Build a better mousetrap
Find hidden value in business applications without customizing the company into a corner
By Nancy Bartels, senior editor -- Manufacturing Business Technology, 9/1/2005 6:00:00 AM
Enterprise systems, if not quite commodities, are not much of a competitive differentiator anymore. They're table stakes in the manufacturing game, and the players to beat now are the ones that have taken those systems to the next level, often by building better mousetraps—that is, applying the systems in areas never expected, or building unique customizations or mini-applications that improve processes and save money.
In response to utility deregulation, Montreal-based Abitibi Consolidated, the world's largest producer of newsprint, developed an in-house energy management system to monitor power consumption and track fluctuating energy market pricing and availability. The system is based on enterprise performance management vendor OSIsoft's Real-time Performance Management platform and Microsoft's SQL Server and Visual Basic.
The project originated with one employee who realized the OSIsoft platform could be used to build a dashboard to give all five Abitibi plants real-time visibility into plant energy use and other key performance indicators, spot electricity prices, weather conditions, and other factors affecting what the company paid for power.
The system—designed, built, and deployed in less than six months—has saved Abitibi $1 million a year on energy costs. It cost the company $77,000, and was done entirely with existing staff.
The same principle—leveraging existing software to meet unique needs—can operate anywhere. All it requires are curious users willing to take the time to improve upon systems, and a corporate environment that rewards such behavior, while at the same time controlling changes to protect overall system integrity.
Developing the culture
Encouraging employees "may require a cultural shift, especially in older companies," says Susan Ganeshan, a VP for business integration software vendor webMethods. "You have to bring IT, business, and management together to build solutions."
You also have to make sure you're not discouraging this kind of creativity. "People are predisposed to work together, but if your company rewards performance that discourages collaboration, you'll never get it to happen," says Bob Parker, VP at Manufacturing Insights, an IDC company based in Framingham, Mass.
In short, operational silos and incentive schemes that support conflicting outcomes have to go.
Lower the cost of curiosity and decrease the risk of taking on microprojects, suggests Michael Saucier, VP, OSIsoft. "Don't let [customization projects] trigger the corporate immune system. Keep them small and let them take hold. Just get out of the way and give people the freedom to ask the next question."
Parker suggests using a comprehensive spreadsheet to inventory company processes, ranking them from largest to smallest and asking how each one could be accomplished more efficiently. Identify the quick projects and turn people loose on them. "This is where to find streamlined wins," says Parker.
Customization and control
As valuable as ad hoc applications can be, they also present a problem. Uncontrolled, they run the risk of breaking the system, or customizing it to the point where it can no longer be upgraded or supported.
"You need to ask questions about the impact of making these changes," says Dave Haskins, senior VP at performance management software vendor Kinaxis. Find out from vendors the location of what Haskins calls "the shark-infested waters" of a system—i.e., the places where changes might have serious unintended consequences.
"IT has to do due diligence," Haskins adds. "You have to make sure a legitimate need has been identified, and that you're using the right approach to solving the problem."
According to Parker, best practices are critical to building out customization. "I've seen companies try to look at an ERP system as a platform, and manage it as a portfolio. They bring the governance of continuous improvement and transformation to the issue. They set certain development standards people must follow."
Parker adds that companies must ensure that small customizations can be supported and maintained if the person who builds them leaves the organization, and that IT has visibility into all the extensions being built. He recommends creating an internal "open-source" community.
"Get peer review," says Parker. "Insist that anything that gets created is out and open to all authorized developers so it can be critiqued and tested."
Protecting the upgrade path
Overcustomization is the danger of systems enhancements. There is a point beyond which a vendor will not support changes you have made. For example, "You can't use undocumented APIs [application programming interfaces]," says webMethods' Ganeshan. "We won't support those."
Strong working relationships with vendors will pay off here. Knowing their upgrade plans means not spending time and effort making a customization that's already in the works. Instead, build quick fixes that will lead to a distinct competitive advantage, or will suffice until the upgrade is available.
Vendors know customers inevitably tweak their systems. Rather than stop the process, they try to leverage it to their own—and their users'—advantage. Sometimes, if the better mousetrap has a sufficiently broad application, customers with good vendor relationships can ask for it to be included in a vendor's upgrade map.
"It comes down to a trust issue between the customer and the vendor," says Ganeshan. Customers need to understand in detail just what the product can do, but at the same time, vendors have to "listen very closely to where [customers] want to go," she adds.
