Posted by Ranga Bodla, Industry Lead for Wholesale Distribution, NetSuite
For Laguna Tools, an Irvine, Calif.-based distributor of European and Asian woodworking equipment, the notion that more is better does not necessarily apply. Certainly not in its IT department.
Downsizing multiple, disparate servers and databases onto one cloud-based enterprise platform gave the company greater agility, flexibility, scalability and end-to-end process efficiencies. Notably, it significantly improved its competitive position against larger rivals thanks to economies of scale that are impossible for smaller companies using traditional on-premise servers and manual processes to match.
Laguna Tools started out 28 years ago as a small California business, importing tools from Belgium and the Netherlands, but gradually expanded by partnering with other distributors in Asia, Australia, Canada, Europe, the Middle East, and Central and South America. In 2010, Laguna won GSA approval from the U.S. government, which allows it to sell to government agencies and organizations.
However, Laguna Tools' expansion was strained by the limitations of its IT systems. It relied on a collection of standalone applications for inventory, accounting, manufacturing, and sales. With separate accounting, CRM, ecommerce, email and shipping software, data had to be manually entered into multiple systems. Hence, employees had to make multiple entries to record a sale in accounting, CRM, ecommerce and the shipping system. That process not only took time and effort, but often produced errors as well as redundant data.
“We were literally playing tennis with the data, back and forth, back and forth,” said Catherine Helshoj, vice president of Laguna Tools. “Along the way, we got a lot of errors in the data, such as someone entering the wrong bill of lading. It was an absolute nightmare.”
That wasn’t the only problem that Laguna Tools experienced with its IT systems. As it grew, and made plans to begin selling products online, it had to grapple with problems related to the outdated systems. Those included slow product shipments and a lack of visibility into performance and operations that were scattered between the systems. As Laguna Tools was facing stiffer competition in many of its markets, these limitations became serious obstacles.
The lack of data integration was also making it harder for the company to sell online and enter new markets. Without integrated data and processes, management couldn’t get the intelligence it needed to plan strategically and move quickly to take opportunities and fix potential problems.
Laguna Tools’ management decided to replace its multiple servers and applications with a single enterprise platform. They chose NetSuite’s cloud-based ERP applications and went live with the new system in 2009.
The move to a single cloud-based ERP/ecommerce platform helped Laguna Tools trim the time and cost of shipping products and expanded online sales. People ordering online now get near real-time inventory data, thanks to live inventory updates that take just 30 seconds to complete. Product prices can also be modified on the fly to take advantage of market conditions.
Besides eradicating the errors created by manual data entry, the migration also cut the cost of the company’s IT operations. As Helshoj noted, “We got rid of all our servers, and that is a cost saving in itself.”
Another major benefit is that Laguna Tools now has a simpler, more secure backup and recovery plan. Before NetSuite, whenever they updated and backed up the system, the company had to bring it down, meaning it had to be done off-hours or idle workers with a daytime shut-down. With each backup, Helshoj would lug home the backup tapes.
“I had boxes of them,” she remembered.
Worse, the servers and other hardware were vulnerable to viruses and other malware, despite attempts to protect them.
“It’s really the worst aspect of the business to manage. It’s a ball and chain around any business owners’ feet. People need to move into the cloud quite honestly,” she said.
Today, Helshoj relies on NetSuite’s redundant, secure network to ensure that Laguna Tools can recover quickly after an outage or natural disaster. It also prevents unexpected outages, which used to occur as often as two or three times per month.
From a long-term strategic standpoint, perhaps the best result has been Helshoj’s ability to do the kind of strategic planning and intelligent analysis of her business and industry that her much larger competitors do. “I can do reports and get the information I need just by clicking a button,” Helshoj said.
“You can automate your processes, automate your marketing and automate virtually everything with NetSuite” she said. “We have a great dashboard, visibility and management tools. It really streamlined our operations and increased efficiency. If you want to emulate the Fortune 500 – they’re in the cloud. With NetSuite we can have a very affordable, very seamless system compared to what the big guys pay.”