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Thursday, February 28, 2008

IQMS prospers with niche industry ERP focus

I don't have a lot of time for "product briefings," but I did take time this morning to speak with Randy Flamm (President) and Glenn Nowak (Vice President) at IQMS.

IQMS is a small (80 person) enterprise system vendor, based in Paso Robles, CA. It is one of those ERP providers that the vendor consolidation wave seems to have passed by. So, I was interested to know how they had managed to stay in business, with so many of their peers being swallowed up by larger vendors.

According to Flamm, IQMS has not only survived but thrived by serving a few targeted industries with a full-function system that fills most if not all of customer needs, and providing good technical performance. It also helps that the firm is privately held and not beholden to the demands of private equity firms, venture funds, or public shareholders.

Target industry focus
The firm started in 1989, catering to plastics manufacturers. Since then they have expanded their focus to small and mid-size automotive suppliers, packaging manufacturers, and medical device makers, in particular.

I'm a fan of the niche approach to enterprise systems. It allows the developers to focus deeply on the requirements of the niche and really gain subject-matter expertise on the problems and issues of those customers.

IQMS's niche focus has driven them to try to address as many needs of its customers as it can. As a result, it has a pretty wide footprint of functionality for such a small vendor, providing extended enterprise applications such as asset management, EDI, warehouse management, and even shop-floor equipment monitoring--functionality that you don't even see in vendors that are much, much larger. They have even introduced mesh networking into some of their asset management, WMS, and shop floor systems.

Now, having said that, I'm sure there are major gaps in IQMS functionality for some clients, especially once you get outside of its target niche. But that's the beauty of a niche strategy. IQMS doesn't have to be all things to all customers. It only needs to be all things (or most things) to a few customers.

IQMS's big footprint of functionality means that it generally doesn't have to reach out to partners to provide complementary products, though it does use Crystal Reports for end-user reporting. Nevertheless, functionality such as EDI, where many larger vendors rely on third-party providers, is offered as part of IQMS core product set. This allows a much greater degree of integration with the rest of IQMS, for processes such as outsourcing management, where product may move through multiple levels of supply chain management. IQMS provides visibility to this material in the supply chain, relying on advanced shipment notices (ASN) in its EDI capabilities to track the movement.

Another point of functionality that is quite interesting, if true. IQMS claims support for multiple facilities, multiple languages, and multiple currencies that I find unusual for such a small vendor. I drilled down a bit on each of these and heard all the right noises (facility-specific planning on a single database instance, double-byte for support of Chinese, ability to specify language by user in a single system, etc.). Again, this level of sophistication is customer driven, as even small manufacturers in this age need to operate parts of a global supply chain.

Technical architecture
Flamm spent quite a bit of time describing IQMS's technical performance, which he sees as important part of his value proposition. The product was originally written in Delphi (from the client server days) over an Oracle database, in a two-tier architecture, with all business logic residing on the server. The product is now largely rewritten in Visual Studios .NET, which gives it a Microsoft development framework, while still using Oracle on the back end. He claims this configuration results in transaction processing that is very fast, much faster than if IQMS had adopted a service-oriented architecture (SOA), and that processing speed is an important criterion in customers selecting IQMS.

Does the reliance on Oracle cost IQMS sales to prospects, especially smaller companies that are standardizing on MS SQL Server? Flamm thinks prospects are more focused on the solution than on the technology, and that the database system doesn't matter. (However, later in the discussion he indicated that he doesn't see Microsoft Dynamics competing in many deals, which tells me he may not be getting to the table where the prospect has a decided preference for MS SQL Server.)

Can IQMS Compete?
IQMS shows that it is still possible to successfully own and operate a small ERP development and sales organization. It claims about 500 customers in its installed base, with about 50 new deals last year, and a 98% customer retention rate. I believe the math works out that they would double in seven years at that pace.

All sales and professional services are delivered direct in North America, and through resellers/partners in Europe and the Far East. The target market is manufacturers in its niche industries between $20 million and $500 million in annual revenue. I would have doubted the upper end of that range, but with the claimed "multi-multi" support, I am more likely to believe it.

Nowak says that he sees Epicor, Syspro, and Plexus in deals, along with Oracle and SAP of course. He is particularly happy with a win against SAP in a 10-day demo shoot out for a $500 million automotive manufacturer last year. Consona (Made2Manage) has not been seen as much as a year or two ago. QAD is seen more in the medical device sector than in automotive, which surprises me. (I'm sure each of these vendors will have a different perspective, of course. I'm just reporting here, not endorsing).

How has IQMS avoided being swallowed by larger vendors? The firm is privately held, so they can simply say no to offers. Not that they haven't had any. Flamm says he gets hit up two or three times a month by private equity and venture capitalist firms that would like to invest in IQMS.

I haven't had a chance to review IQMS's product, nor have I seen them in a competitive situation. But for a small to mid-size manufacturer in the automotive, medical products, or plastics industries, I'd definitely put them on the short list for consideration.

If you've got first-hand experience with IQMS, please drop me a message or leave a comment on this post (link to comments is below).

Related posts
Making money in software with a niche-industry strategy

by Frank Scavo, 2/28/2008 02:17:00 PM | permalink | e-mail this!

 Reader Comments:

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Our company has been using IQMS since 2004. We came from a competing software (M2M when it was still called DTR) which did not have the depth of integration that IQ provides. Particularly the EDI integration is far superior to the old days of having multiple vendors in the EDI chain. Now we are able to see the impact on our schedule almost immediately when we receive new EDI data. This was not possible with our old solution.

When we went live with IQMS, we replaced 4 or 5 software packages all in one fell swoop. We were able to implement and go live in about 5 months - which attests to the ease of use of the software itself.

