Tuesday, November 09, 2010

Cloud-Based Commerce Network Helps Florida Manufacturer MarkMaster Reach New Markets, Streamline Transactions

Transcript of a BriefingsDirect podcast on using cloud computing as a two-way street between suppliers and buyers.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Ariba.

Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and you're listening to BriefingsDirect.

Welcome to a sponsored podcast discussion on ways that businesses are using cloud and e-commerce to improve how they do sales, marketing, and online transactions.

We'll examine how one company, Tampa-based MarkMaster, has quickly moved to nearly all-paperless sales transactions, found new customers via online networks, and increased the amount of product it sells to its existing clients. This was accomplished without a lot of additional IT or business-process spending by using cloud-based collaborative business commerce solutions.

To learn more about how MarkMaster is conducting its business better, please join me now in welcoming Kevin Govin, the CEO at MarkMaster.

Kevin Govin: Thanks for having me.

Gardner: Kevin, we're hearing a lot these days about cloud computing and online commerce. How is that having an impact? How is that changing your business?

Govin: It's totally changed our business. I laughed a little bit at your intro, when you talked about going "paperless." One of our main product lines is rubber stamps, and it seems counterproductive to go paperless with what we do.

Yet we have changed a lot. Now, 95 percent of our orders come electronically. We have one location in the United States that services all of the US and Europe. How could we do that without some kind of cloud transacting? It just makes the most sense. Over the last 10 years, I think 99 percent of our new customers have been coming through those kinds of systems.

Gardner: Tell me about MarkMaster. You've been around since 1933. That’s a long heritage. I am sure the company has adjusted to the realities as time has gone on, but tell me about the company now, your reach, and what you do.

Govin: We deal mostly with Fortune 500 companies. We sell what my brother, who is our sales manager, calls necessary needed nuisances. We sell rubber stamps, name badges, name plates, and interior/exterior signage. It's a unique field, kind of a niche market, as rubber stamps are a mature market. But, we seem to be gaining market share, so that’s been great for us.

Changed our reach

E-commerce has definitely changed our reach, which is, as I said, national and international. We have a plant in Birmingham, England, that we fulfill from as well for our American-based companies. We service 9 of the top 10 banks in United States. We do 8 of the top 10 insurance companies. Without cloud computing, there's just no way we would have even considered doing that.

Everything we do is personalized. Because I'm dealing with people’s names, even the fax -- which sounds like it would be a great thing -- was bad, because of the legibility and the readability. So, this all has been just a godsend for us.

Gardner: Tell me how things have changed in terms of how you've found your customers or allowed them to find you? Is there a different way in which this intersection of your value and their need is happening?

Govin: Sure. A lot has changed. We definitely use the cloud-computing models to go out and sell. Our products are products. There is nothing jazzy about a rubber stamp. Name badges are pretty much specified by the customers. So, we are not out there selling anything new or exciting as far as that’s concerned.

We have changed our model, and our salespeople don’t travel with the product. They travel with the computer and they show what we can do online and what kinds of services we can provide.

The investment in hardware has actually come down over time, but we do like to keep up today with the current technologies.



Obviously, we work heavily within the Ariba network, and because of that, now we are an Ariba Silver supplier. So, there's a lot of pluses that go with that, and we use a lot of banner ads and things like that.

We're also a minority-owned business. People are surprised when a minority-owned business comes up to them, says, "Look, I can transact on these, and this works just like anybody else that you are dealing with now."

Most of our products are considered office supplies. So, I have to look like the big Office Maxes, Office Depots, and that kind of thing. That’s how we present ourselves. Even though we're the biggest in our industry we're still a small company.

Gardner: And you're doing this without a whole lot of your own IT, I am taking it, and/or you haven’t had to invest significantly in more IT resources or facilities in order to do this?

Govin: We do it all ourselves. My background was in IT. Maybe that’s just a fallacy of mine, but we do most everything ourselves. It's all internal. We don’t have a large staff. We only have four people that work on IT systems. The investment in hardware has actually come down over time, but we do like to keep up today with the current technologies even in our web catalogs, etc.

Gardner: I guess the point is that with cloud computing, folks like Ariba are supplying a lot of what is intermediary between you and your prospects, rather than you have to build that all out yourself?

Quick turnaround

Govin: Absolutely. We can turn around on a customer in two days, because it's just all uploading something. There are no ports to connect or anything highly technical at all.

Gardner: What was it about the previous ways that things were done that may have been an inhibitor not only to your ability to find, but also to execute or to satisfy? Has there been some sort of process enhancement that you could point to that has allowed you to scale to grow your business or perhaps just be more flexible?

Govin: Because both on the buyer and the supplier supply side we are having hosted solutions or in the cloud it makes it a lot easier. There used to be a real reluctance from the customers to want to put us on board, because I might only be $100,000 year in spend, and they were going to outlay a lot of IT to connect me.

Now, with the cloud solutions, there is very little IT on either end. I'd imagine that it's even easier now than it was with the paper system before, because we can communicate to their end-users that we’re out here, and we’re ready to be bought from.

