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ROI Systems Defies The Odds Through Delighted Customers Part Three: Strengths, Challenges and User Recommendations

Written By: Predrag Jakovljevic
Published On: June 4 2003

Strengths

Recently, ROI Systems, Inc. (www.roisystems.com), a privately held provider of extended ERP software systems, with its headquarters in Minneapolis, MN, reported profitability for the year 2002. ROI's revenue and number of employees reportedly grew over 6%, while a significant increase in profitability (i.e., a whopping 212% net profit growth) was achieved over 2001. The company also reported record software sales in December 2002, making the last quarter of 2002 the best sales quarter in ROI Systems' history. New site licenses for the company's flagship MANAGE 2000 extended-ERP software suite have combined with service revenues to continue the company's 24-year history of sustained growth through fiscal year 2002, which ended December 31. Being privately held, the company does not publish a breakdown of its revenue figures.

In Part Two of this note, the Market Impact of this announcement. Further, as already mentioned, the company has always made every effort to ensure an easy and bug free migration path when introducing new technology and/or product releases. Probably unique in the industry is the fact that nearly all its customers are running on the current product version releases. This state of affairs sounds like utopia to many, as one might not dare to estimate how many companies still run on several generations old ERP product releases (e.g., SAP R/3 v. 3.x and 4.x, Oracle Applications v. 10.7, PeopleSoft v. 6 & 7, J.D. Edwards' World Software, Baan IV, SSA GT's BPCS v.5 or ancient MANMAN, and so on). The ongoing tug of war between many of these vendors and their install base on old versions continues with frequent vendors' announcements of the support cutoff date, with ensuing customers' traumas and discontent, and then with eventual vendors' concessions and support extension dates till the next urge for discontinuation and then back to the beginning. For more on general old product releases conundrum for both users and vendors, see The Old ERP Dilemma: How Long Should You Pay Maintenance? and The Old ERP Dilemma - Should We Install The New Release?

Well, ROI's customers have not ever had to deal with these issues, since the vendor has always sought additional ways to add value to the customer in an effort to maintain the long-term relationship, such as enhancements (i.e., added functionality inside the product) and extensions (i.e., more software modules, integrated with the existing product), refresh services (i.e., reinstall the software using the most current release) and upgrade services (i.e., upgrade the software from one release to the next), in addition to the above mentioned hot line, knowledge base and consulting services (i.e., business and technical consulting centered on the product and tuned to the needs of existing customers). In other words, ROI System would be an example of a "love the customer" vendor (see The Reinvention of Software Vendors and End-User Value).

A painless upgrade should be the case also with ROI's most recent version 7.0 of its MANAGE 2000 software suite, despite the fact that it now integrates traditional ERP features with CRM, SCM, or e-business collaboration capabilities. Release 7.0, which is based on XML for easier access, navigation, and global interfacing, is indeed a significant evolution for the suite, adding functions such as field service, Internet real-time sales order processing (eSOP) and status reporting, purchase consignments, work order splitting, Internet service request management, vendor-managed inventory (VMI), and expanded advanced planning and scheduling (APS).

While the company cannot be regarded as a leader in the market as its customer base amounts to over 400, primarily (over 90%) North American enterprises, the long-term tenure and experience of ROI's staff and the less traumatic upgrade path of the product offerings have not yet left any customer in the lurch. This fact may be a compelling incentive for companies to opt for the vendor. Expanding incrementally, with modest goals and close attention to the bottom line, and leveraging a tried-and-true business model, partnerships and technologies has been ROI's modus operandi. ROI has positioned itself as a "one stop shop" in that it often sells software and services, which might be an effective strategy in its target market where simplicity, ease of use, and reliability are favored. Also, ROI was one of the first vendors to use its own software product to run its own business (i.e., eating its own dog food), given it captures the phone support history using its own service management software.

ROI Systems seems to have benefited from the prudently cautious approach of medium-size manufacturers, which first strive to establish an enterprise wide infrastructure they can rely upon, before extending outwards. The company may continue to be successful even in the current economic slowdown by successfully addressing the concerns of smaller manufacturers, who while often intimidated by the perceived complexity of enterprise applications, still need to get on board with fundamental e-business capabilities and to remain agile.

This is Part Three of a three-part note.

Part One detailed recent announcements.

Part Two discussed the Market Impact.

