Big Profits From Small Products
Can a VAR build a business by selling a 16 mm product? Just ask Mitch Fries of Diversified Systems Group, Inc. His company uses "Touch Memory" products to grow sales 100% each year. You know what they say – it's not the size of the product, it's what you do with it.
As a VAR or integrator, you probably deal with a variety of customers. Sometimes it's the blue-collar guy working on the shop floor, and sometimes it's the corporate department manager who's far removed from the "trenches." In either case, that person has a myriad of tough decisions to make decisions that have a direct impact on the success of the company. So, how valuable do you think it would be if you promised to help those companies simplify their decision making process?
That promise is exactly how Diversified Systems Group, Inc. (DSG) (Columbus, OH) is growing at 100% (in 1999 sales) per year. The VAR/integrator helps its clients take the guesswork out of asset management by using bar codes and "Touch Memory" products for data collection. Touch Memory is the name of the technology used in Dallas Semiconductor's (Dallas) iButtons. An iButton is a 16 mm, programmable computer chip housed in a round, stainless steel encasement. Information about any item (e.g. machines, furniture) is stored on iButtons and then read by touching a handheld reader to the iButton. "When you give people a keyboard, you force them to make decisions," explained Mitch Fries, COO of DSG. "Our goal with Touch Memory is to provide a simple level of data collection that still maintains the integrity of the data."
The ERP Data Collection Dilemma
In the early 1990s, Fries was working for a company that designed enterprise resource planning (ERP) systems for the manufacturing industry. "We always had problems with the data collection portion of ERP projects," he explained. "People wanted ‘paperless' systems, but that required a computer for data entry. Manually inputting data means the employee spends less time doing actual job responsibilities. This system also allows for possible data entry mistakes." Although bar codes were sometimes used, Fries noticed that these had to be replaced due to fading or damage from oil or grease. After seeing a demonstration of the iButton (then called a MicroCan) at a trade show, Fries was hooked. He decided to join a new company that planned to use the iButton as an alternative to "paperless" data collection systems.
In 1994, DSG was born. The company designed the MicroCan Manager System, a Windows-based toolkit (see sidebar on page 100). Combining this software with iButtons and Touch Memory readers, DSG began selling solutions for asset management and security guard routes. In the latter case, guards touch iButtons at specific locations (e.g. rooms, areas of a building). This verifies the guard's completion of the security route.
In 1996, DSG also added bar codes to its toolkit. "We quickly realized that we couldn't just offer Touch Memory and be successful," stated Fries. "Certain applications can benefit from a combination of technologies." The company also changed the way it marketed the MicroCan Manager System. Instead of positioning it as an end-user, packaged system, DSG sold it as a customizable data collection system. "That change allowed us to accelerate our growth dramatically," he said.
Entering New Markets
Much of DSG's success in entering new markets has come in the area of asset management. The definition of an asset can vary from company to company. For example, in a paper mill, a continuous process machine that runs 24/7 is the company's biggest asset. When it's not running, as they say in the paper industry, you are not printing money. An iButton system, in this case, would be used for preventative maintenance tracking, to make sure the company knows in advance if the machine needs service. Other businesses use Touch Memory for simple tracking of fixed assets, such as desks and chairs.
"We often enter a new market just by introducing a technology like Touch Memory to a potential customer," Fries remarked. "That's how we got started in the industrial and healthcare markets." DSG is also finding this to be true with the advent of radio frequency identification (RFID). However, Fries cautions that you can't let the technology drive the solution. "We are now a society used to getting information on demand. But, sometimes that's just not practical. For example, a wireless solution that provides real-time data is not really appropriate for simple asset tracking."
Data collection is usually not a high priority for IT departments; instead, they tend to focus on accounting and intranet systems. In fact, the push toward large corporate intranets has also helped DSG enter new markets. After all, the more systems companies create, the more data collection opportunities there are for VARs. "Sometimes, when we interface with an existing system, we may actually be salvaging software that we did not provide," Fries explained. "We do this by offering a new way of inputting the data, which was originally supposed to be input via keyboard or paper. Now, the company can feed the database with accurate data, so those intranets can work more effectively."
It's What You Know And Who You Know
As any salesperson will tell you, "getting your foot in the door" is the first step toward any sale. Nothing can help you more than the credibility you receive from a successful installation with a recognized company.
In fact, much of DSG's growth has been fostered this way through partnerships with large companies such as Exxon and Stanley. An installation of a system for tracking medical files at the Yale Medical Center (New Haven, CT) helped DSG enter the healthcare field. Fries said that DSG plans to continue growing strategic alliances with companies that specialize in certain industries. One such recent alliance in the healthcare industry has helped DSG develop a new product specifically for that field. (That product is still in beta testing.)
DSG offers its customers a return on investment (ROI) in terms of time savings and cost savings. For example, an iButton maintenance inspection solution provides data collection without the use of paper or manual keyboard entry. However, if that inspection is regulated by the government, the company has an audit trail that is 100% verifiable. The company has eliminated the risk of fines, or worse, a temporary shutdown.
Because of the accuracy of the data collected from a Touch Memory system, companies make more informed business decisions. According to Fries, "DSG's products feed a company's intranet and make it successful. After all, a company is only as good as the data it collects."
Questions about this article? E-mail the author at DanS@corrypub.com.