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 late—which, 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 systems—Unix 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.
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 which 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,” Linn said.
The result was a detailed map of how information flowed throughout Consortium, which Linn said led to an equally detailed RFP (request for proposal) that the company showed to potential vendors. The RFP delved into obscure needs such as how book returns had to be handled and fed back into Consortiums accounting system. It listed necessary entities, attributes, fields, tables and relationships among tables, and more. When Linn and Goodell interviewed six vendors as finalists, each had to demonstrate how it would execute precise situations that Consortium expected to encounter.
“We were really able to compare apples to apples and see the gaps in different products,” Goodell said. Consortium decided to use Microsoft Corp.s Navision ERP (enterprise resource planning) software, “and there was never any question in anyones mind whether wed made the right choice,” he said.
goodell said he also saw an immediate need for improved executive and management reporting, without waiting for the installation of all new systems across the organization. (At this point, the decision to use Navision had not been made.) His team first used Popkin System Architect to map out the data that resided on Consortiums old Pick databases and then re-created that structure on a Microsoft SQL Server data warehouse.
Goodell said he next wrote a program that would copy information from the Pick system into the new data warehouse nightly; when Navision finally replaced the Pick databases, it used the same data migration program and enabled fresh reporting daily. Finally, Goodells team used .Net and Crystal Reports software from Business Objects S.A. to create a Web-enabled front-end system to generate reports. The new system went live in December 2003.
“Its the basis for everything we do,” from operations and warehouse management to sales and marketing and financial accounting, Linn said. “People are constantly checking inventory levels … tracking where books are being sold and feeding that information back to our publisher clients.”
Now book sales are recorded throughout the day and converted into Web data. Linn said Consortiums publishers can access their accounts anytime to examine, nearly in real time, which of its titles are selling well or poorly. From there, they can work with Consortiums two dozen sales representatives to plan marketing efforts for good sellers or to scale back attention on duds.
“Its all live. Its all right there,” said Larry Rood, president of Gryphon House Inc., a publisher of childrens books in Beltsville, Md., that uses Consortium. “Theyre giving us exactly what we want.”
The total cost? Nearly $1 million—and worth every penny, Linn said. Since 2002, he said, revenues have gone from $11 million to $22 million; profits have tripled, and revenue per client has jumped from $160,000 to $300,000. The efficiency also lets Consortium pursue larger clients that expect such sophistication, Linn said, and his customer base has grown from 70 to 100. Employee head count, meanwhile, has gone from 43 to 50.
Linn said he cannot be more pleased with his companys turnaround in sales and growth, thanks to an IT overhaul that transformed his business operations.
“I set out to buy software,” Linn said, “and ended up going through this very valuable process.”
Matt Kelly is a free-lance writer based in Somerville, Mass. He can be contacted at [email protected]
* Customer Consortium Book & Sales Distribution
* Location St. Paul, Minn.
* Organizational snapshot Provides marketing and distribution services to independent book publishers that need to get the titles to retail outlets
* Business need A new database to track book sales in real time to let publishers know which titles sell well and which should be canceled
* Technology partner IKS
* Recommended solution Extensive mapping of business processes, migration of data onto Microsofts SQL Server and use of Microsofts Navision for business applications