ANT USA INC.

May, 2005
Volume 6, Issue 1

The Planning Gazette

To Our Readers:
A few years ago we
began publishing The
Planning Gazette with a
few lofty goals, chief
among them our stated
desire to follow a
quarterly schedule. Funny
thing happened along the
way...we got real busy.
In an effort to meet our
goal of providing our
readers with quarterly
installments of the only
periodical dedicated
solely to the issues facing
Merchandise Planning,
we have re-worked the
format and hope that by
reducing the amount of
content required to fill
four pages, we will again
be able to publish at
least quarterly.
How to Buy a Planning System
by Ron Fleischer
In the previous issues of The Planning Gazette your budget request and move on to some-
we have dedicated a lot of space to the topic thing else.
of building a better plan. We’ve discussed
Statements like: “we’ve grown beyond the
ways to improve the planning of many of the
capabilities of our present spreadsheets” or
key components of a good merchandise plan
“we need to provide a unified view of the
and the benefits that they should yield.
plan rather than the 100 different spread-
We’ve discussed Sales, Markdowns, Receipts,
sheets our people are using” are a pretty
Inventory, Weeks of Supply, Gross Margin,
good indication that a planning system will
GMROI and many other elements all with the
help. Statements like: “we are turning too
goal of improving overall performance.
slowly” or “we are chronically overbought”
There is, however, one area that we have not are more an indication of cultural problems,
discussed in a few years, and that is your and not necessarily planning-related.
planning system. All too many retailers think
Focus on the BIG items
that simply implementing a new planning sys-
This is the very step that can often be traced
tem or process will magically yield better re-
back as the source of failure following imple-
sults. Sometimes the magic happens by itself,
mentation. Often, people attempt to create
but for most companies the real people in-
and implement a system that will ostensibly
volved - those who will use the system and
do everything, and then find that it does noth-
those that design/select the system – mean
ing well.
more to success than scalability, ease of use
and functionality of a planning system, Consider the requirements of a “small plan-
ning system”, one with perhaps 200 classes
For that reason I thought some time should be
across 100 locations that will allow the user
dedicated to a discussion of how to select a
to plan 25 metrics down to the weekly level.
planning tool and more importantly, how to
If you do the math, you’ll come up with nearly
maximize your chances for success.
26 million numbers! While exception based
Face the Problem planning can make this process more man-
All too often, the retailers don’t start with the ageable, complexity rises where the plans not
Mother of All Selection Questions: why do only “talk to” an order generation system, but
you need a planning tool in the first place? manpower scheduling, replenishment, floor
What specific problems exist that will be ad- planning and assortment planning are all fully
dressed by a planning tool? If that simple integrated as well. Going after the “big
question can not be answered directly and (Continued on page 2)
clearly, you may as well scratch that item off

Juicy Vendor News
by Dmitry Goykhman
How to lose a lot of Money
Gracefully:
It’s been a long time since our last issue,
so plenty of Juicy Vendor News has
drained off the front pages of the
trade press, Web sites, and the wag-
ging tongues of trade show attendees.
Thankfully, one can never go wrong by
overestimating the ongoing turmoil in
the ranks of Retail Technology Vendors.
Island Pacific/Retail PRO double
reverse takeover:
Avid readers of this column will remem-
ber Island Pacific bought RTI (the par-
ent of Retail PRO) and the access to
their extensive dealer base way back
in the hoary mists of time – June 2004,
for about $11 Million.
In August of that year Island Pacific’s
Steve Beck (who led the acquisition
strategy) was out the door, and RTI’s
CEO, Mike Tomzak, took over the
reigns of the combined company, a re- company is now less than $13 Million…
verse inside take over. Not surprising,
The Retek Joust:
given the huge ongoing quarterly losses
Probably the biggest news in the indus-
in the millions.
try is that of Oracle acquiring Retek in
The newly merged company focused a pitched battle with SAP. The purchase
more on the well-known RPRO channel price is around $650 Million (twice the
and a lot of the larger IP clients were, market cap of JDA), or about 80 P/E.
to put it mildly, confused. In the process, Shades of The Market Bubble, or the
the ambitious but stillborn plans to de- price of Larry Ellison’s need? SAP, hav-
velop the next generation Planning and ing been jilted at the altar, is probably
Allocation system were dropped. looking for another would-be market
leader to acquire – could JDA be next
In a plot twist worthy of Shakespeare,
on the block? Of course at the time of
fast forward 10 months to April 2005,
this writing JDA already trades at a
and the losses continue. Island Pacific
nose-bleed P/E level of 101.
announces a 14% layoff, and a new
(old IP) CEO, Barry Schechter takes The Compass, Alphameric &
over, with the following language in the Torex shuffle:
Press Release: “We have missed our Not to be outdone, our compatriots on
revenue targets and the Board believes the other side of the pond have kept up
that Mike should focus his attention on the dance. Alphameric PLC, originally
developing sales”… This makes it a got into the game by buying Pennine
double-reverse inside takeover – re- Retail for £60 Million in 2000. In No-
minds one of competitive figure skating, vember 2003, Alphameric bought Com-
a sport where new flips and twirls are pass Software lock, stock and barrel
invented seemingly every year. Oh, for £9 Million and the rumors were that
and the market cap of the combined (Continued on page 2)
 The Planning Gazette Volume 6, Issue 1
Page 2

