Efficient back office operations in stock handling, ordering and distribution remain key attractions in management software, with attention now turning to web trading, customer dashboards and hand-held devices for instant stock checks and optimising native apps for iPhone and Android. Linking business and manufacturing systems is also gaining ground and Cloud computing is a hot topic, too.
When new business is at a premium and price increases are difficult to achieve, the aim of doing what they do better is driving merchants and manufacturers to look closely at IT solutions. Going over the business with a fine toothcomb to manage costs and margins is how many merchants see the road to survival.
"There are things you can have control over and there are things you can’t control – you can’t change the weather, you can’t change government policy or macro economics – but you can have control over a computer and that helps point you to where the business can be most effective," said Ian Oldrey, director at Ten-25 Software.
He said the appetite for business intelligence had helped his company sell more systems last year than at any time in the past five or six.
Meanwhile rival software provider Ramtac Computer Systems reported 15% annual growth and Kerridge Commercial Systems (KCS) was 18% up last year, with projections for 20% growth, with recent acquisitions stripped out (see panel below).
"About 75% of our business is in construction-type distribution, so considering the state of construction we have had a good year," said KCS sales director Duncan Smillie. "These are people that are having a tough time, but those that are innovative and able to use their systems to make quick decisions are the ones that have done well."
"The market is more buoyant than it has been for several years," said Mike Munnelly, Ramtac chairman. "Customers are more demanding. In a recession they are looking for stock management, but detailed timber tallies, not a make do and mend approach. They want all the information and they want it at their fingertips to enable sensible buying and profitable sales."
Cloud computing
In technology terms, Cloud computing remains a key issue, not least because of its fashion in the consumer sector. Cloud delivers software services and storage through the internet via computer or internet-enabled device. The customers pay a monthly fee rather than buying the hardware and software and running it on the premises.
Ramtac has about 400 installations, mainly among SMEs, but of these only about half a dozen are hosted and none as a Cloud-delivered system. Mr Munnelly said customer fears over data security outweighed fears of disaster on the premises. "Thirty years ago hardware was expensive, you needed an air-conditioned room, a grown-up to run the thing… that’s all in the past."
An early champion of Cloud computing was Ten-25. Its UniTrade 360 has been available as a Cloud-delivered system for just over a year and has been taken up by both new and existing server-based customers and Mr Oldrey said there was now a 50:50 split in take up.
"It wouldn’t necessarily save you money to move from server to Cloud – in fact it’s more expensive, but you have that security and reliability that a customer might not have with servers on site. They might back up at the end of the day, but Cloud goes much, much further than that."
Border Merchant Systems has a Cloud offering but, as a company formed 21 years ago by merchants to provide IT support, by its nature its core business remains server-based. Phil Davies, account development manager, also doubts the economics as a path for all customers to tread.
"We are still about 70% owned by merchants," he said. "Everyone runs the same software and we have four updates a year and two free user meetings. We can support Cloud but it is not necessarily cheaper. Larger companies own their hardware and they want to know where it is and have control. Smaller companies might want Cloud. You can get two, Cabinet Vision can produce photo realistic renderings KCS modules provide real time information three, five years out of a server, so that might be the time, but the economics are not necessarily there."
KCS provides K-Cloud along with a hosting service, but Mr Smillie said Cloud was more attractive to start-ups and MBOs that don’t have financial accounts to secure finance for capital expenditure or to secure leasing agreements.
Border Merchant has updated with additional modules and, along with most others in the market, provides support for hand-held devices and iPhone users. The system provides everything except payroll.
Mr Davies agrees that a key area of attention is CRM (customer relationship management).
"New business is difficult to come by, but there is expansion out there and start-ups," he said. "They are all looking for efficiency and ways to generate revenue, and the way people are doing that is through CRM to better market themselves by using the information they have. The system has to do all the day-to-day stuff, but also show you how you can use that data."
Trading analysis
Ten-25 introduced a trading analysis module in December at a couple of sites and has since added several more. "It works like a spreadsheet and allows the user to get hold of the data you need when you are writing a report, but you can interrogate all your business," said Mr Oldrey. "You can look into every deal to help protect your margin. Timber merchants are very good at knowing their stock, but this helps prevent having stock lying idle."
Bringing together this management information with production is also a developing area.
For example, Joinerysoft, which supplies software for the joinery sector, has launched an upgrade to its Joinery Management Software (JMS) at several test sites and is rolling out JMS Pro across its customer base. Using a CRM system developed for a sister website company, JMS Pro will now provide a fully joined up MRP (manufacturing resource planning) and CRM system that can link into other packages, such as Sage accounting.
"Everything starts with an estimate," said managing director Alan Turner. "We now have a new way where we are mimicking a customer’s workshop in every process a joinery company might want to do – from the timber through the door until it is a window or door.
"Some of the small customers might not need to know how much work is on the spindle moulder, but if you take another company, it might be JMS Pro can make 90% savings in administration, so you could redeploy a member of staff. That might mean one extra door a week and over a year that could be worth £50,000," he said.
JMS Pro is described as web-ready, but a halfway house, run locally with less sensitive information running across the Cloud. "I don’t believe joinery is ready for Cloud at the moment," said Mr Turner. "I think it will be, but for the moment I believe this halfway house is what the customers want."
KCS has added its manufacturing capability by acquisition (see panel, left), however, Ten-25 is not so bullish. "Our system is fundamentally a trading system," said Mr Oldrey. "We do have facilities to go into manufacturing, but it is an awful lot easier to link the systems together, then you get the benefits of both specialities."
Acquisition adds strength
Two of the best-known names in IT have figured in acquisitions. Kerridge Commercial Systems strengthened its e-commerce and dashboard offering through TIS Software and now has a manufacturing capability through Datawright. Progressive Solutions was acquired first by Solarsoft, which was then bought by Epicor. These and other deals are seen in the sector as business expansion and repositioning rather than consolidation.
For KCS the deals beefed up its offering in areas in which it had seen increased customer interest. "We have known Datawright for a long time and we shared a similar technology platform," said Duncan Smillie. "They were finding their manufacturing customers were looking at distribution and we had seen our customers doing more things in manufacturing. While today there is an interface between the two, by the summer both will be part of K8.
"Our base is distribution – buying and selling – but we have been seeing our customers looking at manufacturing, depending on what area they come from, that can be full manufacturing or light manufacturing such as buying in something in large form and cutting or treating it, painting it, anything to add bells and whistles for added value," said Mr Smillie.
