ROI Systems Defies The Odds Through Delighted Customers

Event Summary

Recently, ROI Systems, Inc. (, 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.

According to Paul Merlo, ROI Systems' CEO, the vendor grew all areas of the business last year including staffing, software licenses, professional services, product development and its business partner program. Beginning the year with a strong cash position, and bolstered by sales and services revenue during the year, have enabled ROI to execute on the plans it announced at the start of 2002, in which year many of its competitors reduced headcount and sought acquisition to remain viable. Contrary to these, ROI Systems' business expanded and its balance sheet remains strong and debt-free.

The financially successful year enabled ROI Systems to continue its historically high investment in research and development. Early in 2002, ROI added Web portals to its product portfolio, which should enable employees throughout a company and its supply chain partners easy access to real-time information from their MANAGE 2000 system.

ROI also initiated development utilizing the Microsoft .NET Framework, and, to that end, mid 2002, the company announced that it has been chosen to participate in Microsoft's .NET Fast Start program. This program, which is funded two-thirds by Microsoft and one-third by the software developer, was designed to accelerate the conversion of the developer's product into the .NET Framework. According to officials of Magenic Technologies, the program's sponsor in the Minneapolis/St. Paul area, ROI Systems was selected for .NET Fast Start because of ROI's demonstrated product readiness, technological expertise, and commitment to Microsoft technologies.

One big reason was that many of the pieces that are necessary for .NET were already in place, such as ROI's n-tier architecture and component object orientation. Also, unlike most systems, the MANAGE 2000's business rules are tightly coupled with the database, so information is processed much more efficiently. When an organization is selected for the Fast Start program, the Microsoft Certified Partner works side-by-side with the organization's developers to promote quick knowledge transfer between the .NET expert and the programming staff, to maximize use of the individuals' development skill sets, and to maximize troubleshooting downtime. ROI expects the first release of MANAGE 2000 to leverage .NET will be released in the last quarter of 2003.

This is Part One of a three-part note.

Part Two will discuss the Market Impact.

Part Three will detail Strengths, Challenges and make User Recommendations.

Expanding Business Partner Program

Recognizing that there are opportunities to increase its market share with a well-developed reseller network, ROI Systems has set its sights on expanding its business partner program. Most recently, on May 7, 2003, ROI Systems announced the successful results of its 2002 business partner expansion program, given 20% of 2002 new client sales were initiated by ROI Systems' business partners, many of whom had been in the program for only a few months. The company reportedly grew its partner base from 7 to 51 during the year.

Early in 2002, ROI Systems launched an innovative, resource-sharing program that should enable new partners to become productive very quickly. The program, which has no upfront cost, offers a quick ramp-up for new partners by utilizing existing ROI Systems' resources to fill critical roles as partners learn the capabilities of the application. The program partners resellers with ROI's sales and support teams, and provides order referrals, marketing, and training. With results such as one channel partner securing five new accounts in its first seven months as an ROI business partner, the program is apparently proving successful for both the business partners and ROI Systems.

The ROI Business Partner program commits ROI resources to fill critical roles while resellers are learning how to clearly present MANAGE 2000 capabilities to solve each prospective user's issues. Until the new business partner is fully prepared to manage the sales cycle independently, knowledgeable ROI sales and presales experts demonstrate and explain the system. The vendor points out that, while its competitors continue to promote their channel partner programs that are similar to ROI's former partner program, the new model is proving to be far more successful because it eliminates risk for the channel partner and for the clients signed by the channel partner. Namely, ROI Systems' experienced team of implementers and business process improvement experts complete the entire implementation and provide ongoing service for all business partner clients, rather than simply assisting new partners for a short period of time as is the case with most partner programs. This, combined with ROI's assistance in the sales cycle, should ensure business partners' quick success as well as fast and lasting return on investment (ROI) for the client.

As for the strategic product alliances, late in 2002, HighJump Software, the provider of adaptable, extended supply chain execution (SCE) solutions (see HighJump Grows in a Period of Low Growth Through Adaptable, Broad Function Products; Part Three: Highjump SCE Solutions), and ROI Systems announced a reseller agreement that will enable ROI to offer HighJump's applications to the ROI install base. Under the new agreement, the two companies will develop an advanced execution system that should empower ROI customers to extend the functionality of their current solutions with easily configurable applications for intelligent data collection processes. This potentially powerful combination might eventually yield bottom-line benefits for ROI customers, such as improved data timeliness, increased accuracy and lower costs.

