February 5, Provia Software (www.provia.com),
a somewhat tacit but quite steadfast privately-held provider of supply chain
execution (SCE) software solutions aimed at catering for the entire order-to-delivery'
collaborative process needs, announced that it has completed 2002 with over
80 client sites going live during the course of the year, which was also one
of the company's most profitable years ever. The more than 80 client go-lives
were a combination of new and upgraded sites worldwide, and reportedly came
from a wide variety of industries, including consumer packaged goods (CPG),
third party logistics (3PL), wholesale/industrial distribution, high-tech/electronics,
In addition, a number of Provia's clients added new products from the Provia suite to their logistics strategy, reflecting Provia's continued success in both attracting new customers and marketing into its client base with new solutions. Provia credits a part of its success to the fact that Warehouse Management System (WMS) software (particularly the legacy instances) tends to be among the most customized of enterprise applications, which often makes it more affordable for companies to forego the upgrade process and just install new more out-of-box functional WMS applications.
is a relatively small SCE vendor, but one that offers applications and services
typically expected from much larger, Tier 1 vendors. Although with ~$30 million
in revenues, one would not expect Provia's prominence amongst Tier 1 customers,
it achieved an enviable foothold in the 3PL market during its initial years
as HS&E — over 2,200 installed AS/RS systems worldwide. As a result, ViaWare
can be found in the IT infrastructures of blue-chip 3PL providers like: Fedex
Logistics, Menlo Logistics, Total Logistic
Control, Emery Worldwide, and USF.
recent focus has also been on the Tier 1 private warehousing space and high-profile
client base there would include large Tier 1 private warehousing clients like
Gillette and Graybar Electric. Provia also
serves the Tier 2 3PL market, and will continue to market in the Tier 1 space,
while focusing on additional configuration tools for the Tier 2 space, which
is a larger market.
On a vertical front, 3PL providers and wholesale distribution continue to be hot areas for Provia, though its solutions are finding increasing favor among makers of CPG, and to a lesser extent food & beverage process manufacturers, high-tech and retailers. Provia has been expanding its presence outside the 3PL verticals (which still occupy 50% of its install base). Although the vendor has yet to articulate to the market a clear roadmap for building out these functional extensions, expanding from 3PL to other industries should not be a colossal undertaking as the requirements for 3Pl are already quite demanding. ViaWare OMS, coupled with its devised methodology and tools to enable customers to implement its solutions faster and easier, has made it a leading supplier to 3PL companies, and a similar feat has yet to be replicated as to capture other vertical segments.
OMS has been particularly attractive because it allows 3PL companies to bill
multiple clients and to bill them for value-added services including purchase
order management, shipping order management, kitting order management, event
billing, anniversary billing, invoicing, EDI integration, AutoFAX
integration, Internet access, accounting interface, pallet exchange, perpetual
inventory, soft allocation, etc.
Its relatively recently delivered products like ViaView, FourSite WMS product, designed specifically for the Third-Party Logistics (3PL) industry show that Provia is adept at leveraging its position to generate new forms of revenue.
is Part Three of a three-part note.
Part One detailed recent announcements.
Part Two discussed the Market Impact.
Provia might stand apart from its peers in the enterprise applications industry by claiming that behind every one of its installations is a satisfied client. The company touts its No. 1 asset is that it keeps its commitments and delivers on time and within budget, and thus, 98% of its clients renew their 24/7 support contracts with the vendor every year. Aiding Provia on the implementation front are several integration partners, including general consulting houses like former PricewaterhouseCoopers (now IBM Global Services), Deloitte Consulting (son to be called Braxton), and smaller system integration services firms like Digiterra and Q4 Logistics.
is distinguished from other vendors by its possibly unique approach to implementation
services. Its Knowledge Transfer Methodology allows clients
to learn the nuts and bolts of the product in a two-week course before the start
of the implementation. This methodology also allows its clients to perform the
upgrades with little or no assistance from the vendor. Provia also offers a
self-paced, Web-based training program designed to let clients demo its products
for one month to practice what they have just learned. This approach typically
leads to quicker training and implementation of the actual product. Use of internal
resources can bring clients great cost savings in addition to building expertise
for ongoing maintenance. Client ownership is facilitated by Provia's emphasis
on the packaged aspects of its suite and its stance against customizations that
can quickly ensnare project timelines. While a packaged approach is not for
all clients, those who have chosen the methodology have good things to say.
