The Top 5 Technology Mistakes Distribution-based Business Can Make

Think your smart IT staff will create the perfect technology solution? Afraid they won't? Check out this article from the Association for High Technology Distribution. Where is your organization falling short?

"Isn’t it amazing how technology seems to have taken over almost every aspect of our lives? Can you live without your smartphone? What if you couldn’t see who was calling you before you picked up the phone? Do we ask humans for directions anymore when we have GPS-enabled devices? We hate toll road a bit less now that we don’t have to stop and pay the toll due to I-Pass, EZ-Pass and other Transponders. But when it comes to advanced technology in our distribution-based businesses, and actually many other B2B focused businesses in other sectors, we are lagging behind." Read more...

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The Next Wave of Supply Chain Innovation

We have seen in several sources (Modern Materials Handling Blog, Logistics Management, and Manufacturing.net) Venkat Rajaji's (global product manager for Infor) theory of the next big push for technology in the supply chain will probably come about because of government regulation. He is watching the recently passed Food Safety Modernization Act. This bill aims to make food safer by giving the Food and Drug Administration (FDA) increased power to inspect food processing facilities and force companies to recall tainted food. As Infor points out, the bill and any new government regulation, for that matter, has been met with its fair share of controversy.

In a press release, Rajaji argued that technology solutions can aid food manufacturers by helping companies better manage their internal processes and, where possible, implement solutions to prevent future outbreaks. “Savvy companies throughout the United States have already implemented technology solutions that provide better visibility into their operating processes and address manufacturing problems before they happen,” he said. “However, with this new regulation in place, more companies will likely invest in technology solutions to compliment their processes to ensure quality and prevent the lofty expense of food recalls.”

As a result of this new bill, Rajaji said, "Food safety will have to be part of your DNA from top to bottom. You will need to design your processes and systems for food safety." So, everything from the R&D process to buying from the right vendors to how a company maintains its machinery may have an impact on food safety.

To comply with the law, to minimize the impact of a recall, and to provide transparency to distributors and retailers, Rajaji believes the food industry will increasingly turn to supply chain software and technology tools, like RFID and sensors that can monitor temperature to insure that food products were stored at an optimal temperature.

“You will need to make sure that you’re accountable and that every touch point across the supply chain is safe until it gets on the shelf,” he said. “To do that, you need tools to help you manage and capture data at every point. The legislation is going to drive the need for technology adoption to stay in compliance with the food safety legislation.”

Taken from interview done by Bob Trebilcock, Executive Editor of MMH

How to Adhere to Payment Card Industry Data Security Standards by Ron Schmittling

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PCI Compliance Primer
As consumers rely more on debit and credit cards as opposed to cash, merchants are facing increased risk exposures if they don’t have proper security measures in place. Cyberthieves troll for information on merchant networks, which has resulted in significant security breaches that have made headlines.

In 2004, a consortium of credit card companies, including Visa, MasterCard, Discover and American Express, banded together to set Payment Card Industry (PCI) Data Security Standards. These standards direct merchants that process, store or transmit credit card information to maintain a secure environment. And if your business accepts credit or debit cards, the standards apply to you.

Business owners have to comply with those security standards and implement safeguards to protect customer information. This article will discuss how your company can meet PCI standards and protect against security breaches.

What is PCI compliance, and who must comply?
The three keywords for PCI compliance are process, store and transmit. If your organization processes, stores or transmits credit card information, you must maintain a secure environment as laid out by the PCI standards. So, if customers or vendors use debit or credit cards to make purchases from your business, you must be compliant. This includes meeting 12 standards, which can be broken down into six key areas: building and maintaining a secure network; implementing safeguards to protect cardholder data; maintaining a vulnerability management program; applying strong access control measures; regularly monitoring and testing network security; and enforcing an information security policy.

Your policy will ultimately drive the compliance process, so the first step is to take a security inventory of your business to determine how compliant it is, what security measures are in place and what weak spots must be addressed. An outside adviser with experience in security and privacy can provide feedback on how to structure a plan. This framework will set the tone for your internal compliance strategy and help protect your business.

PCI security standards are not laws; they are a method of self-imposed regulation by the consortium of credit card companies. There are no federal mandates in place, but there is a move in that direction since some states have started to pass laws or require organizations to comply with PCI Data Security Standards. This trend is expected to continue in association with the Data Breach Notification Laws movement.

What are the consequences of failing to comply with the standards?
At their discretion, payment brands such as Visa or MasterCard can fine acquiring banks $5,000 to $10,000 a month for PCI compliance violations. Banks are likely to pass these fees on to noncompliant merchants. Many banks have begun notifying noncompliant merchants of their need to comply or face fines.

You should review your merchant agreement and note any penalties and fees for noncompliance, which can include prohibiting merchants from processing credit card transactions, higher processing fees and other restrictions. Any fraud loss associated with a compromise in security may be borne by the merchant starting on the date of the security breach. Depending on the level of security negligence, the FTC could become involved and impose significant federal fines, up to $250,000 and/or up to five years in prison.

Not knowing is not a viable excuse for noncompliance and could cost you and your organization. It is your responsibility to understand your merchant agreement and what the PCI standards mean to your organization.

What steps can a company take to become PCI compliant?
Compliance responsibility depends on your merchant level, and there are four levels as defined by PCI Data Security Standards. Level 1 merchants are those that process more than 6 million transactions a year. It is important to note the annual transactions are measured in volume, not dollars. Level 2 includes merchants that process 1 to 6 million transactions per year. Level 3 covers merchants with 20,000 to 1 million eCommerce transactions per year. Level 4 includes any merchant with fewer than 20,000 eCommerce transactions per year, and all other merchants with fewer than 1 million transactions annually.

Companies in Levels 2, 3 and 4 follow the same compliance process that includes completion of an annual self-assessment questionnaire and having quarterly network scans performed by a PCI Approved Scanning Vendor (ASV). The results are submitted to the merchant’s bank. Level 1 merchants follow similar procedures, but also are required to have an annual on-site review completed by a Qualified Security Assessor (QSA), a PCI-certified provider and have an annual network penetration test performed. The QSA will submit the merchant’s Report on Compliance to its merchant bank. The PCI Council lists ASVs and QSAs at http://www.pcisecuritystandards.org/.

