Case Study: A book distributor completely overhauls its business processes, resulting in a turnaround in sales and growth.
Ask Don Linn to describe the state of IT at Consortium Book & Sales Distribution Inc.
when he acquired the company in 2001 and he gives a tart three-word answer. It was, he said, "a whole morass."
Thats apparently quite an understatement. As the nations largest distributor of independent book publishers, Consortium, of St. Paul, Minn., had limped along for 17 years with an IBM mainframe to apprise publishers of which titles were selling or not.
By the time Linn arrived, the rickety old database could barely muster up sales figures 30 days latewhich, in todays online world of book retailing, might as well be shelved in the out-of-print section.
"It wasnt a threat at that moment, but it was pretty clear that if we couldnt give [publishers] timely information, perhaps somebody else would," Linn said.
In his new role, Linn said he immediately became worried that the poor state of IT would become a strategic disadvantage, as competitors were already gravitating toward more interactive systems. And so the ex-Wall Street banker and longtime bibliophile began a new chapter in Consortiums operations.
"I thought that if we could be the firstest and the mostest, we could at least position ourselves to maintain our clients and maybe get some new ones," Linn said.
Consortium had been using two Pick systemsUnix databases developed by IBM during the Nixon administration. Linn said they employed closed data structures unable to interface with modern spreadsheets or CRM (customer relationship management) software. The result: Sales reports sent to publishers were often paper-based and printed monthly. New reports required up to two weeks of custom programming.
With 70 clients publishing about 12,000 titles, Linn said he quickly realized that the overhaul would have to go well beyond installing new servers and software. He needed to map out Consortiums business processes, from dealing with customers to employees talking among themselves to get tasks done. Once he had such an "operational audit" done and could see where information flows might be streamlined, an IT system could be created to fit, he decided.
To that end, Linn tapped Integrated Knowledge Systems Inc., a systems integrator in Minneapolis recommended by Consortiums auditors. IKS President Tom Goodell had experience in organizing business processes as well as structuring IT systems, and he said he saw the Consortium project as a challenge of "human engineering" as much as an IS one.
"I saw my mission as increasing overall organizational effectiveness," Goodell said.
Drafting the perfect RFP
Goodell began what turned out to be a yearlong engagement with Consortium in December 2002. He first cataloged the major functions at Consortium: inventory management, finance, order processing and returned books. (Returning unsold books to publishers is a common practice in the industry.) Next came meetings with key personnel in each of those areas to model their processes. Those sessions ran anywhere from several hours to several days per function.
To develop the actual IT processes Consortium would eventually need, Goodell said he used Popkin System Architect, a modeling tool from Telelogic AB. As he picked apart the requests and promises made in each business function, the Popkin tool could generate logical flowcharts to illuminate what processes had to happen and what data had to be procured to complete a transaction. For example, if a bookstore requested 150 copies of "Moby Dick," Consortium needed a process to receive that order and the data to see whether 150 copies were in its warehouses or with its affiliated publishers.
Click here to read Peter Coffees column about Telelogics acquisition of Popkin.
Returned books were another weak spot in the business, Linn said. Managing returns in such a way that stores received the appropriate refunds and that publishers were charged for them, plus handling the inventory itself, had been "very inefficient ... generating lots and lots of paper," he said. Sales and marketing executives rarely saw current return data, so they didnt know what titles were slow sellers that deserved less attention and vice versa.
"We showed the flow of information in and out of conversations and processes," Goodell said. From that, he said he could derive data models and a structure for a database.
Linn said he also involved employees from the beginning to avoid significant challenges with training people on the new system and to allay fears among employees that the new system was a means to eliminate jobs. (Consortium ultimately ended up hiring more employees as new business soared.) "They designed this themselves, so they automatically had buy-in," he said.
A map of where to go and what to tweak.