The
red-hot telecommunications industry is no place for companies
with out-dated technology. Applied Innovation (Dublin, OH), a
$41 million manufacturer of data communications equipment used
by telecommunications service providers, has prospered by providing
the telecommunications industry with cutting-edge products. But
Applied Innovation’s internal information systems were a challenge
until a Windows NT enterprise resources planning (ERP) package
became its core system for doing business.
Applied Innovation
provides devices that are used for network management and mediation
in central switching offices. These software and hardware solutions
allow different types, brands, and even generations of switching
equipment to work together, carrying voice, data, and video transmissions
around the world. Deregulation of the telecommunications industry
and an explosion of new technology have enabled the business to
grow very quickly. Unfortunately, Applied Innovation’s information
systems didn’t keep up with its growth rate and business needs.
In the nearly
15 years that Applied Innovation has been in business, the company
had collected a group of software systems that weren’t well
integrated and generally failed to deliver information when and
where it was needed. Applied Innovation was in an awkward position
for a company that prides itself on innovation. The solution was
to implement and ERP system running on Windows NT Server. The
new ERP system, live since last May, is Avant from Epicor Software
Corp.
The Case
for Change
Applied Innovation specializes in custom-configured equipment
that meets the needs of a diverse customer base. When I joined
the company as a senior systems analyst, it was clear that the
existing enterprise system needed to change. Over the years, the
previous packaged system had been customized internally to add
the functionality that it lacked. In addition, the system was
not easy to modify or well integrated and promoted the existence
of a mixed server environment that was expensive to maintain.
An information
services (IS) team was formed and began researching the newer,
client/server-based ERP systems available. The team evaluated
ERP packages that met Applied Innovation’s business-process
needs with a critical eye toward functionality and growth potential.
The company wanted to avoid being stuck with a system it would
outgrow in a few years.
Once the
team decided a system had potential, the company’s primary
ERP users became involved in the review. The team wanted their
input as early as possible without disrupting business.
A major issue
early in the evaluation phase was choosing the operating environment
for the system. Applied Innovation had been on a network that
used Novell NetWare and UNIX operating systems, but the company
decided that Windows NT was its platform of choice.
Applied Innovation
wanted to standardize on a single operating system. Since Microsoft
Office applications were already in use, tight integration among
all applications, as well as Windows NT Server' high performance
and low cost of ownership, were the main attractions of the NT
environment. The company’s expectations regarding low cost
have proven to be true. Since moving to the NT system, the administrative
resources that the ERP system needs are down by 35 percent.
Restricting
the selection to systems available on NT seemed, at first, to
be very limiting. Two years ago, not many packaged solutions on
NT Server met Applied Innovation’s requirements. Avant however,
met specific business requirements and supported NT.
One concern
was to have a system that would work effectively across a wide-area
network (WAN). When Applied Innovation selected the system in
1996, it was planning a new research facility in Raleigh, N.C.
and couldn’t take chances on faulty information transfer. The
230 employees at the Ohio headquarters and the 20 engineers in
Raleigh had to be able to exchange information seamlessly.
The engineering
department was looking for a way to maintain data integrity. If
the engineers wanted to experiment with a product or change a
plan or bill of materials (BOM), the manufacturing managers had
to be able to continue to work from the correct version of the
data.
The company’s
previous system had lacked the necessary separation between the
engineering and manufacturing data.
Avant on
the other hand, provides a strong separation between these two
functional areas. Avant uses a firewall approach that allows engineering
to develop and prototype products without affecting production.
In addition, Avant features a release process that brings the
BOM to manufacturing when a new revision or new product is ready
to go. To avoid the need for customization and to simplify the
migration process, Applied Innovation needed such features in
the packaged application.
Speed
and Accuracy
The Avant system supports 65 concurrent users, with 100 licensed
users. The Avant software runs on an Intel server with dual Pentium
200MHz processors, 256MB of RAM, and a redundant array of inexpensive
disks (RAID) Level 5 disk array for fault-tolerant data storage.
The system’s
configuration makes it possible to store approximately three years
worth of ERP data before purging and archiving. Applied Innovation
purchased the system with the idea of being able to scale up to
support annual sales levels of $250 million.
The new system
has improved communications speed. Because the server rather than
the client, handles most of the processing, network traffic is
minimized. This system architecture allows the company to gather
and process more data in a central location than before. And Avant
is significantly quicker than the previous system in handling
database records.
But speedy
data access isn’t the only advantage that springs from Avant
Previously, management had to shut down operations for a physical
inventory every quarter, a process that was inefficient and disruptive
to production. Now, the company uses Avanté’s cycle-count method
for inventory control. Epicor’s Avant performs cycle counting
daily on a select list of inventory items marked critical. This
approach avoids production interruptions and also helps to maintain
an accurate inventory count.
Before the
system went in, inventory adjustments had totaled as much as $2
million annually, but the last quarter closed with only $7000
in adjustments. If these kinds of results continue, Applied Innovation
will have to revise its initial estimate for an 18-month return
on investment (ROI) for the ERP system to an expectation of less
than one year.
The rule
of thumb says that in general a company does better if it sticks
to its core competency. Applied Innovation makes leading-edge
telecommunications products, but it isn’t a systems integrator.
Fortunately Epicor came in with a flexible implementation plan
that suited the company’s needs.
Throughout
the implementation project, Epicor provided training, including
on-site sessions, and customer-service support. The vendor also
offers various tools and support for data conversion. Essentially,
if you can export old data to an ASCII format, Avant can import
it efficiently.
Application
Must Fit
Some of Applied Innovation’s products require assembling circuit
boards that outside contractors manufactured. Other products are
made completely in-house. Because of Avanté’s ability to track
inventory at external suppliers' facilities, as well as internally,
the system meets both requirements.
Applied Innovation
is ISO9001-certified, a key differentiator in its market (For
example, the Bell operating companies have stringent requirements
for quality monitoring and reporting). Although Avant supports
many necessary functions out-of-the box, you can also customize
it to meet specific requirements using Avanté’s toolset.
