Insight Enterprises is on a pilgrimage, moving toward the Holy Grail of e-commerce: the "zero inventory model," in which products are shipped directly from manufacturers or distributors to customers. The key to this model is MAX, a proprietary IT system that electronically coordinates all phases of Insight's sales process, from Web or telephone order placement to electronic purchasing and shipping through Federal Express.

In 1998, Insight sold more than $1 billion worth of computers, peripherals, and accessories, primarily to small- and medium-sized businesses. Insight's profit from these sales was $20.45 million, up from 1997's $13.2 million profit. Such a significant sales volume has led to a corporate culture that emphasizes a lean operation and fast growth.

"You look for areas of the company where it requires a lot of manual effort to produce something," says Jim McCoy, Insight's vice president of finance and corporate controller. "First you ask, Can we eliminate it? If not, Can we automate it?"

For Insight's customers, MAX creates a transparent purchasing experience in which the customer's only interaction is with Insight itself. For Insight, it provides an opportunity to offer the lowest prices possible to customers while still maintaining a reliable profit margin.

According to Chief Information Officer Dennis Faggioni, MAX has evolved organically as the company has grown. "Over the last ten years, we continually tuned the system to fit Insight's business model, and we've adapted it as the business model has changed," says Faggioni.


Forward Focus

One of Insight's current major initiatives is expansion. The company has acquired or merged with companies in Germany, the United Kingdom, and Canada and has established or expanded facilities in Indiana and Louisiana. In addition to its geographic expansion, Insight has been increasing its online presence: Sales via the Web accounted for 7.3 percent of the company's sales in 1998.

These business changes, combined with fast growth, accentuated the limitations of the existing MAX system and led Insight to upgrade it by implementing Oracle Financials and Human Resources as well as Oracle8 Database Server.

"Sometimes you need to react very quickly and make changes in your business plan to meet your financial objectives," explains Faggioni. "We needed better tools to allow more-timely reporting to senior management. Oracle Financials will allow us to analyze the costs related to our business much more quickly than before. And the improved detail level will allow us to manage our costs much more effectively."

McCoy predicts that the Oracle Financials implementation will create savings in at least two ways: by streamlining the processes necessary to accomplish accounting tasks and by providing quicker information than the legacy system, which offers only limited reporting and requires Insight to consolidate financial results from each system through spreadsheets.

"Right now, 80 percent of our effort is getting numbers on paper and 20 percent is analyzing the numbers," says McCoy. "Oracle Financials will allow us to reverse that ratio."

Along with savings in the finance department, the new system's faster reporting will allow officers from all areas of Insight to identify other potential savings. "We need to do anything we can to drive costs out of the business," says McCoy. "How do you find where to drive costs down? With information. Oracle technology will make it easier for more people to convert data to information."

Insight Enterprises www.insight.com Insight Enterprises, headquartered in Tempe, Arizona, sells computers, peripherals, and accessories, primarily to small- and medium-sized businesses. In 1998, Insight's sales exceeded $1 billion, with profits from these sales at $20.45 million, up from $13.2 million profit on $628 million in sales in 1997. Such a significant sales volume has led to a corporate culture that emphasizes a lean operation and fast growth. Insight Enterprises is working toward the goal of a zero-inventory business model in which products are shipped directly from manufacturers or distributors to customers. The key to this model is MAX, a proprietary IT system that electronically coordinates all phases of the sales process, from order placement to electronic purchasing to shipping. Hardware Digital 8400 Server Sun Microsystems 4500, 450, and 250 servers Intel Pentium-based desktop and laptop PC clients Software & Services Oracle8 Database Server Oracle Financials Oracle Human Resources Harbinger EDI Links Interworld e-commerce engine RightFAX fax software Sun Microsystems Solaris Microsoft Windows NT and Exchange 5.5

Efficient Workforce

Insight has identified its workforce—its largest cost area—as a potential source of savings. More than 1,200 account executives are leading the charge to meet Insight's goals of increasing market share as well as "customer share"—the portion of a customer's business that goes to Insight. But monitoring and administering such a large workforce is a major undertaking.

"Sales personnel are traditionally a transient employee group," explains Geri Hughes, Insight's director of Human Resources. "Coupled with our explosive growth, that fact itself results in high maintenance requirements for employee data." Oracle Human Resources, already live at Insight, has helped the company streamline the way it administers this changing workforce. The addition of a Web-enabled self-service front end will eliminate the need for human-resources representatives to handle routine employee transactions.

"The Oracle system will allow us to streamline by allowing employees to update their personal information via the Web," says Hughes. "As functionality increases, the human-resources staff will be handling less data entry and will be freer to perform more data analysis for strategic planning."


Competitive Edge

Although cost cutting is key to its business initiatives, Insight's low-cost approach does not distinguish the company from competitors to the extent it once did.

"We still have a leadership position in the way we have connected electronically with our suppliers and manufacturers to deliver products to customers, but others are figuring that out as well." says Faggioni. "With our competitors using the same delivery mechanisms, they too can drive toward 100 percent quality on their delivery commitments."

Although Insight continues to hone its low-cost, quick-delivery model, its longer-range goal is to focus on providing Web-based information that will allow its customers to operate their businesses more efficiently, particularly in regard to online purchasing.

"We really focus on two things we believe that customers want the most: information about the products they are buying and information that helps them better manage their business with Insight—meaning what they are buying from us and how they are buying it," explains Faggioni.

