Which model to choose, however, is the question.
It's not quite daybreak when the buyer of one of TopForm Software's clients sits down at a computer to get an updated report on the status of the company's print product orders. Without a single phone call or fax, the buyer retrieves the information and is free to start the day.
That is just one of the great benefits of online forms management, said Julie Pritchard, president, TopForm Software, Norcross, Ga. "Customers can check a real-time status of their orders whenever, and from wherever, they want."
This no fuss, no muss solution explains much of on-line management's popularity which, for TopForm Software—a software supplier to mid- and large-size distributors—actually began about 10 years ago.
"At first we offered a dial-up service via modem where our clients' clients could access all forms management information—including online requisitions and reorder authorizations," said Pritchard. "Within the past year we've taken this capability to the Internet, where end-users can check real-time data on all of this information through our WebEC module."
Features of the service include order detail, inventory status, order status and usage reports. In addition, distributors' clients can request an e-mail order acknowledgement and track up-to-the-minute packing and shipping information.
Currently, about 18 percent of TopForm Software's customers have adopted WebEC. "It's a big part of our marketing plan right now," said Pritchard. "In fact, we are planning for another 15 percent this year, bringing our adoption rate to 33 percent."
While the system offers great relief for distributors and their clients, Pritchard assured that new technology does not erase the middle guy from the big picture.
"Distributors must, of course, maintain personal contact with their customers so that they can modify their offerings as their customers' needs change or expand," she said. "Also, when they expose their data to their customers, they need to be even more diligent about maintaining accuracy. The old adage, garbage-in, garbage-out, applies and you certainly don't want to have garbage online."
For Steve Wakefield, president and CEO, Sword Microsystems, Huntsville, Ala., online management became an outgrowth of his company's initial business model, which was an automated process for print manufacturers.
"We've focused on internal workflow processes since 1994, and going on-line was a natural growth developed to aid distributors in promoting their products while trying to streamline the ordering process," he said.
Wakefield explained that from a purchaser standpoint, a buyer would have a unique login and access to a personalized catalog. "Then, when an order is placed, it flows seamlessly into the internal manufacturing system, reducing turnaround and error rates," he said.
What makes the management system so attractive, he added, is that the inventory and pricing information design is based on the user's profile. In other words, efficiency coupled with familiarity are its selling points.
According to Wakefield, this is key for maintaining the distributor's integrity. "This system seeks to empower the distributor's position, rather than compete with it," he stressed.
A convincing proposition, for sure, but with online management suppliers quoting anywhere from $10,000 to $75,000 for licensing fees, buyers are faced with a serious dilemma.
The rift lies between two software models—Application Service Provider (ASP) and Business Solution Provider (BSP).
Said Wakefield, "A lot of companies are offering ASP models, whereas we offer BSP. The latter involves a one-time cost for set up and integration that can run from $75,000 to a half million for a purchaser."
Wakefield explained that this is a higher entry point than the ASP model, but once BSP is purchased and installed it offers unlimited distributorship and customers and catalogs that can be administered by the user.
He added that the BSP empowers companies to control the system and grow without continually having to pay additional fees.
"It truly is a lower cost of ownership in the long run," said Wakefield. "ASP's transaction and per-user fees can become overwhelming once a company's adoption rate grows."
In addition, if the client chooses ASP to start slowly, any customer information collected would be lost—or transferred at a high cost—if they chose to switch models.
TopForm is also in the business of selling BSP licensed software to distributors. "Our module allows the distributor to create his or her own system with a unique identity. It is highly customizable," said Pritchard.
She added both models—ASP and BSP—have their uses. "If a distributor wants total control of the data, he or she will choose an in-house system," she noted. "But if the distributor is simply looking for a partner who can get something to run more quickly, has expertise and can spread out the cost, then the ASP model may be a better choice."
One of the largest providers of ASP online management systems is SFI's iGetSmart.com, New York. The completely Web-enabled product provides client access to information via the Internet without installing desktop software.
The advantage of iGetSmart.com, said Rick Wesley, vice president of sales and marketing, is that the average distributor is given more than enough tools to compete with the majors.
"One of the key features of iGetSmart is that it offers distributors not only an e-commerce platform, but it also allows for national distribution—through 16 North American distribution centers—that are all connected in real-time," said Wesley. "This e-logistical piece," he added, "allows resellers to distribute in other geographical areas."
As a result, distributors can pursue any size customer, including Fortune 2000 companies once only targeted by majors.
When asked how much control distributors have over the system, Wesley replied, "Once distributors learn the system, they have total control from their offices. They control inventory and purchasing and can deliver to their customers more than 100 reports, most of which are in real-time."
Those reports run the gamut from every imaginable inventory report, to reorder analysis and even summary invoices with every cost center's monthly activity.
In response to how well this ASP model stacks up against BSP models, Wesley said that iGet-Smart.com is better prepared to deal with the industry's constant evolution and is able to implement features a BSP might not.
"For example," said Wesley, "iGetSmart allows an end-user's cost centers to be regulated by a budget, so that if a cost center attempts to order or requisition over their limit, the transaction is stopped until it is approved by a supervisor."
In addition, Wesley stated that his ASP model does have customizable properties. "Every account that goes on iGetSmart has certain customized requirements, and when these seem to fit universally, we build them and give them to distributors to use from then on."
When it comes to cost, a licensing fee can run as little as $10,000 through iGetSmart.com. From there the distributor is educated on how it works and then sells the system to customers. Once a distributor buys a product and it begins to move through the system, iGetSmart and the distributor share the revenue. "It's a fixed percentage of every dollar that flows through the system," said Wesley.
Installing online management systems can vary. Wakefield quoted an average of 60 to 90 days, adding that more complex companies with several divisions can take as many as six to eight months.
Attributing for this time and cost is the amount of research required to implement the best system. For an ASP model, a lot of time is also spent on education.
"A distributor can become competent on iGetSmart.com within about 30 days," said Wesley. "There are training sessions that the distributor attends and then an iGetSmart team spends a day or two on site with the distributor sales team."
Wesley added that the company is the only online management service provider that also educates distributors' customers.
Final Thoughts
There is no doubt online forms management represents the way of the future. And while some in the industry are not yet willing to take that step, online management providers say it is inevitable.
Pritchard cautioned that companies choosing not to adopt it will have a difficult time attracting new and profitable business.
"Online management systems bring distributors something new and exciting to offer to their customers," said Pritchard. "It gives them a foot in the door while showing customers their use of advanced technology."
Whether or not to go with an ASP or BSP model remains in question, however, as opposing suppliers weigh in their benefits.
Said Wakefield, "People are questioning the ASP model and providers have been eliminated in the dot-com shake out." This shake out, he predicted, will continue over the course of the next nine months to a year.
By Sharon R. Cole
- Companies:
- DemandBridge
- IGetSmart.com