It didn’t take long for Vingage Corp., a two-year-old Reston, Va.-based company that makes products for delivering video over the Internet, to reach a turning point. When the firm was founded in 1999 with 12 employees, it was able to get by with a PC-based Peachtree Accounting system for small businesses.
But the company had grown rapidly, driven by demand for products such as its Video Server and DVD Fulfillment server. Gary Beebe, the company’s vice president of finance, says the growth created the need for a larger, enterprise system. By April of last year, the firm, which now has 52 employees, opted for Oracle Financials 11i.
Beebe says the company was already using the Oracle 8i Enterprise system database, and that smoothed the installation of the financials module from the software vendor’s enterprise resource planning (ERP) system.
“We were also looking for software that would automate billing and invoicing systems without a lot of up—front work,” Beebe says.
In June, the first phase of the installation got underway. By January, Vingage’s Web-based purchasing and expense activities were in place. Beebe hopes to have the accounts receivable component finished by the end of March. The final phase of the rollout will entail the integration of the company’s international business, but Beebe couldn’t offer a date for that step.
Overall, the system cost Vingage in excess of $400,000, although Beebe wouldn’t get any more specific than that. Still, the cost puts the company at the low end of the ERP price spectrum, according to market research firm Meta Group.
Meta surveyed 63 companies and found that the average cost for an ERP system was $15 million, with the most expensive projects running up to $300 million.
In migrating from Peachtree to Oracle, Vingage moved from a Microsoft Windows NT server to a server running Sun Microsystems’ Solaris operating system.
But why bite the bullet? Whether the price tag is half a million or quarter of a million, why go out and buy an ERP system? Beebe offers some insight.
“We were very limited in the type of reporting we could get out of” Peachtree, he says. “There were a limited number of ways to set up an account string. We wanted to set up our reporting across a matrix that included a set of books, locations, account codes, budget codes, and various project codes, so that this would be the end-all-be-all of reporting across our company.”
The company also needed its financial system to handle reporting across all of its business lines.
“We have implemented the Oracle software across all purchasing and payment processes and layered the entire financials system on top of the company,” Beebe explains. “We have automated our production system into the receivables, which has allowed me to meet the company’s growth needs in the accounting area by using the system itself rather than hiring additional staff.”
Beebe runs the accounting system with three people, including himself. “For us it’s a huge efficiency driver,” he adds.
The system has let Vingage move its purchasing process to the Web, Beebe says. For example, employees can request purchase orders from a Web page that includes drop-down menus that provide the information for filling out the order. Once the request is finished, it’s routed to a supervisor, and then sent to finance for processing.
Finance receives the purchase order request, and creates the actual purchase order. From there, it’s sent back to the employee, who then places the order with a supplier.
Vingage’s expense reporting is also automated. Employees submit their expense reports through an intranet to a Web page within Oracle 11i. Once a supervisor signs off, the report is routed to the finance department.
So what’s next? Beebe says the firm is in the midst of automating its receivables function, and six months from now it may be ready to receive customer orders with the system.
Further down the road, Beebe is looking to set up pages in Vingage’s extranet that permit customers to review their accounts.
Beebe says his firm was aided by its being a young start-up without a lot of bureaucracy and few old systems that had to be scrapped. It didn’t hurt that as a tech firm, it was stocked with plenty of employees who were well-versed in using new systems.
“Because a large part of our staff are software engineers, they were largely receptive to using new software and technologies to do day-to- day activities,” he says. In addition, Beebe and some other Vingage managers had prior experience with Oracle software, which helped the firm sidestep extensive outside training.
So what’s the likelihood of another company duplicating Vingage’s experience, even if it isn’t young tech startup, loaded with a tech- savvy workforce?
There’s nothing “to say that it can’t be done, and it can’t be done right,” Beebe says. “But it will take a lot more work, planning, and time.”