Hotting up the pace with web-centric IT

One of the driving forces behind digital television is Saltaire-based Pace Micro Technology. Pace develops, manufactures and distributes TV set-top boxes (now ‘home gateways’) and has helped satellite, cable and terrestrial broadcasters deliver services to millions of viewers. UK customers include BSkyB, ITV digital, Telewest and NTL, and the firm, the leader in Europe, is now driving overseas growth in particular in the USA. Best estimates put world figures for set-top boxes at 35 million units this year, rising to some 90 million by 2005. Thus, whereas in 1998 Pace’s turnover was £180 million, predictions for 2005 are £2 billion. So three years ago, faced with a requirement for massive growth in sales, the company set about gearing its considerable IT infrastructure systems for the new era. And that meant replacing pretty well everything. Jon Jarrett, Pace’s director of IT, says there were several key points: “We have a mission statement that we should be first to market with quality products. So that meant we needed fast-track R&D and first class support for our considerable engineering resources (60% are R&D engineers). But in 1998 all we had was an ageing MTMS character-based MRP system with data being extracted to spreadsheets and desktop databases developed off line by different departments.” And that meant there were issues with engineering change control and out of date manufacturing and business data leading to conflicting management information and mistrust of the system. Also, the IT infrastructure was being stretched to its limits, deploying the system to new offices world-wide was difficult and the system’s age was a major disadvantage. “We could see that it wouldn’t support our forecast business expansion,” he says. And with plans for everything from extranet-based management of its outsourced manufacturing operations in Czechoslovakia, Hungary, Mexico and Ireland to consider (each capable of assembling a set-top box in under 25 seconds), to web-based collaborative engineering on the design side, they were clearly right. Jarrett was appointed in 1998 and his early decisions have proved spot on. Knowing that he would have to establish extensive ERP (enterprise resource planning) and PDM (product data management) systems, he first attended to the infrastructure. Phase One was about renewing servers and putting in a professional server room, with protection and the rest, to improve reliability, service and maintainability. Then, critically, he turned his attention to the lifeblood of this company – it’s engineering IT support. “Although the old MRP system had supported our £180 million business, albeit shakily, we had no coherent way of supporting our engineering. What we needed was a PDM system to control the designs, the projects, the people and so on.” That, he says, would put engineering at the heart of the company in a very real way. Web PDM first and foremost Pace selected MatrixOne’s Oracle-based PDM system, and vested in it not just engineering, but also some manufacturing control. “We wanted data to be entered once only,” he says. So Matrix has been used not only for managing Pace’s Veribest ECAD and Pro/Engineer MCAD systems, with access provided to some 500 users, but also the parts and the BoMs (bills of materials) more usually controlled in an ERP system. “Matrix controls all product and project data and documentation and engineering change control. It’s all in one joined up system,” says Jarrett. Excellent decision. But actually, implementing PDM first was doubly astute. In 1999, everyone and his dog was doing ERP implementations to beat the Y2k bug: “systems were expensive and resources to implement them in short supply,” says Jarrett. By dealing with the essential PDM first, and leaving ERP till 2000, Pace was in an excellent position to call the tune and get first rate attention from the vendor community! So, with the PDM in place, ERP to support Pace’s supply chain, physical build and production was the job for 2000 – to “rein in a lot of separate systems”, cater for the vastly increasing numbers of transactions, and improve management reporting. Other considerations included: achieving close integration (continuing the theme of one-time data entry, “to give a single version of the truth”), with instant reflection of PDM data change in the ERP system; moving to self-service applications over time; and harnessing EDI or the web equivalent for its subcontractors. Jarrett says that while Pace had standardised on Oracle at the database level, and knew that web-enabled applications were the way to go for ease of use and global deployment, it hadn’t investigated the ERP applications market in any detail until then. “We wanted a one-stop solution for all modules and an implementation deadline of just six months,” he says, “to meet our year end commitments and deal with our phenomenal growth rates.” You simply can’t afford to spend too long when your business is moving as fast as Pace’s – or arguably in any business. “We had already had growth predicted to £340 million for the year of implementation, with projects and products to match.” So Jarrett did his shortlisting differently. “We took a pragmatic approach,” he says. “If you go for the standard ITT, you get a very verbose, thick document that no-one reads and is out of date the moment it’s written. It takes months and if you get a shortlist of four, any of them could do 90% of what you need – who’s going to implement more than 90%? We needed a methodology to cut through all this and get there fast.” In fact, he appointed Marlborough Management consultancy. The firm went into all Pace’s departments assessing the ‘imperatives’, ‘nice to haves’ and ‘not requireds’ against its check lists, and then matched those to its ERP supplier database. That got 10 possibles – and the whole process took just three weeks! With a near 98% match, Oracle Applications came top of the list, followed by SAP, Baan and Intentia. Pace’s steering group (key people from logistics, manufacturing, finance, operations and IT) selected Oracle: apart from the right functionality and modules, Jarrett says its database implementation tools and choice of platforms helped. As did 100% web-enabled applications, the promise of a seriously committed support service and a “long term partner with proven technology and leading edge functionality, like workflow.” In the event, he says, “Oracle worked closely with us as one team to review our business processes and configure the applications to meet our business needs. We pushed them quite hard, but this one-team approach ensured we met our deadlines and stayed within budget.” By January 2000, the implementation work was underway. First to go live was Oracle’s HR and Payroll modules – within two months. Jarrett says it made sense to get these in early, partly to match the tax year end deadline, and partly because they provided a great learning environment “that wasn’t going to stop the business” if there were problems. Subsequently, the team went on to install around 25 Oracle applications – all of financials and manufacturing – in just six months: a considerable achievement. From an ERP perspective it’s been another success: its increased functionality and better reporting are supporting Pace’s growth rates. Additionally, and just as important, “The Oracle applications are now ‘owned’ by the users, and we have completely changed the company culture,” says Jarrett. This is no longer an IT-led infrastructure: the system is now trusted and relied upon by its users throughout the departments. And in terms of external deployment and maintenance, the fact of web-centricity has also made life as easy as Jarrett expected. “We don’t have to worry about what’s on the desktop: it’s just a browser interface.” Tight and standard As for tight integration between PDM, ERP and related applications, Jarrett has achieved this using standard interfaces. And the result is not only the desired engineering and transactional support but, for example, much better visibility of everything from raw materials inventory to completed set-top boxes. Jarrett says it’s tough to be specific about benefits: “Our business has changed too much. I can tell you though that our total IT spend is now less than 1% of turnover, when you would expect nearer 1.5—2%. The other thing is we’re now doing three times the business with the same number of people: engineering has grown, but everything else is the same or less.” Although he describes himself as a sceptic where the rest of e-business is concerned, Jarrett isn’t standing still. “We now have joined-up systems internally and our new objective is to join our systems to our partners, suppliers and customers.” And it’s happening: the firm already exchanges a great deal of design documentation with its partners using its extranet. “It’s all secure and password protected,” he says, “via our website.” However, he wants to move towards true collaborative engineering relying on XML-based web hub technology. Similarly on the supply chain side, Pace is currently looking to develop beyond faxes, emails and spreadsheet attachments for forecasts and demand call-offs, to a near real-time XML-based web hub alternative. “Our intention is to get clear visibility of manufacturing being carried out on our behalf by our subcontractors,” says Jarrett.