Is Your Software Obsolete?

• Warning Sign 1: Your system survived Y2K

• Warning Sign 2: Employees access more than one program to answer a question.

• Warning Sign 3: Seemingly simple requests for information take days or more to produce.

• Warning Sign 4: There are time lags between important operational systems

• Warning Sign 5: Your system prevents you from managing the business the way you want.

• Warning Sign 6: Operational system is resistant to modifications

• Warning Sign 7:You have no, or few applications, available over the Internet to your customers

• Warning Sign 8: You cannot exchange “EDI” or other electronic documents with your trading partners or customers

• Warning Sign 9: Key business processes are tied to the knowledge of one person or group

• Warning Sign 10: Your system is full of “work arounds”

• Products Not Promises

• Less Demand on High Impact Employees

• Faster Implementation

• Broader View of the Industry

• Reduced Risk

• High Productivity

• Increased ROI

• Trade Ship Minimizes Costs by:

• Increase Productivity

• Satisfy the Customer

• Summary

• Risk Adjusted Payback

• Income Statement Impact

• Risks

• Overbudget Vs. Project Risk

Is Your Software Obsolete?

You know the software. You know the process. When customer X calls, you know who to see. When the totals don’t agree, you know which to pick. After all you have been around since they deployed the system before Y2K, you know every nook, cranny and scar and how to deal with each of them. Day in and day out you sit down and log into the system without even noticing, accepting it - unquestioned - for what it can and cannot do. But do you ever consider its impact on costs, productivity and customer satisfaction?

What follows are 10 warning signs designed to highlight areas that may indicate that your system is growing obsolete:


Warning Sign 1: Your system survived Y2K

Risk: An outdated system can lead to work inefficiencies, provide stale data and impair the organization’s ability to manage itself, as it needs, while customers demand more for less.

It doesn’t seem that long ago, but if your system was live a year or two before Y2K, it could be getting old. Your organization has changed. The organization has different leadership; perhaps it underwent an organizational restructuring or acquisition/divestiture. In the last 4 years, huge changes in methods of software development have been implemented. This is because systems are required to do more: handle more employees; provide more detailed information; interact with outside applications. The methods and tools to develop software more than 4 years ago are shortchanging your ability to handle these demands. Moreover, internal development, based on time constraints and costs, are usually constructed to reflect organizational boundaries and processes of the time, with an emphasis on early deployment. Most organizations have probably changed considerably in the last 5 years and although they may have added functionality to their systems, it is unlikely that they have kept pace with the changes in the organization.


Warning Sign 2: Employees access more than one program to answer a question.

Risk: Too many employees are spending too much time on routine tasks.

The organization has changed, the way it is managed has changed, and systems although staffed and updated, still reflect an older organization. As such, employees are viewing information from many different sources to come up with one answer. Maybe they use the equipment application, to get a depreciation value to put into the sales application, and then maybe go to the Internet to look up a currency conversion. That person has to have access to all those applications, be trained on them all. They become the glue that ties all these disparate processes, together in a way that helps them do their job. How would you train somebody to do that job today?


Warning Sign 3: Seemingly simple requests for information take days, or more to produce.

Risk: High costs for decision-critical, time-sensitive information.

Such requests for information require that employees work with a skilled IT developer to deliver even simple information in different forms. An example, you are looking at a screen, but the order of the information makes it hard for you to get a specific piece of information, or maybe you want to manipulate it. It shouldn’t take days to get this information to the employees. It should be available to them right on the screen.


Warning Sign 4: There are time lags between important operational systems

Risk: Important operational information is late.

The data in your system is at least one-day [hour/week…] old. It is pretty reliable, but you can’t be certain, because the actual information is updated in another system. This maybe OK for some processes, but the operational data should be available to your employees should be fresh.


Warning Sign 5: Your system prevents you from managing the business the way you want.

Risk: Inefficiencies are built in at the organizational level to compensate for the system.

Changes in organizational structure are dependent on time to implement changes in various systems. Customer demands change, the business environment changes, but the organization holds back on these changes due to system limitations. For instance, the sales/marketing department wants to add some incentives to secure a high-value customer who is also talking to your competitor but “the system” can’t handle it. Your customers want to do self-service over the web, but the system isn’t integrated.


Warning Sign 6: Operational system is resistant to modifications

Risk: Seemingly minor modifications are too expensive, or too timely to incorporate.

More people are hired to do the work. Let’s say you expand from a domestic to an international organization and need to add multiple currencies to your system. This is critical to growing the business, but it is going to take several months or more to implement it. Your business can’t wait, so you hire more people.


