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So let’s talk about Profit From ERP in the real world

(MFX)

The year was 2014 – it was a full ERP evaluation – NetSuite was selected and the project goal was for the ERP system to save $5m over 3 Years

Welcome to the Case Studies Series Level 3 Audio Visual – actual clients using real ERP and getting real results – Today we welcome Level 3 Audio Visual’s CEO Jeremy Elsesser as well as Doug Spencer, CFO – for the first of a two part episode on how Vaco Consulting’s Selection Process and Eide Bailly’s NetSuite Implementation project impacted the phenomenal growth and played a huge role in the development of a multinational business.

I’m the Practice Director for Profit From ERP and Vaco Resources Software Selection & Implementation, Gene Hammons

It’s well and good to speak of how ERP mighthelp your company – but it’s also instructive to see how it reallyworks in the real world – and occasionally, here on the ERPodcast we take a look at a past client to see how everything worked out

Today we’re going to look at Level 3 Audio Visual or L3AV – we first got involved with L3AV back in 2014. A bit about the company – so you’ve no doubt seen a conference room or auditorium where the technology just rocked – video conferences where you could actually hear and see the participants – screens that connected quickly and cleanly – great audio – sharp video – just an exceptional experience.

Well, L3AV is the company you call to make that happen.

L3AV might trick out your boardroom or conference room – they’ll also handle huge educational learning classrooms, and when it’s really important – L3AV goes into the nation’s leading hospitals – managing things like surgical suite technology – so the surgeon in LA can conference in the specialist from Boston, where we’re overlaying the patient’s vital signs across a surgical scope projected on a screen – it’s cutting edge technology delivered where failure’s not an option.

Back in 2014, L3AV chose to go with NetSuite – for a lot of reasons – Today we’ll take a look at why, how that worked out and how L3AV continues to drive efficiencies and productivities using NetSuite. And together we take a real-world lesson, on how to Profit From ERP

(MFX out)

Today’s podcast is being brought to you by Eide Bailly – the same Software consulting team who helped create the success that led to the case study on Level 3 Audio Video. Thorough Vaco Consulting, I was the lead ERP Consultant helping manage the selection process, the Eide Bailly/NetSuite team was chosen.

Back in 2014, the team was under the True Cloud banner, one of the leading NetSuite partners in the country.  Last year, they combined with the Eide Bailly Technology team – And it must be going OK, because back to back years, Eide Bailly has picked up the Oracle NetSuite Americas Partner of the Year award.

In my consulting practice we end up with lots of different software selected by different clients and when it comes to implementation, one of the most very critical success points in any ERP Project, it’s sometimes painful to watch a project start and stumble, lurch and jerk around.

But I’ve been doing this a long time and we work hard to help keep implementations on target.

It can be something you worry about – but not with Eide Bailly – an Eide Bailly implementation will face challenges, every implementation does – but the EB team is ready, willing and expecting to handle anything that comes up. More than once the Eide Bailly team has forecast an issue before anyone else – and I know from experience to listen.

They help keep everything as smooth as humanly possible while implementing ERP – and as you’ll see today, they really keep with it and stand behind a project till it’s completed – no matter what the assignment.

So like I said, different software for different companies and NetSuite doesn’t absolutely fit every company everywhere – but when NetSuite is the right ERP, Eide Bailly is the right partner.  Contact them today at Eide Bailly.com – that’s E I D E    B A I LL Y.com

And now back to Level Three Audio Visual – it’s an interesting story.

L3AV is now a worldwide leader in audio visual, whether it’s corporate meeting rooms, video conferencing centers, In the healthcare field It’s building and supporting Healthcare Simulation Labs. In the Operating room, so much is done with miniaturized operating scopes and video signals. Government, Educational and Hospitality/Entertainment – all the way up to auditoriums and multi-use facilities.

A Level 3 AV project is more likely to be talking about several dedicated computer servers, virtual or otherwise. Signal controllers, monitors, routers…They start with Engineeringin the quote stage – imagine – spec’ing out the audio, understanding speaker placement, the physics of room acoustics, working from architectural drawings for the room or auditorium, wiring, harnesses. Sightlines, is the screen bright enough in the back of the room. Cameras and microphones for video conferencing. Video Walls and Signage.

Now that you understand the design challenge, it’s time to decide what equipment best fits this particular assignment – what meets the budget, fits the room, does the job. And each bracket, cable, component, amplifier, signal router, server, driver, microphone, camera, monitor, speaker – all have to be compatible and each may have specific requirements in order to work properly in the final setup.

So from there, L3AV brings everything in house to the Mesa Arizona headquarters. Into the staging room where the entire system is staged – that means assembled, configured and built then fully tested to insure performance – and repackaged for delivery to the customer site.

Crews on site handle the installation. And remember, this could be a 20 seat corporate board room, or it could be a 400 student college auditorium. It could be different workstations for a group setting or stadium projection sized big screens.

Now think of what we just talked about. Engineer to Order Quotes, the sales team would gather information from the client, work with Engineering and to just spec out the job could take hours and hours of engineering time – with everything reviewed to insure both the accuracy of the engineering and the effectiveness of the final system design. So it’s quite a job to just prepare a quote before you’ve even charged the customer a dime – this is just to win the business. Involved quotes could take quite a bit of time to turnaround – and if you’ve ever done sales you know time is of the essence.

Then, when you’re awarded the business,  you inventory some highly specialized professional sound and video gear – there’s the cost of the staging we talked about before – you’re not just letting anyone plug everything together – it takes a level of professional techs to get the job done.

