Back in 1999, computer retailer Lee Vaccaro could read the writing on the wall. His once prosperous bricks-and-mortar stores in Florida would be hard pressed to survive the twin impacts of Internet e-commerce and a faltering economy.
Without a sophisticated e-commerce system of his own, Vaccaro knew he couldn’t hope to compete. And to implement an adequate system would mean going to a Tier 1 vendor such as Oracle or J.D. Edwards, and spending upward of $2 million. Too rich for Vaccaro’s blood.
So he got out, as he says, “while the getting was good.” He shut down his Florida operations and went on hiatus.
It was the right thing to do as it turned out. The bricks-and-mortar retail computer market subsequently collapsed. E-commerce ruled, and it was a game for big, deep-pocketed players.
Vaccaro kept his eye on the industry, though, and within two years, he saw everything change again. Today he’s back in the business as CEO and founder of BCD 2000, a thriving “online e-commerce vendor of computer systems, components, accessories and services.”
What changed? The cost of e-commerce software functionality went through the floor, Vaccaro says. It finally came down into the range that even relatively small companies like his could afford.
In particular, a Chantilly, Va.-based software developer called Icode introduced Everest, a mini-enterprise resource planning (ERP) system with strong e-commerce functions, designed for small and medium-size businesses. The company is just on the point of releasing Version 2.0 of Everest.
Vaccaro already knew Icode. He had used the company’s previous product, Accware. The efficiencies created by its integrated ERP functionality “revolutionized” his old bricks-and-mortar business in the mid-1990s, Vaccaro says.
He also knew Icode was developing Everest, a completely new small-business ERP package based on Microsoft’s SQL Server technology. In 2001, on the basis of a sneak peak, he decided to build his new business around it.
While costs for e-commerce software had plummeted in the two years Vaccaro was out of the business, a Tier 1 solution in 2001 would still have cost $500,000, he says. Everest, on the other hand, gave him everything he needed to get BCD 2000 off the ground — for $75,000.
BCD is a truly virtual company. Its Web store, built and maintained using Everest, sits on servers at an Internet service prover (ISP). The e-commerce software is totally integrated with back-office order entry, billing, fulfillment and accounting functions, as well as customer relationship management (CRM) components.
The company’s sales reps are all independent contractors who work, typically, out of their own homes, connected to the Everest system over high-speed Internet connections.
Customers go to the Web site and either order online or call the toll-free number and get routed to an available sales rep. The reps place orders using Everest, generating “drop-ship” that are fulfilled directly by BCD’s suppliers.
Suppliers collect their orders by going online to BCD’s Everest system, and if necessary post back alerts about back order status. “They manage all of that fulfillment process now online, rather than us having to do it,” Vaccaro says. It’s a seamless process and Everest is at the center of it.
Swiss Army Knife
Everest has been on the market officially since November 2001 (BCD was a beta customer). Icode has sold the product to about 500 companies, 70 percent of which are currently up and running. By no means all they are dedicated e-businesses.
The primary value proposition, says Bob Skinner, Icode’s executive vice president of worldwide sales, is that Everest is a fully integrated “Swiss Army knife” program for running small to medium-size businesses.
Icode sees its sweet spot as companies with 10 to 100 employees, and it’s priced accordingly. Everest licenses cost between $2,000 and $4,000 per seat depending on components implemented and amount of customization.
Icode positions Everest on the one hand against familiar small business accounting programs such as Great Plains, and on the other, though to a lesser extent, against Tier 1 ERP vendors.
Old-guard small business financial packages such as Great Plains and Accpac are now typically yoked to various point solutions to provide CRM, e-commerce and other business functions, creating supposedly “complete” solutions.
Accpac, for example, last year purchased eWare, an Irish maker of CRM software, and is now integrating the eWare functionality with its financial software. Microsoft, which owns Great Plains, developed its own CRM software and is now trying to integrate it with Great Plains — without great success, according to Skinner.
But these solutions are seriously flawed he says.
“They require a lot of integration. You get a proposal from a VAR on maybe three different products and you end up with three user interfaces, multiple databases and multiple reporting systems.”
“Some of our customers have tried to implement such solutions. But they’re very cumbersome and it’s very hard to train staff. So then they come looking for a single solution that will give them all the functionality they need.”
Because the various components of Everest were built from the ground up to work together, implementation is generally fairly painless, requiring almost no integration, Skinner says. It typically takes three to 15 days onsite — at a cost of about $1,000 a day.
“Implementation costs usually represents 30 to 50 percent of the license cost,” Skinner says.
Until recently, Icode has done virtually all of the implementation work itself. However, the company is in the process of building VAR and dealer channels. In April it expects to announce as many as 50 VARs covering the whole country. They will do much of the implementation work now.
Icode Versus Others
Against other so-called mid-market products, Icode pitches a lower total cost of ownership. License and initial implementation costs are competitive, but more important, implementations are clean and rely less on the integration wizardry of VARs.
“When you implement Everest the first time you’re effectively done,” Skinner says. “When you implement Great Plains, you’d better have a good relationship with your VAR, because you’re probably going to see them quite often.”
Against Tier 1 ERP vendors, Icode’s pitch is simpler. As BCD’s Vaccaro points out, Everest is orders of magnitude cheaper. It’s true that it cannot be customized as far as an Oracle or a J.D. Edwards, but for small businesses that’s as much a strength as it is a weakness. And the program can be customized.
Icode has added many functions for BCD — many of which will be included in Everest Version 2.0, due out later this quarter. Much of the functionality around direct order fulfillment by suppliers was created especially for BCD, for example.
CRM and particularly automated CRM functions are a big part of the new version — partly in response to Microsoft’s push on CRM, Skinner admits.
“It’s really got us salivating,” BCD’s Vaccaro says of the new version.
Everest will allow BCD to personalize marketing in ways it couldn’t before. In future, for example, the company will be able, with a simple query, to find all the customers who bought a given level of Pentium 4 processor or mother board six months before and send them a personalized e-mail as soon as Intel lowers prices on the next-generation processor.
“We could even set up timed events,” Vaccaro says. “If we wanted to do that promotion once a month or quarter we could set up the process in Everest to automatically pull the data when the time comes and complete the process.”
The Promise of E-Commerce
Vaccaro is convinced this kind of personalized marketing is vital to his long-term success. “It’s going to have a huge impact on sales,” he predicts.
He realized from the beginning the importance of humanizing the experience for online customers. For example, BCD recently implemented an instant messaging service within Everest that allows customers to chat live with a sales rep.
Like other online retailers, BCD automatically sends out a series of e-mails to customers when they buy something — to tell them their order has been received, to tell them when it ships and to ask them if they’re satisfied with the product.
“I think the more personable you make the transaction over the Net, the more repeat business you’re going to attract,” Vaccaro says. “We kind of miss out on the personal touch that people get when they walk into a store. We’ve had to compensate.”
The great promise of e-commerce was that it would level the playing field, shrink the globe. The reality turned out to be somewhat different. As many e-commerce do-it-yourselfers have discovered, it takes more than a cheesy Web store front and a shopping basket utility to make a successful e-business — quite a lot more.
Much of what it takes, Everest now provides, and at a cost many more small businesses can afford.