Warning Sign 7: You have no or few applications, available over the Internet to your customers

Risk: Declines in market share.

Competitors offering extended capabilities, (especially ones that reduce cost, or replace time consuming manual processes), to their customers attract a larger share of the customer base. Customers evaluate their business relationships on several factors; one is the ease with which they can work with a vendor. Customers are beginning to expect web applications from their vendors that provide them with on-demand access to their services. Self-service is an excellent example of this and works to reduce costs internally as well.


Warning Sign 8: You cannot exchange “EDI” or other electronic documents with your trading partners or customers

Risk: Customers will migrate to trading partners with this capability.

Electronic exchange of documents has enormous benefits for all trading partners and is growing in acceptance in every sector. Failure to understand this capability will be debilitating in the near future. Your customers or trading partners want an electronic exchange of information between systems (not just email). Increasingly sophisticated large customers will demand this service. Vendors will be able to provide incentives for using electronic exchange. The movement here is inevitable and can have a profound effect on your systems. If the right infrastructure or architecture is not well thought out and in place, future business with important partners may be in jeopardy, or the costs to implement them will simply provide more cost than benefit.


Warning Sign 9: Key business processes are tied to the knowledge of one person or group

Risk: Loss of that key person impairs the organization’s ability to carry out that key business process.

Your organization relies on the business process knowledge of a single person or group. Businesses can’t afford to have one person be so critical to an operation that it fails in their absence. Businesses should rely on a process, not a person. These kinds of experts arise when they understand intricate and technical details about combining multiple processes together. Things a system does very well.


Warning Sign 10: Your system is full of “work arounds”

Risk: Plenty of data, little information.

A separate program is written to handle one customer, a document describes another rule change and somebody else handles that contract. These are all work arounds indicating that the system is aging and unable to accommodate change. Each time a work around is introduced, the risk of a process failure increases, as does the cost and management overhead. Very often, only a few people are aware of these kinds of exception processes that are normally introduced at the request or demand of large customers. When these processes break down, their consequences are magnified.

You have been working with this system for years; the changes in the way you interact with the system have come slowly over time. You might not notice, so ask yourself:

How much work does it take to make the system work?

If you don’t know the answer to that question, or don’t like the answer, it is an indication that your business has moved ahead of your systems, leading to a diminished capability to react to changes in the marketplace. It can be putting you at a competitive disadvantage. It is time to consider alternatives. Build or Buy, two questions come immediately to mind:

Is it cost-effective to upgrade the existing system, and will it be enough?

Should I buy something off the shelf?

We believe, based on the information to follow that the overwhelmingly cost-effective, risk-reduced choice is to buy software off the shelf. Here, in particular, is why Trade Ship software is the best choice:

• Trade Ship offers Products not Promises

• There is less demand on high impact employees.

• Faster time to implementation

• Broader view of the industry

• Reduced Risk

• High-productivity

Increased ROI


Products Not Promises

Most vendors will tell you, “Yes, we can build that”. It is called Vaporware - Software that isn’t there. It is the same as building it in-house with all the associated risks, but at an even higher cost, with less control over the process.

This is an ideal opportunity for a software vendor to have you underwrite the risk, and costs of developing a system that they can market, while charging a nice premium for their consultants. With Trade Ship you can see, touch and test our software. We also recognize there are times when your needs are different and something must be added. With Trade Ship, we develop software using some of the most cost effective resources on the globe and combine that with highly productive development practices to ensure the lowest costs to you.

Another approach often used, at perhaps the greatest risk and cost, is to hire a premier consulting company to build the software for you. The justification goes something like this:

“They are a big company, with lots of resources and a great deal of experience. I may pay a little more, but I am confident that I will have the system I need ". All those things are true, especially the part where you pay more. These companies don’t make money by building systems; they make money by billing out their staff. They are experts at this. Unfortunately many companies are ill prepared to resist what follows.

You signed a contract that has performance incentives, and milestones tied to payments, etc. It doesn’t matter. Whatever the issue, it will not be their fault. Here’s why. I note below the iterative nature of the analysis process. This is the first weak spot in your agreement. Inevitably, and this is almost as solid as the law of gravity, your staff requirements will expand greatly in gap analysis. In the first three months, you will find that your deployment date, or the scope of the release will change, and your staff will be the culprit. After all, the consulting company is only reporting on what your staff says is needed. Certainly some negotiations will happen, compromises will be made, but you will be behind schedule and over budget.

You are only one-quarter of the way finished.