Where should an organization start on its PCI compliance initiative?
The most important step is to set an internal policy of how you’ll address PCI compliance and information security. Too many times, organizations rush into identifying a new product they think will fix PCI compliance or information security problems instead of organizing their efforts around the organization’s overarching policies and processes.

Once that policy has been defined and implemented, an organization can begin to enforce it and truly drive its compliance initiatives. But compliance starts with your information security policy and security controls. Many organizations struggle with where to start, as PCI compliance can be a daunting and complex task. Reaching out to a QSA to kick-start your PCI compliance efforts is a great first step.

What are the PCI DSS main areas?
The actual PCI Data Security Standards include 12 major requirements for validation and certification under six main auditing areas or "control objectives". All of the compliance areas include basic security rules that most merchants and service providers should already have in place, or have a familiarity with them when audited.

The six main control objectives for PCI DSS compliance and validation are as follows:

• Build and Maintain a Secure Network


• Protect Cardholder Data


• Maintain a Vulnerability Management Program


• Implement Strong Access Control Measures


• Regularly Monitor and Test Networks


• Maintain an Information Security Policy

What is a QSA?
QSA stands for Qualified Security Assessor. It is a certification obtained by experienced security consultants that enable them to conduct the on-site data security assessments for PCI DSS Compliance. QSA's are required to recertify every year by attending training provided by the PCI Council and passing a rigorous exam. A recertifying QSA must also obtain annual professional education credits from training and other experiences in order to retain certification. May QSA's also maintain other certifications through their work as security practitioners such as CISSP, CISA, CISM, etc.

What are the requirements for becoming a QSA?
The PCI Council requires all QSA’s to be full time employees of a Validated QSA company. The security professional must complete a thorough application process with the PCI Council and undergo and pass its three-day QSA training course. A closed-book exam is administered which must also be passed to receive the official QSA certification.

In addition, the QSA must meet the following minimum requirements, submit a current resume with the PCI Council, and complete a background check from the QSA company:

• CISSP, CISA or CISM Certificate


• 5 Years of IT Security experience

Why are QSAs important?
PCI QSAs are trained by the PCI Standards Council to understand the intent and rigor required to meet the PCI requirements. Only a QSA can certify PCI compliance and working with a QSA is the best way to ensure your implemented controls will meet the PCI compliance requirements. And of course, getting it right the first time saves time and money.

QSAs are required to strictly adhere to the DSS audit procedures document and complete the mandatory Report on Compliance required for PCI certification and validation on behalf of the merchant or service provider.

Many QSA’s help companies perform their annual PCI self-assessments also. Self-assessments are much easier said than done, as most merchants and service providers simply lack the knowledge and understanding of PCI to self-assess with no help. A QSA can help bridge the knowledge gap and quickly assist with completing your self-assessment.

Further, a QSA can also assist in recommending various hardware and software solutions for PCI compliance along with giving a company excellent guidance on how to meet the rigorous demands of PCI Compliance. When it comes to compliance and certification for PCI, you need to use a QSA.

What types of services do QSA’s typically provide?
QSA’s typically provide the following types of services:

• On-Site Data Security Assessments (PCI "Audits"),


• PCI Gap Analysis or Readiness Assessments,


• Remediation Services for areas of PCI deficiency,


• Project Management,


• General PCI consulting and advice.

Depending on the size of the company, its complexity, and the number of distinct credit card processes, most engagements will last anywhere from 1 - 6 months.

Level-1 Merchants and Level 1-2 Service Providers are required to have a QSA to conduct their annual on-site data security assessment. Level 1-2 qualifiers are that they have more than 6 million transactions. Level 2-4 Merchants and Level-3 Service Providers do not have required QSA audits and may use the PCI Self-Assessment Questionnaire to self-certify.

What are the pros and cons of hiring a QSA versus doing it yourself?
There are pros and cons for both ways of performing PCI compliance, but the pros outweigh the cons in selecting a QSA to assist with your PCI compliance initiatives. QSAs provide third-party validation which proves 'due diligence', in addition, they know the data security standard and how it is to be applied to different types of organizations. The cons are the usually the cost of hiring a QSA. Yet, the costs to the organization when considering ‘doing it yourself’ should also be considered - that is, resources needed to assist with PCI compliance plus resources from other strategic, profit-generating initiatives. Another con to consider is that it can be difficult to get up to speed on all PCI requirements, which could provide an unfortunate opportunity for merchants to miss key areas, controls, and dates. In the long run, it may be far more economical to hire a QSA.

What are the benefits of using a QSA and becoming PCI compliant?
In the past few years as cybercrime has sky-rocketed it's necessary to do more to protect companies and customers alike. The PCI requirements might seem difficult to get a grasp on; however, they are beneficial for customers, merchants, and the credit card industry. Merchant and service providers have to meet a number of measures from QSAs and ASVs in order to be PCI Compliant.

There are a number of significant benefits to becoming PCI Compliant and utilizing a QSA to assist, including:

• 'Trust'. Consumers greatly benefit from doing business with PCI Compliant companies because it means all of their sensitive information is kept both safe and secure.


• Means that your business has been checked for security weaknesses by a qualified, information security professional.


• It provides an incredibly solid structure for greatly improving security, operation and audit performance by a having an independent assessment performed.


• It sets any business up to be more stable and to avoid infections or security disasters.


• Without it you can't process credit card information and a merchant cannot get by without processing credit cards nowadays.


• Merchants who are PCI compliant are offered some level of protection from the fines if you should happen to be breached. If you are compliant at the time you suffer an attack, you may have a ‘safe harbor’, along with connections to a QSA that can assist in shepherding the process to minimize the breach effect on both your customers and business.

About The Author
Ron Schmittling, CPA/CITP, QSA, CISA, CIA, Security and Privacy Practice Leader at Brown Smith Wallace, LLC
Ron’s 18+ years of experience include more than five years in senior-level technical leadership roles at a major financial services firm, as well as, positions in information security and technology consulting for several international organizations. Ron is a thought leader, frequent speaker and author on topics in the information security and PCI compliance arena. Ron is a member of the American Institute of Certified Public Accountants (AICPA), the Illinois CPA Society (ICPAS), the Missouri Society of CPAs (MSCPA), ISACA, Institute of Internal Auditors (IIA), InfraGard, International High Technology Crime Investigation Association (HTCIA), Information Systems Security Association (ISSA), and the Institute of Computer Forensic Professionals (ICFP).
Schmittling can be reached at 314-983-1398 or schmittling@bswllc.com.