The user conference, with ample opportunity for give-and-take between vendors and users, has been a fixture of user/vendor relationships for years, but some companies don't stop there. webMethods, for example, has an advisory board of customers that share best practices.
OSIsoft's Web site has a database of hundreds of examples of customer-developed solutions based on the RtPM platform. Samplings are arranged by industry vertical, and are accompanied by detailed case studies of some of the applications. A link to a form for submitting new applications also resides on the site.
Risk reduction
Vendors have made their architectures more flexible so users can customize systems without jeopardizing the upgrade path. "Now ERP is going to open standards," says Parker. "SAP's NetWeaver and Oracle's Fusion are all about building products on Web services. This gives you the opportunity to customize without putting the upgrade path at risk."
Some systems are intrinsically friendlier to building mini-applications. "We ship a tool that allows companies to build software on top of it," says Ganeshan of webMethods' integration software.
Kinaxis eases the configuration of its performance management system by using a workbook model like those found in spreadsheets. "You don't have a problem when you configure a spreadsheet," says Haskins, adding that enterprise tools should work the same way. "Once a user understands certain key concepts, the vendor should provide capability to do configuration."
OSIsoft says it is structured to encourage customization. "Our approach is to make a bulletproof platform that people can configure to do their jobs," says Saucier. "We don't want the customer to have to think about the plumbing to do a simple application. We also only send out executables. Nobody can change the kernel [the basic code], but we expect that people will change the way they use it."
Perhaps the most radical approach to customization is the one taken by OpenMFG, an ERP vendor offering what it calls a "proprietary open-source" system. OpenMFG releases its source code to customers and encourages them to make enhancements and share them with other users.
"We manage these [contributors] as an extension of our development team," says OpenMFG CEO Ned Lilly. "We go through design conversations publicly so when they submit code, we can quickly document it and bring it into the supported release of the product."
One OpenMFG user—Daniel Baroco, IT manager of Carson, Calif.-based Cedarlane Foods, a $40-million supplier to supermarkets and foodservice companies—sponsored an upgrade to the system's EDI functionality—now available to all OpenMFG users.
Built with assistance from Open MFG developers, the EDI engine allows invoices to be sent via PDF, FTP site, and e-mail. The engine also meets the specific requirements of some of Cedarlane's customers.
"We need to profile not only by customer, but also by ship-to address," says Baroco. "We also need to be able to turn stores off and on. The way it's set up, you only have to make changes once. By making the system flexible, it fits everyone."
The open-source mind-set
While not every manufacturer may be ready for a Linux-based system or OpenMfg's "proprietary open source" model, the process of openly sharing application improvements is taking hold—and in some cases, shifting the relationship between vendors and users.
One experimental model is that of the Avalanche Corporate Technology Cooperative. Its members include jewelry maker Jostens, big-box retailer Best Buy, software vendor Imation, technical consultancy Nuvolution, and bedding manufacturer Select Comfort.
For an annual $30,000 fee, members can contribute, collaborate, and legally distribute intellectual property—including software, best practices, research, and standards documentation—to one another. For example, Jostens took Best Buy's homegrown application integration software and modified it for Jostens' own use—saving $150,000 in upfront licensing fees alone.
Just more than a year old, Avalanche's success is by no means assured. Two of the founding members have dropped out, and the basic premise of sharing good ideas developed in-house is still a tough sell for many companies, but open-source systems and the idea of collaborative development are gaining traction.
Most companies will still keep systems and intellectual property to themselves, and look for a balance between software developed by experts and the customizations that make it a perfect fit for their unique situations. At the same time, vendors try to accommodate their users' needs while maintaining control over their systems.
"We are in the era of mass customization," says OSIsoft's Saucier. "You can be a demographic of one and still derive value from the platform. That will get you 80 percent to 90 percent of the way there. Getting that last 10 percent to 20 percent of value may be the way you differentiate yourself."
Manufacturing Insights' Parker predicts the evolution of a three-tier approach to customizing software.
"I think vendors will encourage [ad hoc building of some applications]," says Parker. "Look at [SAP] NetWeaver. On the other hand, vendors want the market to behave in a certain way. They think, for a big chunk of functionality, come to us; for midrange applications, come to our partners. Users should focus on mini-applications. And in the long run, that's not a bad strategy from a user perspective."
