Ross Systems Inc. (NASDAQ: ROSS), a provider of ERP and e-business solutions for mid-market process manufacturers (www.rossinc.com), recently met with TEC to discuss its focused approach to the market, and subsequent customer successes of late. Ross Systems defines its target markets in terms of the industry, company size and geographic location. Although often thought of as a general process manufacturing ERP vendor, Ross actually goes a level deeper to focus on segments within the market, including food & beverage, chemicals, life sciences, metals and natural products. It targets mid-sized companies including divisions of Fortune 500 companies, while geographically it has the ability to support customers worldwide.
Focus Drives Strategy
A sharp focus has been driving the company's strategy after divesting HR/Payroll products for the healthcare and public sector market segments in 2001, which had proven to be significantly less profitable than its process manufacturing product line and had diluted the company's resources and focus. The current product strategy at Ross includes both a breadth of relevant applications and functional depth, all within the exacting needs of its target process industries. Breadth for Ross is defined by new applications needed by its target markets. For instance, in many process manufacturing segments, customer retention is generally a top priority. As a result, the customer relationship management (CRM) and e-Commerce offerings from Ross focus heavily on customer care and service, partly through information visibility, and on increasing repeat business. Similarly, product depth is defined by the functional needs of the vertical markets. To that end, Ross is adding functions to meet the new CFR 21 Part 11 (Code of Federal Regulations Title 21) for life sciences, and food & drug administration (FDA) safety functions for the food and beverage industries. With such a deep industry knowledge, understanding the company's flagship product, iRenaissance, means understanding not only what its customers do, but also how they do it.
The mid-market focus also leads Ross to a technology strategy that allows customers to tailor-fit systems to their current needs through incremental deployments. Customers can add product modules, or expand their implementation scope to include new divisions, or progress from one technology to another, with no changes to the base software, including modifications made with the Ross' toolset, Gembase. The Gembase toolset, which has recently also been augmented by support for Microsoft BizTalk, .NET framework and Web Services, has allowed customers to move through the changes in technical environments, from 'green screen' via client/server to browser based collaborative applications without obsolescence of its applications. This should be seen as an important capability for future Ross' customers, when one takes into considerations that some of its competitors still rely heavily on proprietary 3rd-party development tools.
The services strategy supports Ross' industry focus as well. Ross' consultants specialize in selected industries (e.g., food, chemical, etc.). Implementation templates are available by industry to speed implementation. In a relatively new initiative named FRONTrunner, Ross is now taking a more active role and great responsibility for implementations leading to multiple examples of "big bang" implementations taking 100 days or less.
The company's distribution strategy includes support for customers worldwide. Ross sells and supports customers in over 60 countries, while iRenaissance is currently available in 18 languages including localized versions to account for local country issues like taxation, local business practices and regulatory issues. Still, Ross Systems suffers from a lack of savvy marketing and broad awareness within its target verticals (which had all but stalled during its difficult times of few years ago) and should increase attention in this area. Also, the company faces the challenge of delivering its ambitious undertaking of rounding up its product offering with more advanced CRM and supply chain execution/optimization functionality, and for providing migration strategy to its large 'older' Unix-based customers as planned.
Vertical Success Purported By New Customer Wins
The success of a focused strategy can be judged by the vendor's success in specific markets. Ross' success can be judged by looking at both the product offerings and customers in those market segments. For a protracted period of time the market has not been aware of the company's strides in acquiring new customers. Even during the recent period of its financial recovery (see Ross Systems - A Bright Spot On A Difficult Enterprise Application Landscape) few knew that ~50% of its ever growing license revenue came from new customers. Particularly since several dozens of new customers worldwide in all industries of Ross' focus (i.e., food & beverage, chemicals, life sciences, metals and natural products) have been acquired since the beginning of 2001. These mean victories over fierce and revered opponents such as SCT Corporation, SAP, Oracle, J.D. Edwards, Baan/Invensys, Intentia, and so on.