Owens Corning, in execution of a multi-site, global implementation of Provia's
WMS and YMS, reportedly completed all but the first of 24 installations with
minimal Provia involvement, despite major operational differences across business
Menlo Worldwide, as one of the world's largest third-party logistics (3PL)
providers, needed to add supply chain software to new sites very quickly.
With little or no Provia support required, Menlo reportedly completed all
installations of Provia's WMS in 30-90 days, in order to meet the immediate
demand. The company considers this a significant competitive advantage in
the 3PL market.
Applied Industrial Technologies cites the empowerment Provia has given it
to manage the software as the reason it has been able to handle unforeseen
costs that might have led to reduced efficiency or limited revenue.
TaylorMade-Adidas Golf reportedly managed the upgrade of three Provia ViaWare
WMS implementations on its own last year, with almost no involvement from
Provia's product consultants.
manager of service parts logistics for Lanier Worldwide, a wholly owned subsidiary
of the Ricoh Corporation, said the experience of implementing Provia's solutions
was unlike any other software system implementation with which he had been
involved. He cited Provia's focus on ensuring understanding of configuration
throughout implementation as enabling the Lanier team to take full ownership
of the solution and be prepared to manage configuration of the system on its
own in the future.
The decision made by the large number of Provia clients to upgrade in 2002 could be a testament to Provia's ability to provide its clients with a strong standard product that requires limited modifications, making it easier and more cost effective to upgrade and to realize the strong value proposition and new features in the upgrade. Provia's knowledge transfer methodology is also quite important in this process.
One of Provia's true technological opportunities might lie in the company's choice to port its Tier 1-oriented, Unix-based WMS to the Windows NT/2000 platform, so that a global single-source code should offer the option for multiple-platform implementations. Owing to the same source code for both platforms, the Windows 2000 version has already reportedly been tested in the field by Provia's current Unix customers, and there should virtually be no new' product concerns for prospects looking for a full-featured Windows 2000 WMS, as the only difference between the versions would be the platform. This is in a contrast to some SCE leaders like Manhattan Associates that have multiple code bases multiple different platforms like IBM iSeries, Unix and Windows, which might be a nightmare for product managers to cope with keeping track of all the products' differences (not to mentioned possibly confused prospects).
Despite the current functional scope, Provia has been looking to the future with the view of further addressing some shortcomings of current SCE systems that admittedly still mainly automate and not necessarily optimize operations within the short-term optimization timeframe, and, consequently, full savings are often not yet realized. For example, the vendor will try to offer the products that would determine optimal order flow for e.g., maximum throughput, lowest cost, and/or service level, and based on the possible constraints like labor capacity, order complexity (kitting, cluster picking, etc.), service level commitments (i.e. order dates), transportation time/cost, and/or inventory availability.
with a direct sales force in North America supported by regional teams, Provia
also reports strong presence and sales in South America. It has particularly
been successful selling in South America's 3PL market, through its partnership
with system integrator Tecsys Latin America (TLA), with offices
in Chile, Colombia, and Venezuela. Thus, the company's continued expansion,
increases in research and development (R&D) investment, and a notable portion
of revenue coming from new product initiatives and new markets have been flying
in the face of current pessimistic sentiment in the IT market. Look for Provia's
global reseller agreement with one of the larger 3PL providers soon, as to expand
its presence to Europe and the Pacific Rim.
Still, Provia's primary challenge is overcoming its lack of market visibility. During the twelve years that it operated as Haushahn Systems & Engineers, the company established a reputation among a select group of 3PL providers and distributors. But Provia will need to broaden its appeal and to articulate more clearly its expansions into other verticals if it hopes to fend off competition from other WMS and SCE vendors.
competition is not exactly negligible either given a slew of WMS vendors delivering
sophisticated collaboration, visibility and SCEM functionality, and many of
them being consistently profitable and having more visibility and mindshare.
In addition to Manhattan Associates and Yantra,
the list of these would contain Swisslog, Highjump,
RedPrairie, HK Systems, and Catalyst,
to name some. Companies such as EXE Technologies, Manhattan
Associates and HK Systems are following similar strategies and benefit from
higher market profiles. The lack of support for iSeries (i.e., AS/400)
might impede Provia's tack on retailers, which segment supposedly happen to
have embraced the platform, and where some vendors are happy to oblige, particularly
the SCE leader Manhattan Associates.