Gardner: It's interesting, Kevin, that we’re really talking about a two-way street here. You're putting your goods up on a network, a cloud, Ariba, and saying, "Here, come and get me." But, there's also that way in which someone in the field has a need, and they say, "How do I find the supplier that can get this to me fast?" That’s what's new and interesting about this cloud.

That’s huge for us, because it puts us in front of all those users that are looking for somebody like us.



Perhaps you could tell me a bit about Ariba as one specific way in which this two-way street is now a bit more flexible, but also something that gets the job done faster, better, cheaper.

Govin: Obviously we’re posted out on Ariba’s Discovery area, so they can find us very easily, and when they look at that, they see number of connections, and we get instant credibility on top of that. Then, of course, we even use the Ariba LIVE event. That’s huge for us, because it puts us in front of all those users that are looking for somebody like us.

Gardner: Maybe we can look at some examples. We have been talking about this at a fairly abstract level. Any specific customers? You don’t have to name them necessarily, but maybe you can tell the story of how this has worked, what the metrics of success may have been, and how others might learn from the way in which you’ve been doing this commerce?

Govin: One of the larger banks that we deal with, when we originally started with them, weren’t even considering us as a supplier, but they found us on the Ariba Discovery network. They called us and said, "Can you really do all of this. You're a small supplier?"

We showed them our list of what we have, where we’d already made Silver. So they knew we were vetted already by the supplier and we ended up with the business. It wasn't necessarily in a RFQ kind of environment either. It was "Wow. You can do this, and you’re the supplier we want and, in our case, you’re a minority supplier." So, it was just having that all together.

Can't always be there

But, they found us on Ariba. We didn’t solicit them. I mean, we had been soliciting them, and they knew of us, but we can't always be there when the customers need these products now. It's just too hard, because our products are needed everyday. So, that came out very well for us.

Gardner: I suppose that’s every salesperson’s dream is to be there right at that point of need.

Govin: It is.

Gardner: And you don’t have to do the heavy-lifting, but you want to be responsive as well.

Govin: Our salespeople have always worked in an environment of just continuing to keep contact with the customer. Hopefully, they remember us or that particular buyer hasn’t been moved to another commodity, which is one of the issues that we were into with the large corporations as well. This definitely keeps our face out there, especially when they know that Ariba is a resource to find a supplier.

Gardner: Now, what are the metrics? I see from some of your information that there have been some growth patterns, new clients, and even your existing clients seem to be using more of your products as a result of this. Your transactions are more swift. So, give me some meat? How is this really impacting your top-line and your bottom-line? What's the result?

Govin: Well, top-line, our sales are growing at least 10 to 15 percent a year for the last 10 years, and that’s the same time-frame that we’ve been on e-commerce and computing that way. So we have to believe that that’s a lot of it. Our industry is shrinking as well. There were 1,200 rubber stamp makers, now there are 400. None are of our caliber -- of course I’d say that, but that has made a big change.

Bottom-line, we had that year-over-year growth, and our customer service department has not grown, or added anybody to that staff.



Bottom-line, we had that year-over-year growth, and our customer service department has not grown, or added anybody to that staff. How does that work, because we've grown exponentially? The reality is online systems.

We proactively give them the information as to the status of their order, and they can actually see it go through our plan step-by-step. Does everybody need that information? No, but it does keep them from calling customer service. So it’s definitely changed.

Now, 10 years ago, we were 95 percent paper, and it's just totally flipped. So, you can count on your hand the overhead that this gets rid of.

Gardner: Let's go to the future. How do you see things panning out? Is there another step that you can take in terms of how you would exploit or use cloud? How do you see cloud coming to your aid as a business?

Govin: One of the things we’re always talking about is transacting in the cloud and getting orders and billing. The billing part is where we want our customers to go next, because it seems like the front-end integration is great, but on the back end there are 100,000 different ways that people want us to bill them and get paid -- EDIs or ACH or whatever.

We see it coming. People are migrating to the pay element, so that everything is integrated, and that’s great for us. It turns money faster. I don’t deal with credit cards as much, all of which cost me a lot of overhead.

Remember, my products are $5 or $6. People buy one at a time. So, handling invoices is just a nightmare. I get 20,000 invoices every day. We need to upload them, link them, and know the bill is okay.

My clients are not the kind of clients that aren’t paying me because they don’t have the money. They're the kind of clients that aren’t paying because I didn’t do the paperwork correctly. So having that end-to-end order-to-pay integration is where we see it's coming next for us in integrating the whole cycle. Some of my larger banks have definitely gotten on-board with that and it's great, and for a small company, it changed my cash-flow as well.

Gardner: We’ve been talking about how one company -- Tampa, Florida based MarkMaster -- has been moving to sales transactions online, and finding new customers. We’ve been joined by Kevin Govin, CEO with MarkMaster. Thanks so much.

Govin: Thanks for having me.

Gardner: This is Dana Gardner, Principal Analyst at Interarbor Solutions. You’ve been listening to a sponsored BriefingsDirect podcast. Thanks for listening, and come back next time.

Listen to the podcast. Find it on iTunes/iPod and Podcast.com. Download the transcript. Sponsor: Ariba.

Transcript of a BriefingsDirect podcast on using cloud computing as a two-way street between suppliers and buyers. Copyright Interarbor Solutions, LLC, 2005-2010. All rights reserved.

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