Apps In Fine Form

Baan suite has business forms and labels maker Uarco filling orders faster

By Tom Stein

arco Corp. knows what it's like to be burned by an unwieldy IT project. An effort to implement a state-of-the-art distribution system from Systems Software Associates Inc. a few years ago suffered from continuously changing user specifications and lack of management backing. The project was late and over budget, and it never fully met expectations.

Now the $650 million maker of customized business forms and product labels is wrapping up an even more ambitious effort-a wholesale replacement of manufacturing and financial applications with software from Baan Co. This time, Uarco thinks it has struck gold. It has slashed cycle times by 90%, cut one-fifth of its order-processing staff, and boosted sales-force productivity by as much as 20%.

But the company has also learned more painful and expensive lessons. The project ground to a halt at one point when Uarco had to scrap its planned hardware platform and redesign part of the system-largely because vendors made inaccurate projections of the system resources needed. "You know a reengineering project is working," says Mike Merfeld, Uarco's reengineering director, "when you can look back and say, `This has been a total nightmare.'"

Why did Uarco embark on such a huge effort, especially after its earlier IT problems? It had no choice. By 1995, Uarco, in Barrington, Ill., had acquired a hodgepodge of unresponsive and unreliable systems based mainly on antiquated Honeywell minicomputers. Processes that should have taken hours, took da ys. "Users would lose their data every time one of the Honeywells went down," says Karl Gouverneur, Uarco's director of technology architecture. "Our systems didn't do a good job of streamlining our business or even staying up all the time."

Uarco looked at several software packages and chose Baan largely because of one key feature-a product configurator that would let Uarco's salespeople and service representatives quickly build complex orders for customers, says Steve Balow, senior VP of technology. "SAP at that point was hot, but it did not have a configurator," Balow adds, "and PeopleSoft's manufacturing applications were only in beta."

The configurator promised to transform the way Uarco worked with customers. Previously, a Uarco salesman carried a product manual the size of a telephone book. Configuring one of Uarco's customized invoices, airbills, or other forms was slow, labor-intensive, and error-prone. Even figuring out which type of form could be used with which color ink could be time-cons uming. Programming nearly 1,000 of its own business rules and constraints into the Baan configurator, Uarco figured, would ensure quicker, more accurate quotes, faster production time, and happier customers.

But last November, when the company was preparing to put the Baan system into production, disaster struck. The configurator had to support hundreds of concurrent users-but in its first major test, the system froze. "This was the scariest moment of the implementation," says Merfeld. Instead of accelerating the product-configuration process, the configurator took 10 minutes just to switch between sets of configuration options, he adds.

At first, the Uarco team had no idea what was causing the delays. Gouverneur says he tried to contact Baan for advice. "They wanted to wash their hands of the problem," he says. "I don't know if they understood what we were doing with the configurator. Baan is a growing company. If you're not one of their largest customers, like Boeing or Snap-on [Tools], it's difficu lt to get support."

Baan Sees The Light
When asked about support for midsize companies, Jan Baan, the software vendor's chairman, says Baan is working to become more responsive. "We are becoming more professional in our relationships with customers," he says. Also, by working with "lighthouse accounts" such as Boeing, "we are benefiting all our customers by improving our generic product," he stresses.

That didn't help Uarco, which was pushing the limits of Baan's configurator by programming an unusually large number of rules into the software and trying to support an aggressively large number of concurrent users. But the software wasn't the only problem: Uarco had also run into a hardware roadblock. Because it already used other IBM equipment, Uarco was trying to become one of the first sites to run Baan on an IBM RS/6000-a top-of-the-line R40 model that both Baan and IBM indicated should do the job. But the IBM box "couldn't provide enough juice," Gouverneur says. "We hit a wall with 180 users."

After a year's work and tens of millions of dollars, the project had ground to a halt. But the implementation team still clung to the hope of finishing on time and within budget. After all, Uarco had replaced its previous IS management with people hired specifically to make this reengineering effort work. VP Balow was a former Ernst & Young consultant with plenty of experience implementing enterprise resource planning software.

Balow brought in Gouverneur and Merfeld from Ernst & Young. Rounding out the project team was Mark Redshaw, a long-time Uarco employee. Together, they set about modifying the Baan configurator software. Uarco made about 215 changes to the system-from removing fields to rewriting code-to make it run faster. But the company still needed a replacement for the IBM RS/6000, so it pitted Unix machines from Digital Equipment, Sun Microsystems, and Sequent Computer Systems against one another. Sun's offering, based on its Enterprise multiprocessor servers, ran the fastest, Gou verneur says.