addition, Provia does not have a substantial number of alliances with complementary
software providers, such as ERP, CRM, and Enterprise Application Integration
(EAI) vendors. Predictably, SAP is the only major enterprise
application vendor for which Provia has coded a certified interface, while Provia
does integrate to other ERP products through a standard host interface, ViaWare
Gateway. Its lack of any mention of harnessing Web services could also be perceived
as laggard, given that the area of order fulfillment and parcel shipping seemingly
lends itself to the use of service-oriented product architecture.
should never discount the competition coming from ERP 800 lb gorillas like SAP,
J.D. Edwards, Oracle, PeopleSoft
and Baan, which, although still with fledgling WMS/TMS products,
are becoming more aggressive within their large customer bases due to their
ERP integration mantra. The likes of Lilly Software, SYSPRO,
Adonix and ACCPAC which have also espoused
a strong WMS product in addition to their traditional ERP products, could prevent
Provia from penetrating the ERP mid-market, particularly in cases of less complex
environments, with basic case and pallet picking, straightforward task interleaving,
and selectable RF, label and paper by work area requirements.
Provia should thus continue to bolster its new name and image recognition with further marketing initiatives to penetrate mid tier distributors and retail companies. Top tier clients can contribute to growth by replicating single site implementations to other parts of the organization, but the mid market is growing faster and offers great rewards for vendors that stake an early claim. In addition, the market has increasingly been appreciating the demands of managing a fulfillment network, a feat that Provia can address with ViaWare by targeting its message appropriately.
Functionally, Provia should consider acquiring or allying with a software vendor that offers full support for ocean, air, and rail transportation modes to broaden the scope of its TMS, and the company's solution footprint needs improvements in terms of International Trade Logistics (ITL) compliance, contract management and payment processes. Therefore, the company might still need to make acquisitions or partnerships to quickly provide a complete multimode transportation product that complies with global trading.
Owing to only a very recent availability of the single source code for multiple platforms, Provia still has to improve the perception of its amenability to the mid-market, and to increase its brand recognition within the TMS market. Owing to fledgling customer base (less than 30 TMS customers) the company might still be omitted in many TMS selections despite having long delivered the capabilities like order consolidation, route optimization, carrier rate management, EDI links with carriers, Internet based shipment tracking, integrated POD (payment on delivery) and claims management, most economical mode (i.e., parcel, less than truckload (LTL), full truck load (FTL)), pool distribution, stops in transit, calculation of best route for multiple stops, carrier selection, rrailer capacity, and 5-digit zip code accuracy.
Nevertheless, the above announcements should keep every competitor on its toes to come up with an equivalent counteractive value proposition. Provia's international reach, attractive products and services, and highly referenceable customer base often positions it well in the highly competitive SCE market.
Highly complex 3PL environments as well as the other industries of Provia focus, in need of next generation of deeply functional warehouse, yard and transportation management software supporting intricate demands like complex piece picking, advanced kitting and postponement, material handling integration (e.g., sortation systems, AS/RS, carousels), highly configurable segregation of tasks by work area and operator, with over 200,000 line items, and over 150 users per site should place Provia on a shortlist of SCE vendors. Provia has a strong value proposition for companies in third party logistics (3PL), consumer packaged goods (CPG), high tech electronics, industrial distribution, and retail. Prospective clients should keep in mind the packaged nature of ViaWare and understand that customizations will cost quite more.
Those companies with existing ERP or SCP vendors (or equivalent legacy systems) in-house should evaluate Provia in addition to their incumbent vendors due to its success in co-existing situations where customers have found that Provia often complements and improves upon the solutions offered by the existing vendors. Existing Provia customers should evaluate the remaining portions of the product suite in search for additional value (e.g., OMS customers migrating into full-fledged WMS). Users that need automation and visibility across multiple transportation modes, including sea and air, might want to consider marrying ViaWare with third-party software for managing international transport lanes.
When considering an advanced WMS, users should look at the complexity of warehouse processes, as well as the velocity and diversity of activity. A center that picks 200,000 orders over 50,000 SKUs with a great deal of value-added services is an example of complexity that Provia would address well. Users should not only consider transaction volumes, but the level of processing needed, and collaboration or customer compliance issues. Other considerations should be ease of use and the ability to pull data from outside source like a small parcel shipper, combine and manipulate the information with own data, and issue a consistent report.
The benefits of using manufacturing postponement to achieve mass customization vary by industry, manufacturer, and the product nature, but in general, any business that has an inverted (V-shape) bill of material (i.e., a small number of raw materials, a slightly larger number of semi-finished products, and a very large number of finished product configurations based on customers' preferences) will probably achieve worthwhile benefits. Industries such as CPG, retail, and high-tech would be good postponement candidates.