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.”
