One of the biggest challenges (or business pain points) for pharmaceutical manufacturers (or life sciences companies) is the long cycles that are required for research and development (R&D) and product approval. This is particularly a challenge for manufacturers of generic drugs, for which cycle times can average 20 months or more (and the full time-to-market period upwards of 12 years).

Why are long cycles a problem?

Simply put, it comes down to the familiar equation that “time = money.” More time needed means more capital spent, and manufacturers watch their bottom lines slip farther and farther away. To begin to formulate a plan to address the issue of long cycle times, it’s important to understand the factors that contribute to this challenge.

Long R&D cycles happen for a number of reasons. One is that there has been increasing need to comply with regulations, including the Food and Drug Administration’s (FDA’s) Title 21 Code of Federal Regulations (CFR) Part 11, for pharmaceutical manufacturers that are employing methods for electronic record-keeping and electronic and digital signatures.

This increasing need often means that additional administrative time must be spent on ensuring that the technical and procedural protocols are set up correctly and doing what they are supposed to do.

Another reason for long cycle times has to do with the need to ensure that all stages of product development are adequately documented for audits. Whether a manufacturer is using paper or electronic methods of data storage, there must be a reliable, consistent, secure, and accessible method of storing all documents related to the research, development, manufacture, and release of all drugs.

Every change to a document must be retained, and the integrity of the versions kept intact. For manufacturers straddling the line between paper-based and electronic methods, all paper-based documents need to be transferred and saved in digital form, a process that can require considerable time for scanning or manually entering data.

What are the business risks involved in longer R&D cycles and product approval?

Fewer products can be developed or manufactured concurrently, which means fewer products get to market. And fewer products to market can mean a decrease in the company’s in-coming cash flow (i.e. decreased profits). Additional worry may come from the fact that with this increase in time-to-market, other competing manufacturers may develop a similar drug and release it sooner, thereby further diminishing profits due to lost market share and a shortened product life cycle. A delayed or lengthened cycle time can seriously affect the return on investment (ROI) for a given new drug or product.

What can help?
A software solution that implements automated controls that address compliance issues, including 21 CFR Part 11.

How does 21 CFR Part 11 relate to product R&D and approvals?

For all of the processes involved in getting a drug to market, strict policies must be established and followed by a company regarding the use of electronic records. Each step of product R&D and approval processes must be, according to the dictates of 21 CFRR Part 11, consistent, reliable, and repeatable—in other words, each version of every document must be archived and easily retrieved for the purposes of inspection or auditing.

But this thorough documentation means that the approval process can be streamlined with automated functionality, as the time needed to send documents to the approving individual(s) will be reduced (with a centralized system, all users may have access to documents, providing they are authorized to do so according to level-specific electronic signatures; also, the system can be configured to send automatic notifications). Consequently, document turnaround time can be reduced, while the authenticity, integrity, non-repudiation, and confidentiality of documents is assured.

Furthermore, for the purposes of an audit, the automated system can aid a company by streamlining document retrieval. With a system that helps you organize and maintain accurate records of all processes, time isn’t wasted on following a lengthy paper trail of documents to ensure that changes have been authorized and tracked, and that all paper versions are now available.

However, it is very important to realize that using a software application off the shelf to automate all processes involved in electronic signatures, document archiving and change management, and tracking and auditing, will not automatically render your company compliant with 21 CFR Part 11.

You must also ensure that you configure the system so it provides you with the validation you need to be compliant—you must establish rules and policies for the application that are consistently followed so you can be assured your processes for electronic signatures and data management are compliant. Both procedural and administrative controls must be in place to ensure process compliance.

Software applications that can help pharmaceutical manufacturers with the issues described above include

* SAP ERP by SAP
* IFS Applications
* DEACOM integrated accounting and enterprise resource planning (ERP) software
* Adobe LiveCycle by Adobe

For insight on the software selection process, check out TEC’s ERP for process manufacturing evaluation center.

Are you in the pharmaceuticals or life sciences industry? Tell us about the solution you’re using to reduce cycle times and manage regulatory compliance.

Infor has accomplished much recently in terms of laying the foundation for and developing a product portfolio that meets the needs of customers old and new, as well as those inherited from the vendor's recent acquisitions. Behind Infor's success lies its open SOA strategy, based on the Software Fortress Model (please see part two of this series, Ambitious Plans and Promises: An Enterprise Software Vendor's Course of Action ). For a general overview on Infor's recent developments, please see part one of this series, Ambitious Plans and Promises: An Enterprise Software Provider Keeps Its Word.

While skepticism is understandable from some—especially the over-promised and disillusioned Baan customers, as well as some market observers—most of the market should actually be pleased to hear what Infor is pledging. "Doubtful Thomases" might question whether the former SSA Global, MAPICS, etc. were really killing these products and if Infor is just making itself look good by paying lip service to the promise of improvements. Certainly, only time will tell whether Infor will make good on these promises, or if it will just repeat the sins of the solutions' predecessors.

To be sure, this decision does not come from the goodness of Infor's heart. Rather, it is based on sound economic (i.e., the great revenue potential from the several thousand existing Baan IV and V customers worldwide) and strategic reasons (i.e., Infor envisions Baan and LN as "platform" rather than "mature" enterprise resource planning (ERP) products, having viable future road maps, including SOA bus and enhancements), as well as to create goodwill (press relations).

At first, Infor may have been tempted to enable migrations to Infor ERP LN 6.1, but it is likely the vendor has realized that the migration paths for Baan IV and V customers, their systems significantly customized, would be prohibitive and daunting. Possibly then, it is more feasible and justifiable to keep all three product releases on their own SOA-enablement and functional enhancements paths. Sure, the research and development (R&D) cost for Infor will increase to a degree (given their monolithic structures, Baan IV, V, and LN will have to be divided into separate fortresses), but that is certainly a lesser price to pay than losing those customers outright to the competition.

