Buyer beware

Here's help in choosing the right computer system for your needs.

by Akarin Weatherford

There are many computer systems designed for distributors, but which one makes the most sense for your business? At Indian River Consulting Group, we are vendor-neutral when it comes to computer package selection. Our approach to helping clients involves a combination of business strategy, return on investment analysis and consumer education, so they can make an informed decision. This article dissects some of the components that should go into your decision-making process. It is by no means a complete checklist, but it should put you on the right track.

The most basic components in all distributor software packages include ordering, inventory control and accounting. The ordering function provides the ability to enter and retrieve sales orders and to issue purchase orders. The inventory function tracks items within your inventory and may integrate bar-coding systems. The accounting feature is usually a suite consisting of general ledger, accounts payable, accounts receivable, reconciliation and basic report writing.

Besides the standard core functionality, a vendor may offer anything from online catalogs, delivery management, EDI/XML transactions, container tracking, equipment rental, payroll or even human resource management. Although these options may be touted as part of the vendor’s package, a third party sometimes implements them, or you may pay a premium to get their benefits.

Overall, the application should provide you value by doing what you do now, but more effectively. Don’t get caught up in the new bells and whistles. All these new features require training and breaking people of old habits. Change is inevitable, but minimize it to best fit your company’s operations.

The database
Every e-commerce system has a database. It’s the data storage program that allows the software to enter, retrieve, update and delete information. This information can be anything from your inventory counts to your customer account information. The most popular database used by e-commerce systems is Progress. Daly.commerce, NxTrend Technology, Professional Data Systems, Prophet 21 Acclaim, and Software Solutions Takestock utilize Progress. It is a dependable, cost-effective database solution, primarily because of its long-term licensing costs, as opposed to other databases such as Oracle or Microsoft SQL Server.

Database manufacturers argue over whose is bigger, better and faster. To be honest, if a database manufacturer survived the Y2K technology shakeout, it probably has the necessary technology and capability you need. The average distributor may never fully leverage its system’s features. You’re not handling real-time securities exchanges or trying to launch a satellite into geosynchronous orbit. Most of the bells and whistles are overkill.

So, here’s what you should be aware of when looking at the database component of a distributor software system:

Licensing
Is the database licensed by server or by central processing unit (CPU)? If by CPU, you could double or triple your licensing costs depending on your server’s hardware configuration. Also, do you pay for each client who accesses the database?

Programmability
Does the package include a good application program interface (API) and software development kit (SDK)? If you need to modify the database, can your IT staff make modifications or will you need to outsource the work? Can you find programmers with the skills necessary to program the database?

Maintainability
How maintainable is the database? Progress has many database aspects that are self-maintaining and tuning. With Oracle, you may need to staff a full-time database administrator to constantly tune the database for optimal performance.

Exportability
This is probably the most important feature. If you move to another technology platform, either by choice or by circumstances created by your vendor, you need to be able to move your data. Plus, in order to seamlessly integrate and share data between applications such as Web-based catalogs or enterprise resource planning (ERP) systems, you need a protocol. Most current databases support the popular Open Database Connectivity (ODBC) interface. Whatever method a database supports, make sure it has one of these “back doors.” Otherwise, your data will be stuck in a legacy system and you’ll pay a consultant big dollars to integrate it into your next platform.

The Web front end
Most distributor software systems offer a Web front end. They all offer some type of online ordering or shopping cart and catalog feature. These come either standard or as an option. This is nifty stuff, but we all know from our own numbers what percent of transactions take place over the Web: next to none for smaller distributors and barely a blip on the radar screen for everyone else.

So, why should I care about sinking money into Web-enabled components? The true value of the Web will come from customer self-service in pre-sales and post-sales support. If your customers can do things such as check inventory levels before ordering, review shipping status and print old invoices at their leisure, 24/7/365, you have provided them with a valuable service. In our industry, we know price is not our differentiator. The differentiator is service.