At some point you will have a system. Ask someone who went through this these questions:


What was the original date of deployment?
What was the actual date of final deployment? What was the initial budget?
What was the final cost?
Were all features deployed?
How much of their staff remained after deployment?
What are the annual costs to keep the system running?
What were depreciation costs?

All of these risks are greatly mitigated when buying a product off the shelf.


Trade Ship has products that are ready now.


Less Demand on High Impact Employees

Internal development will require these expert employees to participate in long, detailed process analysis meetings where they will be unavailable to the organization as business continues. These employees are the experts of your system, using anyone else will compromise the end system. These meetings are very open-ended and lead to an expanding list of requirements. Often, other consultants are hired to assist in moderating these meetings and ensuring the content is captured. These meetings are normally iterative and require approvals and reviews of prior meetings. This is a critical and difficult step in developing the software because the cost of adding any requirement or business process after this step grows disproportionately. Moreover, these reviews embed business processes and organizational structures in place at the time. This doesn’t mean that the processes aren’t faster, but the perspective is to automate an existing process, not necessarily improve the process. It is usually beyond the scope of the staff to determine structural changes to the organization, which might be required by the latter.


We make it easier to move on.


Faster Implementation

Trade Ship software already exists. Key business processes have been captured and built into the system. As such, only a gap analysis is required to ensure the business process is functional. As a commercial software provider, Trade Ship understands that an organization is not necessarily going to change to accommodate the software; rather, our software is developed so that it can be molded to the organization. This is all done during gap analysis and application setup. Gap Analysis takes a fraction of the time that a full systems analysis takes. It demands much less time of your high-productivity personnel so that the business can go on.

After the gap analysis, a review of required changes takes place. Internally, after a detailed analysis, application and system design would begin. These steps aren’t necessary for our software; they are already done. We know what hardware, 3rd party software, network, and other infrastructure items are needed. The software is already written; it just needs your customizations. We just need to cover the items required to hook it up. Something we have done repeatedly. If you are using JD Edwards, or SAP, or PeopleSoft, we are already familiar with those requirements-we’ve done them before.

Considering gap analysis is faster, design and construction are smaller in scope, our familiarity with many leading vendor systems means we can install the system in a fraction of the time. This has at least one major benefit. ROI calculations always consider when you can begin benefiting from any investment. It is our experience that we can deploy broader functionality in 50% less time than internally developed systems.

Payback begins much sooner with Trade Ship applications.


Broader View of the Industry

Trade Ship software embodies a large view of the industry. Often our software is developed to handle a layer of abstraction that would be unconventional for internal development, but critical to future expansion of the company. For instance, the company may be completely domestic in its operations; Trade Ship handles it, and gives you the ability to expand into an international market in the future. Internal requirements may call for all currency to be in US dollar terms; we develop for multiple currencies. Current requirements may not demand customer facing applications on the Internet; Trade Ship systems all have web-based access and the security to implement them. Each of these items is there because we have a broader view of the industry, and each will allow the company to grow with the functionality “built in”. No need to go back and modify the requirements because the business changed. No time lag, no extra development expense. No need to worry because the person who developed the billing engine left six months ago. We do this because we have input from others in the industry -- your customers and trading partners. We are constantly in touch with them because they are our customers too.

This expanded view of the industry allows your company to grow in several directions. It can grow bigger by volume (vertical growth) and can grow by type (horizontal growth) to name two. This means that if you are tracking assets and own one hundred thousand, you can grow to two hundred thousand or more. If you are a marine oriented organization, then you can add non-marine types to your fleet, or instead of containerized cargo, you can take break-bulk. We allow for multi-dimensional growth of your business.

We know the industry.

Developing software internally has some obvious benefits. Once delivered, the system reflects your business. You are the expert and have complete control over it. Your staff built it, and they are members of your organization and culture and their careers are intertwined with the success of the company. Let’s examine this.


Reduced Risk

Forty to Fifty per cent of IT projects fail. Considering that these investments can exceed several million dollars, this is a daunting statistic. They grow worse as complexity increases. Not only was money lost, so was time, perhaps prestige.

For Trade Ship software, once gap analysis is complete, the risk of the new system is virtually completely known; either minimal change are required to deploy, or larger changes to accommodate specific business processes are added. If these changes are too significant, all that is lost is the time to complete the gap analysis, which is a small fraction of the total cost of the software license, and less considering the total budget of in-house development. In comparison by the time you know the suitability of either vendor or in-house developed software, your investment is upwards of 75% of the total budget, and timeline. You are at the point of no return because it is increasingly difficult to reverse or cancel a project at this stage. There is just too much at stake including careers, reputations and investments. The momentum of the project simply precludes any objective review, and, too often, good money follows bad.

