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Biggest isn’t always best

Biggest isn’t always best

Windsor Engineering’s technology boss knows all about the ups and downs of SMEs, in which IT directors struggle for visibility but where they have to be more innovative than their counterparts in large organisations.

Every year (usually shortly after the MIS 100 appears on newsstands) we’re contacted by IT directors who claim they hear too much about what New Zealand’s big companies are doing with IT: Implementing CRM systems, rolling out business intelligence software, installing SANs … It all sounds high-powered and expensive. But what about the vast majority of Kiwi firms with far fewer than 100 desktops? They might not have the enterprise-sized budgets, but they still need enterprise-level reliability.

Peter Gibbs is well acquainted with the challenge. He looks after IT for Wellington-based Windsor Engineering Group, a manufacturer of equipment for the timber industry with an annual turnover of $20 million, small offices in Taupo and Melbourne, and agents in Chile, South Africa and Korea. Its products – such as drying kilns, dust extractors and filtration gear – range in price from $200,000 to $2 million. They are highly customised and engineered to suit the client.

Sizing-up the vendors

Windsor Engineering has 80 staff members, 55 of whom use computers. The 47 desktops and eight laptops run a mixture of Windows NT 4.0, 2000 and XP. Last year Gibbs started buying a new PC every month to ensure none would be older than four years. There is also a PC-controlled plasma cutter in the factory, running Windows 98 and attached to the local area network for data transfer.

The primary server has just been upgraded from NT 4 to Server 2003, and the old server will be rebuilt as the mail server. All users have Microsoft Office and designers and engineers use AutoCAD, as well as more specialised design and modelling packages such as SolidWorks and CosmosWorks for generating models and stress analysis. The 13 AutoCAD licences are on subscription and the software is upgraded with each new version.

The main application is the FoxPro-based ERP system WinMAGI. Michigan-based MAGI has nine other New Zealand sites.

“WinMAGI suited a company this size and can be highly customised to suit us as a jobbing manufacturer,” Gibbs says. “We’re not making thousands of cans of baked beans. Everything is designed for the customer.”

Gibbs looked at a number of ERP offerings. “Some were just too expensive and weren’t necessarily flexible. If we want to change something next week, we want to do it next week. It’s all about cost and flexibility.”

Having been at the firm nine years and with a background in mechanical engineering, Gibbs’ role ranges from help desk to strategy and planning. He is also responsible for ISO 9000 quality management and assurance standards, as developed by the International Organisation for Standardisation.

Graphic Dimensions (a three-person systems integrator and hardware supplier) provides IT support beyond what Gibbs can do.

“They’ve learned our business and know almost as much about it as I do from an IT standpoint. I know enough to keep the company operating on a day-to-day basis and beyond that I phone them. As an engineering company, we don’t want a computer system that requires full-time maintenance and management. Our core business is not IT.”

The firm has a wide variety of users including accounts and administration; despatch and purchasing; management; designers and engineers; sales and marketing; the service department; and the manufacturing and production team. Half the users are technical.

Designers have to be trained to do engineering drawings on a computer, but most people who have come into the company from university in the last few years have those skills. Any quirks in the system, as well as customisation, are taught by peers. The company has also started training in some aspects of Office.

“I’m only now convincing people that just because they’ve seen Excel before doesn’t mean they know how to use it efficiently.”

Show me the money

As the company’s reliance on IT increases, IT has to become more accountable. For the first time Gibbs will have to make a presentation justifying the IT budget. With a turnover of $20 million, 2 per cent to 3 per cent is budgeted for IT operations. Out of that, one third is depreciation; less than a third is staff costs; and the balance is back-up tapes, CDs, software subscriptions and non-capex items. Gibbs wonders if this is standard for a firm of this size.

The IT capital budget is different. At the start of a new financial year, Gibbs makes a list of what he wants to do in declining order of importance. Once the company budget has gone through its first round of machinations and it is obvious everyone wants more money than is available, Gibbs sits down with the accountant to see what can be changed.

Top of the list projects require a written proposal. How big it is depends on how far up the chain it goes. Gibbs and the accountant sign-off items and projects up to $2000. Purchases of more than $2000 go to the CEO, who will give his consent, decline, or ask for more information.

Windsor has just replaced its file server at a cost of more than $30,000, a cost that has to be approved by the CEO who also took it to the board.

“I’m trying to organise things so I don’t have to get permission from the CEO every time,” says Gibbs. “We’re looking at putting together a small team – but it won’t be IT professionals, it’ll be users – to oversee things.”

