Widening the Playing Field - ECI2's mission of acquisition garners another plum company – La Crosse Management Systems12 Sep, 2007 By: Sand Sinclair imageSource
Widening the Playing Field - ECI2's mission of acquisition garners another plum company – La Crosse Management Systems
Powerhouse office solutions company, ECI2, is a company with an illustrious
history and a comet-like future. For more than a quarter of a century, ECI2 has
been driving technology in the office products industry to new heights in
automating over 1800 office products dealers with business system software.
Their software systems process approximately $15 billion (yes that is a “b”)
annually in transactions for dealers, distributors, wholesalers and buying
groups, with over $90 million in customer sales flowing through ECI2 web
storefronts each month. And that is just for starters.
ECI2 is a premier developer of industry-specific business operations
software, with an emphasis on e-commerce and supplier connectivity that is
primarily directed at SMBs. Vertical markets include office products, business
machines, contract office furniture, computer products, Jan/San, industrial
paper/packaging, educational & art supplies, and general wholesale distribution.
A more than $60 million company with more than 100 developers, and over 100
training and technical personnel, ECI2 software is automating thousands of
independent businesses in the USA, Canada,UK and Amsterdam.
There is a big push for acquisition at the forefront of the ECI2 business
plan and its most recent purchase is La Crosse Management Systems, Inc., a
leading provider of copier dealership software solutions. This acquisition
further strengthens ECI2's position as the largest provider of
industry-specific business system software (and related technology) for office
ECI2 will operate La Crosse as an independent subsidiary and will continue to
market and support the La Crosse product line including the dealer business
software La Crosse Neaten™ and eNextgen™. Sales and support of the products
will continue to be handled by the current La Crosse staff, overseen by
presiding president, John Brostrom.
At the same time, ECI2 will position La Crosse for continued growth by
providing additional development resources, sales and marketing support,
infrastructure investments, and access to technology resources and expertise
across ECI2' sportfolio of companies, which includes OMD, Britannia and DDMS,
imageSource sat down with senior executives of ECI2 and La Crosse which
included Ron Books, COO; Don Weary, CEO of OMD and La Crosse; Leon Asbill,
Jr.,Director of Marketing; and La Crosse President, John Brostrom, to learn more
of the company's overall processes and business plan, as well as plans for their
imageSource: What can we expect to see from ECI2 now, and just what
are the business projections for the future?
Ron: As you know, we've done many acquisitions across several
different verticals. However, our core focus across these verticals is
distribution software. For example, we have a product called Ensite Pro that can
manage operations across several different verticals. In industries such as
office products, we are seeing more and more dealers expanding their
operations, adding additional products from closely related verticals such as
office furniture to grow sales to their existing customers. Ensite Pro offers an
office products module, a service module; a contract furniture module; each with
functionality optimized for those verticals, allowing a dealer to run different
businesses off of one platform.
IS: Does that also include jan-san, as well as office products and
Don: It does include jan-san. We also have a jan-san package that is
independent. There are some things that are specific to jan-san, such as units
of measure, but our flagship products do play into a lot of different verticals.
Then we have more specific products that focus directly on specific verticals,
with tremendous expertise and depth of features.
IS: Specifically, what type of verticals are these?
Ron: We operate in a lot of SIC codes. Our Ensite Pro product alone is
used in over 30 different SIC codes. In addition to business equipment, we have
commodity office products, contract office furniture and other project
management-oriented businesses, jan-san, educational products, printing, and
even plush toys. Those verticals take in a lot of different codes.
But while our platforms touch a lot of different verticals, there's actually
a lot of similarity in most of the environments where our products are used. At
the end of the day, it's about managing distribution and business operations. We
take orders - whether its through conventional order entry or via e-commerce -
and handle purchasing, accounting, warehouse operations, equipment service, and
ultimately communicating to the vendors and suppliers within those industries.
Naturally, all of these functions are completely integrated within the software.
