RADical approach to finding the right IT system

THE three thirtysomething partners who head up Glasgow-based IT consultancy RAD Software pride themselves on having the personal touch.

"We’re ‘The RAD Boys’ to most of our customers," says Gary Swan, director and co-founder of the company. "We go to their wives’ birthday parties, play golf with them, and even go on skiing holidays with them."

This level of intimacy may be unusual in a company with nearly 50 clients on its books, but it has grown out of RAD’s conviction that satisfied clients are its greatest asset in a highly competitive marketplace.

RAD managing director Andrew McAllister says: "When we’re speaking to potential clients, we encourage them to go and see our customers, because we know that’s a differentiator. Unlike a lot of our competitors, we have a happy customer base."

Those clients range from engineering companies like Walker MacLeod Group and Texol Technical Solutions, to oil services company Aker Maritime, food manufacturer Lightbody Celebration Cakes and medical devices firm Inverness Medical.

And last year, RAD landed its first client in Ireland, visual inspection systems manufacturer Vigitek. Since first launching in 1997, RAD has rapidly grown from being a three-man band - Swan, McAllister, and development director AJ Cunningham - to an established business with 18 employees.

RAD’s revenues passed the 1 million mark this year, and are expected to swell to 1.5 million in 2002.

This performance is particularly impressive considering "The RAD Boys" built up the business without any external funding.

The idea for RAD came about when the partners were colleagues at a Livingston-based IT firm, installing enterprise resource planning solutions (ERP) for business clients using EFACS manufacturing software.

Swan recalls: "We felt the company we were working for wasn’t putting enough investment into the EFACS product. We thought we could offer better service. So we handed in our notices."

After deciding to found their own company, the partners contacted Exel, the Nottingham-based developer of EFACS software.

"We sent in a request for a distributor licence, and we were really nervous - we spent weeks putting business plans together," Swan says.

"Finally, we met with their account manager in the early hours of the morning in a Lockerbie hotel, and within 15 minutes, we had an exclusive agreement to distribute EFACS in Scotland."

RAD’s first offices were provided by Flexible Ducting, a company which manufactures hoses and ducting products for clients like Dyson.

"They said: ‘We’ll give you your first contract - worth 6,000 - we’ll give you offices, furniture, phones, fax machines and printers, if you sit at the end of that corridor, be our IT department, and out of that you can grow your business’," Swan says.

"It was quite stressful going from a well-paid job to being self-employed, but we didn’t want loans with a lot of risk associated with that," McAllister says.

"So we basically bootstrapped it for the first year. We worked as many hours as we could, we were staying in cheap hotels, we didn’t take any pay for the first six months."

But orders started to flow in as the awareness spread among Scottish manufacturing companies that new technology could improve their bottom line.

McAllister says: "What’s helped us is that some of the big companies, like Asda and Ford, are looking at their supply chain, and they’re weeding out suppliers who aren’t delivering.

"So the pressure is on even more so than before to be delivering on time, at the right price, and at the right quality. Our customers are able to do that, whereas many of their competitors aren’t."

RAD’s ERP systems perform tasks such as the integration of accounts into the manufacturing process, stock monitoring and procurement, orders processing and project management.

With a new EFACS system in place, Swan says: "One of our customers actually stopped producing certain products because they realised they were selling them for less than they were making from them after we gave them the ability to document and analyse sales of individual products."

Information gleaned through the system has led other companies to alter their orders policies, according to McAllister.

"After analysing what it costs for them to trade with a particular partner, some companies have discovered it is not worthwhile to take an order for less than 100 because it costs them 100 to process it.

"Companies are being squeezed for margin, and the only way for them to compete is by lowering their internal costs," he adds. The software also helps companies meet the demands of their clients.

Swan says: "Lightbody’s has to be able to predict how many cakes stores are going to want tomorrow so they can start baking in advance. They run a programme that tells them what to produce and they do it. And they’re hitting all their delivery performance targets."

The RAD partners insist, however, that an IT system is no good to a company unless its employees know how to use it. After installing a system, RAD offers the client staff training courses accompanied by a helpline service to answer questions as they arise during use.

Some of RAD’s clients, says Swan, have been so impressed by the level of support the firm has provided that they have outsourced all of their IT requirements to RAD. "A few of our bigger customers don’t have IT departments anymore; their IT is subcontracted to RAD Software.

"So we don’t just sell and install EFACS anymore, we sell them their PCs, we manage their PCs, their networking infrastructure, etc.

"If they have an IT question, they phone us. For the price of one full-time IT employee, they can have access to 18 RAD staff," he adds.

McAllister admits that the current downturn in the Scottish manufacturing sector has made some potential RAD clients more cautious about spending money on what they perceive to be an expensive IT system.

He says: "When it comes to making investment decisions, companies are often thinking, ‘I could spend 100,000 on a new IT system, or I could buy that nice new big machine that is going to make things for us.’

"But what we’re offering them is a good manufacturing control system that can tell them what machines they should be buying based on the demand they’ve got. So we’re often fighting people’s preconceptions - the actual sales cycle can take years."

Fortunately, McAllister reports, younger, less traditional companies are more likely to understand the efficiencies a good IT infrastructure can offer. And through the relationships they have built with Scottish subsidiaries of international companies, RAD is now being invited to bid for projects as far afield as Germany and Dubai.

But, McAllister stresses, RAD will not bite off more than it can chew: "We want to grow the business, but we don’t want to lay ourselves too thin. The last thing we want to do is take on a contract that totally fails and then get a bad reputation."

Swan adds: "Our customers totally trust us because they know we don’t come in and sell them something they don’t need or won’t work.

"We do everything we can to keep that level of trust."