I saw an interesting press announcement the other day about Activant’s new business rules functionality. Activant (who recently agreed to be acquired and merged with Epicor) is an ERP provider focused on distribution and retail – 60% of revenues come from retail and 40% from distribution. Activant as a whole has 15,000 customers concentrated in North America – though they are expanding to Europe, specifically UK and Ireland initially. The company has $400M in revenue and is healthily profitable. Activant is the 8th largest ERP provider in the US and in the top 40 software companies worldwide. Activant customers range from about $300M in revenue and up. Retailers include people like Carquest, Pepboys, Ace Hardware, TrueValue. Wholesalers include Rexel and Revere Electric.
The announcement on business rules came from the distribution side of the business. They have been in the distribution space since 1967 and built up a lot of experience servicing the distribution industry. They feel this focus gives them an advantage over horizontal ERP products that service many areas. Average staff tenure is over 9 years, giving them a key advantage in terms of knowledgeable staff. They also return 15% of their overall revenue back into R&D.
The modern supply chain has lots of players and Activant’s distribution business focuses on wholesalers in the supply chain. Activant distribution has 4,500 customers in durable goods including electrical, power, HVAC, plumbing, medical and other segments. Each of these segments has a “top” list in which Activant customers are prominent – for instance in electrical distributors 60 of the top 100 use Activant. Their typical customer is a small to medium business, privately held, that is looking for a complete solution. These companies typically have minimal IT staffs. Indeed 70-75% of US distributors are less than 10 employees.
Activant offers both SaaS and on premise solutions though SaaS is a more recent offering and still a small if rapidly growing part of their business. Their sales often replace old AS/400 solutions as well as accounting software and ERP solutions from horizontal or vertical players. Activant’s solutions cover financial management, orders and materials management, manufacturing, ecommerce, services, CRM and analytics.
The key purpose of the business rules capability in the product is extensibility and customization. Essentially extensibility in the product is being provided by allowing customers to make .Net extensions. Activant have a rule manager written in C# that allows customers to write rules that inherit from the core rules in the product. This allows customers to add decisions and processes to their application. They can define responses to actions in the system or to explicit buttons/controls. These responses can change data (to cancel a freight charges when a package is sent collect) or call external services (to look up prices for vendor products for instance).
The reason this kind of extensibility and configurability is important is easy to see – just walk through any distributorship. You always see the same things – process documents and check lists on walls and desks, sticky notes on computer screens about dealing with specific companies and so on. The rules extensibility framework allows Activant customers to eliminate these yellow stickies and embed them logic they define in the system. It also lets customers capture the kinds of things that make experienced people more effective and so reduce the time to onboard new staff while reducing the risks inherent to small companies of vacations, sickness, resignation and retirement. These rules can represent an intense matrix of things to do for a single decision. They can have multiple rules and can call a set of rules from a “master rule” – a decision rule if you like.
Now this is not a “real” rule engine – the rules are more procedural than declarative and are generally written in .Net/C#. However, one of the things they did is build code that allows the product to consume rules in other languages like Javascript, say. This increases the flexibility for their customers but also allows them to have rules in Windows Workflow Foundation – giving a visual interface for the rule. Crucially they have also focused on rule management and they have an organizer that shows the rules in the system, who they apply to, what they impact and/or use as inputs etc. This of course is really important as rule management is always more important than rule execution in the long run. This organizer also allows customers to share rules with others such as suppliers or partners in the supply chain, another neat idea.
Impact analysis is something they are working on to – part of the tool is a testing environment to let customers see how a rule works before releasing it. They are currently taking the test harness and abstracting it for regression testing. This will also allow customers to save results for use with new or changed rules to see how they would be different – the first step towards good impact analysis for non-technical users.
The business rules component is still new but they are seeing a lot of customers starting to use it. While not all their customers have IT teams, even those without them use the SQL Server back end and software extensions to really work their data. Most legacy systems did not let customers do this so many are really enthusiastic about seeing what their data is telling them. Adding business rules has turned out to be an obvious extension for these customers. Activant also have a number of pre-canned rules of various types so users can take a similar rule to the one they need and then edit it to suit. Activant is working on templatizing rules to make things like connecting to data in the system easier.
Besides rules Activant is also looking at analytics. They already have a business process scorecard built by analyzing the hundreds of client databases they see – they built a data warehouse to see common patterns across distributors. This allows them to tell customers what a good target is for inventory turns by segment and company size for instance. They are also working on some interesting technology for allocating costs to customers more effectively so they can help their clients see which customers are truly profitable by providing information about customer profitability right down at the transaction level. Of course this would also let their customers use this data in rules…
Activant is just getting started in decisioning but they have made some good first steps. Other ERP vendors should take note and hopefully the merged company will consider this moving forward.