controls” in place. JDA Software reports lower quarterly

Juicy Vendor News
(Continued from page 1)
Compass management started to run
Alphameric Retail (which coincidentally
lost its General Manager and a lot of
key staff in the process). In November
of 2004, the entire Alphameric Retail
division was sold to Torex Retail – for
£15-30 Million…
The STS/NSB Group/BT Expedite
investment through disposal:
At the end of 2000, UK-based NSB
paid £272 Million took over STS, a
company twice its size. Last year, NSB
divested its UK retail operations to BT
Expedite for about £17 Million, and is
now happily back being “mostly” STS
under a new name and with “tight cost
Market Health
In general, it’s difficult to gauge the
condition of any one vendor, since eve-
ryone will bravely lie and pretend to
be perfectly healthy right until a sud-
den collapse happens, as with Mitech
Systems or Sterling Software a few
years ago. However, one can sniff out
the overall market condition by paying
attention to the companies that man-
aged to go public in the last few
years…
Overall, things seem to be a mixed
bag out there, with some vendors pros-
pering and others contracting. Here are
some glimpses of what’s swirling under
the surface, culled out from the latest
quarterly financials:
revenues, including a dramatic license
revenue drop from $14.6 million to
$10.2 million
Island Pacific reports a $2.3 Million
loss from operations
Retek (just before the Oracle acquisi-
tion) reported a quarterly license and
maintenance revenue drop year-to-
year from $24.3 Million to $21.7 Mil-
lion
Retalix revenue grows by 25% to $33
Million a quarter (putting the company
just a step behind JDA and Retek)
NSB reports revenue growth and
good prospects for its US/Canada
operations. Resulting market cap…
£9 Million

in the RFP will probably eliminate them but that’s the retail equivalent of driv-
How to Buy a Planning from contention. To that end, vendors ing in a thumbtack with a sledge
(who answer RFP’s all the time, after hammer.
System all) have workarounds in phrasing, and
The right tool for the job
in some cases answers are massaged so
(Continued from page 1) I am reminded of a story where a re-
that the requirement is filled. To catch
tailer asked whether the merchandise
rocks” would suggest figuring out where those, and to make sure that no internal
planning tool they were considering
the biggest opportunities are, and then group is “offended” or overlooked, the
would let them plan and track by ven-
creating a list of requirements that will consultants add more and more ques-
dor. They were completely baffled
exploit them. tions to the RFP. The end result is a very
when the vendor pointed out that no-
detailed checklist that sheds no greater
Don’t get me wrong, I am sure there where in their present reporting system
light on the problem. Do 50 pages of
are a few organizations out there that was vendor information captured.
requirements really provide a greater
can handle an all-inclusive implementa- While planning systems can solve many
assurance that your planning system
tion. They may have the infrastructure, problems, they are not the holy grail.
will work?
manpower and most importantly the They will not cure everything that ails
budget to support these huge projects, People can make the difference you, although if you target your re-
not to mention the extra space to put I am often asked what the single great- quirements, the planning systems can
all the consultants these big implemen- est contributor to a successful merchan- cure the issues they were designed to
tations usually require. For the rest, the dise planning implementation is, to address. Buying a planning tool will
question “is this requirement really nec- which I respond “discipline”. If your or- only allow you to plan by vendor if the
essary?” should be the mantra chanted ganization historically has not held vendor information exists in the first
by the team in unison, at the start of people accountable for the OTB, how place. This is actually a pretty common
every project meeting. For added ef- will a new system help you? Sure, a problem and stems from the fact that
fect, chant while facing in the direction new system might give you more timely when new systems are considered,
of the server room… information at a lower level of detail many in the organization want to see if
but if you’ve historically seen negative they can fix “everything that’s broken”
Hate the RFP
OTB numbers on your planning spread- in the main merchandising system re-
Another danger of the requirements
sheets, you’ll probably see them in your gardless of whether the planning tool is
phase is the epic RFP. In theory an RFP
new planning system as well. designed to handle that issue or not.
can be a very valuable tool, but every
participant is onto its limitations. Keep Of course, if you interface your OTB Keep reading…
in mind that vendors know - answering with the Purchase Order generation So what’s a retailer to do? In this day
“No” to too many of the requirements system, and create a lock where an and age, how does one figure out
overbought buyer can’t enter anymore which planning tool is right for you? This
orders, you might solve the problem, is a topic that we will take up in our
next issue.

Opportunities To Argue With Us in Person

Steamed about this newsletter? Want Retail Solutions 2005
to discretely share some Juicy Vendor Birmingham, UK, June 7-9
Home of The Buyer’s Toolbox News? Interested in seeing The Buyer’s Stand L1
Toolbox in person? Fear not, oh Plan- www.retailsolutions2005.co.uk
132 Main Street ning Gazette enthusiast, we attend a
Acton, MA 01720 number of trade shows a year. Retail Technology 2005
Sydney, Australia, July 21-22
Phone: 978-635-0877
Upcoming appearances include: Stand I50
Fax: 978-635-0404
http://www.retailbusinesstech.com
Email: gazette@antusa.com
Retail Systems 2005,
To preschedule an appointment please
Chicago, USA, May 24-25th
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