Challenges

Nonetheless, room for improvement remains within ROI Systems. Owing to its sort of a stealth operation and past modest but steady growth and with 10 direct sales offices and nascent business partners primarily in the US, and a few in Canada, and Australia, ROI Systems has achieved only a small market presence in general and is still perceived as a true niche vendor. This, together with its size of slightly over $20 million in revenues, is reflected in limited brand awareness and an undeveloped worldwide channel. This is further aggravated by the fact that while its product exhibits basic multi-currency capabilities it supports only the English language. The result may be a number of missed opportunities as some companies may be seeking global providers for its entire collaborative supply chain management requirements. Also, some customers still appreciate a mind share and dose of flamboyance and display of marketing muscle from their prospective vendors, such as the likes of Microsoft Business Solutions can exert.

Moreover, some MANAGE 2000 modules do not offer distinguishing intrinsic functionality (although there have been a number of readily available interfaces to third-party specialist products such as Agile Software, Demand Solutions, or Frango) even within the "native" discrete manufacturing areas (e.g., complex project management & accounting, multi-national financial consolidation, quality management, forecasting, warehouse management, sales & purchase contracts, and contact management & marketing campaigns). In particular, the financial management modules are best suited for North American rather than multinational enterprises due to very few localization capabilities. This situation might hold also for the native HR and payroll modules.

MANAGE 2000 is not technologically the most exciting product either. Its original user interface has been less than compelling, and ROI had to create its own software called Personal Workstation Software (PWS) to enable MANAGE 2000 to run on a rich Windows client. For sales order processing (SOP) and service management modules, ROI had to disconnect the application presentation code from the database server and to replace its then PWS thin client client/server user interface with a Microsoft ASP Internet enabled graphical user interface (GUI). The vendor is currently developing a Microsoft ASP.NET thin client presentation layer for almost the entire suite, while a number of new portals are slated for the upcoming 7.1 release at the end of 2003.

Another technological pitfall has been that standard application programming interfaces (APIs) were mainly limited to manufacturing functions, thereby requiring ROI and users to, in the past, hard-code the integration with other third-party applications such as financial applications or warehousing. In the new release, however, Universal XML is used throughout the product.. ROI has long provided Object Linking and Embedding (OLE) and Dynamic Data Exchange (DDE) integration at the desktop thereby enabling links to computer-aided design and PDM applications. ROI Systems also trails most of its direct competitors (e.g., Made2Manage, Epicor or Lilly Software) in its application service providers (ASP)/hosting and Web services interoperability strategy and delivery, which could still be appealing to its target market. Technologically, the product may not be the most suitable as a solution for complex enterprises, worldwide dispersed, with strong requirements on distributed infrastructure, security and interoperability. The above, combined with a possible sharper competitor's focus on a particular industry may tip the scale in favor of the competition in some selection gigs.

Nevertheless, given the above indications, one should expect enhancements along these lines some time in the future, should ROI start hearing louder voices of its prospective customers in that regard. Although MANAGE 2000 may lack sizzle with regards to strategic best-of-breed extensions and cutting-edge technology, its functional depth and breadth, and the vendor's versatile manufacturing experience should compensate for it. Its target customers still appreciate much more the business issues solving rather than to know what is exactly under the hood.

User Recommendations

ROI System is definitely a "user's vendor" that should raise the bar for customer care best practices amongst its competitors. On a more general note, existing and prospective enterprise software users need to understand every vendor's strategy toward them. While you should talk to sales people and vendor executives, also look for more than mere words. Ask about why certain items you think you need are not available as standard offering. Ask about headcount changes, product release schedules, release contents, partnership programs, etc.

The companies that would benefit from evaluating ROI Systems product offering are technologically less aggressive and that praise simplicity, manageability and reliability, small to medium (with $10-$500 million in revenue) repetitive/make-to-stock (MTS), configure-to-order (CTO) and make-to-order (MTO) discrete manufacturers in North America and other English speaking countries (or divisions of larger North American and enterprises from these countries), with a need for solid production planning, engineering, finance, sales, service, business intelligence, and collaborative e-commerce functionality.

The industries that would most likely benefit from using MANAGE 2000 are electronics & computer equipment, industrial & transportation equipment, fabricated products, wood & lumber, furniture, rubber & plastics, consumer products, and medical devices. Multi-national corporations with strong corporate level financial consolidation and localization needs, and companies looking for a much broader functionality beyond traditional ERP boundaries (e.g., more intricate CRM, or complex project management/engineer-to-order (ETO) functionality) from a single vendor may benefit from evaluating other products at this stage. ROI Systems should be included on a short list in selections within the manufacturing mid-market where configure-to-order (CTO) assembly, repetitive/flow manufacturing, distribution, shop floor execution, and field service modules are the main pillars (bear a high importance) of an enterprise application.

Very detailed information about MANAGE 2000 7.0 is contained in the ERP Evaluation Center at http://www.erpevaluation.com/

 
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