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Finding the Key to Small Manufacturer’s Profits - Part 1

Written By: Predrag Jakovljevic
Published On: December 27 2011

This post starts with a trivia question: Please name the mid-market enterprise resource planning (ERP) vendor that has existed the longest in the market with an ERP product that has never been merged with another product? In addition, the vendor and its product offerings have never been covered by TEC and myself. As a hint, the company was founded in 1979 and has always focused on discrete make-to-order (MTO) and engineer-to-order (ETO) manufacturing.

Is there anyone out there wanting to venture a guess? If more hints are needed, it is not MAPICS XA, which was founded in 1977 by IBM, but now belongs to Infor and is currently called Infor ERP Discrete iEnterprise (and before that had changed many ownerships and shared a roof with other ERP products). SYSPRO has been independent since 1978, but has been a frequent topic on this site. It is not QAD either, which has been independent since 1979, but TEC has repeatedly reported about this vendor (see the most recent article on the company). It is not ABAS Software AG either, which has also been independent since its founding in 1980 (TEC just published an article on the company).



Well, since this suspense might get to some of you, and since I need to start writing this article eventually (and I am out of Starbucks gift cards to give out anyway), let me reveal the answer: ProfitKey International.

ProfitKey’s History

The company was founded in 1979 by Richard “Dick” Lilly (who is better known by his next venture, Lilly Software Associates, whose VISUAL ERP product is now part of Infor and currently called Infor10 ERP Express) in Florida under the name Key Systems (hinting at Florida’s splendid keys). The vendor delivered the first ERP system for small manufacturers in 1982 and the first system for MTO manufacturers in 1984.

In 1985, the company took the current name, ProfitKey, and delivered the first multilevel scheduler and the first backward finite capacity scheduler (so-called “common sense scheduler”) in 1986. All of these products were based on COBOL, the language of that day and age. The Gupta Technologies’ client-server 4GL development environment (now part of Unify Corporation) was adopted in 1993 and is still in use.

The 1990s were the period in which ProfitKey was distracted by a number of management and ownership changes (it also moved its HQ to Salem, New Hampshire in the early 80s). In 1991, the company parted ways with founder Lilly and was acquired by Across Data Systems in 1994, taken public under Level 8 Systems in 1995, and then acquired by Platinum Equity in 1998. ProfitKey’s current CEO, Joe DiZazzo, joined the company in 1992 and became CEO in 1998.

In spite of these unfortunate distractions (at a time when other younger ERP entrants were having salad days during the economic boom of the 90s), ProfitKey managed to deliver some notable solutions. Namely, it delivered one of the first real-time integrated manufacturing enterprise systems (MESs) within its flagship Rapid Response Manufacturing (RRM) ERP system in 2002. RRM is one of the industry’s rare fully integrated ERP-MES product suites that provides native document management and workflow capabilities, making it a completely paperless manufacturing solution.

In 2003, ProfitKey collaborated with Kimchuk and Avnet Electronics on RRM Supplier Portal, becoming the first software provider of Web Portal for Avnet customers. Over 1,200 customers with over 21,000 users have implemented ProfitKey software in the US, Canada, Europe, and Asia. But the company today has only about 200 customers with active maintenance contracts.

In 2005, HALO Technology Holdings acquired ProfitKey from Platinum Equity, and the company’s operations were doing fine for a while. From February 2007 through August 2008 PoriftKey added over 100 product enhancements including key additions of engineering change management (ECM), by-products (offcuts, regrind, etc.), quality management, application programing interfaces (APIs), and several financial management enhancements. The Lean/Kanban module was released in April 2009.

But for well over two years, ProfitKey was embroiled in the bankruptcy of its parent company, despite being profitable as a business unit.  This unneeded distraction, in addition to an already difficult economic environment, made for challenging times, but ProfitKey finally managed to find a white knight in New York-based Phoenix Asset Management, which bought it out in mid-October 2011. ProfitKey currently has direct offices in New Jersey, Florida, Arizona, Ohio, and California, with resellers in Kansas, Illinois, Manchester (England), and Montreal (Canada).