About The Brown Smith Wallace Security and Privacy Practice
The Brown Smith Wallace Security and Privacy Practice is a market leader in helping businesses, government, financial institutions, retailers, educational institutions, and healthcare groups and other organizations define the true risks in their environment and deploy the right solutions and technologies to ensure the continued success of day-to-day operations and objectives. Our services include attack and penetration testing, internal vulnerability assessments, security risk assessments, security training, social engineering tests, PCI compliance reviews, PCI readiness assessments, PCI ASV vulnerability scanning, privacy risk assessments, computer forensics, and many others.

Are You Under-Utilizing Your Technology? By Steve Epner, CSP

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Are you and your management team getting the information you need to make the right decisions at the right time for the right situation? Is the information you get from your computer system:

• Current


• Accurate


• Reliable


• Meaningful


• Relevant

If not, you may not be using your computer to its fullest capacity. According to most surveys, businesses use less than 15 percent of the features and functions that are available on their computer systems. While automation systems are one of the largest financial and time investments that most companies make, most owners are pitifully unaware of what can be done. It is a tremendous waste of resources.

What you want to do to be more successful is to get a greater return on your information investment?

You must begin by documenting what you are doing today. This is imperative as most companies have created entangled masses of paperwork based on system failures of long ago. These quick fixes havenever been reviewed as systems have been upgraded, enhanced, or replaced. As a result, most people force their current system to try to do things the old way. The bottom line result is that we use very little of what the system can do for us as we try and duplicate or imitate old procedures that are no longer necessary or appropriate.

We also need to look at what steps have been added to your paper and information flow because you just “want to be sure”. Many times we add steps to review, revise, and approve computer-generated output because there is no trust in what is being created.

Proper planning and execution of your paperwork flow will correct this situation. Our many years of experience have allowed us to find that most companies can easily reduce 20 percent of the time they spend handling paper. In some cases, the number will go as high as 75 percent. Don’t be embarrassed if, as you look around, you find many things that just don’t need to be done.

Another area of analysis that we find very helpful is to look for bottlenecks. When we do a bottleneck analysis, we take a look at the forms that enter, are created in, and leave each desk. It is quite an eyeopener for most executives to see how paper is processed in their offices. There are many times when people get paper “just to look”. They add no value.

We are very conscientious as we eliminate duplication, bottlenecks and efforts that don’t add value for the company or the end user.

More importantly, we take a look at the numbers that you use to run your business. It always amazes us how many people spend time re-entering data into spreadsheets so they can get valuable management information. Most systems today have many of these features built in. We will help you find what is already there to reduce the time and effort you need to find the answers to help you make decisions. Furthermore, we will reduce the number of errors caused by transcribing numbers and the time and effort involved in running multiple systems manually when the answers can be provided on an almost automatic basis.

To make things even better, we can often help you create graphical output which will show you exactly where the company is and where it is going. These reports can be produced on a daily, weekly, monthly, or quarterly basis. By using “running averages”, we are able to smooth out individual peaks and valleys so that a trend is more easily recognized. Executives should get an End of Day Report that shows how they did. This is available in all of the systems we have reviewed and we would guess that it is available in what you already have if you are willing to look for it.

Some time ago (or in the recent past), you made a major investment in automation for your company. You spent a lot of money to buy hardware, software, and services. You took valuable resources (people) and put them through weeks of training, conversion, and start up. The end result is one of the largest noninventory investments that you will ever make (other than brick and mortar). If you are using only 15 percent of this investment, you are not getting the return you deserve or should expect.

Step back from what you are doing, take a look at how things operate, be prepared to make changes, and you can increase the effectiveness of your information investment. Just doubling your return to 30 percent should have major impact on your ability to operate the business effectively and to reduce the cost of servicing your clients.

About The Author
Steve Epner, CSP, Founder of the Brown Smith Wallace Consulting Group
Steve Epner has been directing traffic on the information super highway since 1966. A highly regarded industry expert, Epner is widely published and has provided comment for national business publications including the Wall Street Journal. His experience in business, technology and strategic planning makes him a nationally renowned technical speaker.
Epner can be reached at sepner@bswllc.com.

About The Brown Smith Wallace Consulting Group
The Brown Smith Wallace Consulting Group has been serving the distribution community for more than 20 years through the publication of the Distribution Software Guide, speaking at industry programs, giving free telephone advice to distributors and providing fee-based consulting services to companies who need help selecting the best software packages for their business.

Activant Solutions Introduces Prophet 21 version 12.0

Enhanced User Interface Drawing Rave Reviews

Activant Solutions Inc. announces the availability of Activant® Prophet 21® software version 12.0.

"Before we began writing code for Prophet 21 version 12.0, we did an in-depth analysis of industry trends, including having extensive conversations with our customers, to determine what features to include," said Kevin Roach, executive vice president of Activant. "Our goal with this release of the Prophet 21 software is to help distributors increase efficiencies in their business, helping them through this recession so they will be positioned to take advantage of the opportunities expected to arise during the economic recovery."

Currently more than 1,500 distributors have invested in Prophet 21 software, making it a leading enterprise software solution for the distribution industry. Prophet 21 version 12.0 builds upon existing functionality and is designed to further assist distributors increase sales, improve customer service and reduce operating expenses. Among the many features in Prophet 21 version 12.0 is an enhanced user interface.

"There are a lot of great features in Prophet 21 version 12 that allow us to streamline our processes," said Michael Dean, IT Manger for Power & Pumps Inc. in Jacksonville, FL. "The search bar and my menu options improve our workflow and make it easier to move through the system."

Jennifer Buschmann, president of EA Buschmann Inc. in Lewiston, ME, agrees: "The updated user interface has a lot of potential for the user to customize screens to fit the individual user’s specific needs," she said. "The extended description view and field chooser features are two features we are extremely excited to have."

Many Valuable Features

In addition to the enhanced user interface, new customer relationship management (CRM) tools provide ready access to information, allowing users to streamline their day-to-day processes while improving customer service.

Attributes of the Prophet 21 software's production order and secondary processing functions have been combined into a labor tracking, job costing process that provides true light manufacturing capabilities. Distributors may assign technicians, track labor costs, and issue necessary material through a series of processes that manage the entire production process, whether the manufacturing stages are completed by the distributor or a third party.

