One of my first blog posts for Technology Evaluation Centers (TEC) way back in 2008 (The TEC Blog started in late 2007) was about the importance and complexity of aftermarket service, and featured MCA Solutions, and to a degree, its fierce competitor Servigistics (see blog posts). These two companies, both founded in 1999, have diverged in their “pursuit of happiness.”
While Servigistics has expanded its footprint (primarily via acquisitions), from its original focus on spare parts planning and optimization, into the much broader realm of the service lifecycle management (SLM) platform (look for TEC’s upcoming report on Servigistics’ recently held Exchange 2011 user conference), MCA has instead opted to deepen its organic focus on service parts planning and optimization. Both these strategies appear to be working well in this service economy, based on the companies’ stellar performances in 2010.
Service Supply Chains Remain Complex
MCA believes that there is still plenty of “arable land” in the realm of aftermarket service parts due to the complexity in the aftermarket service business. This complexity stems from demand for service work and parts being driven by equipment sales, warranty, and service level agreements (SLAs). This sparse and intermittent demand for spare parts and labor is also driven by both planned and unplanned maintenance.
Complexity also exists in service supply chain management (SCM) due to the appropriate positioning of locations (nodes) across a global supply network. Additionally, reverse logistics flows and repair activities at different levels of the supply chain require planners to also align with their suppliers’ objectives. Finally, product-related complexity exists due to long support lifecycles and high volumes of supported service parts. One also has to take into consideration product lifecycle-related planning, as planning strategies differ at the different stages of a product’s lifecycle: introduction, maturity, and its end of life (EOL).
What Is MCA Solutions?
MCA Solutions is a privately-held venture-funded company based in Philadelphia, Pennsylvania, United States. With more than 60 employees, the company has had steady growth and very low employee turnover since its foundation in 1999. MCA employees and founders retain the controlling interest in the company, ensuring independence and continued focus and growth in the market. The company’s experts are now also blogging about service SCM issues at its Service Matters corporate blog.
MCA Solutions’ service parts planning and optimization software helps aerospace and defense (A&D), high-tech, and capital equipment companies of all sizes transform their complex service supply chains into bottom-line improvements, by reducing inventory, lowering support costs, and improving service levels (parts availability) to maximize customer satisfaction. MCA’s customer base includes about 30 industry leaders, such as Baker Hughes, Boeing, Bobst, Coca-Cola, Dassault Systèmes, KLA-Tencor, Lockheed Martin, Pratt & Whitney, Roche Diagnostics, Rockwell Collins, Sysmex, Tellabs, and Varian Semiconductor.
For most of these service companies, MCA’s solutions have produced results in as little as two months from start of implementation—e.g., a 5−50 percent inventory reduction and a 2−20 percent increase in service levels. “Soft” benefits, such as increases in planner productivity due to planning activities that focus on exceptions only, are also seen.
MCA products leverage transactional data in enterprise resource planning (ERP) systems. To that end, MCA is a member of the SAP PartnerEdge Program, and has a number of successful implementations in SAP and Oracle ERP environments. MCA offers possibly the broadest range of SAP integration options, from flat file application programming interfaces (APIs) to more sophisticated NetWeaver data- and process-based integrations.
MCA Solution Suite Redux: Old Wine in New Bottles Or Much More?
MCA’s Solution Suite new branding and marketing focus is on business processes and end-user roles with the addition of user-oriented workflows. The MCA Service Business Design module reflects MCA’s high strategic planning level, and supports an optimal design of a user company’s service offering and service supply chain. The module outputs multiple “what-if” management simulations, with analyses and comparisons of service scenarios’ performance predictions in terms of contract support costs and changes to supply chain data.
On the planning level, the former SPO Strategy has been superseded by the following two modules:
- MCA Demand Forecasting—Forecasts demand for every part location across the global supply network
- MCA Inventory Optimization—Determines optimal inventory levels to meet a company’s customer service level objectives at the lowest possible cost
The former SPO Tactics module is now the MCA Supply Planning module, which makes recommendations for the customer to allocate, transship, buy, or repair parts to ensure its tactical plan meets its objectives. Planning outputs are forecasts, stocking levels, and part supply planning decisions (i.e., repairs, purchases, allocations, etc.).
The new module MCA Performance Management, an underlying component of all other MCA solutions, comes at no additional charge. The embedded analytics and data visualization module performs closed-loop performance management to measure, monitor, and respond as needed. Performance outputs are executive reports, graphical views (dashboards) to all data, and interactive workflows. The embedded dashboard product is Corda Centerview.
Different Strokes for Different Folks
Figure 1 shows all the current MCA product names. The additional product names are extensions of the aforementioned three planning modules that feature workflows oriented toward particular end users. MCA’s Solutions Web page explains each of the modules and provides a demo workflow for each (though some functional overlap exists).
