Spotting The NextWireless Revolution
Jerry Peyton, president of integrator Vista Data Systems, says as wireless hardware margins dwindle, selling software for wireless applications is becoming the next profitable trend.
Customers familiar with Vista Data Systems (Cleveland) prior to 1995 probably wouldn't recognize the company today. That's because in 1995, Jerry Peyton bought the company and changed its focus from reselling Hewlett-Packard (HP) HP3000 computers to integrating wireless data collection systems. (Vista sold a small amount of data collection hardware prior to Peyton's arrival.) Today, much of Vista's wireless integration is software related.
Combat Low Hardware Margins With Software
Peyton is focusing more on software because, he said, "hardware margins are rapidly deteriorating." A self-proclaimed "old-timer" of the AIDC (automatic identification and data collection) industry, he knows what he's talking about. His resumé lists 22 years of experience with significant stints at both Telxon (Milford, OH) and Intermec (Everett, WA). It's this background that has enabled him to offer his customers turnkey wireless solutions that include hardware as well as software.
"In our experience, most of the companies we deal with already have some type of wireless hardware installed. Rarely do we find the client who is still paper based and wants to install a brand-new wireless network. In fact, in recent years, I've had more customers interested in my software rather than in my hardware."
And, that software interest is turning into actual dollars for Vista. Currently half of the company's revenue is attributed to hardware and the other half to software and integration services. However, Peyton predicts in 2003 75% of his sales revenue will be related to software integration work (he does not expect his hardware sales to decline).
Some Customers Want To Pay For Support
Vista's Professional Series is Peyton's answer to his customers' needs for wireless data collection software. These packages include ConnectPRO, a real-time data collection software; CollectPRO, a batch, data collection software for shop floor applications; and a new route accounting software called QuickPRO. ConnectPro was the first developed and is presently being used by 45 of Vista's 50 customers at nearly 225 locations. Peyton added a software developer to his staff to create these software packages. In addition, the company now employs three other systems analysts who instruct clients how to use the company's software.
From the beginning, Peyton had a horizontal approach to creating his software products. In other words, his programs could be adapted to accommodate the needs of any industry. He used the analogy of buying a copy of Microsoft Excel as his rationale for his horizontal approach. He said when you buy a copy of Excel, you don't ask for a specific version for your industry. Instead, you configure the program to meet your particular business' needs.
With Vista's software, once the initial training is done, clients have the ability to configure the programs any way they want - much like someone would do with Excel. While many customers desire programming autonomy, Peyton soon realized this model wasn't for everyone. "I assumed everyone would love my vision of software that can be controlled and configured by the customer," he mused. "I thought clients would like being independent and saving the money associated with support costs. But instead, we have found some clients want hand-holding. They want a warm body that can baby-sit them and make sure everything is functional." Although he does offer service contracts with varying degrees of support, Peyton admitted he wouldn't have the resources to accommodate every client's needs if they all required this high level of personal attention.
The Field Sales Industry Beckons
The other obstacle Peyton has faced with his horizontal software strategy is that some companies insist upon a vertically focused software product. Those companies don't believe a program that isn't designed specifically for their industry will work. To combat this type of objection, Peyton tries to use the Excel analogy. If the customer still has the perception that a vertical package with a proven track record is the only option, Peyton walks away from the sale.
However, he has conceded a bit on his horizontal stance by creating QuickPro. This package is designed for remote collection of sales and/or marketing information and the subsequent communication of that info back to the host computer. Customers had been asking for this type of product, and Vista happened to have the know-how to create it. "When I was at Telxon, we did a lot of field sales and store order entry projects," he explained. "In addition, at Vista, we've worked with some candy and tobacco wholesalers and an office furniture company that all used ConnectPro for wirelessly enabling their field sales. QuickPro evolved out of a combination of the [software] routines from those clients' software packages and my past experiences."
While You're At It, Why Not Add WMS And VoIP?
With the software expertise and the products Vista has already, some people may wonder why Peyton hasn't created a warehouse management system (WMS). After all, many of the tier-two and tier-three companies that are on Vista's radar screen typically are looking for a WMS. But, he says he's not interested in competing with the large WMS vendors - many of which are now trying to enter the smaller markets. Instead, Vista has recently become one of 26 companies nationwide that are certified to sell PSC's (Portland, OR) IntelliTrack WMS. "For what it cost me to buy IntelliTrack, it's not worth it for me to develop my own WMS," he explained.
One new software product Peyton is developing is related to VoIP (voice over Internet protocol). VoIP is the term used for managing the delivery of voice information using the Internet protocol (IP) (see "An Introduction to VoIP" on page 72 of Business Solutions' February 2001 issue). Peyton's goal is to provide the software that enables people to have one device that performs data collection and VoIP. Besides developing the software, he is currently working with an engineering firm to create the actual handheld device.
It may still be too early to determine if Peyton's wireless software fixation will reap big dividends. After all, he hasn't even begun to really promote his software, instead putting most of his time into software development. In the meantime, though, he's keeping his eyes peeled for what's on the wireless industry's horizon.