Grow Your Business

Most managers shun automation thinking information technology systems are too expensive, too prone to obsolescence, and too complicated to install and manage.

Vincent Tagle, president of Coolmate Corp., provider of car air-conditioning services and distributor of Denso parts in the Philippines, was among the few who believed their businesses could benefit from an I.T. system. What Tagle did not believe in was paying good money for software, so Coolmate made three expensive but unsuccessful attempts at automation before it decided to hire Global Implementation Services or GIS, a business solutions consultant and a leading partner in the Philippines of software maker Microsoft, which does not retail its products directly but does so through licensed partners.

The Filipino-owned Coolmate had opened for business in 1998 with P5 million in initial capital, but by the end of 2003 its assets had reached P20 million, and in 2005 it racked up P60 million in sales to raise its net worth to P38.7 million. Coolmate specialized in Denso air conditioners that are installed mostly in Japanese cars such as Toyota, Honda, and Isuzu, but it controlled only 10 percent of the market when it was starting out.

Growing increasingly wary of backyard operators offering air-conditioning services at much lower prices, Tagle decided they needed a system that would streamline operations and reduce overhead and let them compete with the small players. By this time the company had already spent hundreds of thousands of pesos on cheap systems that were long on promises but short on delivery.

Indeed, when Tagle took over as company president, in 1999, they had a stand-alone system called Balmori that did basic accounting and inventory, but it ran on DOS or disk operating system at a time when most companies were shifting to Windows. Tagle, who took up computer studies in college, saw they had to shift to another system before Balmori became obsolete, “[But] I never believed in spending a lot on software like Microsoft or other popular applications. For me, these software were overrated and overpriced, and any good programmer could do what the software companies offered.”

Still, the programmer they hired to design software that could run on the IBM-leased server and company-owned workstations disappeared after receiving his down payment. Tagle then turned to a Filipino software company that customized programming. It produced software that promised to meet Coolmate’s system requirements: one that ran on Windows, could network office workstations, do multi-warehouse inventory, generate reports in real time, compute local taxes, and provide training and support services. But bugs appeared and kept appearing as soon as the software was installed, and the programmer defaulted on many services that it promised Coolmate.

Chastened, Tagle listened to advice to invest in a tested system implemented by an I.T. specialist. He asked a friend who was with GIS to send over someone to make a presentation. GIS was known for customizing systems using various Microsoft business solutions, but for small and medium enterprises. The company was backing one product—Microsoft Grain Plains—which could manage and integrate finances, the supply chain and manufacturing; do e-commerce, project accounting and field service; and manage customer relationships and human resources.

For Coolmate, GIS quoted a price of P1 million for the accounting and inventory systems. “Sabi ko, pikit-mata na tayo,” says Tagle. “It was just the price of one Toyota car but the problem was, it wasn’t something you financed in four or five years. This one you paid by phase, and they billed you on every phase of the project.” The system cost aside, Coolmate spent P500,000 more on new hardware to run the program and about P250,000 on licenses for the operating system and anti-virus software.

GIS first studied how to tailor its solution to Coolmate’s business model. It talked to Coolmate’s employees and made flow charts and work instructions, trained a Coolmate team at the GIS headquarters in Makati, and then installed an inventory system that it ran for four months before it started work on an accounting module. It took GIS another four months to install the accounting system and two months more to go live: to run the system and make its data coincide with inventory and accounting reality.

Tagle didn’t mind that the project took more than a year to complete: he wanted it that way because he was pacing his spending. “Besides, I didn’t have I.T.-savvy people on my team. Some of them didn’t even know how to use Excel and Word properly.” That partly explained why the solution’s data accuracy hit only 70 percent when they started running inventory: users were still waiting for receipts to accumulate before entering them in the system.

Coolmate now does minimal system overrides, an indication it’s generating accurate data. Tagle’s people made overrides rare after they succeeded in making system data and actual-inventory data tally in August. “We now allow overrides only if it’s a matter of the customer getting mad at us,” says Tagle. “If the customer is willing to wait, or if it’s not really urgent, then we don’t override.”

The greatest benefit he’s received from automation is peace of mind each time he reads a system-generated report that he knows is accurate. “Now, with the system, I just go to the Smart List of Great Plains to generate any report. Before, to produce a report, my people had to set aside what they were doing to help me out.” The system has also allowed Coolmate to get a better grip on inventory—something Tagle hopes will cut the company’s overhead and improve its margins. At any given time, Coolmate has 3,000 line items or air-conditioning parts that the system manages, and Great Plains allows Tagle to know if the inventory is too much (which affects cash flow, because of the carrying costs) or too little (which affects sales). It also tells him the ideal inventory level, delivery schedules, and if suppliers are delivering on time, delivering in advance (which affects cash flow), or delivering late (which affects inventory).

At the click of a mouse, any member of the sales team would know right away which items were available and in what quantity, and how much discount, if any, a particular customer deserved. Tagle would not have to worry about day-to-day operations or even come to the office everyday. At the click of a mouse, he would see the total sales for the day and know how much profit the company had made. Not least, the system would allow him to plot Coolmate’s direction daily, weekly, monthly, or yearly. “I think we can use the system for another 10 years,” he says. “In the United States, medium-scale businesses are still using Great Plains, and since we’re thinking of going global anyway, I know the system can handle it.”