Insight hopes that by providing this information, it will increase purchasing traffic on Insight.com. The company is upgrading its Web site, using Interworld transaction-engine software running on an Oracle8 database. The updated e-business system will populate individual customers' purchase records, using information from Oracle Financials. According to Faggioni, this information will allow Insight to replace the traditional technology-enabled selling environment with a technology-enabled buying environment.

"In a technology-enabled buying environment, you're focused more on the customer and the way the customer wants to buy," explains Faggioni. "That includes having information about a product as well as about your customers' past transactions with you, so that the customer can make prudent decisions about what to purchase next. On top of that, we provide a viable transaction engine for placing that order."

Insight already offers detailed online information about the "100,001" products it offers, and the company provides "custom landing pages" for major business customers. By the end of 1999, the company plans to increase the amount of information on its Web site as well as provide the ability for customers to interact with account executives online.

Insight's Insights Streamline tasks for customers and employees by implementing self-service capabilities via the Web. Provide customers with value-added information to augment the buying experience. Consolidate information from different areas of the business for better decision making.

"We are implementing ways to assure our customers that they can continue their relationships with their account representatives, even if those customers use the Web to place orders," says Faggioni. "When we bring our new architecture online, customers won't be able to tell the difference, but we anticipate that our productivity in maintaining the site for content and marketing will increase from by 30 percent, allowing us to be much more dynamic.

"Because we will be able to put out a more sophisticated site with more information, the productivity of our salespeople should also improve," adds Faggioni.

McCoy confirms that Insight sees its Web site as offering a strong opportunity to both increase sales and cut costs. While worldwide sales to businesses comprise 80 percent of overall sales, only 40 percent of overall Web sales currently come from businesses, with the other 60 percent coming from consumer purchases. Since Insight's Web sales are currently only 7.3 percent, the opportunities for the company to increase the use of this channel are substantial.

"The biggest bang we could get for our IT buck is to push customers and customer-service functions to the Web," says McCoy. "The productivity of our sales reps who have embraced the Web is double that of reps who have not."

According to McCoy, the key to persuading customers to use the Web is to provide them with information that is useful for managing their businesses. The information needs to add value to their efforts, enabling them to make more-informed purchasing decisions. "Once we implement Web self-service, customers will have the ability to research their accounts via our site," says McCoy. "The underlying Oracle technology will let us do things I can't even consider doing with our legacy system."


Consistent Growth

In addition to its growth within the United States, Insight is growing—and increasing economies of scale—through international mergers and acquisitions. Insight Canada, established in 1997, accounted for 8 percent of the global company's sales in 1997, and 1998 mergers with companies in the United Kingdom and Germany are offering even greater opportunities for new business.

Along with the increased sales opportunities these steps bring about, however, come increased IT planning and implementation challenges. "Every acquisition or merger is different, because of varying degrees of sophistication and types of legacy computer systems," says Faggioni. "We have to look at how we can integrate our business processes and technologies in the most cost-effective and timely manner."

Its German business, for example, which Insight acquired in December 1998, was previously the fourth-largest provider of PC equipment and peripherals in Germany, relying on a simple business process that supplied both customers and retail stores from a single warehouse.

"We're bringing a robust, scalable order-taking Web site that Insight Germany can offer its customers," says Faggioni. "Then, we're implementing our outbound business-to-business model, which is the way in which our account executives relate to business customers. Finally, we're providing our zero-inventory strengths, dealing with suppliers and manufacturers for direct shipment to customers, thereby reducing cost, improving the timeliness of delivery, and increasing the number of products Insight Germany can offer from 2,500 or 3,000 to more than 100,001."

Running an international organization creates special pressures on a company's IT systems, from language and currency translations to 24-hour-a-day operations supporting multiple time zones to the need to reconcile financial and other information from widespread sites. By providing support for languages, currencies, and a single wide-area system, Oracle software is helping Insight adapt the lessons it has learned in the United States to the international market.


New Efficiencies

"When our Oracle system goes into production, we will be able to close the books a week faster than we can right now," says McCoy. "If it takes two weeks to close the books, the information is old and stale. If I can do it a week quicker with Oracle, that's a big benefit right there."

Although McCoy emphasizes that it is essential to analyze the cost benefits of all IT investments—and he cautions strongly against making IT investments for their own sake—he clearly believes that Insight's new system will deliver substantial savings. "The backbone of our business is our virtual-inventory system," he says. "You can't be a player in e-commerce without a strong IT backbone."

The e-business model requires companies to increase coordination between business and IT planning. "It sounds trite, because we've talked about it and heard about it for so long, but today's IT leadership must be involved in the business and in the business decisions," Faggioni explains. "We have to have people who are functionally knowledgeable in those areas."

Although the concept of communication between IT and business planners is not new, the role of IT has evolved along with business plans. IT professionals not only need to continue to focus on efficiency issues but they also need to expand their awareness to the broader business. For Insight, the broader business priority is increasing sales.

"For 40 years, IT has done massive amounts of work in terms of standardization and business processes. And over the last 20 years, it has led tremendous improvements in productivity," says Faggioni. "But now IT has the capability to provide business differentiators, which means that the IT organization has to be smart in the business and be able to develop solutions even for problems that have not been recognized yet."

Cabell Breckinridge ([email protected]