Despite not having the spending power of a large company, Gibbs says he has been well serviced by Microsoft, Xerox, Telecom and Vodafone. However, overall, he thinks some vendors have difficulty understanding the needs and constraints of a company the size of Windsor.

The SME pressure cooker

For a firm the size of Windsor Engineering, Gibbs says, reliability is the main issue; given it can’t afford to run multiple servers.

He only buys brand name machines with three-year warranties. The company has a tape back-up which runs every night and tapes are stored in another building. For reliability’s sake, storage isn’t done on the server but on a different box configured by Graphic Dimension as a RAID array.

Gibbs says the system provides enterprise reliability at a fraction of the cost. To ensure the integrity of data within the system, the company brings in a FoxPro systems analyst two days a week to maintain and customise WinMAGI.

The biggest IT upheaval the company has endured was going from an IBM AS/400 green screen manufacturing system four-and-a-half-years ago to Windows-based WinMAGI. The next biggest change was installing a document management system that was compatible with AutoCAD. Users’ work habits were surveyed and the document management system was custom-designed to match how they work.

One of the key pressures in the industry is keeping down production costs. “We’re a New Zealand manufacturer with a reputation for good quality and sound engineering solutions, but there’s always somebody who says they can do it cheaper. The other main challenge is to be innovative in our products. For a company our size, we have a reasonably large development department.”

Strategically, the IT aim is to reduce costs and improve productivity. “I’d be surprised if any company would tell it any different. An underlying aim of some of the managers is to simplify things. They see engineering and computing as being relatively complex. I believe that making our backroom computer system more complex can gain efficiencies and simplicity elsewhere. But, overall, this company makes money by selling its intellectual ability and adding value to bits of metal. We don’t ever make money out of buying a new computer.”

Gibbs is a cynic when he hears about the increased productivity gains promised by the installation of any system. “I’ve never heard of a vendor who would wait for payment until we got more productivity,” he quips.

However, he agrees data can be made more accessible and user-friendly and this cuts down time. Prior to Windsor installing WinMAGI, purchas-ing of materials for a job had to be handwritten, photocopied and keyed into the system. Generating purchase orders for a $3 million job took two to three weeks. Now, it is more like three days.

Gibbs says gains like this have been made in all parts of the company as a result of getting smarter with engineering and computer systems, but he would like to see a benchmark of what is normal for a company of Windsor Engineering’s size.

Sizing-up the market

Gibbs says, as the IT manager for a medium-sized company, he often feels isolated. He goes to various IT seminars and finds most people there are from large organisations and government departments. He would like to talk to medium-sized company IT people about how they do things.

“How do we know whether we’re behind, average or ahead in terms of what we’re spending for the type of systems we have? How many IT staff do other companies our size have? How have other companies our size dealt with manufacturing, accounting, job history software?”

Other topics of interest include internet access and software licensing.

“How do companies our size view internet access to staff? Do they view it as a matter of right? Do other companies see abuse of the system? What policies are sensible?”

At Windsor Engineering, he says, staff have Jetstream internet access and during most lunch breaks around five or 10 staff members are online – banking and surfing the web. “There is the usual policy forbidding pornography and other objectionable material and staff are warned that all websites they’ve been to are logged but, in two years, there have been no problems with internet access. I find a number of companies are paranoid about giving staff internet access, but my observation is that it can’t be a very good place to work if you don’t trust your staff.”

When it comes to software licences, Gibbs wants to know whether other medium and small companies have software subscriptions or do they wait until licences run out before they buy anew?

Windsor pays $10,000 annually for the latest releases of AutoCAD and software subscriptions are written off as an operating expense. Magi and SolidWorks are also on subscription. However, Gibbs sees no benefit in subscribing for Microsoft software. Instead, the company gets OEM versions of Windows and Office when it buys a new PC each month.

To keep track of licences and make sure they are up to date, Windsor runs Layton Technology’s AuditWizard – a client-side applet that fires information back to a database – every seven days.

Peer pizzas

Gibbs would like to form a loose group of IT managers from firms with one to 100 PCs, which could meet every three or four months to talk about IT.

Apart from giving the opportunity to find out whether you are doing things in the most cost-efficient way and providing a benchmark it could also provide career opportunities, says Gibbs.

“I’m not talking about poaching but being aware of what other people are doing and what their aspirations are. I would have no problems in hosting a meeting and shouting a lunch or some beer and pizza. Or I could fly up to Auckland.

The company is not so mean-spirited that I couldn’t do that. We’re a small family-type company that has grown. The attitude is, ‘That sounds like a good idea, it’s only a couple of hundred bucks, go have a look.’”

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