The Navigator Jan 2005

JANUARY 2005

IN THIS ISSUE

· XALLES NEWS: New Xalles Business Structure and Brazil Recap
· CUSTOMER FOCUS: Quantic and Supply Chain for Fast-Food

· CREATIVITY INFUSION: How to Deploy IT Systems · CHAIRMAN'S CORNER: A Focus on Efficiency

NEWS

Xalles Creates New Business Structure

In January 2005, Xalles Limited will merge with its alliance partner, ArrowVista Corporation of Washington DC, and another small boutique consulting firm in Canada, name to be announced, to form a new business structure that will provide clients with an improved range of services.

The result of the restructuring project will allow Xalles to focus its efforts on its core strengths, providing business strategy and systems implementation services to companies trying to improve their Transportation and Supply Chain processes. The holistic methodology Xalles uses in the deployment of new technology encompasses not only the common elements of solid project management and training, but also a careful examination of the business processes and organization structure that the new technology or system will have to work within.

Xalles' Brazil Trip Recap

In December, Xalles visited Brazil for the second time in 2004 to provide international marketing strategy advice to Brazilian IT companies, through a seminar and key note speech both presented by Xalles’ Chairman and CEO, Thomas Nash. The trip resulted in new clients and talks are currently in process with several other potential IT firms in the country.

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CUSTOMER FOCUS

Supply Chain Solutions for Fast-Food Industry Proven to Work

Quantic Systems, Brazil

Many changes are occurring in the supply chain world and continued development and use of software and web-based solutions to speed supply chain communication and information exchange is at the forefront of many corporate growth and improvement plans.

Quantic Limited, operating as Quantic Systems, based in Goiânia Brazil , was established in 2001. Quantic Systems provides applications specifically designed for the management of sales and delivery of products to niche markets tailored to the needs of very demanding clients.

Quantic Systems has a unique product for particular niche markets in the supply chain. Their Extreme Delivery™ solution has applications in a number of countries worldwide. Some of Quantic Systems’ success stories include the development of internet-based software for the Agrarian Reform Ministry, McDonald’s Brazil, McDonald’s Uruguay and Subway Brazil.

McDonald’s Brazil sales and delivery system, also known as McEntrega™ (McDelivery), was developed by Quantic Systems and launched in June 2001. Quantic used the most advanced technology development tools to create a unique system that could meet the needs of the biggest fast-food chain in the world, with more than 30,000 restaurants in 112 countries. The challenge was to develop a management application for the reception of orders (call centre or internet), the restaurants, the administration and the distribution. Quantic Systems dedicated more than 18,000 hours to the development of a complete management software solution for delivery.

The numbers are a testament to the exceptional results provided by this solution. In 2004, McDelivery resulted in more than 2 million orders, generating almost $40 million Brazilian Reais (approximately $15 million USD)in McDonald’s Brazil restaurants. Today, more than 100 restaurants in Brazil and more than 50 restaurants delivering internet orders use the McDelivery system, the only such system in the world. There are currently also opportunities for exporting this solution to several countries in Asia, Europe and North America which Quantic is researching with the assistance of Xalles.

Subway, the second largest fast-food chain in the world with more than 22,000 outlets in 70 countries, has also partnered with Quantic to develop a software solution for delivery. This month, Subway Brazil will launch its delivery service called Subway Delivery™, which is based on Quantic's Extreme Delivery™. Subway Franchises expect an increase of more than 25 per cent in sales.

Xalles foresees the successful introduction of Quantic Systems’ solutions in new target markets and is pleased to be acting as the firm’s advisors. Xalles is providing Quantic Systems with business strategy services and guiding the company through an international launch strategy including the set-up of a new company in the United States of America, creating an international distribution organization, and the acquisition of investment funding.

The photo shows Rodrigo Cerqueira, CEO (left) and Cesario Simoes, CFO of Quantic Limited in front of one of the Goiânia McDonald’s locations which provides the McEntrega™ service.

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CREATIVITY INFUSION

How to Deploy IT Systems

Much has been written on this topic, yet an unfortunate fact remains. A large percentage of the investment in IT systems does not result in the benefits expected when the project began. Here are some tips for avoiding this common pitfall.

1) Understand the impact of the new system on ALL stakeholders. This list often includes customers and suppliers, not just internal users of the system.

2) Examine the motivation each user has for using the system correctly. Often implementation problems stem from the fact that one user’s data is dependent on another user’s input of that data and the input user has no direct benefit to correct usage. Remember the “what is in it for me?” principle when designing your implementation program.

3) Review the training program. Are your users given one chance at training, or is there a program of ongoing learning designed and ideally built into the system itself? Continuous learning is much more effective than a big bang approach around the launch date.

4) Educate the managers of the end users. Many times training programs focus on the end users and not the management layers who motivate, measure and reward the performance of the users on the job. This reinforcement is essential to ensure long term effective usage of a new system.

5) Establish an effective ongoing support program. On many IT system projects, so much attention is devoted to getting the system “live” that little time or funding remains for the support program. An effective support program can lead to years of tangible benefits long after the deployment team has been disbanded.

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THE CHAIRMAN'S CORNER

A Focus on Efficiency

As we begin 2005, I have been asked about priorities that companies should work with in this new year. As we reflect on 2004 and observed the growth in many world economies, we also observed terrible disasters and political turbulence. For a company to survive and grow in this often unstable environment, we are recommending a focus on efficiency for 2005.

Too often solid management practices are shunned during times of growth. We only need to look at the recent history of the year 2000 in the IT industry for evidence of how errors in business judgment can cause a large impact when they rely on other people’s predictions for the future.

For 2005, we recommend that companies examine a few key aspects of their operation and look for efficiency opportunities:

1) Hiring Practices. As salaries rise in an improved job market, companies often become desperate to hire good talent and often create an imbalanced pay scale in their internal workforce. This can often lead to an exodus in experienced staff because of their perceptions that new talent is being hired for more than their hard earned salaries.

2) IT Spending. There is much inefficiency today in most organizations when it comes to how IT funds are spent and how systems are implemented. Review your company’s spending in this area to ensure that all investments are directed at projects that directly support your IT strategy. Also examine the effectiveness of the implementation of those projects and employ the tips mentioned in our Creativity Infusion section.

3) Supply Chain Processes. Many organizations are still struggling with how to gain efficiencies in supply chain improvements. Look for areas where your current efforts are “penny smart but pound foolish”. Often some simple changes in new areas can result in staggering benefits compared with the relatively minor benefits that traditional supply chain optimization efforts have lead to.

Best success to you in 2005 and may this year be your year of realizing improved efficiencies.

TWN.

Thomas W. Nash is the Chairman and CEO of Xalles Limited, based in Dublin, Ireland.

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For previous issues of The Navigator please click on the following:

October 2004

May 2004