PC Connection has razor-thin margins. To stay healthy, the $1.8 billion-a-year tech reseller has slashed inefficiencies wherever possible in recent years. Yet despite tight financial circumstances, last year PC Connection invested substantially to overhaul its supply chain, building Web services modules in front of its ERP system to more efficiently integrate with partners and suppliers. The upgrades will help the company take on new business opportunities, such as selling software licenses, that promise higher margins than hardware.

It's a far cry from PC Connection's humble beginnings 26 years ago, when it emerged as a small direct-mail seller of computers and related gadgets for hobbyists. The progression has seen the company, which now counts 1,600 employees and operates nationwide, evolve through organic growth and acquisitions--it bought out ComTeq Federal in 1999 and MoreDirect in 2002--into one of the country's largest third-party suppliers of business technology.

But the growth hasn't been without pain. While PC Connection now offers goods and services from more than 1,400 manufacturers, its core ERP system hadn't changed much from the days when the company sold directly to customers. "It was built for the days of pick, pack, and ship," Jack Ferguson, PC Connection's treasurer and CFO, says of the company's Oracle JD Edwards ERP system.

That became a growing problem as the company over the last several years expanded its catalog and extended its fulfillment network to include more than a dozen external partners to handle increasingly complex drop-ship orders. "We were faced with a growing number of products, and we also had a desire to cut inventory," Ferguson says.

It soon became apparent that the system wasn't built to handle such a multitiered fulfillment network. "Once you move to drop-ship it gets more complicated," says Ferguson, who notes that even basic requirements, like the calculation of sales tax on an order, were affected by the new drop-ship arrangements. Before long, managers from various departments within PC Connection were requesting ad hoc changes to the company's ERP system to meet new requirements as they evolved. But the process was becoming unmanageable.