The Wireless Warehouse Management Solution (WWMS) Workbench capability is designed as a tool for the warehouse manager/supervisor to dynamically manage the flow of transactions within their warehouse operation. The workbench is a dynamic list of transactions ready to pick that can be sorted, grouped and moved about in an ad hoc manner. Transactions at the top of the list can be quickly pushed to an available employee. Other warehouse tasks are also displayed and sorted by a user-defined hierarchy and can be pushed to the employee in the warehouse in accordance with that hierarchy. Also, the workbench feature has the capability of dynamically creating group pick tickets, providing a command and control tool for dynamic management of the warehouse picking workload, and providing the capability to push higher priority tasks to available “picking” employees while organizing and balancing usual pick loads. This feature increases the visibility of pickers' tasks, their progress, and their overall performance.

Further enhancing the international capabilities of the Prophet 21 software, Activant has added multi-lingual functionality which allows users to dynamically translate terms used throughout the application. This feature helps increase user productivity by enabling them to use the system in their native language.

To find out more about the Prophet 21 software, visit distribution.activant.com, e-mail distribution@activant.com, or call 1-800-776-7438, press 1.

About Activant Solutions Inc.

Activant Solutions Inc. ("Activant") is a leading technology provider of business management solutions serving retail and wholesale distribution businesses in three primary vertical markets: hardlines and lumber; wholesale distribution; and the automotive parts aftermarket. Founded in 1972, Activant provides customers with tailored proprietary software, professional services, content, supply chain connectivity, and analytics. More than 30,000 customer locations use an Activant solution to manage their day-to-day operations. Activant has operations throughout the United States and Canada, Ireland, and the United Kingdom.

For more information, please visit distribution.activant.com.

The Value of Working Together

A unified business strategy will push results to the bottom line and provide advantage over the competition by strengthening ties to customers and suppliers and promoting efficiency and cost prudency by replacing manual and paper-based processes with digital counterparts.

Exact Software's Gary Chervitz was recently featured in Supply & Demand Chain Executive where he discusses four tips to building a collaboration strategy:

• Corporate culture and behavior must reflect collaborative principles
• Use integrated technologies to revitalize ERP
• Reinvent the paper trail and increase accountability and visibility
• Monitor, measure and manage

Read the full article >>

Collaboration projects successfully help companies do more with less, work leaner and greener with fewer resources and lower operating expenses. Becoming more collaborative is truly a process, and keeping an eye upon continuous improvement efforts is essential. By combining these basic principles with the right collaborative technology, an organization will definitely find itself working together more effectively.

For more information about Exact Software, please visit: www.exactamerica.com or contact us: 1-800-468-0834, ext. 2650.

Distributors Must Embrace Change and Activant Is Ready to Help

Activant Summit Attracts More than 1,300 attendees

"Shift happens," announced Kevin Roach, executive vice president and general manager of Activant Solutions Inc., at Summit 2009, Activant's annual conference for wholesale distributors.
Quoting Alvin Toffler -- "Change is the process by which the future invades our lives." -- Roach told the more than 1,300 professionals assembled in Nashville, TN, in early March that there has been a major shift in the United States from manufacturing to a more information-centric economy, which directly impacts wholesale distributors.

Officially kicking off three days of educational and networking sessions, Roach encouraged the crowd: "Don't let shift [change] happen to you. Make shift happen. It's particularly important in these tough economic times that we are not insular -- that we look outside of our industry to understand how others are using shift to their advantage."

Pointing out that the time it takes the economy to recover from a recession is historically much faster than the time it takes to slip into one, Roach encouraged distributors to position themselves for the future.

Hard Realities
Roach didn't shy away from telling distributors the truth about the lagging use of technology in their industry. "The hard reality is that pervasive EDI adoption among wholesale distributors is only about 12 to 18 percent... as compared to nearly 100 percent of manufacturers and suppliers," he pointed out. "A recent survey revealed that only 39 percent of wholesale distributors can accurately track operating profit by customer and that only 30 percent can track the profitability of fee-based services.

"The lack of access to this kind of information -- in real-time and in actionable form -- effectively leaves you behind the wheel with no dashboard, no windshield -- just an accelerator and a brake to manage your business," Roach continued. "In an environment where change is occurring more rapidly, more dramatically, and more frequently than ever before, you can no longer afford to drive your business the same way and expect to get the results you're aiming for."

Roach cited the example of CC Dickson, an Activant customer in attendance at the conference. "Only seven years ago they were running a $115 million operation on paper alone with more than 800 employees and 112 locations. Now the company uses an Activant ERP solution, streamlining their entire business. That's some crazy shift."

Evolution
Citing figures that demonstrate a loss of more than 200,000 wholesale distribution businesses in the past 10 years, Roach urged distributors to adapt.

"Adaptation means you constantly modernize your processes to meet the competitive watermark," he told the packed room. "What you were doing a few years ago isn't going to cut it today. Improvement is not an event, it's a process. In today's economy, you must reinvent yourself constantly."

Promising that Activant will continue to do all it can to help distributors succeed, Roach concluded his comments: "We are your partners. Our success as a technology partner is 100 percent predicated on your success as a distributor. We want you to strive... to compete on a higher level... and to ultimately succeed through solutions that help your business run more flexibly, efficiently, and profitably."

ROI
Distributors gathered in Nashville to participate in three days of educational sessions and networking events designed to help them maximize the use of their Activant solution. Classes were lead by Activant technology experts as well as well-known industry consultants, including David Bauders, Bill McCleave, Dr. Barry Lawrence, Bill Muehlbauer, and Jon Schreibfeder.
Daron Brown of South Central Company, an HVAC distributor located in Columbus, IN, raved about what Summit 2009 did for his business: "There is no doubt in my mind that with the tools we brought back [from Summit], we will get ROI from this trip. It was potentially a company changing week for us."

Aaron Pace, of EVCO House of Hose, a Salt Lake City-based fluid power distributor, agreed. "Our company has sent people to Summit every year for the last four years." commented Pace. "It is ALWAYS worth the money! Not only is the software education top-notch, the general business training is certainly a cut above the rest. As far as training and networking dollars go, Summit, by far, offers more bang for your buck than almost anything else out there."

Summit 2010 is scheduled to take place March 10 through 14, 2010, in Washington, D.C.
To find out more, visit distribution.activant.com, e-mail distribution@activant.com, or call 1-800-776-7438, press 1.

