Revstone Industries rescues Vassar from the dead with Plex Systems
It is unusual to hear that a software application contributed to the bankruptcy of a business but that's what happened to Vassar before it was rescued by Revstone Industries.
In this 41 min podcast case study, I spoke Janice D'Amico senior business analyst at Revstone, Chris Schmitt, controller at Vassar and Dave Hewitt, Vassar's plant manager.
The discussion kicks off with Mike and Janice explaining that what was supposed to be a $4-6 million SAP implementation by itelligence that ratcheted up to some $15 million in budgeted project spend with very little to show for it. At the time Vassar filed for bankruptcy, its liabilities were around $115 million. That makes the expenditures on the SAP implementation significant to the whole.
Upon rescue, Revstone canned the SAP project and implemented Plex Systems. Getting Plex accepted was no easy ride. It was a case of once bitten twice shy but Janice persuaded Chris that Plex would work without requiring a slew of programming core code. There were some risks attached to this implementation because Revstone's immediate past experience had been in using Plex in a batch manufacturing machine tools business. Castings are somewhat different with many variables that don't necessarily appear in machine shop situations. However, the implementation went ahead and in the written case study, the company attributes 456% ROI arising directly from the Plex implementation.
Returning from bankruptcy always creates tensions but also provides the opportunity for new management to clear the slate and start over. This has advantages and will almost always lead to significant process improvements. Chris Schmitt, the accountant largely responsible for reporting out of Vassar is a different type of number cruncher to that which you usually find. During our conversation it was obvious he has a deep understanding of what it means to run a castings business. He had, at one time, thought of buying the business. This kind of knowledge and understanding is often critical to success. It means the basic communications that have to take place between administrators and operations staff are of a different quality to that where functional heads operate out of well defined silos. This is nothing to do with IT yet inextricably linked to 'getting it right.'
Chris readily admits that he has little IT knowledge but he and Janice found that Plex was able to easily accommodate the castings industry taxonomy for its screens and panels. A key topic that recurs during the conversation is that Vassar could work with Plex from the early stages.
I was particularly interested in learning the extent to which Plex, as a SaaS solution, adds value to the business. Key findings:
- Due diligence in acquisition is not encumbered by the need for systems analysis. SaaS models do not require on-premise IT investment that needs review. It serves to lower business acquisition risk.
- Anytime, anywhere access over the internet means investments in VPN technology are not required. The flipside is that management has real-time access to information regardless of location.
- Real-time plant floor data means the company can report operational efficiency on a shift basis and not be waiting weeks. That in turn means plant operatives don't have time to dream up excuses why things went wrong. 'There's no more lies,' says Chris.
- Vassar believes it has and will continue to see transformational benefit in the way it runs the business and grows efficiencies.
- The company has seen a dramatic reduction in the cost of operating IT.
- It has been possible to develop a close working partnership between the finance people and operations based upon a single view of data.
Today, Janice believes Plex has delivered around 70% of functional requirements. This contrasts sharply with what we usually see in general ERP implementations where the provider may only offer 40-50% functional fit.
Observations:
- To date, SaaS companies have not been good at explaining the benefits companies can achieve in offering an alternative to on-premise solutions. The written case study, while eye catching, only concentrated upon a few points and did not tease out the SaaS specific attributes that contribute to this implementation's success. This podcast case study provides solid insights to the type of benefits one should expect from a SaaS implementation.
- This case study was unusual in that it talks about a business in distress. These cases provide some of the best examples around how implementations need to proceed in order to achieve demonstrable business success.
- The fact Plex is being successfully used in anger at a previously distressed business speaks volumes for that vendor's attention to this important segment of the market.
- During the discussion there was no mention of security, despite the fact Janice and Mike talk about access from anywhere at anytime via a simple Internet connection. Security is at once an issue but overblown. Buyers should still undertake security due diligence when considering SaaS solutions.
- Fast track implementation makes a difference. Early results instil confidence that is often missing in on-premise implementations. This is clearly having a positive impact as a differentiator.
- Real-time information, anytime, anywhere is clearly helping to transform this business. However, it does not happen in isolation. Teamwork from analysts, accounting and operational people are vital.
- This case study should be a wake up call to all of SAP, Oracle, Microsoft, QAD, Infor and others which supply manufacturing industry solutions. The SaaS boys are coming to get you. They can prove successful in challenging environments at fractional cost.
Endnote: Apart from minor edits, the case study descriptive text for this post comes from JD-OD.com, a joint venture between Jon Reed and Dennis Howlett