Harry Debes' first year as CEO of Lawson Software was dominated by the company's merger with Intentia International, in early 2006. Now, 15 months after the deal's completion, he tells just-style how the firm is leveraging its strength in the fashion sector with some exciting new ERP software developments, to help companies reduce lead times and improve delivery performance.
 
Mergers and acquisitions are an almost weekly occurrence in the fashion industry, as the high profile agreements recently sealed between May and Federated Department Stores, Kmart and Sears Holding, PPR and Puma, VF Corp and Fruit of the Loom go to show.

The reasons for such deals are well-documented, and more often than not include one or a combination of the following: improving efficiency by consolidating overheads and reducing costs, moving into new international markets, becoming more competitive, and boosting financial performance.

But less well-known is what actually happens behind the scenes when such a huge and complicated transaction takes place.

For Harry Debes, who took over as CEO of Lawson Software Inc in June 2005, his first year in the job was dominated by the company's merger with Sweden based Intentia International. The deal, which was completed in April 2006, marked the culmination of nearly 12 months of activity and "1000 things on our to-do list."

Bringing together two mid-market enterprise resource planning (ERP) software vendors with a portfolio of products in 20 languages, more than 4,000 customers in 40 countries, and total combined revenues of around US$750m highlighted not only the size and complexity of the task in hand, but also the cultural challenge between the businesses.

"One was a US-based company and the other a Swedish based company," Debes tells just-style, "so there were lots and lots of things to look after" including getting all the legal paperwork and filings in place while continuing to run the businesses.

"The biggest job in the first year was just getting the deal done as we had all these financial issues to resolve, specifically restating Intentia's history into US GAAP (generally accepted accounting principles) standards.

But this meant a lot of the legwork had been done before the transaction was completed, "so on the day that the deal actually closed many good things were in place immediately, like all the communication systems, the networks, the new logo and branding, and the new go-to-market strategy.

Since last April, the focus has been on combining the businesses, which posted revenues of $191.2m in the third quarter to 28 February 2007, an increase of 118% year-on-year as sales from the former Intentia were factored in.

"The most challenging part of what we had to do is now behind us," concedes Debes, who has considerable M&A experience garnered in previous roles at SPL Worldgroup, JD Edwards and Geac.

"We're now in the strengthening and building mode and are very optimistic about where we are today and will be in the medium to long term."

Key vertical in fashion
In particular, the company is leveraging its strength in the fashion sector, which has been singled out as one of the six or seven key verticals where it already had a strong track record and on which its resources and customer service will now be focused.

"Fashion is front and centre - and we've added some pretty cool new features," said Debes.

First and foremost, the new M3 release Enterprise Management System 7.1 launched in May now separates the technology from the applications. Not only is this intended to make some of the technical aspects of an implementation easier, but it will also simplify the upgrade process as new versions of the software become available.

It also includes features to make it easier to use and richer in function. The brand new user interface, in particular, has a modern look and is more intuitive to use. Instead of going through five or six different screens to enter an order or receive a purchase order, for example, this has been simplified down to just one.

The applications themselves include features that are targeted specifically at the fashion industry where the focus is on managing the supply chain, visibility across the supply chain, and reducing lead times at the same time as improving delivery performance.

They also address the way in which companies are working much more collaboratively now than they did in the past, and embrace trends like brand owners sourcing more and increasingly moving into retail operations.

The Supply Chain Orders application is aimed at both manufacturers and brand owners and gives complete visibility across a network from the customer order right down the supply chain. It also allows users to make changes at any point in the chain and see the impact of those changes flow automatically up and down the supply chain.

For manufacturers, who typically operate more than one site or use subcontractors too, the Fashion Planning Workbench is a completely new product which links in with Supply Chain Orders. It enables a company to plan, to balance orders against capacity, and to decide where it's most appropriate to make things - and to take those decisions at a style or style colour level. Again, changes are automatically implemented in the operational system.

Also available with M3 is Lawson Business Intelligence which enables users to drill down to get detailed information out of the system. It includes a smart alert feature for exceptions to a particular pattern, such as when a supplier moves the date back on a purchase order against a style.

ERP investments
Lawson's customer list ranges from Acushnet, RM Williams, Pringle of Scotland, Quiksilver and Red Wing Shoes, to TAL, Koramsa, Delta Galil, Schiesser and Rossignol, many of whom are on their second, third or even fourth system and are closely involved as development partners on testing the software before its general release.

At the other end of the spectrum, however, many companies in Asia are buying their first enterprise system and still need educating about ERP and what it can mean to their business.

So why should they make this investment?

"The fashion industry has a complex supply chain and a complex supply chain network with a lot of steps in it and, coupled with the squeeze on margins and the cost of labour, being as efficient as you possibly can is absolutely essential," explains Debes.

"An ERP system gives you the tools to run your business, to plan your demands, to source your labour and raw materials and to produce what customers need and when they need it, and get it to market in the most efficient way.

"I can't imagine anyone trying to do that manually or with a spreadsheet. I think it is just prone to far too many errors and miscalculations."

And of course despite the most meticulous planning for what should happen, it just takes a little break in the chain (like a supplier having a problem with one of the fabrics, or only being able to deliver certain colours) to have a fantastic impact across the supply chain.

Another new option for fashion companies who are resource constrained or implementing for the first time is QuickStep Fashion, a pre-configured ERP application package created specifically for the needs of fashion and apparel companies, launched early 2007.

Lawson expects it to "make a big difference to apparel customers" since it is a tailored offering including tools for education and training, with documentation of all the core processes.

It reduces the amount of time for an implementation and enables users to get their basic processes up and running quickly - which in turn gives the project a lot of impetus and recognition and sets the right mindset for additional value adding capabilities.

For Lawson, fashion is now "front and centre," according to Debes. He adds: "Pretty much on the day the transaction was announced we've emphasised that positioning and all our marketing and company material continues to emphasise it."

Underscoring that commitment, Debes points out that of Lawson's 320 fashion customers worldwide, three of the top ten apparel brands, and three of the top ten luxury brands use its systems. "We won our first Lawson M3 fashion customer in 1992 and they are still with us."

By Leonie Barrie.