About Activant Solutions Inc.
Activant Solutions Inc. ("Activant") is a leading technology provider of business management solutions serving retail and wholesale distribution businesses in three primary vertical markets: hardlines and lumber; wholesale distribution; and the automotive parts aftermarket. Founded in 1972, Activant provides customers with tailored proprietary software, professional services, content, supply chain connectivity, and analytics. More than 30,000 customer locations use an Activant solution to manage their day-to-day operations. Activant has operations throughout the United States and Canada , Ireland , and the United Kingdom.

For more information, please visit distribution.activant.com.

STAFDA TECH BRIEF – Spring 2009

No signal of a recovery yet:
Various forecasts continue to project reduced spending on IT initiatives for 2009. A survey published by Computer Economics (http://www.computereconomics.com/) projects IT operational spending for 2009 to be at 1.5% of revenues which is the lowest level since the 2001 recession. Another survey conducted by SearchCIO (searchcio.techtarget.com) reports that 1/3 of the companies survey will reduce the IT budgets for 2009 while another third will hold the line at last years’ levels. BSW Consulting conversations with distributors indicate that many projects have been put on hold waiting for some indicator that it’s safe to spend money on new technology. For the most part, they are still waiting for the signal.

Even though many sectors of the industrial marketplace are in recession, distributors need to invest in new technology or upgrade existing software and infrastructure to remain competitive. This is especially true for businesses that have legacy systems (systems that are based on technology, languages or hardware platforms that are generations out of date) or heavily customized their software packages and haven’t been able to move to the current version for many years.

Typically, distributors will postpone technology investments during difficult economic times as they don’t have the cash to invest in new hardware, software license fees, and implementation services. However, if those investments are delayed for too long, when the recovery comes along and demand increase, those distributors are at a disadvantage while they try to catch up.

There are several alternative approaches to acquiring technology that you should consider:

Leasing:
The traditional approach to managing the cash flow of your technology purchase has been to use leasing to spread payments out over a 3 to 5 year period. This approach is still viable but more difficult given the condition of the credit markets. If you can obtain this type of financing it allows you to continue to purchase hardware and software. Hardware, software, and consulting can all be leased. You will need to work with a leasing company that has a history of financing technology transactions to make sure that all the details are handled properly. Be sure to ask for references so that you can verify this.

Alternative financing models:
We recently were involved with in a software selection project where one of the software vendors selected as a finalist proposed some pretty innovative financing. This approach has been used in the Tier 1 market (companies of $1B in revenue) for quite a while but is now appearing in the mid-sized company market.

The typical software purchase requires a significant investment at the inception of the project for licenses, hardware and implementation services. Over an average 9 month period your project team and software vendor will install new hardware, install the software, convert data, configure the software, train your users, conduct conference pilots, and finally go-live on the new software. Over the next several years the investment generates costs savings justifying the investment.

Economic Business Alignment Inc. (http://www.ebainc.com/) develops a customized payment plan that matches payments for the technology with the return generated. Every financing deal is individually underwritten since EBA assumes the financing risk. If you can put a deal together this eliminates much of the reason for postponing your project.

A new approach to making technology investments that has been gaining momentum for several years. Instead of making an up-front purchase of user licenses you sign up for a subscription and pay a monthly fee to use the software. You’ll need to be familiar with the following terms:

Cloud Computing:
Cloud Computing refers to computer processing resources (services, software, services) that exist at some remote location that can be accessed over the Internet. Google created massive data centers to host the equipment they needed to create the indexes of everything on the web that was need for their search business. The latest data center is located in Oregon along the Columbia River where they can get cheap hydro-electric power to operate and cool the center. Microsoft and Yahoo have similar facilities.

The centers represent “the cloud” where users access services. An example of these cloud based services would be Google Maps: enter the “to” and “from” addresses and get driving directions and maps. You aren’t concerned about the servers, the network, the user interface – it “just happens.”

Software-as-a-Service (SaaS):
Software-as-a-Service refers to programs that operate in the cloud that are paid for on a subscription basis. The number of these web-based services that you or your kids might be using at home have exploded in the last several years – hosted email like AOL, Gmail or Yahoo, social networking like Facebook, Myspace or Linked In, photo editing software like Picasa or photo sharing sites like Flickr. This list goes on and on. All of these services are available for free or at a nominal cost. If there is a cost it is normally in the form of an annual subscription.

There are a similar set of free or nearly free services available for business that you can use to improve productivity or streamline costs. Travel expenses can be reduced by holding meeting on line. Services such as GoToMeeting, Webex, or Live Meeting are low cost ways of hosting on-line meetings with integrated audio services the ability to share powerpoint presentations and other exhibits over the Internet. If you’re conducting any type of email marketing to your customers you’re most likely using services such as iContact or Constant Contact. These are very low cost tools that allow you to be very productive with no initial investment and little training.

SaaS for Business:
This approach to computing is also being used for serious business purposes from single purpose applications to enterprise software. You may want to think about how these types of applications can integrate with your existing ERP software or be used to upgrade your capabilities:

Function-specific application – Example: E-Mail SaaS

The vast majority of e-mail traffic is spam. At our office, our IT staff maintains a hardware device that is used to filter out the spam so that only “good” emails are delivered to our Outlook Exchange mail boxes. When the filtering device fails or is overwhelmed by an increase in traffic we are flooded by the Spam. If the traffic increase is permanent, our IT group has to determine when to invest in a bigger device that can keep up with the amount of traffic.

We could purchase our e-mail filtering from a SaaS provider. We wouldn’t have to invest in hardware as it is runs in “the cloud” and has an almost infinite amount of resources and redundancy. The staff time to monitor and maintain the device would be used to monitor the service but with less time devoted to the task. The amount we would pay would depend on the amount of traffic filtering that we needed.

Process-specific application – Example: Salesforce automation

One of the earliest success stories for a process-specific application delivered as SaaS was Salesforce.com. Founded by an ex-Oracle executive in 1999 Salesforce was an early innovator of what was then called “on-demand” computing. The product provides a fairly long list of functionality including sales force automation, customer service & support, marketing campaign management, etc. If your ERP vendor doesn’t offer a CRM package and you’ve been wanting to add this capability, consider this option. Other SaaS companies are providing application-specific products that include Business Intelligence, Demand Planning, Supply Chain planning and more.

