Fourth Shift's evolution Within SoftBrands' DemandStream

Event Summary

Early in 2001 Fourth Shift Corporation, a former prominent mid-market ERP provider for manufacturers, became part of then AremisSoft, another diversified but somewhat obscure ERP provider (see The Mid-Market Is Consolidating, Lo And Behold), and has unfortunately all but fallen into oblivion due to the alleged criminal activities of its new parent company towards the end of 2001. Namely, AremisSoft, with the accusations of reporting fictitious revenues, the ensuing Security & Exchange Commission (SEC) investigation, a shareholders' lawsuit, and the company's consequent bankruptcy filling, became a harbinger of an Enron-like trend.

Amid the turmoil, a part of AremisSoft spun off from the old corporation with its clean books, and renamed itself into SoftBrands Inc. group (, which has been operating as a privately held holding company and has since taken over the responsibility of its products and customer base, hoping to shed its tainted past, to return to its enterprise software roots, and leverage its large installed base of more than 5,000 users in 60 countries. The company as a whole also now has over 700 employees and is projecting revenue for 2002 of ~$80 million, falling significantly down from $175 million of 2000's combined revenues for what was then AremisSoft and Fourth Shift, though (the magnitude of revenue shrinkage might not be that severe given AremisSoft's 2000 reported revenues are quite questionable from the hindsight). Softbrands' revenue comes mostly from its SoftBrands Manufacturing division (, but it also receives about 30% from sales and support of a mid-market hotel, property and leisure management systems (i.e., PORTfolio, IGS HOTEL, Medallion, RIO Grand and other respective products) within the SoftBrands Hospitality division ( The manufacturing group of SoftBrands, on its hand, has three complementary product sets tailored for mid-sized manufacturers: Fourth Shift, evolution and DemandStream.

SoftBrands emphasizes the spin-off action has distanced it from AremisSoft's Chapter 11 filing (as of August 2, there is no any relationship between SoftBrands and AremisSoft, other than that SoftBrands is entitled, per the final agreement, to 10% of any proceeds from the ongoing actions against AremisSoft and its former executives), and has allowed it to move on unfettered by past difficulties, as it has spent the past year also sensibly re-aligning itself with significant changes in the overall IT market, such as the demands on enterprise applications providers to deliver better return on investment (ROI), their increasing need to balance skill shortages and the escalating costs of new product development between certain regions. The new organization seemingly has a strong vision, confidence and great enthusiasm, as it is seeking to advance its two flagship enterprise resource planning (ERP) products — Fourth Shift and evolution — as well as its new supply chain execution (SCE) DemandStream solution, which addresses lean manufacturing and execution .

To that end, as to send more positive vibes to the market, the company recently made its first major announcement since being acquired with the release of Fourth Shift 7.20, believed to be an important milestone in the advancement of its ERP scope, as it introduced several new features designed to benefit both the user and system administrator. Although it included over 40 functional enhancements most frequently requested by its current customers, it was largely a technology release rendering the product fully Web-enabled, browser-based with a configurable role-based portal front end. Thus, the 7.20 release offers the following enhancements:

  • My Fourth Shift Workplace, a browser based User Interface (UI) for use locally on a local area network (LAN) or remotely over the Internet, has been enhanced as users can now access through it the entire suite of Fourth Shift's extended ERP modules, as well as virtually any Windows-based application. Role-based portals can be created for common positions or tasks, such as purchasing, shipping, production planning and accounts payable.

  • The Connectivity Toolkit provides a doorway into a new realm of customization by featuring a library of customization tasks varied from simple to advanced, to make modifying UI easier. Customize using common web-based development tools like JavaScript, VBScript, and Active Server Pages (ASP) and Web-oriented customization tools for My Fourth Shift Workplace' should allow users to integrate fields from other web sites and other data sources directly into the Fourth Shift task-based screens, including customized lookups, cross-references, and data collection.

  • The Electronic Data Interchange (EDI) module has been completely re-written to provide much faster performance. Speedy Advanced Shipping Notice (ASN) data entry with new screen customization should allow users to change labels or hide unused fields within screens.

  • Fourth Shift 7.20 runs on a Microsoft Windows platform and features support for SQL Server 2000. Enhancements in this release for SQL Server include powerful information search features as well as automated full or incremental backup and restore capabilities.

The company also plans to harness Microsoft .NET technology within the release 7.30, slated for the first half of 2003, as well as another large group of user-requested functional enhancements.

This is Part One of a two-part analysis of recent announcements. Part Two will discuss Challenges and make User Recommendations.

Market Impact

"Down, but (certainly) not out" should describe the current SoftBrands' state of affairs. These have by no means been easy last several years for smaller applications vendors, but SoftBrands' predicament has been additionally magnified by the well-publicized extraneous trouble on top of the proverbial conundrum of how to expand the products offerings, deliver a modern, Web-based product architecture, and defend the turf from flagrantly intruding and succeeding bigger brethren and peers, while coping with thinning resources. If one could extricate at least one benefit gained from former AremisSoft, it could be its early astute moves in terms of rejuvenating acquired software largely by shifting its development offshore to India (and then to China owing to Fourth Shift's strong presence in the market), resulting in AremisSoft's alleged solid growth while erstwhile Fourth Shift company had been a sluggish at the same time.