On the flip side, you need to look at your customer base. If you are a wood flooring distributor and your customers are local Mom-and-Pop stores who primarily do business with you via fax and phone, you probably will not need this feature. Again, analyze your situation objectively based upon your business requirements.

Languages and platforms
Computer systems can be built in many different languages. In fact, most applications use at least two languages: one for scripting to the database and another for building the logic, business rules and user interface.

When looking at system languages, go back to the issues of programmability outlined under databases. You can’t do anything about the scripting language because that comes with the database. However, the front-end logic, business rules and user interface should be written in the most common, off-the-shelf languages such as HTML, Java, C/C++, and Visual Basic. Remember the laws of supply and demand. It’s probably easier and cheaper to find a Microsoft Visual Basic programmer rather than a C-TREIVE programmer for Computer Insights Inc. This will be important if you expect to place a high demand of customization on your system.

The operating system (OS) platform is another consideration. Most computer systems are Unix or Linux-based. However, more and more vendors are moving to the Windows NT/2000 platform. Simply put, in terms of computing power vs. hardware costs, the Windows NT/2000 platform is becoming a better deal. Operating system reliability is still a hot part of this debate. But when you look at companies like Compaq (now Hewlett-Packard) offering complete servers on a one-card circuit board that you can hot-swap on and off your network when you have a server issue, maintainability and reliability costs are becoming more of a level playing field.

Also, look at your network environment. Do you currently have "green screen" terminals that you’ll have to replace with PCs? If you have PCs, will you need to buy special terminal emulation software for each PC to access the main computer system? Tally these dollars for your main office and each branch or distribution center and you’ll be surprised at the number. And this doesn’t include installation, configuration and maintenance of these terminals!

Lead times and training
Turning on your IT project is not like flipping a light switch. You (or your project manager) must understand that deploying, migrating and training happens months after you sign the purchase order. Typical lead times are in the range of four to six months, depending on the installation size.

Old habits are hard to break. Moving to a new computer system, especially if there isn’t a computer system currently in place, is a monumental task. Your new system may have a whiz bang, wireless, PDA-enabled customer management interface, but good old Bob "Outside Sales" Smith still keeps index cards on each customer in his car trunk. Distributors are sales organizations. People make the sales, not the technology. You must carefully plan how to acclimate your culture to this shift without rushing the process too hastily.

Data migration
Software vendors often downplay or overlook data migration during initial planning. This factor depends largely on your legacy system database. If the legacy database has a way to export your old data, then moving and mapping data via a standard protocol or connector is easy. However, you may encounter a worst-case scenario and be forced to manually enter every record from your old database to your new one, which could take months.

ROI
Look at the major areas that will give you the biggest and fastest payback. This is usually in the areas of pricing and inventory management. Although these provide internal payback, your customers may drive you to change systems because they may require EDI transactions or force you to track sales in a way your current system cannot handle. Steer clear of factoring transaction costs and body counts as part of your payback model. If you count on these numbers alone, you’ll be in the hole the rest of your life.

Strategy
Where do you want to be in three, five and even seven years? If you perform heavy customization of a software package, you will eventually hit a wall when the key programming language dies and the person you were paying for the code modifications becomes unavailable. COBOL was a language that would last forever, right? Who knows what tomorrow will bring. If you’re cornered into a system based on a dying technology, you’ll pay huge sums of money to transition to a new system down the road. Evaluate what you currently spend every year for IT resources and compare that to the cost to transition to a new system.

The vendor
Is the software vendor stable? How large are their customer service and technical support staffs? This will help you determine if the company can complete your installation on time. How many other distributors use the vendor’s system? How do they compare in size to your company? The way a system performs in a two-branch, $5 million distributor is quite different from a 20-branch, $500 million distributor. Make sure that you’re not comparing apples to oranges.

This article originally appeared in the July/August 2002 issue of Progressive Distributor. Copyright 2002.

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