Therefore, given three different product road maps, the details are currently sketchy about what customers can hope for in terms of functionality, as well as how useful these products will be in light of some customers having modified the product to a level where it is hardly recognizable.

In any case, if Infor will indeed be adding features, that can only be good. There have been broad indications of enhancements being made to financial management, supplier relationship management (SRM), human capital management (HCM), servicing, warehousing, and manufacturing functions. Moreover, this might even be more about Infor Open SOA and Infor's need to cross sell products to these customers, since Infor's revenue model is based on keeping the maintenance stream going and cross selling products. To that end, via the Open SOA approach, Infor will likely offer the Baan install base extended-ERP systems from other Infor point solutions, particularly in the areas of corporate performance management (CPM)/analytics, supply chain management, (SCM), business-to-consumer (B2C) and business-to-business (B2B) e-commerce capabilities, mobile applications, and so on.

Some skeptics may also point out that the initial additions planned for Baan IV and V are mostly what we would call regular upgrades and extensions. However, for those Baan users whose product instance is not that badly modified, the price of becoming compliant and up-to-date on their own (i.e., using their own regulatory and IT experts) might be much higher than the price of being reinstated into the service and maintenance contract (see What Is the Value Proposition of Support and Maintenance?).

Further, the details on IBM's current Baan and LN capabilities and its success in reselling these Infor products are also sketchy at this time, and we will have to wait and see if the two companies actually sell some of these solutions. IBM used to be a major Baan implementer in the 1990s, but like almost all other leading systems integrators (SIs), it has since all but disbanded the Baan practice. These experts have moved on to implementing other ERP products, and it is questionable how easily one can ramp up the competencies of Baan and LN once again.

Furthermore, IBM resells many mutually competing enterprise applications products; while the total number of deals for IBM is certainly significant, deals for each individual ERP vendor are very rare. Yet, vendors like Infor or Lawson Software like the fact that IBM resells their product, due to the added credibility IBM's name gives these products in the marketplace, but it is questionable how much revenues they can actually expect.

In any case, while skepticism is understandable in light of the past, the fact is that 22 percent of Infor's employees (about 2,400) work in the R&D department. Looking at this from another angle, Infor's R&D expense last year was about $400 million (USD), which represents 18 percent of its total revenues—an amount significantly higher than the software industry's average of 14 percent. Such numbers are indications of a vendor that "means business" and that wants to be in for the long haul—and the vendor certainly has no illusions that this will be a "cakewalk" (easy).

In the first part of this series (please see Quote-to-order: New Ingredients in the Recipe for Success), the emerging quote-to-order (Q2O) sphere was discussed in terms of its history and current developments, as well as how software providers are rising to the challenge of meeting their customers' Q2O needs. The second part, Quote-to-order: Newcomer Causes a Stir in the Market began an in-depth analysis of how the vendor BigMachines has been claiming a space for itself, serving clients in the high tech industry with its Q2O solutions.

BigMachines' Differentiation

BigMachines' differentiation from its competitors, especially from the "old-guard" (with client/server on-premise technologies), comes from many directions. The lean front-end (LFE) moniker is meant to indicate that BigMachines is "leaner" than its old-school competitors, particularly those with much broader enterprise suites, because

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Its solution is solely focused on managing the full end-to-end inquiry-to-order process (quoting, configuration, and proposals) executed by customers' sales teams and channels, whereas most competitors stop short of truly empowering sales with one generalist solution that tries, suboptimally, to manage all aspects of the sales order process.
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The on-demand technology and implementation methodology takes less time and resources than implementing older technology based on client/server or on-premise technology—in other words, "faster is leaner." Additionally, on-demand administration tools can allow customers the flexibility to maintain and change their solution over time as their businesses change, which is another fundamental shift from older technologies.
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Native reporting and analytics come on top of customization via on-demand administration tools and self-administration by customers. The user interface (UI) can be tailored to match distinctive customer quoting processes, which leads to custom implementation (system configuration) rather than custom programming for each customer.
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BigMachines' team has process expertise and experience deploying the solution across a variety of industries for the most complex applications, while its management team has experience working for the world's best and leanest companies: McKinsey & Co., Case, Hewlett-Packard (HP), General Electric (GE, with a Six Sigma Black Belt entitlement), Dell (also a Black Belt holder), Accenture, etc.

BigMachines has also made substantial investment in services and support over the past several years. The vendor's press release of July 2008 notes that

[t]he company has expanded its Customer Support program to include a new online Support Center, an interactive customer idea forum called "My BigIdea", and online customer collaboration tools. BigMachines' online Support Center provides the company's global customers with a single point of entry to a repository of support information and tools, as well as an interactive community to share best practices and drive innovation in product design and development. In addition, Web 2.0 community applications have been added, including My BigIdea, an interactive forum where customers can submit their own ideas for product enhancements. Using My BigIdea, other customers can view the suggestions, add their own comments, and vote on the ideas they would like to see implemented. My BigIdea provides a wealth of information to the company's Product Management team as they plan and prioritize product roadmaps.

This is the same type of collaboration platform implemented by both Starbucks ("My Starbucks Idea") and Dell ("Ideastorm").

