PowerCerv Finally Overpowered By The '02 Hurricane Season Part 2: Strengths and User Recommendations

Event Summary

What has long loomed as inevitable fate has finally happened at the beginning of October, when PowerCerv Corporation (OTCBB: PCRV, www.powercerv.com), a Tampa, FL-based provider of enterprise software solutions for small-to-medium sized discrete manufacturers and distributors, announced that it has signed a definitive agreement to sell substantially all of its assets to ASA International Ltd. (NASDAQ:ASAA, www.asaint.com), a holding company of vertical enterprise software business-to-business (B2B) software solutions and value-added services, based in Framingham, MA.

This is Part Two of a two-part note analyzing this event.

Part One provided the background for this event.

PowerCerv Strengths

Nonetheless, PowerCerv has long grasped the requirements of its target market, small-to-medium enterprises (SMEs), which wish to meet most of their business requirements from a single source. To that end, the vendor has continuously attempted to differentiate itself from its peers by providing combined enterprise resource planning (ERP), customer relationship management (CRM), advanced planning & scheduling (APS), and business intelligence (BI) functionality, and technology that facilitate flexibility and supports distributed, remote applications deployment.

Even a way back with the release of its ERP Plus system at the end of 1990s, PowerCerv focused on tight integration of its Sales Force Automation (SFA) product into the core ERP applications, the addition of APS capability through marketing Taylor Scheduling Systems' production scheduling product TESS (Taylor Enterprise Scheduling System) as an optional integrated component of its ERP Plus software, and the incorporation of BI tools within PowerCerv Intelligence module. To that end, its flagship ERP Plus system denotes a tightly integrated software suite that streamlines front- and back-office operations that range from lead generation to after-sales service. The solution includes the following five modules:

  • Distribution Plus

  • Manufacturing Plus,

  • Support Plus

  • SFA Plus, and

  • Financials Plus

PowerCerv products have also long exhibited a componentized architecture, which has been crucial for deployment of e-business products. The Web-based collaboration and commerce functions offered by PowerCerv are found in its eSeries e-Business collaborative portal applications that integrate with ERP Plus, and include the following five modules:

  • eView

  • eConfigure

  • eOrder

  • eCRM, and

  • eDashboard

eOrder and eView respectively provide the ability to do either business-to-business (B2B) or business-to-consumer (B2C) transactions over the Web. With these, users can view and query enterprise information including customer invoices, credit memos, on-account transactions, open-order status, and detailed inventory information with the real-time product availability. eCRM is the Web enablement of some CRM functions featured within ERP Plus, eDashboard is a customizable Web-based screen that tracks key business drivers important to executive officers such as CEOs and CFOs, while eConfigure is a powerful Web-based sales configuration solution.

PowerCerv had even attempted not to stop short at combining integrated ERP and CRM applications for mid-sized manufacturers, as it has beefed up its collaborative supply chain management (SCM) capabilities, and lastly, has highlighted the business case for these combined functional capabilities under the concept of Integrated Enterprise Response, which is the company's minted term for the focus that its software should bring to customers' minds. The idea thereof is for PowerCerv's customers to e.g., share valuable inventory information, by enabling their Web-based order processing, by engaging them in Web-based CRM activities such as self-service diagnostics and lead-capture capabilities, and by generally developing a more responsive organization. To that end, PowerCerv Vision is a business knowledge data repository that supports PowerCerv Integrated Enterprise Response concept by providing visualization of workflow processes between CRM, ERP, APS and e-business applications. It also enables data migration, implementation methodology and enterprise training and ad hoc communication in a knowledge management manner. For more details, see PowerCerv Facing Another Stormy Season.

The market has long realized that CRM systems not only require integration with ERP systems to reconcile data such as customer master data, but also the bigger issue of integrated inter- and intra-enterprise business processes. For make-to-order (MTO) products, the overall process starts with capturing customer requirements at the front end that can be dynamically converted into work orders, routings, and other procedures via product configuration engines. The traditional use of CRM software, which initially had to do with sales opportunity management, contact management, and tracking the customer database, and then grew into the area of post-sale customer-support activities, has meanwhile produced many natural integration points from CRM and ERP all the way down to the shop floor.

