Is Fourth Shift Succeeding in Providing 'Complete Customer Care'?

Is Fourth Shift Succeeding in Providing 'Complete Customer Care'?
P.J. Jakovljevic - August 14, 2000

Event Summary

According to a press release from July 25, Fourth Shift Corporation, a Minneapolis-based global application software vendor for small-to-medium enterprises (SME) and, an Internet marketplace that provides mutual benefits to buyers and suppliers of manufactured direct materials, have partnered to bring together enhanced e-commerce functionality for Fourth Shift users. Fourth Shift will utilize the XML Integration Toolkit to seamlessly link Request-for-Quotation (RFQ) data and Quotation data with the online strategic sourcing platform for manufactured direct, indirect, and specification-based raw materials.

Fourth Shift users who are involved in discrete manufacturing will be able to source built-to-order components and other specification-based materials involved in the manufacture of their end products directly from their desktop computers. Additionally, they will be able to search for open RFQs in their areas of expertise and nominate their company to bid on the contract. With the added benefits of, purchasing professionals will be able to locate ideal trading partners, submit RFQs for new contracts, and receive the results of reverse auctions, all from their familiar Fourth Shift vendor operations, manufacturing planning and scheduling, and product definition screens.

"As a company incorporating the Internet into our core business strategies, Fourth Shift's progress is evident," stated Keith Vincent, Fourth Shift's VP of 'e'. "It's staggering to imagine the tremendous time and cost savings that this e-procurement option will bring to our customers. We're very excited about our partnership with"

"We are thrilled to bring our e-procurement functionality directly to Fourth Shift users, " stated Bill Sheehan, vice president of business development at "Our partnership will put viable e-commerce tools on the desktops of thousands of manufacturers. The transparent functionality is elegant, and the economic results will be powerful."

Earlier, on July 18, Fourth Shift Corporation reported a loss of $.37 per share for the second quarter ended June 30, 2000. This loss includes a one-time charge of $.08 associated with an expense reduction plan implemented on June 30, 2000. Total revenue for the quarter was $15.1 million (See Figure 2).

Figure 1.

Figure 2.

"The second quarter results are disappointing," said M. M. Stuckey, Chairman and CEO. "The market's in a pause, we have tightened our belts accordingly, our cash position is adequate and our strategy is right for what our market needs. Businesses are asking for advice on Internet strategy and looking over their shoulders for what their peers are planning, so they are holding off buying decisions. This decision dam will break and the race will be on to get operational, but when is still uncertain. Fourth Shift is positioned to grow rapidly when buying decisions resume".

Market Impact

The time has come for Tier 2 and Tier 3 vendors to feel the Y2K-caused pinch, while their bigger brethren seem to have gotten over that malaise. This was not unexpected, as Tier 1 ERP vendors were hit first, primarily due to much longer implementation times required for larger implementations and customers had to put their plans on hold much sooner. We believe that the smaller vendors are now in for a rough time as they continue to expand their products, refine their marketing message and defend their turf from each other and from ever more intruding bigger vendors, while coping with much scarcer resources. Fourth Shift CEO's somber message speaks in that regard.

Nonetheless, Fourth Shift Corp. seems to understand the requirements of its target market (SMEs) that wish to acquire most of their business applications from a single source. To that end, the company launched in February 2000 a program to promote itself as a sole solutions provider. The program is called Complete Care and is possibly the most comprehensive approach for small and midsize manufacturers to obtain needed business enterprise applications, backed by professional services and a long-term commitment to the customer's success. The Complete Care program begins even before a customer commits to any purchase as a Fourth Shift project manager is assigned to participate in meetings with potential customers. However, Fourth Shift has yet to demonstrate substantial progress in developing an indirect channel to supplement its strong direct sales force.

Fourth Shift introduced Complete Care concurrently with enhancing its core ERP product. The new functionality includes a set of what Fourth Shift refers to as business relationship management (BRM) applications, providing functionality for such things as automating sales forces and facilitating relationships with customers and suppliers. That was provided through an OEM relationship with Pivotal's BRM product, which has been tightly integrated with the Fourth Shift 7 e-ERP system.

Fourth Shift also offers a robust and fully integrated APS engine as part of its product suite through an OEM relationship with Systems Modeling Corp. Further in 1999, Fourth Shift began developing a set of applications that will enable its customers to conduct business-to-business (B2B) e-commerce. Fourth Shift acquired underlying technology for these applications, which it calls e-Business Centers, through the purchase of Computer-Aided Business Systems (CABS), which specialized in developing workflow-based e-business solutions. This acquisition has also somewhat mitigated the company's multi-site product functionality, which was mediocre in the past.

Fourth Shift offers products and services for e-commerce, 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. Fourth Shift 7 provides connectivity to other applications and follows the Microsoft standards regarding BizTalk and XML.

Possibly differentiating Fourth Shift from its main competitors is the company's ability to measure, at a strategic level, the cost, benefits, and business justification of the new technology. Fourth Shift's new website is a portal where manufacturing companies can benchmark themselves against comparable companies contained in an online database of more than 150,000 firms. This site is co-sponsored by Grant Thornton a leading accounting and management consulting firm providing a broad range of professional services to growing entrepreneurial organizations.

As for the latest partnership announcement in case, we foresee a benefit for both parties. Fourth Shift and its customers' potential benefits are obvious, whereas should embrace the addition of 3,700 Fourth Shift customers who will utilize the functionality and collaborative sourcing technologies that allow buyers and suppliers to locate new trading partners, negotiate purchases, and collaborate on the Internet.

User Recommendations

Fourth Shift's target market, manufacturing and distribution companies in the $10 - $150 million-a-year revenue range, should certainly consider the company's latest value proposition, but avoid selecting it without looking at what the other vendors have to offer. We generally recommend including Fourth Shift in a long list of an enterprise application selection to lower-end of the mid-market companies, which have limited IT budget and conservative IT strategy, and have significant discrete job shop manufacturing, CRM, supply chain and B2B e-commerce requirements. The industries that would most likely benefit from using Fourth Shift 7 are electronics, computers, machinery, fabricated products, and medical devices.

Customers should insist on a contractual timeframe for delivery of a solution, and seek reference sites (preferably in their vertical market space), which have been successful with the product suite. Each e-business component should be put through its paces using a well-documented set of requirements, scripted scenario demonstrations, and rigorous reference checking. As for the new added functionality through partnerships, users are advised to ask for firm assurances on the availability and future upgrades timeframes, and more detailed scope of combined product functionality.

Customers interested in Fourth Shift's assistance in connecting them to digital market places may want to ask the following questions: What methodology does (or will) the company prescribe? Will Fourth Shift map customers' schemas to those of the marketplace? With suppliers talking to manufacturers, customers and sales people interacting via the network and a back end solution "keeping up" with all of it, what "lowest common denominator" network configuration is recommended by the company?

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