Other new support features include the following:

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an integrated global customer relationship management (CRM) platform to manage customer accounts and contacts
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an online support center Web portal to provide a single point of access for customers
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a helpdesk with new voice over Internet protocol (VoIP) system integrated with a CRM system to ensure that BigMachines' support agents have relevant customer information at their fingertips


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a customer knowledge base to provide access to a comprehensive solutions database online, 24/7, 365 days a year
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online customer collaboration tools to share ideas within the customer community and directly with BigMachines staff
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dashboards and metrics-reporting tools to track and monitor helpdesk case load, including causes, volume and frequency of issues, and patterns and trends over time, to ensure continuous improvement

Additionally, the July 2008 press release states that "BigMachines has also created a new Customer Success Management team. Customer Success Managers are responsible for proactive communication to customers, sharing best practices, and ensuring that BigMachines['] customers achieve full adoption and value."

Given that the above traits are not necessarily applicable to distinguishing among software-as-a-service (SaaS) Q2O peers (such as Firepond, Webcom Inc., Click Commerce, Sterling Commerce, etc.), BigMachines touts its leadership with more than 100 successful customers. Two enterprise-strength data centers with guaranteed uptime and the product's scalability and internationalization are also advantageous here. As mentioned earlier, BigMachines has also established partnerships with leading global services firms for global implementation services and customer support capability.

Since Statement on Auditing Standards 70 (SAS 70) audits are a big deal for all on-demand applications providers that want to sell into large enterprise clients, BigMachines' hosting partners are SAS 70 Type II–certified, and the vendor is undergoing its own stringent SAS 70 audit, to be completed mid-2008. Compliance with the Sarbanes-Oxley Act (SOX; see Thou Shalt Comply (and More), or Else: Looking at Sarbanes-Oxley) is also important in the sales quoting space, particularly concerning documented approvals for pricing or discounting by representatives and channels, and for customer's contract pricing. BigMachines has also helped many of its customers with these issues.

Complex Industrial Machinery Experts

BigMachines has "ruled" the market segments of complex industrial and process machinery that handles liquid, gaseous, and solid materials, such as pumps, valves, actuators, compressors, mixers, agitators, etc. The vendor's staff is thus well-versed in specifications that include the valve's operating conditions (such as fluid properties, size, desired materials of construction, and connection type), as well as the actuator type and other related accessories.

In the case of mixers and agitators, staff are quite "au fait" (fully competent) with the detailed specifications of things like viscosity, blending times, and volume of the material. It is critical that such information be encapsulated in the software system because it determines specifications such as the motor speed, impeller design, and shaft length of the product. From these specifications, the user can then select such options as end connection, body material, actuator type, seal type, and material, while the online configurator can also dynamically generate figure numbers, bills of materials (BOMs), and drawings to help an engineer complete a plant design.

To be even more attuned to this target market, BigMachines has opted to participate in the initiative of the nonprofit consortium FIATECH AEX. This initiative will eventually include the development of standard Extensible Markup Language (XML) schemas for motors, air coolers, reciprocating compressors, pressure vessels, centrifugal fans, centrifugal compressors, control valves, storage tanks, relief valves, and transmitters.

But, to also expand from these niche industries, BigMachines has lately found and penetrated new markets for expansion and growth, including high tech, software, networking hardware, medical instruments, and services markets. In a dramatic shift, these new high tech and other markets now represent over 70 percent of BigMachines' customers acquired over the last several years. The SaaS CRM market is more heavily dominated by these newer industries, and the faster growth expected of SaaS versus traditional client/server technology will likely continue this trend.

Multi-tenant "SaaS-y" Debates

To get into subtle multi-tenant SaaS nuances, BigMachines has a hybrid SaaS model with a multi-tenant database and dedicated Web front-ends for each customer. The application is delivered as SaaS, and unlike several of its competitors, BigMachines doesn't have a parallel client/server on-premise business, and no off-line technology is required to set up and maintain its software.

Like the rest of its product suite, BigMachines' administration engine (for system setup and maintenance) is fully on-demand and delivered only via the Web. This engine enables flexibility for users to add channel partners (value-added resellers [VARs], distributors, third-party agents, etc.) with or without licenses to other integrated applications. Also, fully on-demand administration tools enable globally disparate administration teams. Some of the competitors, such as Firepond, claim to be "multi-tenant/on-demand," but in reality, they only have a multi-tenant user front end, whereas off-line client technologies required for all product data and rule maintenance with periodic publishing of the off-line client tool to a multi-tenant Web front end.

BigMachines' hybrid (in other words, not completely multi-tenant) architecture has the flexibility to allow customers to upgrade according to their needs and desired schedule, and not necessarily when the vendor decides to upgrade them or another of the customers wants to upgrade. The architecture also has the flexibility to tailor the UI to the unique needs of the sales processes of different customers and industries.

For example, e-commerce and channel scenarios, in which a distributor is guided through the sale process of a gas turbine, are fundamentally different from the way that a software company representative is guided through the modules, number of users, commercial terms, and service fees of a software and services implementation. These different users may require very different layouts of their configuration pages. Despite the single-tenancy of the UI, the solutions allow its customer administrators to change or maintain the product anywhere in the world from a Web browser.

Challenges Spare No One

However, Webcom, a competitor that has the pervasive multi-tenant SaaS solution as well as a traditional on-premise one, cites the customer's choice as an aspect of flexibility as well. In fact, there are indications that many quote-to-order (Q2O) buyers within the complex engineer-to-order (ETO) environment may still prefer the on-premise, behind-the-firewall deployment. That gives lots of maneuvering space to the likes of Cincom Systems and Experlogix. Cincom recently introduced a specific strategy for the SAP ecosystem for customers with product complexity beyond what the SAP Internet Pricing and Configuration (IPC) product can handle, while recently the Cincom Acquire product was certified for Microsoft Dynamics and Microsoft .NET technologies.

