The Systems
Showdown
FROM PUBLISHING
TRENDS (NOVEMBER 2002)
The
words “disaster,” “nightmare,” and “terrifying” pop
up when talk turns to the company-wide software systems
that several large US publishers began to adopt in the
last decade. In this article James Lichtenberg,
President of consulting firm Lightspeed,
LLC, finds that the dot-com boom may be over, but
for some publishers, the information age is just beginning
in earnest. Additional reporting by Publishing Trends.
The glossy brochures may trumpet “integrated business
intelligence” and “real-time enterprise,” but when it
comes to actually making use of today’s sprawling corporate
software systems, many in the publishing world are feeling
unplugged. Say “Oracle” to some managers, and
their eyes roll. One executive admits that after millions
of dollars in outlays, his company’s system is “still
not where it needs to be.” Meanwhile, a top officer
at one major house says, “After SAP arrived,
the most powerful person in the company was the head
of inventory management.” These are no trivial concerns.
Bertelsmann’s Direct Group processes tens of
thousands of orders every hour, and smaller publishers
are no less at the mercy of their data lifelines. As
software permeates everything from human resources to
inventory control, the attack of these company-wide
information systems — known as ERPs, for Enterprise
Resource Planning — may be publishing’s 21st-century
battle royal.
Like all good combatants, publishers can be secretive
about their systems (one company at first said its ERP
vendor was “classified information”), but the general
outlines of the software landscape are clear enough.
Both Random House and Pearson have implemented
SAP, but in different ways: Pearson took a baby-steps
approach with oxygen tents standing by at each installation,
while Random went for a “big bang” approach, with a
hard start for everyone (and a hard spell for accounts;
see article). Simon
& Schuster also uses SAP for certain functions,
with a full review in progress. HarperCollins
works with Vista, which provides a smaller, publishing-centric
program, and whose new Author2Reader release has been
implemented by Elsevier. McGraw-Hill is
working through an Oracle 9 implementation. Like the
much smaller Wiley, AOL Time Warner Book
Group has elected to stay with its legacy systems, some
proprietary and some off the shelf. “We have simply
taken what we have and built on it,” explains Phil
Madans, AOL TW Director of Publishing Services.
“Our philosophy is: if a good new package comes along,
we integrate it with our system.”
Pure
Vanilla SAP
While
the mix-and-match attitude has its adherents, many publishers
have tossed out their aging, ad-hoc agglomerations of
different programs and made a fresh start. In that department
the German company SAP has generated most of the buzz
— and the backlash. Spanning up to three years and costing
perhaps $100 million for implementation and training
(as was the case with legal publisher West),
a SAP rollout is inevitably grueling. “Rolling out an
ERP involves politics as much as business processes,”
affirms Cynthia Batty, VP Operational Systems at S&S.
“Strong leadership with a vision of what you need makes
it possible to avoid problems that otherwise become
major headaches.” Companies such as GM and other
manufacturing giants for whom SAP’s package was originally
built can handle the price tag, as well as SAP-friendly
processes that are linear, sequential, and rigidly defined.
But books aren’t bobbins, and as publishers have found
to their dismay, SAP is no right-brained beast. You
can’t call something an ISBN number, for example: it’s
“material.” So for better or worse, companies are forcing
their processes to fit the software, and not vice versa.
“We told our people from the beginning, no source code
changes,” says Andrew Webber, Senior VP of Operations
and Technology at Random House. Ditto for Charles
Benante, Vice President, Ebusiness for Pearson Technology.
“Customization that would make the system more familiar
is not only expensive in itself, but makes the system
more complex,” he says. “And it really drives up the
costs of upgrades.” Pearson is now implementing SAP
4.6 for a major subsidiary, and taking a hard-line approach.
“The focus is to implement pure vanilla SAP, and there
is no doubt that it is causing us to rethink everything
we do,” Benante adds. “It is re-engineering the way
we do business.”
Others have taken a less arduous route. One happy story
comes from Thomson Learning, which has been using
a system from J.D. Edwards for the past eight
years. Carl Urbania, Thomson Senior VP &
CTO, says the system “has been very appropriate to our
business, even as we grew from $500 million to $2.5
billion in annual revenues. The product is robust, has
rich functionality, is user-friendly, and there’s good
support.” Incidentally, in J.D. Edwards May launch of
Version 5, the company took its full suite of integrated
software and broke it up into 70 different components,
so that customers can pick off the most relevant products
in their quest for the ever-elusive “quick value.”
Technology,
or Genius?
Still,
some smaller businesses are finding a scarcity of options.
Kevin Hamric, Director of Sales Operations for
publisher Sybex, says his company uses a proprietary
system: “We lease it, and it needs a complete overhaul.”
In search of a replacement, Hamric is leaning toward
a Vista system for its flexible, customizable modules.
“It was written solely with the quirkiness of publishers
in mind,” he adds. (Ironically, Sybex is the official
publisher for SAP in the US, and the industry’s learning
curve has been a boon. Says Hamric: “We sold a lot of
books because of their mistakes.”)
For those companies sticking with their current if awkward
home-grown systems, another solution may be at hand.
Recent new products from IBM and Siebel
appear to promise not only a flexible way (IBM) to manage
content creation, but also software (Siebel) that will
permit many different systems to harmonize. However,
as S&S’ Batty observes, “An integrated solution
is something that publishers will need in the 21st century.
Either way — ERP or home-grown — it’s going to cost
a lot.” In the long run, the varied approaches to ERPs
may respond to a basic question about publishing itself.
Is the business one in which cost accounting is the
central mechanism for management? Or is it a quirky
process in which past results may not be a reliable
guide to the future, say, when a middling author has
a breakout success that wins a Pulitzer Prize? As some
see it, technology is no substitute for genius. “There’s
no print-out in the world,” says David Kent,
CEO of HarperCollins Canada, “that can do what
Phyllis Grann did at Penguin Putnam.”
©2002
Publishing Trends
