incredible array of features and functions. We were seduced by the demo. We ignored some pretty obvious danger signs. I let hubris carry the day. See my posts on the initial implementation starting with Implementing a new software platform.

But what to do? Have I allowed myself to get caught in the trap of “We have too much time and money invested in making this work, we can’t abandon it now”? The vendor has made some improvements. We have build an entire sub-structure to support this creaky platform. My experience still shows me that the potential of this system, once working right, is huge. The circumstances that made us decide on this platform have not changed. (Although they almost did…more on that in another post) We have certainly become better at working with the damn thing. The vendor is offering us a new version that addresses the most serious shortfalls we have encountered.

But the vendor has always promised long and delivered short. Will this happen again or have they changed? I have seen a reorganization of the company that looks promising. Well, I am going to give them one more chance with this latest round of changes and service packs. (Gawd, this sounds sort of lame. It is like being in a dysfunctional love affair…)

Of course, today it looks like in their attempts at preparing us for this wonderful new version, they managed to knock our entire system down cold. (Checking the system…Yep, still down. Now going on six hours of lights out).

So we have learned about a rigorous testing protocol. Like the song says, “We won’t get fooled again. No. No.” That is the best advice I can offer. It is a time consuming complete pain in the ass to do this right, but the payoff is huge.Real world, real time stress testing. Exploring every wrinkle in the system and the human processes that drive it. If you do not test throughly, you might as well not test at all. Just roll the dice. Same odds.

OK, the software issue is a big one, but it is not the only thing that has caused us to falter. I think I am too angry after writing about the software to do the others justice, so I will close now.

NEXT: Inventory is easy, right?

Crisis or opportunity?

Well, I am back in the saddle as far as my blog is concerned. The last few months have been a challenge to say the least. I am the co-President of a middling sized direct marketing company. In 2009, internal and external circumstances have given me the biggest challenges in my career.

A perfect storm. Everyone in business has had to face the condition of the economy. OK, fine. We adjust. However, we also moved to a new ERP system, found ourselves with massive inventory problems and made some major missteps in our marketing.

I would love to take some ivory tower position that pointing fingers and affixing blame is a unproductive exercise. Of course, that would conveniently also get me off the hook. You can’t be someone in my position without looking deeply at yourself and ask “What was my part in this?”

Simply put, I took my eye off the ball.

I have a complete armory of rationalizations and excuses. Perhaps many of them are quite legitimate. At the end of the day, I allowed senior managers to operate their areas of responsibility in a manner that was not in the companies best interests.

I have a management philosophy that can be summed up in a few words.

“Establish a strategy that tries to execute the wishes of the Board of Directors, take my own initiative to give the company the best chance to grow and prosper, get good people and give them the tools to succeed.”

In an organization like ours, everyone has to wear multiple hats. In addition to my overall management responsibilities, I have specific control of all the technology the company uses to accomplish its goals. A few years ago, I became convinced that the software platform we were running the business on was becoming obsolete and would soon put us in a “software straightjacket” that would hinder us in executing our strategy. It was a good system, mature and robust. But, given the direction the company was going, it was rapidly falling behind in what it could offer us.

Our software company had an excellent track record in the fourteen years we had worked with them. I couldn’t have been happier with their performance in supporting and maintaining their application. When they offered a next generation system that seemed to be a perfect fit for the direction we were going, I thought that this was a no-brainer.

I underestimated and chose to ignore some of the challenges we would face moving to this new application. Another perfect storm. An unmitigated disaster. We really thought we did our due diligence. We really thought we were prepared for this transition.

We weren’t. The vendor wasn’t. We suffered.

NEXT: Lessons learned

Open Source, Linux and the SMB

Another TLA encroaches on my life. All the hip vendors now call us an SMB. Accurate enough label, but pretty generic. 

We begin our project of implementing a Help Desk System, a Manufacturing ERP System and a Database Server all using Open Source software. The whole thing will run on a Linux platform.

If you remember, we are a middling sized direct marketer. We sell merchandise via catalogs, a website, retail stores and various face-to-face opportunities. As a big fish in our very small pond, we have enjoyed a pretty solid market share.

We recently implemented a fancy, new CRM platform. While we are still struggling with working out the kinks in this system, we discovered that that our operation refuses to fit in any know pigeonhole. The new system is pretty awesome on the rare days it is working properly, but it still doesn’t completely do everything we need.

We found that we need:

• A way of managing issues arising from the new system as well as other IT related problems. Buttonholing me or one of my team in the hallway just wasn’t cutting it.
• A true Manufacturing ERP system. The new platform sorta, kinda, maybe handled this, but we decided we need an industrial strength solution focused on this part of our business.
• The new system really does a great job of collecting data on virtually everything that happens in the business. I mean everything. What it doesn’t do a great job of is regurgitating this data to users in the way that they want it. Enter a Database server that could allow us to build tools to let users see just about anything that want, anywy they want it.

Unfortunately, my IT budget is pretty well blown for the year and was doomed to shrink anyway. Any attempt at implementing a “best of breed” application was laughable. We put together any initial quote that the whole shootin’ match, including the server, was going to cost about $30K.

So, what to do? One of our newest members of my core management team has been a big proponent of Open Source software. His last position was with a slowly dying manufacturer where he had no budget. He implemented a couple of Open Source applications with very little upfront costs with reasonable success.

Once we took the red pill, it was interesting to see just how much Open Source software there is out there. Most of the vendors of this mostly free stuff are modeled that the revenues come from customization and support.

Off we went. We decided that the Issues Management could be handled by an OS package called vtiger. In fact, we gave this application a pretty good shakedown in the aforementioned CRM platform.

Our Manufacturing needs looked like they could be met by using another OS package called WebERP.

