Grand & Toy has implemented software from Clarity Systems to create an application that provides key performance indicators (KPI) reporting.
The office supply giant wanted to keep track of all those pens and pencils through a system that reports performance by different departments and levels of management, allowing the firm to compare data across different time periods.
Clarity 6 software provides budgeting, planning, reporting, modeling, consolidations, and forecasting in a Web-based application. Clarity views Grand & Toy as a unique customer because they have gone beyond simply budgeting or planning software, and instead have implemented what it refers to as “operational performance management.”
John Melodysta, chief administrative officer at Grand & Toy, said that using Clarity solutions for KPI reporting, identifying order defections, combating sales divergence, and even revamping their payroll system, has helped ROI as well as the company’s overall efficiency.
“If you’re going into it with the mindset you’re going to use it for just budgeting, it will cost you whatever it will cost you,” Melodysta said. “But, if you start to make use of all the other applications they have to offer, you’re cost of ownership goes dramatically down. It also has ease and quickness of deployment and simplicity. It’s Excel over the Web, I mean, what gets better than that?”
Frank Pizzolato, CEO and CFO at Clarity Systems, agreed, saying that that many companies are still stuck in the traditional Excel world and often pay the price when they try and expand.
“There are some major enterprises out there that continue to use tools and processes that are outdated,” Pizzolato said.
“Excel seems to be the tool that people are most comfortable with in building a budget, and what happens is they will start with a small Excel model, it gets adopted, and when the company grows to many individuals Excel begins to break down. So the model is great, the collection of data is great, but the tool they’re using is broken because it’s not the right tool.”
Clarity refers to themselves as a niche player in the performance management space. Pizzolato said the first business problem customers want to solve is budgeting, planning, and forecasting, because that process is typically broken in most companies.
He refers to Grand & Toy as the prototypical company for others lagging behind in corporate performance management (CPM) to look to in terms of alignment of business systems.
“You’ve heard the term, ‘what gets measured gets managed,’ and it’s very true statement for a company like Grand & Toy,” Pizzolato said. “It was able to, at a corporate level, define what its KPI are and then allow people in the field to march to those same performance indicators.”
Grand & Toy has also implemented, through the Clarity tool, an application called the Defector Detector, which identifies and flags, based on order frequencies and annual sales, whether or not an account appears to have stopped ordering or has reduced its ordering rate.
With Grand & Toy on their side, Clarity Systems hopes to compete with the the larger performance management vendors in the now hot and crowded CPM market.
The market recently saw ERP vendors buying out CPM solution providers in an effort to create more complete business performance management offerings. Examples include Oracle’s purchase of Hyperion, SAP’s acquisition of OutlookSoft, and Business Objects’ buyout of Cartesis.
“ERP vendors are beginning to realize that their transactional systems don’t cut it for performance management and are acquiring CPM vendors to round out their suites,” Pizzolato said.
IDC Canada’s Joel Martin, vice-president for enterprise software research, agrees with the Clarity executive saying the CPM market was one of the fastest growing sector in the ERP space. Total value of the CPM market was pegged at $55 million last year based on vendor revenues.
The growth is expected to continue and will double over the next five years, Martin said, which opens the door for mid-range players like Clarity.
“They have a great opportunity not only in Canada, but also in the U.S., European and Asia Pacific markets,” Martin said.
“You look at ERP apps and they’re growing at roughly 5% of annual growth. CPM is growing at 10%, and while you’re talking about a several hundred million dollar market in ERP versus a $55 million market in CPM, it’s undeniably a hot market,” the IDC analyst added. The reason for the strong market growth, according to Martin, stems from companies who have invested heavily in ERP and are now looking to automate those processes and tie them into other systems.
“It’s driven by the thinking in most companies that, ‘we understand what we need an ERP for and it’s great for capturing information, but then how do we use that information to make sure we can tie it to KPI or the MBOs (management by objectives)?’” Martin said.