Figure 1.
In addition to end-user role variations, the product allows for various deployment options. The MCA Enterprise Edition is the tried-and-true on-premise deployment for enterprise-class customers, where MCA’s consulting group aids in installation, deployment, and production integration. Interactive Rapid Model Build is a brand new tool that facilitates implementations.
MCA OnDemand is a private cloud planning solution hosted in a secure data center, and is associated with a significant reduction in required information technology (IT) support. The brand new offering MCA Desktop Edition, an entry-level tool, is a single-user, low-cost, easy-to-deploy desktop solution for a small company in the management of individual service programs. The desktop edition is packaged with all required software components, has a basic integration, and contains the Interactive Rapid model Build.
Stellar 2010
Some customer companies that have seen great success this past year include BlueArc Corporation (for an on-demand edition, with third-party logistics [3PL] services provided by Flash Global Logistics), Pratt & Whitney, Baker Hughes (a multi-million dollar deal and MCA’s first entry into the oil & gas sector), Acal Technologies (a group that used the former Click Commerce’s Xelus product, which is now owned by Servigistics), and Roche Diagnostics. The pipeline is reportedly good for both short and longer term deals, and the expansion of some current MCA customers is likely to increase demand for service planning solutions.
While Servigistics remains the main nemesis, Baxter Planning Systems has been chipping away at a number of high profile deals (MCA was not involved in many of those selections). Baxter has gotten new wings after the blockbuster deal between Network Appliance (NetApp) and UPS saw the company become the preferred spare parts software provider for its 3PL services. Its low-cost recurring revenue business model and on-demand only offerings are attractive to many companies, although the vendor appears to drop out of deals when customers opt out of a software-as-a-service (SaaS) solution. In contrast, MCA has several customers paying over a million dollars in annual maintenance—a quite different model.
Meet MCA’s CEO
I recently had the chance to discuss MCA’s current state of affairs with the company’s chief executive officer (CEO) Bob Salvucci. Salvucci joined MCA Solutions in September 2002 as CEO, and has guided the company’s continued ascent, leveraging his 30 years of success at IBM and SAP America during their respective periods of high growth. His broad experience with these two tech giants provides MCA with the management expertise necessary to drive its sales, marketing, and product innovation teams while, most importantly, assuring the success of MCA's customers.
Key to SAP America's meteoric rise in the 1990s, Salvucci joined SAP in 1993 as an Alliance director, responsible for developing strategic partnerships with Microsoft and IBM, as well as with the consulting firms ICS Deloitte and Andersen Consulting. His success in these areas fueled SAP's growth in the 90s. Salvucci subsequently held a variety of sales management roles, with responsibility for more than 50 percent of SAP America's total revenue.
In 1997, Salvucci became president of SAP Public Services, a start-up subsidiary. During his three-year tenure in that position, he grew the public-sector business from $20 million to $200 million (USD) in sales—and the organization from 6 to 250 people—while managing all aspects of the business, from marketing and consulting, to human resources, to product and business development. In his final role at SAP, Salvucci served as senior vice president (SVP) of operations, where he was responsible for all administration, real estate, and facilities in North America, including the company's $50 million (USD) capital budget.
Salvucci began his career at IBM, where he held myriad positions, with increasing sales, marketing, and management responsibilities in the United States and Europe. He holds a bachelor's degree in Commerce and Engineering from Drexel University in Philadelphia. Salvucci is active in many Philadelphia-area civic and business organizations.
What follows is a question and answer discussion with Bob Salvucci:
PJ: Regarding demand for your solutions across different territories, verticals, and product lines/modules, what were the major highlights in 2010, and what do you expect in 2011?
BS: 2010 was MCA’s best year ever for revenue and profit, and we attained a 25 percent increase in our customer base. Business leaders can now articulate a very clear business case for service parts planning solutions with clear differentiation, versus ERP solutions that were never designed to solve their expanding customer requirements.
To address the broad range of users in service organizations, in 2010 we introduced a number of user-specific solutions in the MCA Solutions Suite, which are enabled by configurable workflows and flexible business rules. We also released MCA Desktop Edition, which made our solution accessible to a broader customer base. We expect that this solution will enable collaboration of original equipment manufacturers (OEMs) with their key suppliers.
Europe delivered strong growth in 2010. We entered 2011 with a record pipeline, and we anticipate our growth to continue in this key market. We continued to expand our key markets of aerospace & defense, high technology, and complex capital equipment, and entered into the oil & gas sector. We will continue to look to expand into additional industries.
We are seeing increased interest in support of processes such as sales & operations planning (S&OP) for service as well as the desire of businesses to offer more sophisticated managed services.
PJ: How are your major system integrator (SI), independent software vendor (ISV), and other partnerships going (with as much color as you are willing to provide)?