The offshore development remains a significant part of the new company's strategy, since product development for evolution is done in India, and for Fourth Shift in China. SoftBrands is indeed one of a few rare vendors that fully incorporate offshore development into its R&D strategy in a more than a casual manner, the trend that has recently been taking hold market-wide. Even more, skilled programming resources in India and China, complementing their more expensive counterparts in the US and Europe, have recently been bolstered to ensure that constituent divisions will have all necessary wherewithal to develop new products and enhancements at a less cost for markets around the world.

This combination of similar offshore R&D philosophies could become even more of a driving force, given enough product development in the pipeline and on the company's platter in order to match the competitive offerings. Having long acquired a reputation for quick and inexpensive implementation and excellent service & support, and in an effort to expand up-market from its traditional small, single-site enterprise stronghold, erstwhile Fourth Shift embarked on harnessing advanced technology (i.e., object-oriented, Windows NT/SQL Server-based, and featuring productivity enhancing graphical user interface (GUI)) by introducing in 1997 OBJECTS Enterprise Software. This was its intended upgrade of its former outdated MSS product (which was written in 3GL C code, and featured a batch process architecture and non-relational proprietary database) that was supposed to enable users to link to multiple sites using the Internet or wireless technology. Disappointing sales sent the company back to the drawing board, where it combined OBJECTS with MSS, releasing MSS for OBJECTS in 1998, soon after to be renamed in Fourth Shift Software System.

Fourth Shift

In 1999, Fourth Shift began developing a further set of applications to enable its customers to conduct business-to-business (B2B) and business-to-customer (B2C) e-commerce. To that end, it acquired underlying technology for these applications through the purchase of Computer-Aided Business Systems (CABS), a Colorado-based developer of workflow-based e-Business solutions. The CABS' acquisition has much improved the company's plant execution and multi-site product functionality, which had been mediocre or non-existent before, by providing VisiBar and VisiWatch applications.

VisiBar is a data collection and workflow application that accepts input from multiple sources (e.g. bar code scanners, sensors, digital scales, relays, and other software applications) and allows users to create scripts to transfer, manipulate, analyze and act on the collected data, enabling thereby the organization to e.g., automate plant floor, materials transfer and warehouse operations.

VisiWatch is a transaction monitoring application that can be set up to "watch" for specified events and then take a predetermined action, such as sending an automated e-mail message, generating a report, making a change in another database, or synchronizing the info with another enterprise system. VisiWatch is a Visual Basic for Applications (VBA)-programmable software application, a sort of a "silent assistant" designed to monitor and react to any of the following seven kinds of events: Transaction Event, Time-based Event, Startup Event, File Event, E-mail Event, Transmission Control Protocol (TCP) Event, and Object Linking and Embedding (OLE) Events.

Response to Market Requirements

Although Fourth Shift had long grasped its target market's requirements of competitively priced functionally adequate products, ease of use and modification, short implementations, and strong service and support, during the late 1990s, however, it, somewhat painfully like many of its peers, realized that its target market needed more than an inexpensive and easy-to-use back office system. To that end, the company has gradually introduced or incorporated, in an "embedded approach" OEM fashion, a line of integrated e-business, customer relationship management (CRM), and advanced planning and scheduling (APS) components within its core ERP solutions. It has been known for adroit blending of third-party products with its own and delivering the combination as a tightly integrated unit, transparent to the user. By embracing concepts of component (modular) technology in designing its product, the company has been providing a great number of middleware application programming interfaces (APIs) for interconnectivity among its own and third-party components, also providing for flexibility and incremental deployment. Fourth Shift 7 provides connectivity to other applications based on the Microsoft standards like BizTalk and eXtensible Markup Language (XML), which is considered quite appropriate for its target niche.

This had promoted it as one of the first smaller ERP vendors with ability to embrace customer and supplier activities tied to core transactional back-office system. To that end, Fourth Shift offers very competitive e-commerce ability within its market niche, including but not limited to online catalogs, Internet storefronts, online credit checking, credit card validation, rules-based parametric product configurator, online procurement, and order fulfillment. All the major constituencies have been provided with e-Business applications while the above-mentioned My Fourth Shift Workplace takes care of employees, Fourth Shift's Customer Center application enables customers or channel partners to browse the user-enterprise's online catalog, configure products, place orders, view their own specific pricing, check product availability, and access the status of their order(s) by tracking shipping and viewing their account and payment information. Former Fourth Shift's Supplier Center application, which was originally designed to streamline purchasing and give suppliers visibility into the user-enterprise's production demands, has been discontinued and all of its functionality has been rolled into DemandStream. As mentioned earlier, the recent release of the Fourth Shift suite offers integration to DemandStream, and complete Web-browser enablement.

