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The IT Guy

Al’s Cartage boss Norm Frohlich knew what he needed from a new IT system. What he didn’t realize was how its development would test him as a manager.

by Stephen Petit

A shepherd is tending his sheep at the edge of a country road when a brand new Range Rover screeches to a halt next to him. The driver, a sharply dressed man, asks the shepherd, “If I can guess how many sheep you have, will you give me one of them?” The shepherd, surveying the sprawling field of sheep, agrees. The man parks his SUV, connects a wireless modem to his notebook computer, scans a satellite image of the ground, opens a complex spreadsheet, then prints a 150-page report on his high-tech mini printer. “You have exactly 1586 sheep here,” he says.

The shepherd tells the man he can have his sheep. He takes one of the animals and puts it in the back of his vehicle.

The shepherd looks at the man and asks, “Now, if I guess your profession, will you pay me back in kind?” The man eagerly agrees.

“You’re a consultant,” says the shepherd.

“Astounding!” shouts the man. “How did you know?”

“Simple,” answers the shepherd, “First, you came here without being called. Second, you charged me a fee to tell me something I already knew. And third, you don’t understand anything about my business. Now I’d really like to have my dog back.”

That’s funny, although not enough to draw more than a bemused look from Norm Frohlich. The president of Al’s Cartage, a 70-year-old general freight company based in Kitchener, Ont., has had his fill with consultants. “They have their place,” Frohlich says quietly, followed by a slight chuckle. “Just not around me right now.”

Al’s Cartage has maintained an earnest if not stolid character as it’s grown from a courier company with a pick-up truck and a motorcycle into a diverse trucking operation with six terminals serving pretty much anywhere you’d want to go in Ontario, door-to-door, overnight. When Frohlich says, “Our strength is our people,” you get the feeling that it’s no ordinary corner-office platitude. “We have about 220 employees, and each one is capable of making a difference at our company. In a nutshell, my main job around here is to make sure our employees have whatever tools they need to be effective and work in a way that makes them feel happy and productive.”

Technology has been a big part of that. Al’s has used computers to streamline its accounting and dispatching since the early 1980s. But by the mid-1990s, the systems were struggling to keep pace with the company’s ambitions. It added interline agreements to extend its service across North America, and customers were demanding more information about their shipments. Tight margins made prompt billing critical, but the accounting and fleet management packages wouldn’t talk to one another. To the clerks and support staff, the old DOS-based operating system seemed clunky compared to the more visually appealing Microsoft Windows environment.

“We looked around and figured we had two choices: we could modify existing software that would do what we needed, or we could build a system from scratch,” Frohlich says. “We put together a group of people at our company to determine what we needed our computer systems to do. We had a generous budget worked out. We thought, let’s get experts to help us, because we didn’t know which way to go. We’re not technology people. We run a trucking company.”

The consultants brought in a parade of experts, Frohlich recalls. Together, they discussed how to create a Windows-based system that would integrate accounting, dispatching, and shop management—and, everyone realized later, would not smoke and spark at the stroke of midnight, Year 2000. They debated the pros and cons of using off-the-shelf software, but after using a patchwork of ready-made applications for nearly 15 years, Frohlich’s crew was clearly intrigued by the idea of having software designed just for them.

“When the consultants were finished tossing around ideas and started putting plans on paper, we were excited and eager to get started,” Frohlich says. “But once we committed, we never saw any of those people again. I guess that was in 1995.”

Instead, for the next two years, Al’s Cartage hosted a string of mostly junior programmers who knew nothing about transportation and incredibly little about developing software. “The firm we were dealing with had a very high turnover rate,” says Rena Finlay, a senior systems administrator at Al’s Cartage. “We quite often got developers who hadn’t been trained in the programming language we were using. We had four who were fresh out of school, or who had no previous work experience.”

“Every time they changed people or project managers, there was a whole learning curve they had to go through,” Frohlich adds. “The initial plan was developed at a high level, and the new guys in the trenches had no clue what the goals and needs of Al’s Cartage were.” Deadlines slipped and costs piled up. “We would be told, ‘In two months, we’re going to need X-number of PCs here so we can do testing and training,” says Finlay. “When the two months were up, we’d invested in the PCs but the applications weren’t developed enough to function properly.”

By 1998, Frohlich looked at what his company was spending and wondered whether it could afford to keep it up. “We had allocated $250,000, start to finish,” he explains. “What we had paid—and this is embarrassing to us, because we work very hard to control costs—was up around $900,000. We were doing about $15 million in annual revenue at the time. We had to get pretty creative with the financing. We had to hire a programmer of our own to look after what the others were doing. We had to keep doing business using a computer system we had outgrown. We put off buying trucks.”