IS: ECI2 is on the move, claiming expansion in a big way. Your recent
acquisition of La Crosse brings up questions in the dealer community, not unlike
when OMD, Britannia, and DDMS were acquired, with customers asking, “Now what
Don: When there's an acquisition, dealers normally have two main
concerns: who are these guys (ECI2) and what is their history? They want to know
that we are serious about the industry and not just like some of those venture
capitalists out to turn a quick buck. There's also the fear that we might take
the customer base and force them off the software they are comfortable with and
onto some platform. This is not what ECI2 does.
Ron: This is a critical point: when we do an acquisition, we do not
handle it the way many technology companies do, which is to force the dealers to
a single platform with the goal of cutting costs by eliminating other platforms
and, unfortunately, people from the acquired company. We do the opposite. We
invest in the companies we acquire and give them access to complementary
technology –e-commerce solutions, our manufacturer and vendor communications
platforms, and our mobile computing products, for example – to strengthen their
existing product line, as opposed to eliminating their software platforms. We
also keep executives like John (La Crosse) on board, with the intention that
they play a prominent role in the future of the company. We try to add value to
an acquired company from a corporate perspective, as opposed to the way these
kinds of acquistions are usually done.
Don: In the case of La Crosse and OMD, which are viewed as similar
companies operating in the same market, questions come up about those
similarities. But these are different platforms that offer unique feature sets
to dealers, and we value them for that uniqueness. So, no, we are not going to
combine these companies together. You can look at our history; we have a number
of brands in other vertical markets. Each of the brands has its own merits and
we've enhanced and invested in each.
Leon: This is not something we just say we are going to do; we have a
proven track record of doing it. We already have several divisions that are
operating in the same verticals. DDMS is in office products, office furniture
and in equipment, as well as others. Britannia is also heavy in office products,
and is in office furniture and machines to some extent. We aren't eliminating
one in favor of the other.
Ron: It comes down to solutions-based selling; we qualify customers
and try to understand their business needs, then direct them to a platform that
makes the most sense for them. For one dealer that might be La Crosse, for
another one OMD, and for another, DDMS.
IS: When you acquire a company, do you promote that brand's name in
similar marketing materials as before?
Ron: Like past acquisitions, including OMD, La Crosse has built-in
name recognition and a reputation that carries a lot of weight in the industry.
We don't try to rename or replace that prized aspect. We'll keep the recognition
a brand brings to the table, with minimal mention of the parent company (ECI2)
in marketing materials.
Leon: There is value in the name and reputation of the acquired
company which the industry, the dealers, and clientele already know and respect,
so we don't replace that. We just want dealers to understand that those brands
are a lot stronger and better positioned for the future now that they are part
of the ECI2 family of companies.
Don: That is a good example of how we collaborate with newly acquired
companies. We don't come in and say, “This is it. You do it the ECI2 way now.”
Instead, we value what they have done, what they have accomplished, and the
specific industry and customer knowledge they have. Of course, if an acquisition
needs additional help in marketing strategies, we can assist them, collaborating
to get the best results. We can also share technologies and some of the larger
investments we've made from ECI2 – such as our e-commerce platforms–since a lot
of these companies share similar challenges. Basically, we reinvest in these
companies to expand on the things they have already been successful at doing in
IS: ECI2 primarily delivers the latest solutions for SMBs, and is
touted as focusing almost exclusively on the independent, verticalized software
company/developer. How does this play into your search for other companies to
Don: There is a very specific profile to the companies we look for.
They're verticalized, they're healthy, they have a stable customer base and,
typically, they tend to cater to the SMB marketplace. As a result, they all
exhibit some of the same challenges and issues that we pointed to earlier,
including competing in very sophisticated markets that are getting more
sophisticated all of the time. We step in to assist them in meeting those
challenges,continuing to innovate.
IS: From your vantage point, what else is involved in a supportive
capacity to define financial stability for acquired companies?
Don: You have to remember that these companies started out as
independent operations. Over time, their customers have grown increasingly
sophisticated. We can help them meet challenges that an individual company can't
readily solve, leveraging technology across our divisions and making investments
to better operations.