Consequently, Fourth Shift product remains a major breadwinner for the SoftBrands Manufacturing division (~65% of its revenue), being a web-enabled product for different manufacturing mid-markets (available in 17 languages) spanning across 60 countries with more than 4,000 customers (although only a half of them are actively paying for maintenance), some of which are the fastest growing manufacturers and global enterprises from the Global 2500 including Eastman Kodak, Unilever, Bosch, Gillette and Electrolux.

Fourth Shift product covers many bases with nearly 50 integrated application modules handling order entry, accounting/finance, inventory control, manufacturing, executive decision support/business intelligence (BI), engineering (in alliance with Agile Anywhere for collaborative product design), purchasing and shipping, along with the above-mentioned adaptable web-based supply chain visibility modules that communicate through portal technology. The product has traditionally been very strong in terms of transaction entry and reporting and tactical level production status visibility, lot traceability, cost control and work in progress (WIP) management, rendering it well suited for order-ship-bill operations within make-to-stock (MTS) and configure-to-order (CRM) manufacturing environments. CRM and HR are also integrated and through DemandStream integration there is support for lean manufacturing, while APS comes through alliance with Preactor, web-based product configuration through Eden Origin partnership, financials can be enhanced with Ledgersoft, and e-procurement comes from Biomni alliance.

The evolution Product

Another extended-ERP product named evolution (formerly Aremis Enterprise) is a highly configurable ERP and B2B solution, built on Windows NT and Unix server and Oracle, Informix and Microsoft SQL database platforms (i.e., Oracle and Informix on the Unix server platforms, Oracle and Informix on the Windows NT platform, and Oracle and SQL Server on the Windows 2000 platform), and therefore should be more amenable to larger mid-size manufacturers. Its deep functionality embraces applications for the Internet, information publishing, connectivity and multi-site operations, with core applications being production, planning, sales, inventory, purchasing and financials as approximately 6,000 loosely coupled, configurable components. The product is especially strong in dimensional and converter manufacturing environments such as textiles, apparel, food and metals, by featuring functionality for dimensional slitting, cutting and rolling, lot tracking, product configuration, plant maintenance, engineering change control (ECC), quality management, distribution and multi-plant planning and project control.

Like Fourth Shift, there are also integrated CRM and HR applications, and EDI support, and shop-floor data collection. A recently announced release tagged 10i allows a complete browser-based deployment of all applications and system administration tools, with a universal look-and-feel browser-based interface. As for implementation there is so called ensure' business process toolkit with a 1,000 strong library of default business processes and HTML-based drag and drop modification facilities.


DemandStream, on its hand, is a supply chain execution (SCE) solution whose purpose is to increase the velocity and decrease the cost of a manufacturer's supply chain. It achieves this by enabling a blend of lean methodologies and eliminating wasteful steps and processes. In doing so it allows companies with uneven demand patterns or high product mix environments to take advantage of "Lean" principles like Demand Pull scheduling. Available off the shelf, DemandStream is able to interact with most ERP systems including Fourth Shift and evolution and thereby bridge the chasm between companies that are heavy planners, and those that must respond to constantly changing demand on the fly. To that end, the Data Integration module is responsible for importing data using Import Wizards into the Shop Floor Module from a back-office system, and for inputting data using XML messages generated by the Shop Floor Module back into a business system. Applets are included that generate manufacturing orders and purchase orders, item changes, bill of material (BOM) changes, and non-replenishable Kanban.

The product delivers the following four important capabilities to manufacturers:

  1. Dynamic Electronic Kanban or replenishment signals -The Material Replenishment Module uses multiple inputs, including demand patterns to determine the optimal Kanban quantity, which dynamically moves with the business' demand to ensure an efficient inventory level. Shop Floor Operations is an interactive application that uses the Web-based graphical Kanban Board to create and manage the work cell schedule. The individual work cells can make any necessary adjustments and then execute the schedule automatically. Purchase Orders are also automatically based on the Dynamic Kanban signal.

  2. Demand Responsive Operations through Supply Chain Event Messaging

  3. Supply Chain Planning & Scheduling - Supply Chain Execution is also an interactive Web-based application that enables the shop floor to interact with suppliers through the Supplier Kanban Board. Features include interactive shipping and an enhanced XML messaging system, while reports include material shortage reports and daily workload usage reports.

  4. ERP System data translation and integration.

Consequently, the product should allow manufacturers to leverage their investment in ERP systems and at the same time embrace lean manufacturing methods, and thereby improve productivity, competitiveness and profitability, all being a must in current difficult economic times.

Therefore, the above broad product set, bundled with a reputation for quick and easy implementation, low start up and running costs, one of the speediest problem resolution in the industry and one of the highest ranking for the management of upgrades and excellent customer service should create at least cross-selling opportunity for SoftBrands to shore up its large customer base.

This concludes Part One of a two-part note on Fourth Shift Corporation. Part Two will discuss the Challenges the company faces and make User Recommendations.

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