Enterprise-wide application –Example: ERP software

Full blown ERP packages (order processing, inventory management, accounting, etc.) that are delivered using the SaaS model was introduced by NetSuite (http://www.netsuite.com/) in 1998. Originally perceived as an accounting only application it now includes a full range of functionality. Software companies that have their roots in the Wholesale Distribution world are joining in: IBS (http://www.ibsus.com/) recently introduced IBS Enterprise Online. This solution is hosted at IBM’s datacenters and provides the same distribution-centric functionality as their on-premise solution. As with any ERP selection, a rigorous evaluation of functionality is required to ensure that the product will satisfy your business process requirements.

Ask these questions:

Like any flavor of new technology, Saas isn’t without questions and concerns. When considering whether to utilize SaaS application you need to consider the following:

· Does your ERP vendor already provide that functionality?
· How would you integrate a SaaS application with your current ERP package?
· How would you customize or personalize the SaaS application?
· If your network access was lost for 2 or 4 or 6 hours or longer what would you do?
· If the SaaS vendor went out of business could you continue to use the application? And much more important, who owns the data and how would gain control over your data?
· What are the economics over the long-term? (At what point is renting the application more expensive the purchasing it?)

All companies are looking for ways to conserve cash during this downturn while staying competitive for the long-term. These ideas may help you to do so.

The Brown Smith Wallace Consulting Group is a Saint Louis-based consulting firm that specializes in researching software and technology topics for the wholesaled distribution industry. Their Distribution Software Guide has been published since 1991 and helps the STAFDA member evaluate, compare and analyze software to determine which packages best fit your operation. Learn more at http://www.software4distributors.com/. As a member of STAFDA, contact Jeff Gusdorf, CPA (314-983-1208) for a free 30-minute consultation.

Maximize the Value of Your ERP System by Jeff Gusdorf

ERP packages cost a lot of money - not just the initial investment but ongoing expenses for support, maintenance, training, new modules and consulting services. Every executive who is considering buying new software should have a plan for maximizing the value generated by their ERP package. The plan should recognize that the risk of failure exists and create the appropriate safeguards. This article provides an overview of the entire process and provides tips for promoting success and guarding against failure.

The typical ERP project takes three years. Some smaller or simpler projects will go faster and some more complex business will take longer. Regardless, every ERP project will go through five phases to arrive at the point where their new software system is stable and providing the anticipated benefits envisioned when the purchase was made. Those phases are:

Phase 1: Build the Foundation - Draft a project charter, identify benefits, build the business case, identify metrics, establish the steering committee and project team prepare the project plan, and assign roles and responsibilities

Phase 2: Software Selection - Determine the business requirements and conduct a defined process to identify and purchase the “best package”

Phase 3: Implementation and Go-Live - Implementing the software involves planning, installation, data conversion, process configuration, training and go-live

Phase 4: Stabilization - Resolve problems, make process and procedural changes, retrain and get additional training

Phase 5: Improvement - Implement 2nd phase modules, assess the implementation, continuous improvement

I. Building the Foundation:
Just as you wouldn’t start a construction project without blueprints and engineering drawings you shouldn’t start a project of this size and complexity without the appropriate plans in place. This is one of the most common mistakes we see – companies start a selection project by looking at software packages instead of formally defining the scope of the project.

• Draft a project charter: This brief document provides a high-level summarization of the project. It outlines the business reason for conducting the project, defines the goals, objectives and some high level deliverables. The charter should also include a preliminary schedule, any budget constraints that have been established and any constraints or risks that have been able to be identified.

• Identify benefits and metrics: Benefits realization is the process of ensuring that the ERP project produces the expected benefits after the system has been implemented and stabilized. Documenting this at the inception of the project keeps the project team focused and accountable over the life of this project while giving the steering committee the means to determine that the project has produced the benefits beyond successfully implementing the package, which can be a difficult enough challenge.

Without a formal planning process it is easy to lose track of the expected benefits and the ability to determine that the project actually produced those benefits. This process also clarifies that the responsibility for the realization of the benefits is typically the business process owner not IT. The Safe Quality Food Institute administers the program in the US and is responsible for managing the many components of this process. They publish the codes, train and license the SQF consultants and auditors, maintain the centralized database of certification and compliance records and provide on-going training.

Benefits can fall into the following categories:
1. Strategic

• Support business growth/acquisitions
• Build linkages to customers and/or suppliers

2. Organizational

• Support change in structure
• Decentralized management

3. Managerial

• Improve decision making

4. Operational

• Reduce costs
• Improve customer service

5. IT infrastructure

• Increase capacity
• Reduce obsolescence risk

After identifying the benefit you will need to document the following information so that in the 1 to 2 years that it will take to achieve this benefit you will be able to determine if the benefit was realized. The benefits document needs to answer these questions:

1. What is the benefit to be realized?
2. Who will be responsible for producing the benefit?
3. How is this process being measured (headcount, items, cost, etc.)?
4. What ERP process has to be implemented to achieve this goal?
5. What metric will be used to determine if the goal was achieved?

• Establish Steering Committee and Project Team: The steering committee will consist of a small number of senior management who will approve the selection decision and approve the expenditure. This committee will review the work of the project team. The project team will consist of 6 to 10 department heads that understand the functional needs of their business units and departments and will ensure that the software selected will satisfy those requirements. During implementation the roles of these teams will expand and become more complex.

II. Software Selection: With the foundation in place for the project, your project team is ready to start the software selection process. The goal of the selection phase is to select package that “best” fits your business. “Best” is a blend of business process functionality without being so complex that implementation success is at risk, vendor knowledge in your vertical market, fit between your team and the vendor team, technology fit with your IT staff’s capability and price.

• Project Initiation: Get this phase of the project off to a good start by conducting a formal kick-off meeting. The kick off meeting should be hosted by the senior management sponsor or the steering committee for the project. This meeting serves to introduce the team to the project charter and project benefits developed during the foundation stage. Review of the project plan and responsibilities helps team members incorporate this project into their schedules. Communicating the progress of the project to the organization is important throughout the project. Take a proactive approach to letting the organization know the status of the project. Developing a formal communication plan helps to create the discipline now which will pay off during the implementation.

• Requirements Definition: Identify all business processes and process owners and users and involve those users in the discovery process. Interviews with those process owners to understand their needs, concerns and hopes for a new system are very important to prepare a complete set of requirements and to promote involvement and support in the user community. We use business process outlines to guide those interviews to ensure that we cover every process and every step of those processes. We will prepare process flowcharts where useful. Much of this work can be re-used during the design step of the implementation phase.
  

