Provia Tackles RFID in a Twofold Manner Part Six: Market Impact

Market Impact

These days when radio frequency identification (RFID) is constantly on everyone's lips, and when every relevant enterprise application vendor is hedging its bets towards becoming RFID-ready or is even convincing the market that its RFID-compliant solution is exactly what the doctor (such as Wal-Mart, Target, Albertsons, the US Department of Defense [DoD]) ordered, the typically quiet Provia Software (www.provia.com), a privately-held provider of supply chain execution (SCE) software solutions, naturally feels the time has come for it to be more vocal about its RFID endeavors, albeit after it has already put so much effort in terms of the proof of concept in the field.

At the end of May, Provia announced at the Distribution/Computer Expo 2004 in Chicago, Illinois (US) that its ViaView event/alert management and decision support product plays a key role in offering visibility to supply chain data for companies supplying RFID-tagged products to Wal-Mart and other retailers.

Further, at the end of March, Provia announced that it has aligned itself with its parent company of over fifteen years, Viastore Systems, a leading provider of automated storage and retrieval systems (AS/RS), and material handling control systems, with over 3,000 cranes installed worldwide.

As for the products' functional enhancements, at the end of 2003, Provia announced the release of FourSite 4.4, an upgrade of its fulfillment solution oriented towards third part logistics (3PL) providers. Industry-wide globalization is a major factor affecting logistics and supply chain management businesses.

Provia remains an interesting enterprise applications provider, a borderline anomaly. Namely, it is a relatively small and quiet, privately-held supply chain execution (SCE) vendor, but one that offers applications and services typically expected from much larger, tier one vendors. Although with approximately $30 million (USD) in revenues, one would not expect Provia's prominence amongst tier one customers; nonetheless, it has achieved an enviable foothold in the third party logistics (3PL) market during its initial years as Haushahn Systems & Engineers (HS&E)—over 2,200 installed (AS/RS) systems worldwide, while it has completed more than 500 SCE installations worldwide at over 160 customers. As a result, ViaWare can be found in the IT infrastructures of blue-chip 3PL providers like, Menlo Worldwide, Total Logistic Control, Versacold, and NYK Logistics. Provia's recent focus has also been on the tier one private warehousing space and the high-profile client base which includes large tier one private warehousing clients like Gillette and Graybar Electric. Provia also serves the tier two 3PL market, and will continue to market in the tier one space, while focusing on additional configuration tools for the tier two space, which is a larger market.

On a vertical front, 3PL providers and wholesale/industrial distribution continue to be hot areas for Provia, though its solutions are finding increasing favor among makers of consumer packaged goods (CPG), and to a lesser extent, food and beverage process manufacturers, high-tech manufacturers, and retailers. Provia has been expanding its presence outside the 3PL verticals (which still occupy half 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 and common across many industries.

As for Provia, its ability to prudently expand its traditional warehouse management systems (WMS) savvy into a full-fledged SCE expertise to address increasingly required customers' order fulfillment management has played well to its ongoing strong performance. The FourSite Order Management System (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 to capture other vertical segments. The OMS product 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, electronic data interchange (EDI) integration, AutoFAX integration, Internet access, accounting interface, pallet exchange, perpetual inventory, soft allocation, etc.

The relatively recent, delivered products like ViaView, a product that combines supply chain visibility, event management, and decision support, or its ViaOptimize product, designed to optimize a facilities' output by limiting the constraints within a facility show that Provia is adept at leveraging its position to generate new forms of revenue. ViaView's new executive dashboard feature allows managers to have near real time access to inventory and order status. The product also allows users to subscribe to events and non-events. Labor analysis and exception reporting are enabled by support for Microsoft Excel and Access, as well as for Infomaker, Crystal, and Cognos reporting and analytical products. To that end, from the moment an order is created, Provia Software's ViaWare and ViaView suites aim at helping managers track orders in real time and make orders visible throughout the entire delivery process, which is the core of its value proposition.

This is Part Six of an eight-part note.

Parts One through Five detail recent announcements.

