By David Sims
david@firstcoffee.biz
The news as of the first coffee this morning, and the music
is the 2001 compilation John Coltrane
& Miles Davis, 1955 – 1961 from the Columbia Jazz series:
We have clarity on
the Epiphany
cash issue. It looks, like First CoffeeSM suspected, as
if we have different definitions of “cash.”
Two days ago First CoffeeSM wrote about an
article on Epiphany, which prompted a note from Gordon Evans, in Epiphany’s corporate communications department.
Evans said that the ComputerWire article First CoffeeSM
highlighted had grossly understated the cash Epiphany had on hand.
“Always known for being cash rich,” ComputerWire wrote and First CoffeeSM quoted, “in the
second quarter 2004 the company had a $93.4 million cash pile, but by the
fourth quarter 2004 this had dwindled to $18.1 million, and at the end of the
first quarter 2005 it stood at $21.5 million.”
Evans wrote to say that actually, “we
have more than $250 million in cash on hand as of our last earnings report
Q105.”
Such a discrepancy is rarely a case of someone getting
numbers wrong, it’s almost always a case of how you define the terms. Sure
enough, a reader who knows a whole lot more about business accounting than
First CoffeeSM does set the matter straight.
Looking
at the Epiphany’s
1Q reported results, she writes, “you can see from the Balance Sheet at the
bottom of the press release that Epiphany had ‘cash and cash equivalents’ of
$21.5 million on March 31,” which is the number ComputerWire reported as their “cash” position.
“Based
on a quick skim of the balance sheet, I’d hazard a guess that the $250 million
figure (Epiphany CEO Karen) Richardson mentions is what you get if you add together all the current
assets, which comes to $171 million, and the $84 million of long-term
investments,” she says.
In
other words, Evans and Richardson are wrapping up all the assets the company
has that could be fairly easily liquidated into one big number that, arguably,
gives the best picture of the company’s balance sheet health.
“Companies
do this often,” First CoffeeSM’s reader wrote. “Personally, I can’t
recall ever seeing ‘long term investments’ being referred to as ‘cash,’ but
that’s just me. I’m not an accountant either.”
First CoffeeSM considers defining “long-term
investments” as cash “on hand” a bit of a stretch as well.
…
The more First CoffeeSM considers Airframe
Business Software’s idea to
offer metered-use CRM the better it looks – although there are a couple
possible drawbacks.
A couple days ago Airframe announced the 3.0 release of its
immediate-use on-demand applications, using what Airframe calls “utility pricing” – in other words,
pay-as-you-go, like in a metered taxi ride. It’s not a new idea, but this is
the first instance First CoffeeSM’s seen of it applied in CRM or ERP
offerings pitched at small business.
The package, Airframe Express, consists of three 100%
web-hosted applications: CRM Express, HR Express, and Help Desk Express. Geared
to small to mid-sized businesses (emphasis probably on the lower end), they’re
intended to solve the usual issues around customer relationships, human
resources, IT and asset management.
In an innovation for CRM on a par with salesforce.com’s introduction of the subscription model of software
delivery, Airframe announced a pure utility-style pricing for all its products.
Customers pay not per seat per month, but only for their actual usage of the
system, with subscription fees calculated daily and billed monthly. The current
subscription price is $39 per user, but that’s promotional, it’ll go up soon.
Zaki Farhat, president of Airframe customer Cetec, which
provides “comprehensive Workforce Management Systems to a customer base of
Fortune 500 companies,” according to Farhat, reported using Airframe is “10
percent of the cost and complexity of traditional enterprise software.”
It’s a great model for businesses with lots of seasonal
workers. “If you plan a big marketing push for July and August
and will be using summer interns recruited from school, you’ll be able to add
10 or 50 seats, not just for those months, but only for the actual days the
interns work,” Olivier Delerm, vice president of product marketing tells Marshall
Lager, an industry observer who never hears any beer jokes.
It’s also a good way to test-drive products
without locking in to long-term contracts. The downside is that since it is so
minutely priced, company bean-counters will inevitably get persnickety about
who’s racking up the most charges. It’s the nature of the beast.
When it’s one price for all you can use,
the system gets used more and, presumably, companies extract more benefit. When
it costs depending on use, the subtle – or not so subtle – vibes from
cost-conscious management are naturally going to be to use it as little as
possible, which would defeat much of the point of having the system in the
first place.
…
First CoffeeSM’s also impressed with what New Zealand
Post’s done this past week, deploying
core networking infrastructure and Internet Protocol Communications technology
from Cisco
to “improve the efficiency of its growing mail operations, to reduce costs
and to help enable the growth of its banking business.”
NZ Post is a substantial operation, employing over 9,000
staff and turning over $1 billion ($700 million U.S.) in 2003/2004. The primary
challenge was that much of New Zealand Post's infrastructure, such as its aging
private branch exchanges needed to be replaced because they were out of date
and no longer capable of meeting the organization's needs.
So Post, Cisco and Datacom developed a solution based on the
replacement of separate voice and data networks with one IP-based network,
which is capable of delivering voice, video and data. It’s expected to generate
at least $2 million ($1.4 million U.S.) in operational savings over the next
five years, partly by reducing the costs of managing moves, additions and
changes within the company.
...
Self-confidence on
display at Wimbledon from 18-year old Scottish player Andrew
Murray: “I'll lose my next match.”
...
Wrapping up the week, First CoffeeSM needs to
note that Roger Nunley, managing
director of the Customer Care Institute, which issues the Global Contact
Centre Benchmarking Report says he
believes that U.S. benchmarking alone is no longer enough.
“In this global economy, it’s no longer sufficient for U.S.
companies to benchmark their contact centers only against other U.S. companies.
With today’s ever-evolving technology and the move by some companies to
outsource offshore, best practices contact centers can be found in a growing
number of countries around the world.”
Kind of like how great basketball players can be found in a
growing number of countries around the world these days as well. A casual
watching of the NBA playoffs this year showed key players from Argentina, the Virgin
Islands, Germany, China, Canada (yes, it’s a foreign country) and others.
“To ensure best practices, contact centers must benchmark
globally,” Nunley argues. The 2006 study is now underway. Contact center
managers can register for
participation and receive a free copy of the report.
…
Reading this past week’s issue of The Economist, First CoffeeSM noticed an article on a
company practicing vertical integration, just-in-time production, delivery and
sales. It contacts retail outlets daily to find out what the best-selling items
are, produces in small quantities to avoid oversupply and create “scarcity
value” and replaces product lines quickly and unpredictably, thereby encouraging
impulse purchasing.
The product cycle is five weeks from design to delivery –
much faster than the industry norms, and updates of existing product takes two
weeks. The company launches 11,000 new items a year, compared to their industry
competitors’ 2,000 – 4,000.
Big deal, you say. Lots of companies are doing that these days.
Maybe, but how many in fashion? That’s right, it’s Zara, an arm of the Spanish holding
firm Inditex which through crafty uses of IT and CRM is changing
the way fashion’s created and sold.
Markdowns are rare and advertising’s done sparingly. Retail
outlets use point-of-sale terminals to report directly to headquarters. Store
managers check their PDAs daily for new product designs and order what they
think will sell to their customers. Zara’s technology is simple, even a bit “old-fashioned,”
Economist says, but Zara spends
one-fifth to one-tenth less on IT than its rivals, and three to four times less
on ads.
Most strikingly Zara does not hire star designers or set
trends on catwalks, but studies what’s popular among its customers and gives
them what they want – “fast fashion.” How fast? When Madonna gave a series of concerts in Spain, by the final show girls
in the audience were wearing the star’s outfit from her first show.
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