IT failures of this magnitude can have devastating consequences on a company including its finances, share price and perception in the market. Trade Ship products are working entities when we present them. They are not prototypes, or concepts. Their performance and deployment characteristics are known. Building new systems involves many new variables and costs that must be managed, often by people who never worked with them before. Here’s what I mean.

Systems today are built using either Sun’s J2EE specification or Microsoft’s .Net. Which is best for your company? What criteria do you use to make the selection? What are the risks? How are they similar, how are they different? Each of these platforms will likely require not only training on a different language, but on how to build the components and how to put all the components together. There can be significant retraining costs for your staff, and retraining does not equate to expert. Additionally, these new technologies have fairly steep learning curves, so the code they produce initially will not be as robust or defect free as they software the write later in the cycle. The problem with that is that the most important development is usually done first. The technical experts you may have to hire as consultants at high rates (bearing in mind that these are the people who will be architecting your system) are technology experts and are unlikely to understand your business. Additionally, costs and risks are increased because new generation development tools are expensive. Often single developer’s licenses can exceed two thousand dollars for enterprise licenses. Some approach four thousand dollars.

The typical staffing profile of a long-term project is that it expands from start to finish. Once deployed you can release some of the consultant staff, but usually one or more has become so critical to the operation that it is too risky to remove them from the project. What is left is about 50% of the project staff to maintain the system. This is a team of valuable, highly compensated technical personnel who require the full demands of an HR department to provide them with career incentives. If the system is developed and deployed, this group is well worth the cost, but what if the project fails? You have a group of people, many recently recruited, with a skill set un-deployed in your enterprise.

Trade Ship already absorbed these costs. By purchasing Trade Ship software, these kinds of risks are virtually eliminated. You don’t worry about the development of Excel, Microsoft does. Trade Ship works the same way for its systems, and you don’t have to worry about it all over again in four years, because your organization changed, and technology moved on. Trade Ship worries about that. We have a worldwide network of developers in both the US and international markets. We understand the software industry in a way that is uneconomical for a non-software development staff to know.

We provide the benefit without the risk.


High Productivity

We live our corporate life by building software. This kind of software immersion leads to very high quality software with productivity characteristics that will probably be overlooked when accomplished by internal staff. Trade Ship has developed a process of developing software that accomplishes two important goals. One is to make the user highly productive, the other to make the developer highly productive. To that end, we developed Sea Plates. This coding construction makes all of our systems, web based and conventional, appear the same way to the user. Employees viewing one screen will understand how to navigate all of our screens. We do this by embodying similar behavioral characteristics into a template and then let developers only modify the template. This leads to highly consistent application behavior and system development. Productivity benefits don’t just end there.

Our systems are designed to give the user all the answers on the desktop. Important, time-critical information is delivered to those who need it through the use of alerts. A contract is coming up on a customer, an alert is sent. They didn’t act on it; it is escalated.

If someone is looking to book several containers to a customer, but their credit is questionable, the system let’s us know. There is not need to look for it, or remember to look for it. Credit, what does credit mean? Could mean money could be volume. Maybe they are overbooked for a particular facility. The system knows.

Unless your in-house system provides you with a competitive advantage it is no more than a commodity to you, but you are probably paying monopoly prices. Why? Because there is a mismatch between the time needed for the skill to be available (100% for an operational system) and the amount of time you will actually apply that skill (50%). For example, if your system is deployed on Sun Solaris using an Oracle database, you will need a person familiar with Sun hardware, one who is a Unix administrator and one who is an Oracle DBA. It is highly unlikely that you will find and keep one person who has all these skill sets, so you may hire two or three people to support it, but the amount of time actually required to support the system is equivalent to one man-year.

All in all by selecting Trade Ship off the shelf software, a customer can avoid the risks, costs (explicit and hidden) and inefficiencies of internal development while leveraging high-productivity software developed and maintained by a company that survives on this capability.

We make you work smarter not harder.


