A Vendor's View: Haht Commerce

25 February 2002 00:00  [Source: ICB Americas]

With last November's rollout of its Suite 7.0 Demand Chain Management solution, Haht Commerce Inc., Raleigh, N.C., weighs in with a product that addresses the interlocking requirements of customer life cycle or demand chain functionality.

From the individual enterprise's vantage point, the supply chain constellation is comprised of suppliers of both direct and indirect materials used in the company's production processes or operations. By comparison, the sell-side or demand chain orientation involves the company's all important interface with its customers.

The supply-chain paradigm centers around "the price, availability and delivery of raw materials and other cost of production items," says Rowland Archer, Haht's chief technology officer. With demand-chain software, "the focus revolves to marketing, selling and servicing customers, and the revenues that are thereby generated," he says.

The Suite 7.0 solution adds new features to Haht's traditional sell-side core by entailing product cataloging, Web site content, management of contact lists, partner and channel relationships, e-mail marketing campaigns and enhancement of analytics and business intelligence capability. Also, wireless interface is supported. Such improvements in portal technology in aggregate have been pivotal in keying the development of the branded storefront and the impetus of demand chain model realization, say analysts.

To this end, Haht acquired channel management vendor iMediation and content exchange vendor arcadiaOne last month. These acquisitions "extend the product and brand information and channel management components of our product road map, increase our European presence and increase the size of our customer base, specifically in the consumer products industries," says Haht chairman, CEO and president Tom Thomas.

Consumer products, discrete manufacturing and the chemical industry are important customer bases for Haht as the company moves forward with its Suite 7.0. "At this point, we have about five customers who are either starting from scratch or who are beginning to upgrade to 7.0," says Charles Clark, Haht's vice-president, chemicals practice. "We have an important leadership position in the chemical industry with 15 companies actually using our solution," he adds.

Haht's Suite 7.0 has built-in integration with SAP's and J.D. Edwards' ERP systems. Since the chemical industry is about 80 percent dominated by SAP, this business segment "naturally commands our attention--along with equal and proportionate emphasis in two other key business areas--consumer products and discrete (industrial) manufacturing," says Mr. Clark.

Haht officials emphasize the cost-efficiencies gained by the company's product lines. "We've done a lot of work integrating order management with SAP," adds Mr. Archer. "We have seven instances of SAP running here at Raleigh, more than some of our competitors have in their entire customer base. You can buy a tool like a WebMethods, hire big five consultants to achieve at greater time and expense merely what our product offers out of the box."

Haht follows a traditional software license model with no transaction fees. "We deal with entities from $200 million to $300 million in size at the low-end, with the majority of our customers in the $1 billion to $5 billion revenue range, and there are some giant firms included, such as Degussa and Aventis as well," says Mr. Archer. "Our license entry point is from $200,000 to $300,000 up to $500,000 to $600,000, with approximately the same amount accruing in services," he says. "So we have customers ranging from $500,000 to $1 million for an initial project, where the goal might be order management and account status installation." High-end licenses "can run in the $2 million range and are indicative of firms implementing the full functionality of demand chain management over multiple years, calling for incremental services to boot," says Mr. Archer. There's a contractual 17 percent annual support and maintenance fee that covers upgrades as well as telephone support involved with engaging the Haht suite.

No one, suggests a Haht executive, starts the implementation process company-wide or globally. Usually the software is introduced in a $500 million to $5 billion division, meets with some success, and then the initiative spreads, progressively, to other divisions and countries. In these times, companies are notoriously cautious and understandably want the pace of implementation to proceed in stages and phases. "In three to six months, the early divisional adopters frequently become champions of our solution within their own companies," says Mr. Clark. "ERP integration has been a major stumbling block to fashioning successful e-commerce fits," he says. "In three to four months, our client has a highly-tuned application that its customers, in turn, enjoy, while at the same time being able to enter valuable data directly into the ERP system of our client. This customer-driven order process regimen is a welcome advance from the legacy model where the service rep has to fight through 20 complicated ERP screens to arrive at an effective operational destination."

Occidental Chemical Corp. is a case in point. "In OxyChem's case," says Mr. Clark, who was formerly vice-president of e-business for OxyChem, "from start to finish, we had a fully operational (across all divisions) application in 180 days. The system design was aided, in part, by customer input garnered through focus groups. By contrast, another company that we're familiar with, which shall go nameless, [which] chose to go down the ERP route in January 2001, does not expect to roll out a single division until mid-2002, and hopes, with smooth sailing, to implement to all divisions by the end of 2002, an obviously much more protracted timetable than ours."

Mr. Archer characterizes the key elements of Haht's solution as "elegant, robust, integrated, real-time, flexible, with in-house customizations sometimes accomplished within a matter of hours or days." Contrast this expeditious timetable, he points out, to a world of "big ERP systems, not particularly flexible, requiring Big Five resources, where total cost of ownership is much higher, without the product being satisfactorily extended to customers in a way that can flexibly meet their needs."

It's not talking out of school, Haht officials believe, to report back from the field that some prospective clients have remarked that an SAP might "want $2.5 million, plus $1 million ongoing, for what you people offer to do for $500,000, plus services."

Haht's customer base currently numbers between 55 and 60. "We've just come off two successive record revenue quarters, and we're still on target to achieve our CEO's expressed target of reaching a modest level of profitability at some point during the current year," says Mr. Archer.

The three major prevailing trends worth noting, according to Mr. Archer, are "signs, in some quarters, of a growing adoption rate, evidence of an emerging global deployment rollout, and the evolutionary move from an early e-commerce model to a more sophisticated demand chain management model."

"One of our clients, Sigma Aldrich," says Mr. Clark, "is enjoying an adoption rate on the order of 20 to 25 percent while other companies employing different solutions are struggling to get above 5 percent." Sigma Aldrich estimates that every incremental 60 orders a day it takes in through its Web site is the equivalent of one new customer service rep hire. It is documenting $400,000 in monthly savings, up from $100,000 less than a year ago.

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