Along similar lines, Experlogix is Dynamics-certified and also involved within Infor's ecosystem. Access Commerce too is integrated to QAD and Infor enterprise resource planning (ERP) products, and there is always the traditional single-tenant hosting option provided by these vendors.

The point is taken that BigMachines' customers very much value the flexibility to schedule (and test) their upgrades and interfaces. These companies are running mission-critical systems that process orders; not all enterprise systems are as critical, nor do they need this flexibility. Still, a single-tenant UI for each customer means more costs and less profitability for the vendor (a downside in addition to the distraction of having to track each customer's exact product release). Namely, one of the true benefits of a multi-tenant architecture is lower cost structures for the vendor to maintain (savings that are hopefully passed on to customers). In other words, every single customer gets the same attention when it comes to requirements: the vendor that does not maintain multiple product instances does not have to take resources away from enhancing the product.

After all, despite its impressive growth (Technology Evaluation Centers' [TEC's] estimate of the company's revenues are at about $10 million [USD]) and achievement of its profitability targets, BigMachines is still a small startup into which over $40 million (USD) of venture capital money has been invested, and one may never know how much longer the investors will patiently wait for the true "payday." Also, BigMachines' subscription pricing per user per month is somewhat higher than its SaaS peers.

While the vendor claims that it is good value for its leading product on the market (which also involves embedded reporting and analytics), others might look at it as the company's somewhat desperate need to grow faster and generate more cash flow for its investors. However, BigMachines believes premium products should carry premium prices, and the company must justify its value and high levels of re-investment into future products and services.

One challenge BigMachines must contend with is the competition presented by ERP players in the Q2O market. For one, prospective customers inevitably delay their decision to implement an Q2O system, as they try to validate an incumbent ERP provider's claim that its product can do the Q2O job as well as a system specially designed to handle Q2O processes and issues. Even when the company selects a Q2O specialist like BigMachines, one has to wonder whether it is a strategic decision or a tactical stop-gap measure (while the ERP provider catches up with the functionality).

Also, there are indications that Oracle and IFS are working on (or have completed) a single engine, which, as stated in a report from AMR Research about Oracle Configurator, "can be used for modeling both sales and back-end (engineering) product configuration, eliminating the need to synchronize sales and product configurators."

Thus, some Q2O players have espoused more value proposition by building much broader business-to-business (B2B) supply chain management (SCM) suites for multichannel commerce. The first one is Click Commerce, which was made private by Illinois Tool Works (ITW) two years ago, but remains an independent operating company (see Will a Tool Manufacturer and a Supply Chain Software Vendor 'Click' in Matrimony?). According to AMR research, while sales configuration remains a component of the suite, the company targets companies looking for the broader B2B e-commerce capabilities the suite offers, such as catalog management, guided selling, pricing, partner relationship management (PRM), warehouse management, spare parts optimization, and trade funds management.

Along similar lines, Sterling Commerce (which recently acquired Comergent) has meanwhile combined its configurator and PRM capabilities with other software assets to address broader customer order management. In 2007, Sterling announced an offering called Sterling Selling and Fulfillment Suite, which addresses multichannel distributed order management (DOM) through fulfillment. It is needless to say that these two high-profile companies have no viability issues like their startup SaaS peers do.

The need for agility in business grows ever more pressing. Reacting in real time is vital, and time is a commodity always in short supply. Many companies are currently heavily focused on financial measures, especially how the numbers look at the end of accounting periods. While financial reports are important, relying on them too heavily can lead to a business geared to analyze the past rather than one driven to manage the present and prepare for the future. If your business is driven by accounting periods alone, then it is poorly equipped to react as dynamic situations unfold. Reacting to financial results is like reading the newspaper—you can see what has happened, but it is much too late to do anything about it.

Traditional organizational structures and systems can make understanding real-time operational situations almost impossible, delaying corrections, costing the business money, and—in a downturn—even threatening its survival.

The criteria for business success are normally measured in financial terms, but the day-to-day management to ensure these monetary goals are met needs to look beyond pure historical financial-reporting. Today, success is all about the difference between measurement and management.

Cost, time, resources, cash, and risk have long been the five fundamentals of project management. These performance indicators need to be observed and controlled in real time in order to manage and deliver a successful project. Projects typically cross departmental—and often company—boundaries, and they always have a start and an end. In today's business climate, there is much that can be learned from this approach to help manage the whole organization through the downturn and beyond—even for businesses that do not see themselves as operating in traditionally project-driven sectors. Project management techniques, applied across the board, can help an organization evolve into a true project-centric business.

In today's globalized business environment, a project-centric approach means putting together the best mix of resources—people, production, design, sales, marketing, service, and so forth, both from within the organization and from the extended enterprise—for each product and service offered by the business in order to ensure the best chance of success. This may mean moving away from traditional thinking. Traditionally, production has always been done in house, with certain products tied to specific locations. Today, for instance, a manufacturer must make a business case whether to make or buy a component or an entire product. If you have the right information in real time, you can make the necessary strategic decisions about which resources to use, where to locate elements, and whether to perform various tasks in house or through subcontractors, outsourcing, or offshoring.

The right mix to deliver success can often change. The benefits of yesterday's cost-driven decision to offshore manufacturing to China might be offset by tomorrow's increase in delivery costs due to rises in the price of oil. A historical perspective on costs is no longer enough to manage the business. Moreover, cost savings must be balanced against nonfinancial measures, such as quality, skills availability, and environmental concerns, as well as risks such as the potential impact on brand and reputation. The focus must shift from backward-looking financial measurement based on accounts and cost centers, to company-wide management of cost, time, resources, cash, and risks, supported by real-time information.

