If you’re into ERP, RDBMS, SQL and web services, you might be interested in reading more to understand how we disrupted a $5 million ERP project and in the process, landed our first major client for Calc123.
ERP and RDBMS is not always the best Solution
More than 15 years ago, we had encountered an interesting situation involving a spreadsheet; an Excel-based, transport rate calculator that had a lot of clever IT folk stumped.
The spreadsheet was actively being used by because it worked! It provided a solution. It provided substantial business value.
In fact, it would have sat squarely in the “business critical” category for software and processes.
And so it was that this spreadsheet became the target of an “IT transformation” program by the IT department.
It’s not a unique situation but in this case, converting a spreadsheet into a database application was not going to be easy.
Excel Quoting for Vehicle Transport
At the time, PrixCar Transport (or Toll Autologistics as it was known then) was using a spreadsheet to create approximately 30 vehicle transport quotes per day.
To produce a quote, a Customer Service Representative (CSR) would perform a series of manual steps in the spreadsheet. The inputs were combined with upwards of 10 thousand rule checks to determine the most appropriate rates based on vehicle sizes, transport types and pickup/destination combinations.
The whole process could possibly be repeated four times for each customer enquiry. This meant a CSR could be tied up for as long as 7-8 minutes to complete a complete quote for the customer.
Still, the spreadsheet was “The Bible” for the business when it came to vehicle transport quotes. In fact, that spreadsheet was a major contributor to annual revenues exceeding $20 million.
Think about this…
If the process could take as long as 7-8 minutes and it contributed massively towards more than $20 million in revenue, how many CSRs would you need in your company to service quote requests.
$20 million from a SPREADSHEET?!
A few of our peers proposed to redevelop the spreadsheet into a complete ERP system by encapsulating the spreadsheet’s rules in code and database entities.
The spreadsheet was unravelled, rate calculations decoded and rules formulated in ways that would better fit a relational database model upon which the new system would be built.
They placed a multi-million dollar price tag on delivering the final solution. (AUD$5 million to be precise.)
The trouble was, even with that enormous price tag, the project did not proceed for 3 main reasons:
- The proposed cost (after factoring risk) would be more than 25% of annual revenues;
- The same execution of rating logic to the business could not be guaranteed;
- The IT department would need to be intimately involved in pricing decisions to ensure the new system would accommodate such decisions.
Moreover, IT licensing and operational costs would go from hundreds of dollars per year, to hundreds-of-thousands of dollars.
The business case failed because the ROI just wasn’t there and the ERP project never really got off the ground.
An Excel Challenge with a Different Set of Eyes
It was eight years later, in 2013. We, ourselves had evolved in our thinking.
Considerably more pragmatic as a consequence of our own experiences, we had come to recognise that Excel can, and does provide a real and unique value proposition to businesses.
We revisited that same spreadsheet with a different set of eyes, asking a different set of questions.
- What if, instead of replacing the spreadsheet, we found a way to make it enterprise-grade?
- Would it be possible to apply a growth hack and SaaS mindset and actually adopt the spreadsheet as the Source System of Record (SSoR) for rate calculation information and run it in a secure and infinitely scalable way?
- And if we succeeded at doing this, could we be seeing a future of spreadsheet-driven lead generation and conversion rate optimisation?
The first iteration of an Excel Calculation Engine was built to run that same spreadsheet and made it securely available to a private community of our Client’s customers.
Fast-forward 3 years (to 2016) and our Client is using Calc123 and their spreadsheet and has consequently built their business to a capacity of more than 50,000 quote calculations per month.
In addition, the average time to produce a quote is now less than 1 second (compared to 7-8 minutes).
Most noteworthy, the entire project has been delivered at a fraction of the original ERP budget. In fact, the Calc123 implementation of their Excel Application now runs at less than 20% of the originally-proposed IT licensing and operational costs.