Parts Six and Seven discuss the Market Impact.

Part Eight will note Challenges and make User Recommendations.

Parts One through Four will be published between August 11 and 14.

Part Five to Eight will be published August 18 to 21.

Provia Strengths

Provia's entrenchment within 3PL's might come in handy if Wal-Mart suppliers realize they cannot meet the January 2005 deadline due to the many issues both within and beyond their control. This may create opportunities for 3PL providers, if these suppliers decide to outsource their shipping and processing of products that go to Wal-Mart, rather than invest the time and resources in its own RFID deployment. Further, many other retailers are closely watching Wal-Mart and will likely soon be demanding RFID capabilities from their own suppliers' network. It is thus very likely that these 3PL's will turn to Provia for help with RFID compliance, either in a quick-fix RFIDware approach or thorough a deeper ViaWare RFID manner.

The fact that Gillette has already been using RFID technology with ViaWare WMS to track cases and pallets of its selected brands of female shaving products should further bolster Provia's savvy perception within the industry (for details see RFID Case Study: Gillette and Provia). Provia has also recently also landed major new contracts, including Blockbuster Video, Wireless Retail, and Applica, a manufacturer of the Black & Decker line of consumer products. In addition, a number of Provia's clients have 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 with the fact that 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 and more "out-of-box" functional WMS applications. The decision made by a large number of Provia clients to recently upgrade could be a testament to Provia's ability to provide its clients with a strong standard, "out-of-the-box" 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 above-described knowledge transfer methodology is also quite important in this process.

Provia Strategy

One of Provia's true technological opportunities might lie in the company's choice to port its tier one-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. This is in a contrast to some SCE leaders like Manhattan Associates and RedPrairie 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 when keeping track of all the products' differences (not to mentioned possibly befuddled prospects).

Like many other SCE vendors, Provia too has revamped its strategy to attack the lucrative business-to-business (B2B) order fulfillment software market. Since its beginnings as a mere WMS vendor fifteen years ago, Provia has expanded its domain expertise into order management and fulfillment collaboration, and consequently, it now offers two major, loosely-coupled suites of products to support these capabilities. The suites that Provia has built both through acquisition and internal development over the past few years allows it to pursue larger, longer-term contracts, which is an ability that should ensure its future success provided it continues to execute well and leverage its highly delighted client base.

The ViaWare suite of execution applications for fulfillment is Provia's response to an obvious trend among many warehouse management software vendors which is to round out their product offerings by including adjacent functionality. In addition to above-mentioned ViaView and ViaOptimize, key components of the suite are Provia's flagship warehouse management system (ViaWare WMS); a yard management system (ViaWare YMS); an order management system (ViaWare OMS) solely for 3PL providers (acquired in 1999 from Logistic Concepts); a transportation management system (ViaWare TMS, via a reseller relationship with Pinnacle Distribution Concepts established in 1999); a small parcel shipping (ViaWare SPS) management module; and the ViaWare Gateway integration tool to other enterprise systems. ViaWare Gateway is the single point of contact between Provia and the host, ERP, legacy, and other enterprise systems, and is devised to allow adding other Provia products without having to redo the integration. For example, using ViaWare Gateway, orders requiring RFID compliance will be sent to RFIDware when they are released for picking from the ERP or WMS system. The information transmitted thereby will include: order number, customer, ship-to address, product info, and ordered quantities.

As a recap, the proven history of successful implementations and consequent profitability; reputation for successfully transferring solution knowledge and ownership; standard, scaleable solution architecture; multilingual solutions; broad and integrated SCE solution suite; and experienced, professional people with 110 combined years of logistics experience on the senior management team would be the tenets of Provia's success so far (for more information, see Provia Proves Its Way to Success).

This concludes Part Six of an eight-part note.

Parts One through Five detail recent announcements.

Parts Six and Seven discuss the market impact.

Part Eight will note challenges and make user recommendations.

Parts One through Four were published between August 11 and 14.

Part Five to Eight will be published August 18 to 21.