Microsoft Aims at Enterprise App Market

Microsoft is intent on moving into this lucrative area.
Posted December 20, 2005
By

Drew Robb

Drew Robb


The 1980s and '90s saw an explosion of business applications to digitize the way companies do business. Software developers built Enterprise Resource Planning (ERP), Customer Relationship Management (CRM) and Supply Chain Management (SCM) suites by the score to eliminate paper-based administrative processes, and provide management with accurate data. Firms like SAP, Siebel and Oracle thrived in this new environment.

Now Microsoft Corp. is intent on moving into this lucrative turf. Through a combination of acquisition and in-house development, the software giant is broadening its Microsoft Business Solutions portfolio.

''Microsoft is making headway into the enterprise application space,'' says Paul Hamerman, vice president of enterprise applications at Forrester Research, Inc. of Cambridge, Mass. ''It acquired ERP vendors like Great Plains and Navision and has been steadily growing its revenues in this sector.''

According to Hamerman, however, Microsoft still only accounts for about four percent of the business application market. German ERP powerhouse SAP, on the other hand, has a 35 percent to 40 percent share within the ERP market alone.

Microsoft plans to narrow the gap with a little help from its friends.

''Partnering on government, retail and manufacturing applications has worked well for Microsoft,'' says Hamerman. ''Microsoft assists other ISVs to offer both stand-alone Windows-based tools, as well as applications that extend the range of products like Great Plains.''

Windows in the Warehouse

In warehouse management, Microsoft Dynamics GP (the new name for Great Plains) offers some inventory functionality. While that may be enough for some companies, it falls short for organizations that live and die by inventory efficiency. Industries, such as produce or liquor suppliers and other distribution-intensive fields, require a full-featured warehouse management system (WMS) as the backbone of their business. It's in specialized niches such as this that Microsoft partners can offer the most assistance in popularizing the Windows platform as a business application staple.

Motek Inc. of Beverly Hills, Calif., for instance, offers Priya WMS, a Windows-based warehouse management system tailored to the needs of the warehousing and distribution field. Four Seasons Produce Co. of Ephrata, Penn., uses this tool to store, track and deliver more than 11 million cases of food, produce and other goods each year throughout the Eastern seaboard.

The company began the implementation of Priya last year to combat inefficiency. Over time, IT workers there had added additional warehouses to cope with double-digit annual growth. Finally, the company had five facilities within a 10-mile radius -- four for storage and one for shipping.

''Our biggest hassle was caused by transfers between buildings,'' says Heath Johnson, director of IT at Four Seasons. ''Every night we had to move goods to the main facility so they could go out the next morning. As well as being inefficient, this added greatly to our costs.''

To make matters worse, Four Seasons had to track goods and inventory manually. This meant keying in every item received and shipped, and applying labels to every box by hand. With so many transactions taking place, the company suffered from significant errors. It wasn't uncommon to lose track of whole pallets of produce, which ate into profitability.

Four Seasons opted for a set of best-of-breed tools, including Priya WMS by Motek; a radio frequency (RF) system by Symbol Technologies Inc. of Holtsville, N.Y., and a hands-free voice-based picking system by Vocollect Inc. of Pittsburg, Penn. These applications are mainly hosted on servers running the Windows 2000 Server.

In addition, the company decided to consolidate its five dispersed locations into one central building. It embarked upon the construction of a 262,000-square-feet warehouse facility and headquarters complex. However, Four Seasons couldn't wait for the construction to be completed so it attempted to deploy the new warehousing systems at five locations at one time.

That proved to be too much, too soon.

''We underestimated the amount of training, process revision and manpower required,'' says Johnson. ''We needed more time to make the system efficient in one warehouse before rolling it out to the others.''

Increased Efficiency

Within six weeks, the company had successfully implemented Priya at one location, and had eradicated various RF handset bugs. That led to further projects over the next few months to add the WMS to additional buildings.

''Our success in one facility gave us the foundation to cross-train other staff,'' says Johnson. ''We rotated staff through the successful WMS warehouses to build their confidence and prepare for the rollout.''

The new system tells the product selectors (known as pickers) where to go, validates the location, and directs what quantity to pick. Instead of having to look at a screen or label, the picker has both hands free and hears the commands via an earpiece. After each pick, he says what has been picked. This method has significantly enhanced selection accuracy and productivity.

Since Priya's full implementation, the produce company has achieved some spectacular results: 63 percent reduction in inventory picking errors (now only 12 in 10,000 cases picked); 38 percent increase in selector productivity; 22 percent reduction in lost sales due to errors; and a 64 percent reduction in hours spent on inventory control

''We used to pick 155 to 160 cases per hour and now it is up to 220 cases per hour,'' says Johnson ''We also have accountability and traceability right down to the loading dock and truck so we can detect the source of any errors.''






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