The ultimatum Featured

10:01am EDT July 22, 2002

When Yesterday Corp. President Tom Sincharge received a phone call last September from his largest customer—Grande Appliance Manufacturing—there was no way to know it would fundamentally alter the way his company did business.

But that’s exactly what happened after Grande’s chief operating officer, Bob Walker, delivered this message: Unless Yesterday Corp. could take Grande’s orders and payments electronically, Grande would have to find another supplier for its plastic and rubber tubing needs.

“It was like something out of a CEO’s worst nightmare,” Sincharge recalls. “We were essentially told, ‘Change the way you do business or say goodbye to your biggest customer.’ Obviously, we didn’t have much choice.”

Worse, Walker gave Sincharge just four months to comply.

Sincharge admits the ultimatum unnerved him, but not because Yesterday would have to upgrade its technology. For more than a year, he says, he had felt the cool shadow of technology hovering over Yesterday Corp. as its customers developed Web sites, installed new hardware and software and embraced new information technologies.

“We knew it was coming eventually,” Sincharge says. “Grande wasn’t the first customer to ask whether we could handle EDI. They were probably the fourth or fifth.”

But Sincharge had hoped to work on the company’s conservative board of directors slowly, selling the idea of a substantial investment in technology over an extended period of time.

“Nobody likes being forced into making changes,” says Sincharge. “But Grande was one of our oldest and most important customers.”

The appliance giant accounted for nearly 15 percent of Yesterday Corp.’s income and generated about $1 million in annual profits. The way Sincharge saw it, loss of that business would not only make life very uncomfortable for everyone at Yesterday Corp., it could make the inevitable move to high-tech information systems impossible to pay for—perhaps ultimately leading to the company’s demise.

Sincharge called an emergency meeting of the board of directors and told it that Yesterday’s existing computer system was woefully inadequate for what Grande proposed. “We had some outdated computers in our accounting department, and some PCs in our warehouses to track inventory, but that was essentially it,” he says. “There was no network to speak of, and few people, if any, could tell you a thing about the Internet or the World Wide Web.”

The person in charge of the keeping the company’s computers running had fallen into that role as a part-time necessity in her role as bookkeeper.

As for Sincharge, the man who would have to lead Yesterday Corp. into the brave new world, his main experience with e-commerce was buying a book for his wife’s birthday from Amazon.com. “Even then, I was concerned about giving out my credit card information over the computer.”

The board meeting was heated, Sincharge recalls. One board member suggested letting Grande go and simply tightening belts; another suggested hiring a full-time clerk to handle Grande’s orders, giving the illusion of electronic processing. The prevailing view was to spend just enough money to meet Grande’s demands and leave it at that.

When the board finally settled down, Sincharge presented his proposal. First, Yesterday needed a computer network that would link its corporate offices with the manufacturing facilities, somehow tying together the accounting, inventory and sales departments so they could share customer information.

He also envisioned a Web site, complete with an online catalog of Yesterday’s product line. While the most important issue was implementing electronic commerce that satisfied Grande’s requirements, Sincharge insisted it needed to be something that other customers could use as well—thus assuring an eventual return on investment. Says Sincharge, “We needed something that was forward thinking and could grow as our operations changed.”

Sincharge prevailed. The directors scheduled another meeting in two weeks, at which Sincharge would present a proposal that met two points: First, whatever Yesterday implemented had to meet Grande’s requirements within four months. Second, the long-term plan had to provide Yesterday with a return on its investment.

Based on references from business friends, Sincharge contacted three consulting firms—each a different size—asked them to analyze Yesterday’s operations and, within the two-week time frame, provide proposals for Yesterday’s project.

What he received, on the same day as the scheduled board meeting, ranged from a phase-by-phase long-term approach to a turnkey total solution. Sincharge looked at the numbers, swallowed hard, then raced to the boardroom.