Then It’s off to the customer location – Now we need the right crew at the right place at the right time. And since L3AV goes all over the world, you can’t very well send someone back to the Arizona HQ from Chicago because you didn’t bring the right cable ends – so we’re making sure that’s all there – and did anyone think to rent a scissor lift because the Video screen and speaker array is going to be hanging off a 45 foot ceiling over the stage?  As you can see, there’s a lot to it

So roughly, that’s a brief snapshot of some of what the L3AV guys do.

Now let’s take a look at the situation. Back in 2014 L3AV was a $14m company, expecting a healthy 17% growth rate – by 2018, they’d just about doubled in annual revenue and since going internationally, they’re planning to double again in the next 3 years. Phenomenal growth.

But back then, everything was relatively manual, lots of spreadsheets controlling the quote process, the engineering schedules, the inventory – it was complex.

Here’s the good part. L3AV had already taken an engineering approach to their processes and workflows, all of the systems and processes were well defined on paper. We could see what was happening each step in the process and so even before ERP selection began – –  we were so far ahead of most ERP projects – we just had to translate the steps and stages into ERP workflows and processes.

I was the lead consultant for the Selection Process – back on those days our Vaco Consulting practice focused on ERP selection only – So I circled back around to catch up with CFO Doug Spencer and CEO Jeremy Elsesser

(SFX phone: Hi Gene…)

And Doug – can you update us on how L3AV has grown since we last spoke – I remember there was a projected 17% growth rate for 2015 and things really took off by 2018

(SFX phone: Revenue $28m – 40-50m)

So when most companies hit a growth spurt, the first step is to bring on more people and throw bodies at the problem – which really drives overhead costs

(SFX phone: Doug Acct Team growth)
Overhead to Revenue steadily declining. Important? Well, what if it’s going the other way? What if you’re covering up the lack of technology with excess labor? This is a vital, common and important point. L3AV first started looking at ERP, as $14m company. They were truly running lean and I have to tell you, most $14m companies are not ready to look at a program as robust as NetSuite. The cost and complexity seem too much for smaller companies – but in this case – let’s do a little comparison – now L3AV is near $30m and runs an accounting office with 6 people. Another $30m company I spoke with last month – I don’t think their business model as complex as L3AV, but they run QuickBooks and they have 13 people doing double entry paperwork on spreadsheets to keep up with the workload. So, two companies, both around $30m, 6 people and NetSuite or 13 people and QuickBooks. If you were to say each person in accounting is roughly paid $50k – some quick math says the QuickBooks company is paying $350,000 dollars MORE in labor – all in an effort to avoid a $60,000 ERP program – so utilizing my MBA level math skills you could come to the conclusion that the effective cost of Quickbooks is $290,000 – every year. Put whatever number on it, we see dozens of companies every year with grossly overstaffed business offices running QuickBooks – probably because it’s easier to incrementally hire just one more person than undertake an unknown like converting to ERP…until things get really out of control – L3AV did just the opposite – and we’ve talked about Accounting – remember, there’s also several other departments using NetSuite at L3AV

Now of course that brings us to implementation – which every company who’s ever purchased any ERP package – well they tend to underestimate – and that can be rough – So we asked Jeremy how NetSuite Helped – or even Hurt operations at L3AV

(SFX phone: Jeremy Helped or Hurt)

One of the major advantages going in, was there was a real engineering approach to process at L3AV before we started. Processes were mapped and the tools at hand were large whiteboards so everyone could see progress and spreadsheets to facilitate moving a project forward, so I asked Jeremy were the whiteboards and spreadsheets still a key feature after NetSuite went live.

(SFX Phone Jeremy Legacy Spreadsheets and Whiteboards Gone)

One of the strengths of NetSuite is the internal workflow – which allows you to route approvals based specifically on your business processes – so the question to Jeremy, how has Quoting progressed?

(SFX Phone Jeremy Quoting Process and Visibility)

So far so good – We’re beginning to see how the effective application of technology – ERP a the right time, saves money by automating processes you’d otherwise have to handle through bringing in more bodies  –

And the overall takeaway isn’t that NetSuite handles quoting – but that you can take different processes that are critical to your business and adapt the tool to work with you. You’re not locked into a pre-developed workflow, you’re developing a custom workflow to meet the changing and evolving ways you get the job done.

(MFX Fade In)

So let’s review where we are so far – L3AV stretched to get into the NetSuite platform – it was a big undertaking – in hindsight, with the tremendous growth of the business it’s obvious it worked out. But in the beginning it was a big step. By sitting down and really understanding the requirements, by really understanding how NetSuite could save money, an important move was taken.
Running lean overhead in the beginning and lowering fixed costs to revenues sounds great but what you’re really doing is making the most of the team you have in the first place by increasing efficiencies in a myriad of ways –   I can’t tell you how impactful this is to growing companies – I mean, if you were to simply hire more people to manage growth, you can cover the extra salary costs, you’re just less profitable. But then you also have to manage all those new people – so you end up taking your core team out of building growthand put them into building infrastructure to support growth– so the choice is, either have your key people actually build growth or build infrastructure – you tell me which is more profitable faster.

To continue our review, you’ve heard Jeremy and Doug mention several times about how people throughout the organization can see what’s going on – getting answers to help them do their job better. They talked about the taming the whirlwind of whiteboards and calming the storms of spreadsheets.

But we’re running short of time in Part One – coming in Part Two – we’ll talk about the $5m Cost Revenue Model – we projected it – did L3AV achieve it?– Exactly how do you handle one of the most difficult quoting processes with several million variables? How about Purchasing – and how NetSuite develops with your business. Resources, Project Management, CRM and the value of using ERP Selection Consultants – all right here, in Part Two of the Case Study Series –  Level Three AV – – – it’s the real world – – of Profit, From ERP