This project-centric concept needs to be instilled throughout the business, at all levels and across all departments. Many managers and executives are left with systems that don't provide easy access to performance metrics in real time. It is often these individuals that regard a project as something that delivers a specific service or tool to the business, and who don't see it as a fundamental approach to delivering the core goals of growth and profitability. By compartmentalizing the role of projects, those management teams are missing out on a very efficient approach to running the complete enterprise. Structuring the whole organization on an integrated set of projects enables success to be clearly identified, measured, and communicated. As we approach the back end of the 21st century's first decade, the project-centric approach is evolving into a clear structure for the modern, agile business.

Project management techniques should no longer be the reserve of specific industries or departments. Setting precise goals, with a defined budget, to be reached within a specified time frame, is now more common than ever before. The fundamentals of project management are now core to companies specializing in areas such as contract manufacturing, construction, and contracting, as well as in the service and traditional asset management industries. These sectors are likely to have taken a project-centric approach to running major parts of their business some time ago.

The construction and contracting industries are great examples of the project-centric approach. They are 100 percent project-focused in how they deliver products and services, but do they take the same approach to make sure the financial goals of the business as a whole are reached? Some do, but not all, as even these types of businesses struggle with measuring the past rather than managing for the future. Real-time visibility throughout the whole project life cycle, across organizations and all company business processes, is the key to success.

Improve Visibility

Building a company's business on a network of integrated projects not only sets out the logical steps to business success, it enables managers and senior executives to have better and faster visibility of progress, enabling operational and financial risks to be managed more closely, corrections to be made, and the consequences minimized.

What is key here is that businesses see the project as a real-time execution model, not just as a framework for planning and follow-up. Project-centric business applications make this work, integrating information across all departments, such as human resources (HR), finance, production, and others. This agility is even more essential in a tightening global economy.

The current accepted approach to business makes understanding a company's real-time performance difficult. Quarterly figures are often not available for weeks after the end of the reporting period, so this information is already out of date by the time it is available to the business. Yet chief executive officers (CEOs), investors, and customers are demanding more visibility, improved real-time access to information, and faster reaction to change. Taking a project-centric approach pulls together forecasted, estimated, and actual metrics, and puts monitoring in place to provide a view of all elements—not just financial actuals.

Operational and financial risks can also be evaluated on an ongoing basis, and strategies can be defined upon these. This approach delivers a level of analysis on which decisions can be made quickly and with confidence. The business becomes agile.

Project metrics are common practice for staff of all levels. They provide the right insight into the business. An enterprise resource planning (ERP) system that is built on project-centric fundamentals can provide the insight that managers need to understand the immediate situation, and the effect that adjusting resources, costs, and timings on individual projects will have on larger financial goals.

Significance of Time

Time is a great leveler, as the problem of allocating time applies to all businesses, irrespective of size and financial strength. For example, it has been proved time and again that the first product to enter a market achieves the highest profits. It is better to be a leader than a follower, and launching a new product into a new market involves major risk, cost, cash, time, and the best use of key resources. This is a forward-looking application of project-centric thinking.

It is often stated that the key constraint to execution is the availability of key executives' time. For example, when pursuing the global expansion of a business and establishing international operations, being able to execute to a predictable time plan is paramount. Maintaining the timeline is difficult if key executives do not have real-time visibility of ongoing processes, preventing them from proactively making timely decisions. This is a clear benefit of the use of project-centric business applications.

Project-centric Businesses

More and more companies in the manufacturing sector need to look at their product portfolios and the mix of in-house production, outsourced production, and after-sales services and spares that will deliver the greatest profits. Contracts often run for defined quantities of specific products over a finite period of time. The manufacturer may have several projects on the go at any one time. Globalization has made outsourcing easier for the established brand owner. As a result, more and more businesses have increasingly complex supply chains.

Changes in the global economy have released such industries as utilities from public ownership, and have created global players that own many different businesses in different countries. Sales and marketing entities in western Europe are selling electricity that is generated by a different company and delivered to the consumer on a network owned and run by yet another company. This focus on a core business service by different entities in the supply chain enables those holding the relationship with the consumer to chop and change providers to suit consumer demands and producer improvements. Suddenly the whole business is being run on project-centric fundamentals: cost, time, resources, cash, and risk.

But what does it mean for your business? The CEO of today must embrace this project-centric approach and manage the business by focusing on the five elements presented here. There must be a change from siloed organizations geared to measure the past, to companies driven to manage the present and to prepare for the future. This is a world where companies need to become project-centric, using systems that provide the agility needed to react instantly. To ignore this challenge will make it difficult to weather the downturn and stay ahead of the increasingly global competition.

provided a detailed background of the still-evolving quote-to-order (Q2O) space, including historical examples to show why the market is increasingly demand driven. Part one summed up by making general observations as to how Q2O software solution vendors have addressed the market, and about the additional features and functionalities they will need to incorporate as demand shifts.

Now it's time to take a look at one of those high-flying "newcomer" providers: enter BigMachines, Inc. (www.bigmachines.com), a rapidly growing company founded in 1999, and with North American headquarters (HQ) in Chicago, Illinois (US), and European HQ in Frankfurt, Germany. The vendor also offers global customer support and hosting operations with a technology center in San Mateo, California (US), a West Coast data center in San Francisco, California (US), an East Coast data center in Sterling, Virginia (US), and an Asian research and development (R&D) center in Hyderabad, India.