Frohlich felt misled. “The consultants and the project managers always seemed to underestimate what was needed,” he explains. “New technology would come along which made what they were using inadequate, so they would want to switch. They grossly misjudged the complexities of the trucking business. We hadn’t planned for any of that.” Finally, after yet another missed deadline, Frohlich stopped cutting cheques and the programmers stopped showing up. The two sides brought their lawyers together. After three months of legal wrangling, it was decided that Al’s Cartage would own whatever work was finished to that time, “and we agreed not to sue one another,” says Frohlich. “From then on, we were on our own.”

As soon as a settlement was reached, Stephen Jones, the programmer Frohlich hired, put his head down and started writing code. “The finished product is a consolidation of maybe 45 individual applications that work together,” Jones says. “Up until then, we had finished 12, although in many cases they had to be reworked. I was at it day and night.”

In September of this year, Frohlich felt confident enough to state that his computerized management system was finally yielding some of the efficiency gains he had envisioned five years and nearly a million dollars ago. “From here on out, it’s all maintenance,” he says. “Our IT costs have stabilized. We bought new hardware, new wire in the building for more speed.”

And then Norm Frohlich cracks a bit of a joke: “We’re down to one typewriter in the office now.”

The most unusual aspect of Frohlich’s experience with IT is his candor, says Ken Weinberg of Carrier Logistics, a Tarrytown, N.Y.-based developer of software for LTL operations.

“I know Norm personally, but I’ve met a thousand Norms. These are right-thinking, successful businesspeople who approach technology and technology suppliers in a way that’s completely different from how they would ordinarily handle any other major investment in their operation,” he says. “They would never continue to dole out hundreds of thousands of dollars to a truck supplier who consistently fails to live up to its delivery promises. They would never think to build their own truck when they can go buy one from the dealer up the street. Yet I see people do these things with information technology all the time.”

Ultimately, the responsibility for making the right choice about technology investments that can help a company compete lies with its owner or general manager. And too often, Weinberg argues, those managers and owners haven’t taken time to identify needs that new technology can help them address.

That said, here are four guiding principles for operations-minded executives who are contemplating an investment in information technology.

1) Don’t get wrapped up in nomenclature and ROI projections. Focus on what you need your software package to do to help your bottom line.

“Return-on-investment is difficult to quantify when you’re talking about management systems,” says Mark Woodka, senior vice-president of e-business development at TMW Systems, a software company in Beachwood, Ohio. “So think about everyday problems you’d like to solve. How many days does it take you to collect money? How many errors do you have on bills? How many errors are created because your discounts are wrong, or your rates are wrong? How much staff could you reduce if you cut your dependence on manual systems?” Ask the developer what impact his software can have on these areas—and to explain it in simple terms.

2) IT consultants and software salespeople can help you define your goals, but don’t let them redefine your problem to suit what may be irrelevant solutions they want to sell you. You may end up with greater problems than you started out with. Some consultants are also contractors. Their motivation may be to find problems they’ll be only happy to solve—for a fee.

3) Seek developers who have worked with trucking companies. “You’d be surprised how many people miss this. Trucking is such a unique and specialized environment that you can’t just hire some programmer who can try to piece something together, often using bits and pieces of software they constructed for another client whose business model is entirely different from a distribution operation,” says Randall Burrell, vice-president of sales and marketing at Maddocks Systems in Langley, B.C. “Poke around. Ask software companies and developers what they’ve done in trucking. And not just in trucking, but in LTL, TL, dispatch management—whatever relates to your need.”

Ask for references and follow up on them. A reputable company is more than happy to supply them. “The commitment you make with software and IT is way too important to your business to not do due diligence,” says Burrell, “You absolutely do not want to be is someone’s test case. If you’re not satisfied with the answers you get, keep looking.”

4) Don’t rely on technology to solve your management problems. “This may sound strange coming from a software supplier, but I do not believe that trucking companies should be the ones on the leading edge of technology,” says Weinberg. “It does not earn them business in a competitive market. If anything, it’s a detriment, because they use what thin margin they have on technology projects and not on investments that help them to grow.”

It’s a lesson Norm Frohlich has taken to heart.

“Every few weeks, we try to sit down and have a meeting with the managers of our various departments,” he says. “Rena and Stephen are at the table, because they’re a part of that team. Even just a few years ago, you wouldn’t have included IT people in meetings with your top operations people. We’ve learned—the hard way—that it’s important for the IT group to see the need to use technology not for technology’s sake, but for the sake of trucking, because trucking pays the bills.”

By going it alone, Frohlich and his team will have to keep a vigilant eye on what’s happening outside their circle. Indeed, perspective—on what companies like yours are doing in IT—is an overlooked facet of ongoing product support and development. “You want to talk about what the guy in the corner office should be doing to manage technology? He should be reaching out,” says Carrier’s Ken Weinberg. “He should be making himself more aware of what’s available on the market. He should constantly be asking himself, What are the paybacks? Who else is using this technology? So as nice as it is that IT and operations people are sitting at the table and working together, they can only continue to build on their own ideas until they look outside for new ones. And there are a lot of new ideas out there.

   
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