The food & beverage industries account for 29% of the company's iRenaissance install base. The food industries' complex sales channels (Brokers, Distributors and Agents and more) and deals structures are supported by the iRenaissance suite of applications. Sub-vertical requirements such as HACCP (Hazard Analysis & Critical Control Point) compliance, brand protection, recall management, catch weights (the ability to handle the actual weight of units of goods that are sold or inventoried by quantity), dynamic recipe adjustment, attribute matching & tracking, and expiration date management, are all examples of food-specific functionality provided.
Premium Brands was a commodity meat company that transitioned into specialty meats, including changing its name from Fletcher's Fine Foods. As part of this change in strategy, it acquired a number of companies including rolling out iRenaissance into each new acquisition to ensure best practices and consistency. Among other results, iRenaissance helped Premium Brands reduce returns due to out of date product by 50% using Shelf-Life Management.
The chemical industry accounts for 19% of the company's customers. Chemical specific functions include co-product and by-product management, MSDS (material safety data sheet) support, dual inventory units of measure (UOM) (including details like specific gravity, wet weight & dry weight, physical units & active units, and multiple packaging types), potency management, and integrated plant maintenance.
GEO Specialty Chemicals has a strategy that includes global growth through acquisition to achieve diversification within chemical industry. They found that iRenaissance supports their key initiatives of rapid integration of new companies with consistently applied best practices and quality. They now have 5 divisions, with 19 plants in the US, the UK, and Europe. The plants make a wide variety of products, both in make to order (MTO) and make to stock (MTS) manufacturing modes. One acquisition, The Peroxide Chemicals unit of Hercules, was completed in February 2001 and went live two months later in April 2001.
The life sciences industry accounts for 24% of the company's customers. The next iRenaissance release, 5.7, will provide full 21 CFR Part 11 support for Electronic Records and Signatures, Audit Logs, etc. Life sciences customers using iRenaissance have achieved FDA validation and Ross will soon be offering more specific validation applications to help customers in their FDA validation efforts.
Cambrex is a life sciences company with 100's of unique products and thousands of customers ranging from individual research scientists to large corporations. At Cambrex, responsive customer service requires highly skilled customer service representatives (CSR's). Using the iRenaissance Customer Portal, Cambrex is improving customer service by providing accurate, timely information while increasing repeat business. They are accomplishing this with no increase in CSR staff.
The metals and natural products industries, including pulp and paper, steel and building materials, account for 28% of the company's customers. Examples of specific functions for these industries, in addition to many functional requirements that are mentioned earlier in other industries, include lot traceability with heat tracing and chemistry, roll tracing, and the ability to manage dimensional products (e.g., linear feet and square feet).
Triangle Brick produces a low complexity product (bricks) that has a high complexity supply chain (manufacturer to dealers to builders to homeowners). Triangles CSR's spent 75% of time on order status checks and 25% on selling. Using the iRenaissance Customer Portal, they increased CSR selling time, improved customer service and channel loyalty. In addition to providing order status information, Triangle provides builders and homeowners information on buildings in their area that utilize the brick in question with a tie to MapQuest to assist the builder or homeowner in locating the example buildings.
Ross Systems is back with a vengeance as a competitor in an enterprise business applications market with a dearth of true process manufacturing oriented software providers (see SCT Corporation: The Last Viable Process Manufacturing Vendor Standing?).
Enterprises in the food & beverage, chemicals, life sciences, metals and natural products industries worldwide should look closely at Ross Systems. It is suggested that evaluations of Ross and all other vendors be conducted at a detail level, looking at not only what a vendor does, but also how it does it. Most vendors claim to, e.g., support lot tracking, which they may indeed do, but how they do it varies greatly (with many 'buts and ifs' as the process fit-gap analysis unfolds). Only by looking closely at "the how" aspects during the process of scripted software demonstrations can a company understand which vendors can meet their specific demands.
Enterprises that fall in the general category of "process" manufacturing but do not fall within Ross' target markets should still consider Ross for their long list. However, they should be careful to evaluate iRenaissance at a detail level to understand the potential fit for their needs. Existing Ross customers should be active in the special interest groups to continue to push Ross into greater functionality for their industry.