An example to consider in this industry is ecInteractive, our new e-commerce
product. We've invested millions of dollars to make it the finest in the world,
something La Crosse or OMD could not have done on their own. Additionally, we
have a private supply network (PSN), a very sophisticated communication system
for Internet transactions between dealers and their suppliers.
IS: Overall, how large is this private supply network for ECI2?
Don: It's huge. It's running about $1 billion dollars a year in
transactions already. As we go into new verticals and find new relationships
with suppliers, it's only continuing to grow.
Ron: The PSN (private supply network) allows for electronic and
Internet communication of purchase orders, receiving and invoicing
electronically, and real-time stock and price checks – all straight from the
dealer's system. It basically integrates a dealer with their suppliers.
IS: As technology rapidly changes and both staff and customer need
training to be familiar with product features and benefits, how in depth is your
Don: Obviously, we want to make our customers wildly successful with
our productivity tools. Their success breeds our success. To the degree that we
deliver tools, tear down barriers to productivity, and train and help them to
better use the software, it's to everyone's advantage. Frankly, that's also one
of the challenges of a smaller company, especially if you're lucky enough to
build up a hugely loyal following. All of a sudden you're dedicating an
incredible amount of resources to just maintaining that customer base. Once
again, that's the value ECI2 brings, access to additional training resources.
Ron: We've implemented training programs across all of our companies,
especially for acquisitions that didn't offer much in the way of training. We're
big on webinars, web demos and virtual classrooms. We also do users meetings
that allow dealers to catch up on latest technology, getting one-on-one time
with instructors and hands-on practice in software labs. Our companies basically
do cradle-to-grave support. We don't just limit support calls to software
issues. A majority of the questions we get are “how-to's” such as “Can you teach
me how to do this?” We're very open to those calls. We don't turn anyone away or
look for additional charges for those services. We give full support, which is
critical in these vertically-specific industries.
Leon: In addition to implementing training and user meetings for
acquisitions, ECI2 establishes customer advisory groups.
Ron: These advisory groups are people who take advantage of our
software and who work with us as representatives for the rest of the dealer
community. They help set development priorities, make design recommendations for
new products, and keep us informed about the industry and the challenges dealers
are facing in their businesses. We always say that we don't design our systems,
that the dealers design them.
IS: John, how do you see La Crosse now, with regard to keeping its own
uniqueness and “business as usual,” yet enhancing its platform under ECI2?
John: We've talked about the new technology available to us now. Two
of our biggest initiatives were dealer-to-manufacturer communications and
integration of the whole supply chain. That's something we don't have to develop
ourselves now. That includes new input for field technicians, remote/mobile
devices, etc. Instead of developing products from scratch, we can utilize ECI2's
existing tools and strategies so, already, we've seen the synergies and
positives for us. As far as the La Crosse organization going forward, well, to
be brutally honest, our Achilles heel had been sales and marketing. We focused
on keeping our existing customers happy, and did utilize the media to a small
extent, but now, as part of ECI2, we can put some real meat into the sales
force and marketing programs, creating more visibility and a stronger presence
in the marketplace.
All in all, as soon as our customers get over the shock that an acquisition
like this causes, they'll realize all the tremendous benefits this brings them.
La Crosse is a small company by some standards, and in a small vertical market,
so we've become close to our customers. Our first priority is to assure them
that this transition will be relatively seamless and will result in additional
benefits for them. It provides them stability because of the size and strength
of the organization we are now aligned with.
Nick Lechnir, Marketing Director of La Crosse sums up the recent
acquisition. “We’ve already seen very positive results from the collaborative
efforts of Laryssa Alexander, Marketing Manager of OMD, and Leon Asbill,
Marketing Director of ECI2. Their willingness to meet and discuss ideas
regarding printed and online announcement media have been exemplary. It just
goes to show that ECI2 truly values a team-oriented environment where skilled
and talented team members can share ideas & provide guidance for each other when
it is needed.”
Obviously, everyone on the ECI2 team are professional" all-stars.”