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This trucking company's CFO learned that being in the heart of Silicon Valley at the peak of the tech market was a mixed blessing.
Joseph Radigan, CFO.com | US
May 22, 2001
Marshall Witt would agree with the argument that business in Silicon Valley can be both a blessing and a curse, but with a slightly different take. Witt is CFO of Viking Freight, a San Jose, Calif.-based division of FedEx Corp. that has 140 employees in its tech department, five of whom support Witt and the 125 users of the company's enterprise resource planning system.
That's all well and good. But Witt has faced a nettlesome problem almost since his first day at Viking three years ago: Tech programmers don't feel like their career is going anywhere when their job is supporting a rickety old IBM AS/400 midrange computer that runs an ERP system. It certainly doesn't help morale among the troops when right up the road are places like Sun Microsystems, Oracle, Intel, Hewlett- Packard, and the army of start-ups building the next wave of the Internet.
"When you try to find programmers who know the AS/400, it's hard to do," Witt says. "It's not a language programmers are seeking out."
It's not that Viking wasn't exactly stuck in the mud where technology was concerned, and Witt notes, "We wanted to give our staff a chance to elevate their skills and be part of the strategic future of the company."
But last year, the issue was forced for the firm when IBM discontinued support for the CICS middleware that ran on older models of its AS/400 midrange server.
Big Blue's bombshell was about as welcome as a hailstorm during a July 4th clambake, but it did spur Viking to search for a new enterprise resource planning supplier.
"This was right at the peak of the incredible bull market," Witt recalls. "And here we are in the heart of Silicon Valley trying to find skilled tech professionals."
By last April, Viking had decided on Infinium, a Hyannis, Mass.- based vendor that runs an application service provider, or ASP, center out of Marlboro, and the company was live by August.
Witt won't disclose what he's spending on the Infinium contract, but he notes that it's priced with a variable fee tied to the number of users. If the company grows, it winds up paying more. If it shrinks during a recession, the costs will go down, too.
"Our cost is a variable stream that matches our volume," Witt says. But switching to an outsourcer also helped Witt and the technology staff get a better grip on who was actually using the system and why.
"When you're on an owned system, you don't pay attention to everybody who is using it," Witt says. "This allowed us to scrutinize everything and make sure the people who are using the system actually need it."
With the switch in systems behind him, Witt was ready to move on. Since the ASP contract went live last year, Viking has embarked upon a variety of Web initiatives. In December, the firm rolled out a service called "I Ship Viking" that lets small- and medium-sized business clients enter orders via the company's Web site and track their status on line.
More recently, Viking began shifting its data warehouse from an older Tandem system to an industry standard platform using Sun servers and an Oracle database.
The shift in the data warehouse has been instrumental in the rolling out of a customer relationship management system from Clarify that's already live, with 100 customer service reps in the firm's two call centers in San Jose and Salt Lake City.
By next year or 2003, the firm wants the entire sales force to be linked to the system.
Beyond the CRM system, the revamped data warehouse will help Viking in other ways. Part of that comes from the corporate parent, which bought the San Jose trucker in 1998.
"FedEx is very heavily into data warehousing," Witt says. "Everything is about getting more information to the decision makers."
Now that the transition is largely finished on the CRM side, Witt expects Viking to add more real-time analytics to the corporate staff.
For example, since the early 1990s, Viking has closely tracked the number of packages and the weight of each one on a daily basis. Shipments are also tracked by city, route, and individual truck. The Sun and Oracle platform will let Witt and the rest of Viking's corporate staff gain more details on each piece of data they track.
"We monitor our company performance on a daily basis," he says. "We look at every key indicator. It's amazing what we track. It's literally a time and motion study that tracks down to the worker the number of shipments an individual delivered and their weight by the hour."
Witt explains, "We kind of established a performance scorecard based off of 100 percent, and then set goals for every service center. If it says Seattle, 'your goals are x; today they came in at y,' we can tell on a daily basis how well we are doing by city. What we want to do is make sure that the decision makers can continue to o drill down in a timely fashion."
For a trucking company, the timeliness issue cuts right to the heart of the business, and details on problems that might be impeding the firm's ability to complete its deliveries on time are crucial.
Witt concludes, "More than anything, it's the information that becomes the value, not the shipment itself."