According to the BigMachines Web site and associated press releases, the vendor is a provider of on-demand configurator, quoting, and proposal software and associated professional services. Its clients are in the high tech, industrial equipment, medical instruments, and software and services industries. The company's solutions help its clients' sales teams and channels to streamline their selling processes from customer inquiry-to-order. The BigMachines solution digitizes complex selling processes and captures an organization's tribal knowledge. By doing so, it provides online product selection, configurator, quoting, and ordering capabilities for new products and aftermarket parts, and streamlines configuration, pricing, quoting, proposal generation, and order management. BigMachines' rapidly growing customer base of over 100 corporations includes global leaders such as Kodak GCG, Siemens, Ingersoll Rand, and NTT Communications, as well as innovative growth companies such as ShoreTel and Aruba Networks.

Getting Cozy with Customer Relationship Management (CRM) Powers

BigMachines' Lean Front-end (LFE) solution provides reporting capabilities that help analyze sales activities, and integrates to existing enterprise resource planning (ERP), computer-aided drawing (CAD), and CRM systems, including those from Salesforce.com, Oracle CRM OnDemand, Oracle, and SAP.

For Salesforce.com and Oracle CRM OnDemand customers, BigMachines offers two different product editions: SPP (standing for selection, pricing, proposal) and CPP (standing for configuration, pricing, proposal). The SPP is an entry-level solution that does not include the configurator module. Both solutions enable users to streamline their entire Q2O processes, all within the familiar Salesforce.com CRM interface.

The CPP and SPP product pricing capability includes BigMachines' certified and packaged integration to these two CRM products above. The vendor also offers Professional and Enterprise editions which have different price points, minimum numbers of users, bundles of other BigMachines modules, and other add-on original equipment manufacturer (OEM) software. All of these product editions are part of the umbrella BigMachines solution.

For instance, as noted in a BNET article from 2006, BigMachines'

SPP solution extends Salesforce.com's functionality to enable users to generate rich and accurate proposals. SPP users can quickly select the right products to quote to the customer by searching for products using multiple search criteria, including descriptions, part or stock-keeping unit (SKU) numbers, product families, price lists, and other custom fields. Users can add the selected product(s) to a quote with one click, and the quote is automatically populated with address and customer data from the related Salesforce Accounts and Contacts tabs. Quote and revision numbers are also generated automatically and all changes are tracked.

The article goes on to say that

[r]ich proposal packages can be generated in Adobe (.pdf) or Microsoft Word (.rtf) formats, and include cover letters, product descriptions for each line item, pictures, graphs, drawings, marketing collateral, and terms and conditions. All relevant proposal data is automatically populated back to the Salesforce Opportunity… [ensuring] up-to-date pipeline data and [eliminating] manual data re-entry. Quotes can be converted to orders with one click and submitted electronically to the business system via BigMachines Integration.

According to Big Machines, more than half of its customers are "the result of a 2005 certification agreement forged between the two companies," and SPP and CPP have since been available through the Salesforce.com AppExchange marketplace of on-demand applications.

Mid-2007, BigMachines announced the general availability of BigMachines CPP for Salesforce PRM (standing for partner relationship management), a best-of-breed application designed to help companies manage quotes and generate accurate forecasts across multiple sales channels. BigMachines' CPP application is now fully integrated with Salesforce.com's on-demand PRM solution. BigMachines CPP for PRM extends Salesforce PRM by empowering channel partners to more quickly and accurately configure solutions, generate their own quotations, and sell products more easily and quickly, while capturing channel quoting activity with direct integration to the Opportunities, Reports, and Forecasts tabs in Salesforce.com.

BigMachines CPP for PRM also integrates a slew of new features to improve the sales process for channel partners.

In 2006, BigMachines announced in a press release that the integration between its on-demand LFE solution and Oracle's Siebel CRM On Demand was "successfully validated" by Oracle. At the same time, BigMachines also became a Certified Partner in the Oracle PartnerNetwork (OPN). As mentioned above, BigMachines' offerings help enable sales teams "to configure complex products, manage complex pricing and up-sell options, create quotes and proposals, and send error-free orders to ERP systems or order entry personnel." As for Oracle, "its multi-channel offerings allow organizations to manage and coordinate all customer interactions across the Web, contact center, field sales/service force, branch/retail network, and indirect and partner distribution channels."

The same press release adds that

[t]he integration of BigMachines with Siebel [Oracle] CRM On Demand allows users to populate quotes and orders directly with Siebel [Oracle] CRM customer contact data, and then link detailed quote and order information directly to CRM opportunities. This helps reduce manual data entry across multiple systems, and provides an integrated view of sales wins and losses across customers, accounts, and opportunities.

[BigMachines' solution] can be configured to customer needs using on-demand or on-premise platforms, and can integrate with Siebel [Oracle]CRM On Demand or on-premise as needed.

One of Technology Evaluation Centers' (TEC's) series of articles focused on an emerging class of front-office e-business and customer relationship management (CRM) applications aimed at managing what is being termed the lead-to-order, configure, price, quote (CPQ), or quote-to-order (Q2O) set of processes in the complex multichannel sales environment (see Q2O Systems: Solutions for Quotation Management and Pricing Configuration).

This software category has to do with much more than product configuration. As suggested by a 2002 article from Manufacturing Computer Solutions,

it automates the processes from "needs analysis" (what the customer wants and why), through option recommendations, to configuration and change management (including validation), pricing, quoting and financing. The emphasis is on right-first-time and business process web automation.

This applies equally within the context of business-to-business (B2B) and business-to-consumer (B2C) e-commerce. (See also The Perfect Order – Inside Out or Outside In?).

Why Such Demand for Q2O Systems?