The fact has long been that several PowerCerv peers mainly partner for CRM capabilities, rather than having built their own CRM software, giving PowerCerv the deeper level of native integration that cannot be obtained via third-party partnerships or acquisitions. The best example would be product configuration, which requires a tremendous amount of integration deep in the guts of an ERP system as it leverages the item master, bills of material (BOM), work operations (routing), costing/pricing, work order management, sales order, and sales quote management. Configurators need to, for example, add or change an operation, change the work center where the operation is performed, change the run rate on that operation, and change the set-up time, and they also need to produce special instructions or comments on the work order, sales order, or invoice. Further, each of those parameters affects cost, and available-to-promise (ATP) date. Therefore, the third-party product approach lands itself with problems like redundant data elements that need to be repeatedly tediously synchronized between disparate databases and systems, and it also leads to very common problems such as different user interfaces (look and feel), different release schedules, programming languages, and in some cases, even different database technologies.

Still, although ASA seems to have obtained an intriguing complementary product offering and a modest client base for almost next-to-nothing cost, it has to quickly articulate a clear and assuring message to the market that it can and will execute a strategy for enhancing PowerCerv product lines for a foreseeable future. While the current users will probably feel comfortable with existing support and maintenance, upgrades and incremental improvements will continue to be a hard sell and completely new sales unlikely until the new parent company makes more determined marketing effort and channel revival attempt.

User Recommendations

For PowerCerv users, while the acquisition does not completely end the uncertainty, it should help alleviate anxiety given PowerCerv could not go any longer as an independent entity. Provided it will operate as a separate, highly complementary business unit within ASA, PowerCerv should be able to more aggressively pursue the new business that has lately been beyond its reach due to the above-mentioned reasons. The current market trend is towards vendors that can provide comprehensive solutions for medium-sized companies, and PowerCerv seems to have a fair shot at delivering that. Enterprises should nevertheless monitor the consistency between the announced strategy and the new parent company's actions in continuing to support all of the former products strategically. Consequently, until the merger is consummated, users evaluating PowerCerv should exercise caution, keep themselves informed, and consider generally available (GA) functionality only.

Existing users should urgently clarify their support status and the long-term product development and migration strategy with the new/old management. Due diligence and development of case scenarios for either a system change or remaining with the status quo states goes without saying, although different users might end up with different action plans, subject to their particular state of affairs. For instance, users that are only using PowerCerv products in certain remote plants are in the least quandary and should cautiously go with the flow and contemplate contingency plans for the time when upgrades become necessary.

In the case of a successful implementation, smooth business processes flow and users being fond of a system, one would have to reckon with the tremendous issues of managing change and user resistance. Unless there is a crying need for and apparent (preferably quantifiable) benefits from abandoning the PowerCerv product currently in use, you may be better off by hanging on for a while. Nevertheless, be on high alert and develop medium- to long-term alternative plans for moving to a new technology. Ensure that you have the prerogative to change the source code and a team of skilled PowerBuilder resources available. Self-sufficiency' should be the name of the game.

If you are interested, perhaps the existing calamitous situation could even be leveraged to your benefit. Consider negotiating a pilot or trial period at no cost to you. Moreover, leverage the PowerCerv opportunity to negotiate a lower price with its competitors. If ASA is willing to provide its solution at a low cost, use that information with other vendors. Savvy CIOs may end up with a sound business case that enables them to reap the upside benefits of these sweet deals, while protecting the downside with a sound risk management plan that includes backup and a fallback strategy.

Still, until the company can present a solid reorganization plan and new product strategies become clear, we do not advise potential users to deploy its products, although learning about new features would not hurt. We suggest evaluating the bells-and-whistles, price, and corporate viability of other vendors instead, before making a selection. PowerCerv's target market, primarily North American manufacturing and distribution companies with less than $250 million-a-year revenues, with light discrete manufacturing requirements and that require seamlessly integrated ERP and front-office functions, should certainly consider the company's latest value proposition, at least for the sake of challenging the other vendors' offering. Organizations with significant engineer-to-order and process manufacturing requirements may benefit from evaluating other products in any case.

The industries that would most likely benefit from using ERP Plus are electronics, consumer goods, machinery, and fabricated products. Customers should always 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.

On a more general note, given that over the last few years, the enterprise market has become obviously stratified into solid vendors on one side, and stagnating, non-profitable and cash-depleted vendors on the other side, and since this will become even more accentuated in current economic milieu, customers are advised to conduct due diligence regarding vendor viabilities. Pay detailed attention to the balance sheet, a recent investment in R&D pattern, and to any fine print footnotes/remarks in financial statements.

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