It is critical when defining business requirements that you review all processes and capture all information about the current state of these processes. It’s easy to overlook some of those processes if you aren’t careful. We have developed business process outlines to guide those interviews. These process outlines reflect what we believe to be standard process flows in most distribution companies. These outlines ensure that we cover every process and every step of those processes. Analyze the following areas when conducting discovery sessions:

1. System Tools
2. Productivity Tools
3. Product Management
4. Supplier Management
5. General Ledger
6. Accounts Payable
7. Accounts Receivable
8. Commissions
9. Treasury
10. Fixed Assets
11. Budgeting
12. Payroll & Expenses
13. Inventory Management
14. Procurement
15. Product Management
16. Customer Management
17. Channel Management
18. Marketing Materials
19. Campaign Management
20. Manufacturing
21. Lead Management
22. Sales Force Automation
23. Quoting
24. Sales
25. Retail/Counter Sales
26. eCommerce Website
27. Customer/Supplier Portals
28. Service
29. Warehousing
30. Logistics

• Long-list to Short-list to Finalist: The horse-race component of this process involves identifying a large (7-12 is large enough) group of software vendors who have the potential to supply the software solution for your business. Use the requirements to determine which vendor can satisfy them the “best”. “Best” will be different for every business; we determine best by looking at the mix of process functionality, vendor knowledge in your vertical market and their stability and strength, technology and price.

• Finalist Due Diligence: Once the finalist has been selected you still have to negotiate an agreement. Conduct reference phone calls and client site visits, negotiate final price discounts and negotiate the contract. We strongly suggest that you conduct a pre-implementation meeting prior to signing a contract so that you fully understand the implementation methodology your selected vendor is going to use.

III. Implementation: You have probably devoted 6-9 months to get to this point and are confident in your selection of the software package and the vendor that will help you implement the software. Now - the real work begins. This phase of the project has the greatest risk and requires that the steering committee is paying close attention. We have seen projects with services estimates of $200,000 become $500,000; or estimates of $1M and 1 year become $2.5M and 2 ½ years Watch carefully to make sure your project doesn’t wander off course; it can happen quickly. You may want to have an independent party provide project monitoring since the project team is so busy with the actual implementation.

• Plan: The vendor implementation team will work with the project team to put the implementation plan together. This will seem a lot like the planning done in the Foundation stage. Make sure that the sales team hands off everything that they have learned during the software selection stage; you can reduce your costs by doing so. If they haven’t made a good hand-off, alarm bells should go off!

• Assess/Design: The vendor team will develop a detailed understanding of your business processes to be used when configuring the software. They will develop a data conversion plan; don’t under estimate the value of cleaning up your master file data. Don’t spend the money to convert transaction history; just keep your old application available. Review and decide how modifications that you identified earlier in the process will be prioritized. Review and decide how any other software products will be integrated with the new ERP system. Make sure the benefits statements and the metrics are incorporated into this process otherwise you will not maximize the return on your investment.

• Build/Test: This is the critical phase where the software is configured for how your business wants the software to work and testing is done at a departmental level and in the conference room pilot for all users. User training occurs during this phase so users are prepared to test the software. Your team will conduct multiple conference room pilots where the software is tested. The quality of your go-live experience is dependent on how rigorous you are in this testing. Don’t short-cut this and repeat it until your satisfied.

• Go-Live: This is the big moment when all of the hard work is put to the test. Usually starting on a Thursday, all transaction processing is stopped. All data is converted following the scripts created previously. End-users, with support of the vendors’ consultants and the project team start to use the new system to process real business. This is always a challenging period but if you have done your homework you’ll make it through.

IV. Stabilization: Congratulations! You have survived the go-live process and the first few months of using the new system.

• Project team transfers responsibility to every-day user: The project team has lived with the new system and has worked to get to this moment. The team will be disbanded and members will return their focus to their own functional responsibilities. Reliance on outside consultant will be reduced or eliminated. All users must now operate without their hand-holding. It’s important that users have accepted the new system. Be on the look-out for users that need more training or re-training so that they can use the system with confidence.

• Process changes: During this period it will become apparent if any of the process decisions that were made were incorrect. The configuration settings will be changed to adjust the processes. Data entry screen layouts, inquires, reports can be modified to make the user more efficient. Users will also personalize their interaction with the software.

V. Improvements: With the new system stable, this is a good time to bring out the benefits document again and audit the benefits of the new system. This is a very valuable exercise to conduct. It will reveal where benefits are being received and where they are being missed. It will also reveal if certain departments fell short of the goals and need more training or help in using the system. You may also embark on implementing second phase modules that you didn’t have the resources for in the initial implementation of the software.

A Final Thought: Buying and implementing software is expensive, time-consuming and risky. Technology related products and companies change at a rapid pace. To access more information and resources about software selection and our consulting services check out our website www.software4distributors.com.

About The Author: Jeff Gusdorf, CPA is a Principal in Brown Smith Wallace’s Consulting Group. He is the managing consultant and is responsible for IT strategic consulting, software research and evaluation. Jeff has more than 20 years’ experience as a financial manager and technology consultant in the manufacturing, distribution and service sectors.

About The Brown Smith Wallace Consulting Group: The Brown Smith Wallace Consulting Group has been serving the distribution community for more than 20 years through the publication of the Distribution Software Guide, speaking at industry programs, giving free telephone advice to distributors and providing fee-based consulting services to companies who need help selecting the best software packages for their business.

For Immediate Release: From the Editor and Publisher of Progressive Distributor Magazine by Rich Vurva

To learn more about researching, evaluating, analyzing and comparing software request the 2008 Progressive Distributor Supplement Guide released this month.
To order a complimentary copy visit http://www.software4distributors.com/pdsupplementguide/default.aspx

A sagging economy has forced distributors to search for ways to streamline their businesses. One way distributors can become more efficient, lower their cost of doing business, and potentially increase sales is to utilize technology.

For example, in our recent annual reader survey, distributors anticipate that while outside and inside sales efforts will remain their primary sales solicitation methods, they expect Internet sales to grow in popularity in the next 12 months. Doing business online not only provides a quick and easy way for customers to place orders, it’s also more cost-effective for distributors because it reduces costly in-person sales calls.

Technology can help distributors streamline their operations in other ways as well, such as providing greater customer access to inventory, speeding the order entry and invoicing processes, utilizing EDI, CRM and WMS systems, and much more.