The reasons for the recent healthy market interest in these applications are manifold. For one thing, there has long been the need for mass customization capabilities within manufacturers' operations. In a supply surplus economy, almost all products and services are made more customizable to meet customers' exacting needs.

The best example is the evolution in the automotive industry from Ford's 1914 Model T to today's Ford lineup and the ability for customers to even build their own cars online. To be fair, in the 1930s, the long defunct Duisenberg car manufacturer let "celebrity" (deep-pocketed) customers buy a unique, customized car; but the point here is that this has increasingly become a prerogative of the general population today.

The coffee shop industry is another great example of creating value via mass customization. While the ordinary, corner-store filter coffee still generally costs $ 0.99 (USD) a pop, a highly customized cup of coffee can easily amount to several bucks (or 50 cents per syllable, anecdotally). Those who prefer "an extra-hot, half-decaf, triple-shot, vente, sugar-free, low-fat milk, vanilla, extra-foamy dry latte" know all about this.

Furthermore, personal computer (PC) industry leaders are also moving from selling solutions with basic configuration to those that are more customized and higher value, while both hi-tech and industrial products are increasingly packaged into higher value-added customer hardware and software solutions and accompanying services.

Besides mass customization, some ill-fated "dot-com" ideas from the early 2000s are back now, but with a refined value proposition and backed by the latest technological developments. Thus, in 2007, the MFG.com Internet marketplace reported that in the preceding 12 months, the $2 billion (USD)–value was sourced on the site. Then, beside unstoppable globalization, as described in Don Tapscott and Anthony D. Williams's book entitled Wikinomics: How Mass Collaboration Changes Everything, there is a "perfect storm" (or "category six business revolution") in the market owing to Internet generation demographics, broadband pipes, and networks going on everywhere in the global playing field.

The mass collaboration phenomenon is the direct result of many online collaboration tools being readily available for shared innovation and development, forums and knowledge bases, and peer production. In fact, collaboration nowadays is rather about efficiency and driving costs down by maintaining win-win relationships and working together (with the idea of shared, paperless repositories of information). This differs significantly from the concept behind e-commerce tools in their first incarnation, which had everything to do with driving down supplier prices (and thus reducing costs).

According to a 2002 article from Manufacturing Computer Solutions, the vast majority of global manufacturers (about 90 percent) have a number of predominantly B2B relationships, while only about 20 percent sell directly to end consumers. Also, they have multiple sales channels, mostly with agents and distributors, necessitating (for example) slick and easy-to-use digital catalogs, portals, and product configurators for sales support.

Thus, being on the same page has become the name of the game; proposals and other similar documents must be clear, concise, and use acronyms and vernacular that rings a bell with decision makers.

Contemporary technology has rendered integration of formerly separate point solutions into more cohesive Q2O suites much easier. In other words, it is nowadays more feasible to standardize and integrate systems and customer-facing processes, such as generating multitier channel leads, taking and fulfilling customized orders (with highly configurable items), and coordinating warranty, spare parts, and other post-sale services.

Some realization of identifying and empowering a single "inquiry-to-cash" process owner (to provide a unified, single face to the customer) has also been helping to defuse the conflict of multiple functional groups traditionally claiming ownership of various parts of the process at most companies. Consequently, the inquiry-to-cash processes are no longer siloed by functional areas, such as sales, marketing, engineering, fulfillment, or finance departments.

As products and services become more complex, the work of internal sales people, partners and distributors, and direct sales forces has become more difficult than ever. Yet, today, the majority of customers using complex equipment still use cumbersome, manual processes to specify and purchase sophisticated equipment like pumps, compressors, or valves.

On the other hand, manufacturers (suppliers) also rely on manual processes (the so-called "quote-and-hope" or "if it passes, fine" methods) that thrive on fragmented product knowledge (the so-called "tribal knowledge" or "chasing the expert" phenomenon), long lead times, and costly and inefficient proposal generation. Not to mention the complication when dealing with the indirect channel with the lack of consistency and visibility, when multiple companies, functional departments, and people have to be involved. In addition, the complicated purchased equipment often has to be correctly sized and configured to meet the customer's application requirements, which requires process and related technology know-how.

In addition, the pricing and commercial terms can be quite complex as companies have multiple price lists and various channel- and customer-specific pricing policies. Thus, any process improvement solution must be able to fulfill both the technical and commercial requirements, as well as facilitate an efficient information flow and collaboration among all parties involved.

While technologies and tools like guided selling are critical elements of customer self-service sales, giving tools to salespeople is also crucial. Salespeople seem to fall into two proverbial categories: "eagles" and "journey-people." Eagles are the intuitive, fast-moving, high-flying minority, those who take to sales easily and excel in the role. Conversely, journey-people are pretty much everybody else, and although they make a comfortable living at sales, they need ongoing coaching and enabling tools to improve.

New Web Technology Developments Certainly Help

On the B2C side, turning casual online shoppers into buyers takes a personal touch, and that is where the latest generation of e-commerce personalization tools comes in. As a recent article in the Wall Street Journal points out, this software produces product recommendations "behind the scenes" that cater to individual tastes and needs on a supplier's web site. Compared with earlier versions, the latest tools, besides being much more affordable, perform more (predictive) analysis of buyer activity, and the resulting recommendations are more likely to reflect the interests of individual customers.

The article goes on to say that personalization is an increasingly used tactic on the Web, since it often results in significant improvement in conversion rates (i.e., from "just browsing" to "now buying"). Thus, tools for analyzing individual buying and browsing habits have existed for some time. However, early tools—in spite of a steep price tag—were simply not robust enough to transform this analysis into useful or accurate results.