ProfitKey’s Value Prop

ProfitKey’s vision is to be the most trusted global provider of ERP solutions in the discrete manufacturing market. The company’s mission is to provide the most comprehensive, high-performance, cost-effective, and real-time solution in the ERP market. The idea is to provide small-to-medium companies with the best software solution in the manufacturing industry to help them remain competitive, operate efficiently, and exceed customer expectations. The vendor believes that by delivering solutions built around the business of manufacturing, its customers can improve the way they do business--from the front-office all the way to the shop floor.

ProfitKey provides manufacturers, primarily North American single-site environments, with straightforward, hassle-free manufacturing ERP solutions that just do their job well and “keep the delivery tracks and trains rolling.” Its fully integrated ERP, advanced planning and scheduling (APS), and MES product line provides critical real-time information that helps manufacturers strengthen their competitive position in the marketplace by delivering goods to demanding customers exactly as needed. ProfitKey’s solutions deliver ongoing value to their customers by enabling them to achieve continuous business process improvements.

The vendor also strives to deliver unmatched support services for its conservative and loyal customers and partners. Its experienced installation, training, and support staff make system implementation painless to customers. ProfitKey offers the following commitments to its customers:

  • responsive customer support

  • customer-driven product development

  • rapid implementation (90 days or less)

  • low total cost of ownership (TCO)

  • a highly skilled professional services group


ProfitKey’s target market is custom MTO and ETO discrete manufacturing, from jobbing shops to companies with some repetitive manufacturing and batch production. The sweet spot includes companies with US$10 million to US$150 million manufacturers, primarily in North America (RRM currently supports the English, Spanish, and French languages). The company estimates a market opportunity of 450,000 discrete manufacturers with approximately 400,000 at US$50 million in revenues or under. The vendor competes in the following vertical segments:

  • aerospace

  • automotive

  • original equipment manufacturers (OEM)

  • contract electronic assembly

  • medical devices


Typical competitors are GlobalShop Solutions, Epicor 9 (or the legacy Epicor Vantage product in case of replacement opportunities), Infor10 ERP Express (formerly Lilly Visual), Consona ERP (Intuitive and Made2Manage), E2 Shop System by ShopTech Software, and Exact JobBOSS. ProfitKey is quite versatile when it comes to discrete manufacturing environments, but it does not have true project accounting capabilities (although it does have some aspects of project-based manufacturing). Within the overall master job (for example, ProfitKey has had customers who made multi-mile piping systems for power plants), individual sections or sub-projects have their own sections that can be manufactured separately, and tracked in and of themselves, and their status can be monitored down through all levels (as deep as 50 levels), yet these sub-projects are all rolled up automatically.

RRM Product Basics

The core RRM product is written using the aforementioned Unify (formerly Gupta) development tool, while the E-Commerce components are written in Active Server Pages (ASP), the technology from the time of “Web 1.0.”  The product suite supports Oracle and Microsoft SQL Server databases, while supported operating systems include Microsoft Windows, IBM AIX, and Linux. Reporting capabilities are offered via embedded SAP Crystal Reports.

As I said earlier, ProfitKey offers full customer support, implementation, and IT services. Classroom training sessions are offered in the in HQ office, and there are Web training sessions as well.

Most of RRM's functionality was developed in-house, such as the ERP Core, MES, Quality Management, ECM, By-Products, and the Kanban/Lean Manufacturing Version. Optional third-party functionality for customers that need more robust capabilities (at an additional license price) comes from the following partnerships:

Part 2 of this blog series will analyze ProfitKey’s response to the remaining exacting demands of its pragmatic prospective customers as well as notable challenges for the vendor’s vision. Your views, comments, opinions, etc. about ProfitKey’s newly minted strategy, its recent moves, and your experiences with the vendor and its products are customarily welcome in the meantime.
 
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