The final straw for Cowan came when he received a report on small-distribution businesses put out by an industry trade group. "According to the criteria in the report, PSC was extremely well positioned in every aspect of the business, except for one," says Cowan. "We were way behind when it came to investment in technology." It was time to go shopping.
It was April 1993, and Mike Fenske was now working full-time for PSC as the company's controller. Fenske approached Arthur Andersen's small-business unit about its taking over the job of finding and setting up the right system, but he and Cowan ultimately decided they'd be better off keeping the task of selecting the system in-house and letting the vendor set it up. "A consultant comes in and tries to understand everything about your business in a few days," explains Fenske. "He or she has a great process for doing that, but it's better when it's being handled by someone knee-deep in the business." Besides, he adds, a consultant usually won't know much about the specifics of the software packages that are being considered, which is where a company like PSC needs the most help. In a sense, Cowan and Fenske were, between the two of them, creating and filling the position of chief information officer.
By late 1993, after poring over literature and sitting through countless demos, Cowan and Fenske had settled on a new software package. It was a fairly generic accounting-oriented small-business program that incorporated modules for both analyzing customer sales and managing inventory. PSC was three days away from throwing the switch on the new software -- the $20,000 bill for the package had been paid, and the employees were in the middle of intensive training on it -- when Cowan dropped by a get-together of Paul Mitchell distributors and ran into a pal who owned a North Dakota distributorship. The friend described the system he was using to run his company, and Cowan was impressed.
"People are always telling you how great their system is -- it's an ego thing," says Cowan. "But this package really sounded terrific." The software, sold by a company called DSM, not only provided a wide range of accounting and customer-reporting features but was specifically geared to the inventory-management and order-fulfillment needs of distributors as well. When the friend invited him to come out sometime to see the software in action, Cowan excused himself, ran to a pay phone, and called Fenske to tell him to put the brakes on starting up the new software and to get ready for a trip to North Dakota.
Cowan and Fenske liked what they saw there, and Cowan called Terri to tell her he wanted to buy the system. He also told her it cost approximately $200,000. She was stunned. "Are you 10 times as excited about it as you are about the other one?" she asked. He said he was, and after a pause she told him to go for it. He and Fenske then went to Minneapolis to visit DSM, which put them in touch with a series of glowing references and provided some masterful demos. To Cowan's disappointment, though, DSM's salespeople couldn't demonstrate a few of the features they had described, such as the ability to adjust orders automatically to reflect outstanding customer credits and back orders and the ability to determine the least expensive way to pack and ship each order. Cowan told the salespeople he considered those capabilities crucial, and they assured him that the features would be up and running on the package they delivered to him. Cowan signed off on the deal, writing off the $20,000 investment in the other package.
DSM's technicians came to PSC to install the package at the end of 1993, and Cowan got his first nasty surprise: the missing features he had been promised simply weren't part of the package, nor were there any immediate plans to make them so.
"The salespeople had sold us a bill of goods," says Cowan. "I hit the roof." He and Fenske also blamed themselves, of course, for not having insisted on seeing the features up and running before they considered them a selling point. Cowan's most immediate concern was the new system's inability to automatically calculate the best way to pack and ship orders, a capability he believed could cut way down on the labor-intensity of his warehouse operations and shrink his shipping bills. But a quick search turned up a separate software program, Tracer Research's ClipperShip, that provided the feature and little else; DSM agreed to pay half the new program's $10,000 cost, and to make it work smoothly with its own package. Cowan was pleased with the way the combined software worked, but the extra effort pushed back the launch date of the new computer system by several months. As for the ability to reflect credits and back orders, DSM said it would add the feature if PSC would pay the programming costs of $20,000 or so. An irritated Cowan declined.
PSC spent the first three months of 1994 preparing for the changeover to the new system. That included teaching people the somewhat more complicated operations of the new system. Entering a new account, for example, called for using six different screens on the new system, while it had taken just one on the old system. It also included going through practice runs using real data so any problems could be uncovered before the system was actually involved in running the company. In retrospect, says Fenske, three months was inadequate. PSC should have spent at least twice as long looking for and eliminating glitches, he asserts.