Such analytical tools are now both cheaper and more powerful, some even featuring the ability to operate in "hands-free" mode (in other words, without necessitating human intervention; see also Using Predictive Analytics within Business Intelligence: A Primer).

Helping to Establish Cross-departmental Metrics

For its part, the B2B environment requires even more special analytics (metrics and key performance indicators [KPI]) and sophistication (see Differences in Complexity between B2C and B2B E-commerce). In addition to logically expected improvements of quote and order accuracy (to eliminate costly and unnecessary customer service intervention before the order can be processed, which in turn contributes to lengthened lead times beyond the typical forecast window, while in some cases, erroneously omitted components need to be added in at a supplier's cost), other potential benefits can be derived from deploying a Q2O system. AMR Research's report Sales Configuration—From Efficiency to Excellence (from late 2007) suggests that such benefits include the ability to use the data gathered during the configuration process to feed the demand (forecasting) signals; to make better decisions on future product features and options, configuration constraints, and recommendations rules; and even to determine entire product lines across seasons and geographies.

The report goes on to say that manufacturers increasingly realize the need to improve demand visibility as a driver for sales tools like guided selling and configuration, since a well-deployed Q2O system can determine demand variability and product variants' profitability.

Also, in the spirit of mass customization, the report claims that pushing historical configuration data back into the product lifecycle management (PLM) process can lead to products with broader appeal and lower production costs. AMR has identified a broad trend of manufacturing organizations becoming interested in using insights gathered in the sales process for demand forecasting, product development (including rationalization and parts standardization), field service, and overall improvements in the customer experience.

"Leaning" the Front End Too

Additionally, while most lean initiatives start on the manufacturing floor, the time has come for best-in-class manufacturers to apply the basic philosophies of lean (in other words, continuous improvement and waste elimination in business processes while delivering more value to customers; see Lean Manufacturing: A Primer) to other parts of the enterprise. Many manufacturers that made improvements in their back-end manufacturing processes have meanwhile recognized that significant opportunity still exists to reduce manual effort and costly errors in the front-end selling and services.

According to Godard Abel, chief executive officer (CEO) of BigMachines (to be featured in parts two and three of this series), the same lean thinking can be applied to complex product specification, quoting, and ordering processes, by mapping the steps and identifying those that add value and those that are wasteful. Some of the most apparent examples of wasteful steps include



* repeatedly clarifying and checking prior work due to incomplete information flow


* re-entering (re-keying) order data multiple times in various systems




* fixing specification and engineering errors after an order has been placed


* re-work, warranty, and plant rescheduling costs caused by faulty process and application engineering

Lean initiatives have recently driven some cutting-edge manufacturers to identify objectives for a more effective front-end process, specifically to eliminate manual processes and the need to rely on a wide variety of paper-based tools (such as catalogs, price books, and sizing tables), as well as homegrown software such as that for sizing compact discs (CDs). Many existing quotation and order-entry processes involve many redundant steps and labor-intensive manual processes that only add lead time and complexity to the value chain, as noted in a 2007 case study (Case Study: Rolling Out Lean) published in Quality Magazine. The case study also notes that

given the complexity of some products, the processes used to create quotes and orders become slow and error-ridden, and manufacturers realize the need for a technology enabler that meets the challenges of this lean front-end vision to reduce non-value-added activities, leverage best practices and knowledge, and develop a "mistake-proof process" for product selection, configuration, pricing, quoting, and ordering.

In addition to analyzing their current customer-facing processes, companies need to analyze the tools and systems that support front-end information flow during these processes.

Broad Enterprise Systems Providers Largely Coming Up Short

Moreover, traditional enterprise application software packages have not easily supported the management of end-to-end inquiry-to-cash processes. Enterprise resource planning (ERP) systems, for instance, have traditionally been weak in their ability to handle sales, marketing, and product configuration tasks. Another weak spot for ERP products is in generating proposals, whereby manufacturers can set up Web tools to automatically generate proposals online, complete with all of the technical and commercial data the customer needs to evaluate the quotation. This can include cover letters, product descriptions, technical datasheets, performance graphs, drawings, and commercial terms and conditions.

Consequently, a slew of well-funded start-ups have flooded the market with integrated modules that can be mixed and matched, so that enterprises can assemble a package of tools that suit their needs instead of committing to a single product with flaws that they're unlikely to be able to fix. The latest Web 2.0 technologies have helped in that regard, like so-called "mashups" that enable two on-demand Web applications to work seamlessly as one via Web-services integration.

As these customer-facing applications become more sophisticated and cheaper, thereby providing the potential for users to automate and improve what are currently largely disconnected, often manual business processes, one should expect increased Q2O penetration within small and medium enterprises too. Some Web-based software-as-a-service (SaaS, see Software-as-a-Service's Functional Catch-up) Q2O providers have been riding on the wave of the booming on-demand market. Besides the well-known success of Salesforce.com and NetSuite, the SaaS market was particularly validated by the recent launch of products like SAP Bysiness ByDesign and Microsoft Dynamics CRM Online, while Cisco also acquired the SaaS Web-conferencing pioneer WebEx.

Web 2.0 technologies create rich, dynamic user interfaces (UIs), for which the innovation is nowadays really being driven in the consumer market because of the "survival of the fittest" theory. In other words, an individual can switch from using Yahoo to Microsoft MSN to Google Ads with a click, whereas a heavyweight enterprise package or database could take years to unplug.

However, while the Q2O space is seemingly prosperous and experiencing hardly any consolidation, the vendor landscape has shifted quite a bit over the last few years. A crop of next-generation, Web-based, on-demand, startup providers has flourished, among them BigMachines, which has seen considerable growth in the past couple of years.