The one thing that stands out for us with IQMS IS their committment to customer's needs. They are more than willing to entertain customer's suggestions to improve software design when it will benefit the majority of their customer base. WE like this idea as it gives us access to what we think of as the best of breed in software applications.

And as for your comments on the Oracle backend, we have been very happy with the Oracle solution; for the most part it has been maintenance free from my standpoint (the IS Manager).

While it is still complicated to manage one package that addresses so many areas of the company, at the end of the day, I have one place to call when there is a problem -- no more finger pointing between the main ERP and the 3rd party providers.

So I can attest to customer retention, we are still very happy with our decision to implement the IQMS software package.
IQMS has been the best investment we have made as a company. We also came from another enterprize software and have never looked back.
The ease of working with a software provider that listens and uses your suggestions is very refershing. I can only say good things about IQMS and with adding a second plant in another state it is renforces our dession was the right one.
Our experience of converting from a paper based system to IQMS has been remarkable. The ease of setup and training made implementation of non computer usage personnel a breeze and as a molder of pharmaceutical products we are constantly being audited by the top manufacturers whether stateside or within the international arena. The usage and export of data to customers has been a positive in the creation of Excel charts and capability studies. The ability to send to customers data in a format that they could import has been impressive in lieu of sending charts and data for manual input by customer. This implementation has also led to certification by major customer and use of internal control charting thus the reduction of customer complaints in critical to quality dimensions.

In closing two thumbs to the staff of IQMS in the creation of this database with the end use customer in mind.
We went live with IQMS in January of 2005 after a year and a half of intense evaluation of various ERP solutions, including several from some of the larger vendors. We felt that IQMS by far provided the best fit for us as an injection molder. After 3 years in action, we still feel we made the right decision. IQMS provides an extremely robust solution with many functions for the plastics industry that just aren't available in other software packages. The IQMS staff is very knowledgeable, responsive, and helpful which makes maintenance fairly straightforward and simple. Running IQMS has helped us take a giant leap forward in just about every aspect of our business.

Mike Moore
New Berlin Plastics, Inc.
New Berlin, WI
I work for a manufacturer with facilities here in the US and Mexico. We needed a system with both English and Spanish front ends and with the capabilities of multi-currency. IQMS even worked with us to understand the complex accounting in Mexico and worked to develop the software accordingly. As the IT manager, having a single Oracle database, without third party packages, has made maintaining the system less
cumbersome than other systems I have worked with. IQMS understands the manufacturing industry and is a solid package.
My company forecasts approximately 200 million in revenue for FY2008 which puts us in the middle of IQMS’s target customer range. We operate in contract packaging, consumer food packaging, medical thermoforming, injection molding, and extrusion (internal customers only) industry segments. IQMS supports all of these segments. We have 10 facilities on three continents and currently support 3 currencies, EUR, USD, CNY, with SGD support in the past. IQMS supports daily or accounting period spot rate adjustments, we use both depending on the currency. Financial reporting at the corporate/ facility level are done through FRX financial reporting software, Microsoft product that is an IQ partner. IQ supports our Chinese operation with the double byte support mentioned in the initial post.

Operationally the majority of Enterprise Material Requirements are being driven by IQ’s integrated Forecast module. In addition, customer demand is driven through manual and EDI delivered sales order entry. IQMS’s MRP engine natively delivers requirements to purchasing in 2 major formats, aggregate quantities over a user specified period of time or daily usage within that same time frame. These are not the only native views but the ones that we rely on. Through reporting we have extended the native functionality by custom material requirements views per customer and vendor. Each of the facilities manages their own material requirements. One location has division based material requirements (Sub-plant). The majority of our vendors are local with short lead times. IQMS also handles our long lead time Asian vendors. In addition to traditional vendor relationships we are also beginning vendor consignment programs with multiple Asian vendors which will be supported in IQMS. In our largest facility we control inventory using IQMS’ integrated warehouse management functionality. In our other facilities we use standard inventory control functionality. We also use the following modules to support other areas of our operation: Real-time Production Monitoring, Quality Module (CAR, ECO, Document Control, MRB, etc.), EDI (860,810,940), Customer Consignment Inventory, and Physical Inventory & Cycle Counting.

Our relationship with IQMS is a positive one. They have always been receptive to any changes to existing functionality that we have asked for. We are currently working with them on some new custom developments that will be added to the package in versions to come that will further IQMS’ support of our contract packaging segment. The single greatest asset that IQMS has is its people. Any plan will not succeed without great people, and their staff is great. Each day presents many challenges in everyone’s business and they always help us meet our challenges with professionalism, expertise, and a great attitude.
At Jatco Inc., we have been with IQMS since 1990, and the RealTime plant-floor monitoring keeps our production on schedule. I can stay ahead of any calls from the President of our company by keeping an eye on the monitoring screen - I know that if he sees production slipping on the RealTime screen I can expect a phone call. We are a custom manufacturer and finite scheduling is the key to our success. We are also using Quality management with Doc Control and SPC, Time & Attendance for labor tracking along with HR and Payroll, Preventative Maintenance, and IQ Voice Alert for plant-floor events. We have been very happy with the robust technology, superior support, customer-driven software upgrades and the responsive nature of the relationship over all these years.

Rex A. Clement
Plant Manager
Union City,Calif.
We have been using IQMS since the early days of inception and have grown right along with IQMS through the years. One of our favorite things about the system is that it can be tailored to our specific needs. IQMS is also very open to customer suggestions and is contantly making improvements to the software to keep up with the changing needs of all of their customers. As our company has grown, we have added many more modules that we are now utilizing. We are especially excited about the Quality System. We feel it has helped us continue to improve our ISO system as we utilize more of the Quality Modules.
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