Finally, for database operations, it look like MySQL, an OS Database platform recently bought out by Sun. This could be free, but we wanted the latest enterprise version of the software with some built-in support. $595 per year.

The last bit was a server. We put together a custom server from IxSystems. Cost about $3,200 without OS. Red Hat Linux costs about $395 for an annual subscription. You could download the Red Hat Linux server software for free, but we just felt we needed some official versioning and also wanted to keep it up to date.

So, there you have it. About $4,200 bucks to get the job done.

All the pieces are in place. Now comes the fun part…making this deal go. I’ll keep you posted.

The Social Graph of Bill

I am wandering back into this whole social graph thing. I have been pre-occupied with more pressing matters and have let this project sort of die on the vine. I know am convinced more than ever that understanding this phenomena is going to be important. How can I ignore the incessant drumbeat from all the high-minded marketing and PR firms that if you don’t get something going in this area, you will be left behind.

OK, but really how to proceed? I am a big fan of Jeremiah Owyang, a Forrester Research analyst who seems to have a keen eye for developments and strategies in the Social Networking  arena. This is a guy who is not only plugged into this scene, but is willing to share his thoughts using many different avenues.

After following Jeremiah for a while, I decided to jump in and test the water. I have signed up, tested and tried to use over 40 different applications. I have created The Bill Social Network which loosely ties all these sites together. If you google (with the quotes) “The Bill Social Network”, you will see what I mean.

 

Social Media Map of Bill.pdf

My feet are wet. Now to develop a strategy to use all this research. Stay tuned.

Three ways design makes you happy

This video is from TED.com, a site that is full of (mostly) wonderful 10 to 20 minute videos of speakers from all manner of disciplines. While I have had the pleasure of enjoying many speakers, the following video really caught my attention.

Take 12 minutes and learn how the design of things can make you happy.

 

Don Norman on Design

One month later…

We have been up on the new platform for a month now. You would think that things would be settled in by now. Not a chance. I have always been told that if you are angry or upset, you should close the notebook or put down the pen and think before you put something out there that you might regret.

Well, %#!@ that.

My team and I are still devoting at least 50% of our time to solving issues with this new application. Every day it seems that we uncover some anomalous  behavior from this application. Admittedly, since we were running our legacy app for over 15 years, it really held no surprises for us. Even if something unpredictable happened, we knew enough about the plumbing to at least know where to look.

Tuesday, we discovered that 75% of our shipments did not post. Did not process. Did not get sent to our credit card processor. The worst (well, the 2nd worst…the worst is that in tough times, I have $25,000 hung up in space) thing is that when something like that happens, we just don’t have a clue where to start looking. This has been a helluva learning experience.

I am truly beginning to feel that our vendor, despite all their efforts, might not be able to completely solve all our problems.

Problems aside, we are also getting a sense that some of the functionality we were promised might actually be vaporware. Fax to a customer…sorry, it is broken. Full and complete access to the underlying reporting and documents the system uses for customization…well, sort of, but not really in a useful form. Advanced 3rd party features for the website… real soon now.

We will see. There ain’t no going back. I will say that they are promising a release in May that may solve some of the more glaring issues. Time will tell. I can say I am not looking forward to a major update to the application in our busiest month of the year.

Sigh…I guess I feel better. It really is a forest for the trees syndrome. It is sure tough to see the long view advantages of this application when you are down in the trenches all day long. I have to get back to the business of running this business, not firefighting all day long.

The Saga Continues….. (or Open Source, What a Concept!)

Things are starting to calm down, at least a little bit. Perfect timing. My owners came to me a day or so ago and said “OK, enough with this new system, we have got to get down to business”. Well put. I have personally done NOTHING else for the last two months but this project. It is not like my regular duties just went on hold while all of this has gone on. Monday I hope to start sliding my IT hat off and put my manager’s hat on.

Our company is pretty well all over the map. In some ways, it defies description. We are a direct marketer…no, we are a face to face sales organization…no, we are a light manufacturing firm…no, we are a retail store… no, we are an eCommerce player…no, we are…what? This is partly due to ownership’s attitude that we must be all things to all people in our marketspace. It is arguable that this is a pretty dangerous strategy. So, when it comes to implementing an ERP system, there are inevitably some compromises. Our new system is definitely targeted to the multi-channel direct marketer. We do some light manufacturing, but really it is to feed our marketing channels with products. There is no denying that the products we manufacture or assemble ourselves offer very attractive margins. Managing this element of the business with the new system is a case of trying to shove a square peg in a very round hole.

We finally waved the white flag on this issue in the last couple of days. We have decided to create a new business unit that will handle our manufacturing and assembly operations. Basically, if a product requires any processing before it is ready for sale, it will be handled by this unit. Of course, this excludes packaging, bar-coding and the like. That operation will still be handled by our WMS group.

This new unit will run on its own ERP platform.  In the wide world of manufacturing, its needs are pretty simple. We started our thinking in the traditional “Let’s se what is out there, do some cost studies and get some demos” approach. Once again, our new Open Source advocate offered us an interesting solution. Riding on the success of vTiger, we were much more open to this idea. Certainly at the level we intended to operate at, the price was right…FREE.

What he proposed was a web-based application known as Web ERP. At first blush, it looks pretty rough around the edges. We looked at some other ERP systems out there. We wanted it to have a web-based interface. We would have preferred it use MySQL as the underlying database. We needed it to have a fully functional accounting element. I looked at quite a few that fit the bill, but I kept coming back to Web ERP. Certainly cost was a key factor. You can imagine that this last project had eaten up my budget.

We will see. I have given a tentative agreement to create a test environment with this application.

I’ll keep you posted.