The project finally came together. The system's 300-odd users could generate product quotes within three minutes, compared with the several hours it took before the new system was implemented.

"We did not intend to change the hardware or make all those modifications, but I still wouldn't change anything we have done," says Gouverneur. "I wouldn't go back and try to implement SAP." With Baan's software, "the productivity that our people are enjoying is incredible."

With the old system, salespeople used their oversized manuals to configure orders, then faxed or sent the paperwork overnight to one of six order-processing centers. There, someone examined the order and passed it to a pricing person, who handed it off to a scheduling person. These people used different systems, and information was entered over and over; each reentry was an opportunity for error. Overall, it took about five days until the order was ready to be overnighted to a manufacturing plant. VP Balow says items woul d sometimes be missing when orders finally shipped.

The process now is more streamlined. Salespeople no longer spend 70% of their time trying to configure orders. Instead, they call a customer service representative who uses the Baan software to configure the order. The order is then zapped within the Baan system to the manufacturing shop floor, where scheduling staff pull up a screen to access the data. A scheduler can also view the status of all manufacturing plants online. "He can see which printing presses are backed up and then subcontract a piece of that job to another plant," says Merfeld. The complete process takes hours instead of weeks.

Cycle Times Slashed
Balow says the Baan system is giving Uarco a competitive edge over industry rivals such as Moore, Standard Register, and Wallace Business Forms. "With our new system, we have been able to slash our cycle times by 90%," he says. As for Uarco's sales force, "We are freeing up two extra days of selling time per week because our salespeople have to do much less administrative work," he adds. Uarco salespeople typically generate between $500,000 and $750,000 of revenue per year, Balow says; with the new system, they're already running at a projected annual rate of $100,000 in additional sales. "We are just now hitting our stride," he says. "We expect to see an even more dramatic jump in sales."

The system has affected nearly all of Uarco's 3,500 employees in some way. About 500 people used to work in order-processing centers. Just before the system was rolled out, these employees were told that if they wanted to remain with the company, they would have to reapply. About 400 successful candidates received training on the new system as customer service reps. Today, they configure orders to specifications called in by salespeople.

Uarco completed rollout of the system to its nine manufacturing plants and three remaining customer service centers in July, three months later than originally planned. Balow won't say exactly how much the 2-1/2-year implementation cost. He admits it amounted to "a significant percentage of revenue," though less than 10% over Uarco's original estimates. Training costs alone hit $4 million. "Early on, we looked at the numbers and said that even if the project delivered half the value and took twice as long, we still had to do it," he adds. "The rationale was that compelling."

Balow admits that these numbers may seem high-especially at a time when vendors are promising six-month implementations and one-to-one ratios of software to service dollars. Balow's advice: Don't believe the hype. "Vendors think the only way to penetrate mid-market companies like us is to reduce implementation costs," he says. "I disagree. The thing to do is improve your implementation value. These packages present a lot of opportunity, but they're not for the faint of heart. Unless you are a delicatessen or a monastery, just figuring out how to unplug your old systems and go to the new one will take you months and months."

Jim Shepherd, an analyst with Advanced Manufacturing Research in Boston, agrees. "Vendors have created a lot of unrealistic expectations," he says. "Implementation speed has nothing to do with software and everything to do with the size and scope of the project. Complex change can't-and shouldn't-be done too quickly."

Uarco figured that if it was going to reengineer its business from top to bottom, it couldn't afford to cut corners when it came to the technology. Besides the Sun servers, Uarco beefed up its network with Ethernet switches from Cisco Systems and spent $1 million to rewire its sites. Instead of using PCs, it bought 1,200 network computers from Wyse Technology Inc. One reason: The NCs cost $800 apiece instead of an estimated $2,500 for full-fledged PCs, says Gouverneur. Also, "We wanted to reduce our total cost of ownership and we didn't want to put PCs on the shop floor. If an NC breaks, it's easier to fix. Plus the NCs take only eight minutes to set up, vs. eight hours for every PC."

Uarco also augmented the Baan system with a workflow system based on Lotus Notes, which also serves as an online training manual. Users work with Baan on one side of the screen; on the other, Notes provides step-by-step instructions on how to navigate through the Baan software.

Gouverneur says he learned some hard lessons during the implementation. The biggest, he says, is to disregard the marketing brochures. "You can't believe what the vendors tell you in terms of hardware, software, budgeting, and sizing numbers," he says wearily. "But I guess that's all part of earning your battle scars."

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