Expert: Eric Hofer - 9/17/2009

Question
Hi Eric,

I am working with a US based start-up Beverage Dist. Co. that has asked me to find a low cost off the-shelf package that would support their company. Do you know of any apps that I could look into or what would be the avg. cost for a basic custom built application. Appreciate your reply in advance.

Regards
Sandy.

Answer
Hello Sandy,

Yes I know a bit of what is out there.

There are some handheld systems which focus primarily on order taking and not much else; as you look for more features (as your business grows in complexity) you have to go up market.  That means its more expensive and therefore I think out of scope.  (Note it also means you have to re-tool and call in consultants).  

Most companies start off with pen, paper, photocopied forms, spreadsheets and perhaps either a part-time accounting system or somebody's relations to handle the back office.  I guess you're past this point.  

The challenge I see from what little I can glean from your posting is that you need more than just an order taking handheld system.  I'd expect you need a well thought through system on which you can grow your business.  In that regard, as far as inexpensive goes, the field is very small.

Check out www.salessuite.net.  They're a group that are offering a back office system (from pre-sell (and route-sell) to settlement) that they rent - so the upfront costs are minimal and you pay as you go.  As they are a mix of package and consultants (they're staffed by people with real world experience working for Fortune 500 FMCGs), they can also set your team with a route-map to grow your own internal competencies without having to go back to ground zero at every point in your evolution.  Working with their feature rich systems, you don't have to keep converting each time you are able to open a new facet to the business.  As an internet business, they do much of their work remotely so as to limit the expenses.

I just did a comparison with the typical back office systems and found that over a 5 year period, the typical HH & Back Office for say 85 staff savings was around 65 EUR a head per month; for even smaller operations (15 staff it came out to 250).

Now, as to custom build...  Depends upon scope, calibre of your IT and business teams, facilities they have available.  Here are "quick" recollections on price-tags associated with development projects I've done (while with Pepsi):-
- my first On-Premise Order, Despatch, Marketing equipment management system - 1.5M USD initial and overall project cost (lifetime) - 3.2M (supporting up to 110 depots in 13 countries)
- my first handheld system for order taking - 25K USD (built in Turkey)
- my second handheld system, learning from the first system - 80K (built in the UK)
- rewrite for vending machine management and settlement - 250K
- reporting system - 120K; integration to Excel models - 25K more
- marketing equipment management and call centre - 150K (developed in Central Europe with lower staffing costs)
- handheld system extending out from SAP using off-the-shelf and 3rd party software - 300K
- settlement system (using Excel) for pre-sell and route-sell, with in field cash collection and integration to Quickbooks - 30K

You'll probably notice that the costs have come down for me over time (as my knowledge and the tools available improved).

I think "custom" development is a slippery slope.  Its not for the faint-hearted.  Ask yourself, do you see yourselves as say a softdrink or software company?  Success comes from focusing on what you're good at, and finding supplier/partners with integrity whose profit comes from your long term success.  That's why I recommend the "pay as you go" solutions.  These companies don't make a killing setting up your systems which eats up your precious capital.  They thrive by seeing you thrive, and therefore it's in their interest to help you improve.

Now you're always going to need some custom work: to integrate with your accounting system, meet local reporting requirements, implement your unique ways to market (by getting you the information you need to implement such).  So you're going to need IT / business (re-) engineering skills; if this is where your customization is, great.  Then your cost of customization is your standard "staff" costs; and that staff are freed up to do stuff that makes you profitable as opposed to managing something that you had built for yourselves and needs to be kept ticking over.

If you can give me more of an idea of your business model, route-to-market, accounting and back office systems, skill levels, customer base size, sku mix I can add more.

Eric