BS: We continued our partnership with SAP and re-certified our offerings last year. Business users desire the advanced capabilities of our best-of-breed solutions while the chief information officer (CIO) wants assurance that the solution will seamlessly integrate into the company’s ERP environment. Our certification in multiple environments provides that assurance and our implementation process continued to improve resulting in faster, lower-cost implementations in all ERP environments.
We do have partners that can provide integration services and can help with business process change, but we don’t appeal to firms that are looking to just throw bodies at a project. We target third-party firms, such as Bristlecone, to reduce implementation costs, especially in on-demand environments. We are also recommended by firms like Deloitte that recognize the strategic value of our solutions for their clients.
We are complementary with a number of ISVs in the aftermarket service space, including best-of-breed companies such as ClickSoftware for field service scheduling, Vendavo for parts pricing, Axeda for remote diagnostics, and a number of companies such as Axeda and Metrix that do transactional service management. We also have a number of implementations in conjunction with the 3PLs that have a complementary critical parts offering, such as Flash Logistics, Choice, and DHL/Excel.
PJ: What is your message to a field service organization when parts management and multi-echelon inventory optimization (MEIO) is not the top pain?
BS: We can add value to any organization that has spare parts to support equipment and that are not using a solution developed for service parts planning. We often see that service executives are not totally aware of the pain their planners are experiencing and the money they are wasting with excess inventory and missed service targets because of poor planning tools.
While a number of our customers are Fortune 1000 companies with large service organizations, we also have customers with less than $5 million (USD) in parts inventory. We have brought significant value to those customers by reducing inventory, increasing service levels, and making their planners more productive.
PJ: Are you seeing any trends in mobility and what are you doing about it (I realize that this issue might not be as relevant for you as for, say, field service software providers)?
BS: Our primary users are planners and managers; however, our solution is available on mobile browsers, and includes e-mail alerts, and we do see increasing usage on mobile devices.
PJ: Whom do you see as the main competitors? What is your differentiator against each?
BS: Our most typical competition is an internal solution that companies have developed because their ERP solution did not meet their needs. We have an increasing win rate versus the other best-of-breed vendors in the planning space. The differentiators that have made us successful are as follows:
- Focus on space: Because we are entirely focused on the service parts planning space, we have continued to innovate and expand our platform without distraction. Our management, not venture capitalists (VCs), controls the company, and our prospects like the certainty afforded to them as they evaluate a supplier. We have a very low employee turnover and built an experienced team of experts in product development and consulting. Our customers continuously recognize the excellence of our employees.
- Better solution: After years of developing and testing our planning and optimization approach with service leaders, we have developed a solution that provides the lowest inventory for our customers’ desired service level. Feedback from prospects and customers that have benchmarked our solution against others have shown our results to be 15−40 percent better than our competition.
- Planner-friendly workflows: Having earned our reputation for better algorithms, we are now finding that an equally important differentiator is ease-of-use for planners. We deliver an alert-driven planning approach with processes automated with configurable workflows and user-specific alerts that afford planners very easy adaptability and thus increased productivity.
- Flexibility: Our solution was developed with flexibility and configurability in mind and has been implemented in a wide range of industries without customization. With the Enterprise Edition, OnDemand (SaaS), and desktop deployment options, we have been successful in planning environments from one to hundreds of users.
PJ: How are your OnDemand offerings doing?
BS: We have had an OnDemand solution since 2004 and currently see about one-third of our new customers implementing our solutions in that environment. We released the Desktop Edition based on the need for tools in smaller organizations or at the program level in large global multinationals. Desktop Edition includes a graphic and interactive front end that enables users to develop models in hours to support their customers.
PJ: Is parts planning & optimization (PPO) still the breadwinning product for MCA? What else is selling well?
BS: Service Parts Planning & Optimization is the core of the MCA Solution Suite and is our breadwinning product, but there are a number of other solution areas that complement this and are generating significant demand. For example, MCA Business Design allows managers to design their service supply chain offerings and perform analysis of scenarios to understand the cost and service impact of changes to lead times, supply chain flows, product reliability, and other key variables. In addition, all our customers are implementing Performance Management, which provides graphic visualization of key metrics and user-defined alerts, and allows for drilling down to planning workflows to take action on alerts.
PJ: What is still keeping your executives awake at night (SAP deciding on its own parts planning solution, Oracle, Servigistics, etc.)?
BS: MCA sees a challenge and opportunity in expanding to a number of industries that have the potential to significantly improve their service supply chain but have been slow adopters of advanced planning solutions. We remain concerned with global economic conditions and slow job growth in the United States and Europe. Finally, the situation and unrest in the Middle East and Africa as well as the recent disaster in Japan and their potential impact on prices and recovery is something that many countries are beginning to experience.