Advanced Training Program

Mid 2002, ROI announced its advanced system-integrated education program, which delivers point-of-use, on demand training to users of ROI's MANAGE 2000 solution, and which is reportedly being hailed by ROI's clients and educators as a significant advantage to productivity. Using extensible markup language (XML), documents, demonstration videos and audio files throughout the organization can be easily assembled to create educational materials at various levels of detail for various audiences. XML enables the same set of materials to be used for multiple purposes, since, e.g., a set of training materials can be used by a self-learner via the path assembled for independent study or by an educator via the instructor-led course, which can include detailed instructions for new instructors. Documents within the set can be hidden or revealed to accommodate various users' needs and knowledge levels. While the user selects the preferred level by clicking on pull-down menus. XML also facilitates easy additions and updates, since, as MANAGE 2000's new or enhanced features are documented, XML tags are added so the documentation is readily available to be linked to, or replace existing links in, educational paths. This repurposing of materials increases training course development efficiency, improves quality, and keeps the training materials up-to-date and pertinent.

According to ROI Systems, new technologies such as XML and HTML, in combination with ROI's move to an n-tier, fully component object environment, have removed logistical barriers such as manpower and cost that have traditionally been prohibitive to vendors to develop equivalent training programs. Also, authoring tools were highly specialized and difficult to learn, and the scope of the undertaking was too daunting. With these technologies in place, the knowledge components can be linked directly to the system's documentation and live screens. Because XML is standards-based, off-the-shelf authoring tools such as XMetaL, Microsoft Word or even Notepad can be used to update XML-tagged materials. The use of XSL, the style sheet language compatible with XML, enables the content to be repurposed and then presented in a variety of intuitive, meaningful and consistent presentation formats.

High-level application overviews drill to increasingly detailed instructions, so users can scan a summary to reinforce previous learning, or use the step-by-step instructions that include links to appropriate screens and online help. The integrated courses include complete online course materials, workshops, tips, techniques and extensive notes. All education materials are bundled with MANAGE 2000 and delivered to ROI's clients with system releases and service packs. Links and easy search capabilities provide quick access for users to get the needed information. If desired, ROI's consultants can conduct training tailored expressly for clients' specific requirements via the Web, in-person at the client's site, or at one of ROI's corporate training facilities. The education program also includes regularly scheduled webinars, allowing clients to access interactive training on various topics from their work stations via the Internet.

High-Profile Customer

All the above moves have further rendered ROI Systems an attractive choice for new customers even during 2003. To that end, very recently, ROI Systems announced that Dale Tiffany, Inc./Amerdale Industries Inc. has become the latest high-profile customer for its MANAGE 2000 system. Dale Tiffany is recognized worldwide as the foremost designer and manufacturer of fine art glass lighting, including Tiffany-styled lamps and shades. The company plans to use its new ERP software to improve order fill rates for its high volume electronic data interchange (EDI) trading partners, strengthen customer relations and create an infrastructure for future growth. As Dale Tiffany moved from primarily distribution to increased assembly of its lamps and other lighting products, the company found a need for bill of material (BOM) and materials requirements planning (MRP) software, as well as EDI. Since service, manufacturing and forecasting capabilities also were desired, the company initiated a search for a fully integrated enterprise system. Since Dale Tiffany had carved out an enviable reputation as the premier manufacturer and distributor of fine lighting, it was seeking the same in an ERP vendor.

According to Dale Tiffany, the company evaluated several ERP systems and their providers. Key criteria for the new system included ease of use, full integration and automation of all departmental functions, internal tools for custom tailoring screens and functions, demand forecasting and EDI. ROI Systems reportedly stood out from the rest of the vendors because it proved the solutions without the need for too many workarounds while other contesting vendors emphasized custom programming or third party applications. ROI also wanted to work with the prospect and listen to their requirements rather than giving a generic, canned demonstration of the software.

This concludes

Part One of a three-part note.

Part Two will discuss the Market Impact.

Part Three will detail Strengths, Challenges and make User Recommendations.

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