In order to gain the greatest benefit from the latest technologies, distributors must have reliable software vendors to help them determine the best solutions for their business.

That is why Progressive Distributor magazine is especially pleased for the opportunity to partner with the Brown Smith Wallace Consulting Group to publish this supplement to the Distribution Software Guide. For nearly 20 years, the Distribution Software Guide has earned a reputation as a reliable resource for detailed information that helps distributors make informed choices when it comes time to upgrade their distribution software packages. Our hope is that this valuable supplement will enable your business be better equipped to succeed in a challenging economic environment.

About The Author
Rich Vurva is the Editor and Publisher of Progressive Distributor Magazine, which reaches 37,000 executives and salespeople at industrial and contractor supply distribution companies.

About The Brown Smith Wallace Consulting Group
The Brown Smith Wallace Consulting Group has been serving the distribution community for more than 20 years through the publication of the Distribution Software Guide, speaking at industry programs, giving free telephone advice to distributors and providing fee-based consulting services to companies who need help selecting the best software packages for their business. For more information visit http://www.software4distibutors.com/.

EDITORS NOTE: Permission to reprint is hereby given to all print, broadcast and electronic media. Permission is also granted for reasonable editing, including article title change and customizing for your audience/industry. Please send a copy of the published information to: Brown Smith Wallace Consulting Group, Sara Nelson, 10151 Corporate Square, Suite 100, St. Louis, MO 63132

For More Information Contact:

Sara Nelson
314.983.1393
snelson@bswllc.com

For Immediate Release: From the Editor and Associate Publisher of Industrial Distribution Magazine by Jack Keough

To learn more about researching, evaluating, analyzing and comparing software request the 2008 Industrial Distribution Supplement Guide released this month To order a complimentary copy visit http://www.software4distributors.com/supplementguide/default.aspx.

In a recent survey conducted by Industrial Distribution, distributors told us that one of their top concerns was soaring operational costs. It’s been a continuing problem that has been rising in importance in recent years.

One of the chief ways distributors can reduce those costs is through the use of technology. With the advent of expanded technological software, distributors can reduce errors in shipments; track and control inventory; and improve the manufacturer-distributor relationship as well as the customer-distributor relationship.

Technology can help in all those areas. But finding, evaluating and deciding on which software provides the best solution to solve your specific problem can be a daunting and time consuming task. That’s why Industrial Distribution is publishing this special section. This report, a supplement to the 18th edition of the Brown, Smith, Wallace Consulting Group’s Distribution Software Guide, is the number one source of detailed information for distribution-oriented companies beginning their selection process for new business software.

The guide is designed to provide independently researched information to make it easier for distributors to evaluate and select the right software for their specific needs.

Our survey clearly indicates that distributorships of all sizes will be looking for information on how technology can improve their internal and external operations. We hope this supplement will help you research, evaluate, compare and analyze the tools that are essential to your business operations.

About The Author: Jack Keough has been editor of Industrial Distribution for 21 years. Nine years ago he was also named associate publisher. Jack is considered a leading spokesman for the distribution industry. He has spoken at many industry conventions as well as at national sales meetings. He has also served as a panelist on radio and television and taught journalism at the college level. Prior to joining Industrial Distribution, Jack worked with community newspapers in Massachusetts for 15 years. He is a graduate of the University of Massachusetts.

About The Brown Smith Wallace Consulting Group: The Brown Smith Wallace Consulting Group has been serving the distribution community for more than 20 years through the publication of the Distribution Software Guide, speaking at industry programs, giving free telephone advice to distributors and providing fee-based consulting services to companies who need help selecting the best software packages for their business. For more information visit http://www.software4distributors.com/.

EDITORS NOTE: Permission to reprint is hereby given to all print, broadcast and electronic media. Permission is also granted for reasonable editing, including article title change and customizing for your audience/industry. Please send a copy of the published information to: Brown Smith Wallace Consulting Group, Sara Nelson, 10151 Corporate Square, Suite 100, St. Louis, MO 63132

For More Information Contact:
Sara Nelson
314.983.1393
snelson@bswllc.com

Distribution Virtual Tech Fair, Hosted by the Brown Smith Wallace Consulting Group

Does your technology system have trouble keeping up with your business? Knowing where you were yesterday does not help with the speed of business today. You need business intelligence about your operations, suppliers and customers at your finger tips. No matter how many work-arounds you develop or how many repairs to your system you make, your competitors are already passing you by. So in essence you are working for your system instead of your system working for you. Having the right system in place, allows you to spend more of your time making great decisions.

While you may have a hunch that you are spending more than you should to support customer’s questions and compete for their business, it may be hard to say at what point the cost of maintenance and upgrades would exceed the cost of a new system. How do you compare budgeted maintenance costs against the unknown costs of a new development? Fortunately, there is an industry-full of expertise that works through the fix-or-buy issue.

You have committed to moving forward and selecting a new system. So, which system should you choose? And how will you decide? Have you ever started searching for a product but did not know where to begin or who to contact? The Distribution Virtual Tech Fair can ease your pain by making it easy to research software and technology solutions online. This event gathers the industry leaders, the up-and-comers, the niche players in one place to answer your questions. Get access to the experts, virtually, and find out how others in your shoes have quantified the risks and benefits of migrating to a new system.

For two days only, April 30 and May 1, 2008 from 8:00 am to 6:00 pm Central Standard Time, attendees can meet with leading technology companies and industry experts from the comfort of their office -- live, online, interactive and 100 percent free. This complimentary, event takes the most successful elements of a live trade show and translates them into the virtual world of the Internet. Attendees can enjoy booths filled with Brochures, Fact Sheets, Literature, Whitepapers, On-Demand Presentations, Podcasts and Product Demos. Attendees can select content of interest, view it immediately or upload to their virtual briefcase so they can view it at their convenience.

Communicating and networking at the show is easy. Exhibitors and attendees can email, chat through IM, blog and exchange vCards which can be downloaded directly into Outlook. You can also start a discussion with others in the Show’s Lounge.

During the show, attendees can earn points for great prizes just by participating. The Virtual Auditorium includes educational presentations designed to provide proactive, industry-leading solutions and advice from industry consultants, IT managers, application experts and vendors.

To Register:
Register online at http://www.virtualtechfair.com/

Learn More By Taking A Virtual Tour:
Click here to begin http://www.virtualtechfair.com/virtualtour.html