Increased ROI

With Trade Ship software we believe we can return the highest return on that investment by : 

• Minimizing Costs

• Increasing Productivity

Increased Customer Satisfaction


Trade Ship Minimizes Costs by:

• Leveraging existing investments in enterprise Information Systems software, like Oracle or SQL Server

• Deploying on low cost, high speed hardware

• Developing high quality software

• Providing faster implementation

• Vertical and horizontal business growth (Volume increases/More fleets)

• Vertical and horizontal technical growth

• Having a low cost-structure

• Leverage offshore development resources

• Reduced in-house staff required for support

• Software amortized across many installations, over many years

• Building in “EDI”: 3rd party VAN costs eliminated

• Increasing fleet utilization by providing comprehensive information about it

• Reducing risk

• Our software is Ready Now

• Flexible licensing: ASP, Service Bureau, License

• Flexible pricing options:

• Assuming Technical Risk

• Easier deploy ability

• Known performance

• Infrastructure definition

• Understanding current technology

• Increased developer productivity

• Consultant “Experts”: industry and technology

• Industry knowledge

Increase Productivity

• Common screen structure (Consistency between web and traditional GUI)

• J2EE

• Programmer productivity

• Well defined standards and guidelines

• Industry Best Practices

• Declarative deployment

• Fully leverage containers capabilities

• Focus on the business problem

• Templates for consistency

• Active management of time-critical events

• Alerts

• Bulletins

• Integration

• Everyone sees same data at same time

• “Holistic reporting” all aspects, everything current

• No interfaces

• Immediate

• Reduced system complexity (feeds from feeder applications)

• Reduce complexity of transactions

• Reduced training costs

• Better cross training

• More detailed, complete reporting

• Details tracked at component level

• Opportunity for all parties to participate

Satisfy the Customer

• Customer Self-Service application

• Enterprise Integration

• Easier to do business with

• Increase points of presence

We can make you more profitable

If you want more information, or a more detailed explanation on how Trade Ship can provide you with software that is Ready Now, please contact us, or visit our web site at www.tradeshiponline.com for detailed information on our product lines.

How Trade Ship’s OTS Systems Impact Your ROI

This document intends to explain how an operational system can achieve a 2 year payback, (functionally equivalent to 50% ROI), and how Trade Ship can improve on that lofty return.

Because the risks and costs are high, it is unlikely that any company would endeavor to undertake a project unless the returns were compelling. To show that these kinds of investments have the potential for large, year-to-year returns, we want to identify how such projects are justified by detailing their ability to reduce costs, increase customer satisfaction, increase productivity or grow the business.

Let’s assume a $2MM investment in software, where we have 100,000 units, in a company with 100MM in revenues. Here is how we return 1MM in either reduced (red) costs and increased (black) revenues in that company.

There are many more, but if you were able to achieve these modest gains, it is easy to project a 50% return on such a system providing that internal development processes were well established, and staff was prepared to undertake such an effort.

The following pages detail and compare costs based on in-house development and Trade Ship systems, on a slightly different scenario assuming a 2-year payback on an in-house system.


Summary


Assumptions:

• 2 Year Payback based on internal development, similar operational returns for Trade Ship package.

• License fee = 1.25% of revenues

• Impact of taxes not factored in, as such issues like depreciation or expensing are left out leaving the terms at EBITDA

• Discount factor is 10% which is a combination of inflation and increasing IT costs

• Project Risk factors are added to the overall cost at 50% and 25% respectively because 1/2 risk is mitigated by having a deliverable system in place

• Internal project team size proportional to revenue which is relative to size and complexity of organization and its systems

ROI Calculations:

Risk-free returns following assumes project went exactly as planned, delivered on time with all the functionality deployed.

Conclusion: Failure and over budget risks are essentially equivalent over 3-5 yr period, and are included in total cost -- see Overbudget vs. Project Risk for justification.


Risk Adjusted Payback

Adjusted for 50% risk, internal development would have a 3-year payback, as risk adjusted cost would be 1.5 x 1,511,550 or 2,267,325

Adjusted for 25% risk the Trade Ship development would have a 10-month payback, as risk-adjusted costs would be 1.25 * 834,075 or 1,216,419


Income Statement Impact

Assumptions Companies in this sector have operating profits of 10% of revenues
Pro Forma company has revenues of $100,000,000
Pro Forma company will budget up to 2% of its revenues for a new system

Detail

Overbudget Vs. Project Risk

Justifications, Adding Risk to calculation:

Consider 2 scenarios, 1 in which the project was successful, but was 50% over budget, and one that had a 50% failure risk and was cancelled immediately after it exceeded the budget. Budgets for both are 1,000,000, and have a one-year payback

When we total the projects based on cost and return we get:

We can see that projects over budget can have a greater impact on short-term returns than a project that is cancelled once it exceeds its budget, but have a larger benefit over the long-term.

Over the medium term, they can be similar.

The chance of failure is essentially equal to the percentage of over-budget a project goes over the medium-term (3-5 years).