September 25, 2008

IDEA Turns to the Future

By Misty Byers, TED Magazine

IDEA’s 10-year history has had its share of fits and starts. But with a new president at the helm, the company is entering its second decade true to its ultimate mission: to be the data synchronization service provider to channel.

"IDEA is from the channel, for the channel. Manufacturers, distributors- and those upstream and downstream from them-they are our owners and our customers," said Bob Gaylord, who joined the company as president in December 2007, replacing Mike Rioux, who led the company from 2000 to 2007. "First and foremost, we are a data synchronization service provider. We have a VAN service, we have a warehouse- a data synchronization warehouse- and we have a certification process. There is nowhere else-and nothing else-like it in the channel."

The key to this, he explained, is the concept of a common standard. "It’s all about having a standard way of defining and processing things," he said. "Stan – dardization begets synchronization. Synchronization begets efficiencies- and that goes back to exactly what the founding visionaries wanted from the system."

Asked to describe IDEA’s growth over the past 10 years, Gaylord calls it "nothing short of a miracle."

"A handful of people took a nugget of an idea-supported by some incredible manufacturers and distributors-and grew it into an industry-wide, channelwide data synchronization service provider that people depend and rely on," said Gaylord. "Other channels come and ask, ‘Can you come do this for us?’ That’s something the entire channel should take great pride in."

THE EARLY DAYS

The idea for IDEA took shape in the mid-1990s in an effort to solve the problem of the exchange of information over EDI. Information on an invoice or sales order was coded based on EDI definitions, and while each part or category was standardized, the actual way of conveying the categories was not. (For example, one company might identify the shipment date with dashes and another with slashes.) Furthermore, the charges for sending data over the EDI were high and, be cause the system was not in real time (the system required companies to dial in to retrieve data out of their mailboxes, usually at the end of the day), same-day shipments were a rarity.

IDEA’s early visionaries-which included John Haluska, chief information officer for Thomas & Betts; Steve Tecot, former owner of Tecot Electric(acquired by Rumsey Electric in 1997); Dave Crum, owner of Crum Electric Supply in Casper, Wyo., and past NAED chairman; Clyde Moore, former CEO of Thomas & Betts and former NEMA chairman; Sandy Cutler, CEO of Eaton; Bernie Westapher, vice president of sales and marketing at Panduit; Tom Kozak, past director of Pan-Link Products at Panduit; Arnold Farber, former NAED president; and Jim Mc Clung, past president and CEO of Lithonia Lighting dreamed of a network that would bypass the expensive proprietary EDI system and speed data along a network using open Internet standards.

"Many of us looked around and saw technology applied in other industries very successfully," recalled Crum. "Then we looked at our own ndustry-and we were still mailing invoices and phoning in and faxing orders. It was apparent that we had a lot of costs in our business relationships, and that they would impact us severely in the future if we began to implement technology in a more efficient way.

"So we came up with the idea of putting into place an infrastructure that would focus on product standards and on a platform that would communicate those product standards and other business documents-like invoices and SPAs," he continued. "That was the beginning of the architecture for IDW."

IDEA’s early visionaries pushed members of NAED to meet with representatives of NEMA with the goal of synchronizing data. In March of 1998 the industry’s top executives met in Arlington, Va.-and IDEA was born.

Today, IDW is the heart of IDEA. Global in scope, it enables product manufacturers to deliver all important business and price information through a central information bank, eliminating other more costly and less effective methods. In turn, distributors and other authorized users have a single source 24/7 location for obtaining product and price using the same data standards.

To facilitate the delivery of the information to and from IDW and to enable the exchange of business documents between manufacturer and distributor partners, a parallel effort was initiated to develop a private industry extranet called Industry Data Exchange (IDX).

Both became operational in 1999, and since then IDEA has labored-first to survive and then to become the data synchronization warehouse envisioned by its pioneers.

In 2001 the company suffered a neardeath experience with MCI WorldCom (which built the network component of IDX). "The initial process was certainly an uphill battle-the struggle with MCI WorldCom and others-but we were all in a learning mode," said Malcolm O’Hagan, retired NEMA president.

Shortly after, a new IDX (IDX2) was developed under agreement with Activant Solutions, which, under the direction of General Manager Steve Biezczat, still serves as the engine of IDEA.

Two years of fiscal challenges resulted from the MCI WorldCom fiasco;23 electrical industry companies came to IDEA’s financial aid, a move that as kept the company fiscally sound and profitable since 2003.

But while the company’s financial position remains stable from other profitable ventures, true realization of the company’s growth goals rests on IDW.

However, Crum noted that there’s still a lot of work to do. "Assisting and convincing those remaining manufacturers that this is the system that they need to utilize to benefit their relationships with distributors and customers will be an ongoing battle," he said.

To further complicate the matter, although IDEA has been successful at getting more of the transactional data fields into IDW, distributors increasingly need more information.

"When a distributor turns and faces a customer, he needs more than just transactional data," noted Crum. "He needs the descriptive data fields for each SKU -color, dimension, pictures-things that customers are interested in when purchasing products from a distributor. That’s an area where there is still a lot of work to be done. We need to get the manufacturers to work harder on developing those descriptive embellished data fields so that we can have a complete set of data-a complete set of clean, up-todate, standardized data, that is."

"By my calculations, there are about 144 manufacturers and about 440 distributors associated with NAED," said Westapher. "That represents about 85,000 different possible formats of communication. The industry will never take costs out of the supply chain with that variety of communication methods. One standard has to be developed and followed, and then that standard has to be populated with accurate data."

Aiding in this process is the IDEA Standards Committee (ISC), which was developed in 2002 after IDEA assumed the responsibility for managing the electrical industry e-business data and EDI standards. Through its various subcommittees, the group has developed and revised more than 80 standards documents for electronic data exchange (EDI, EDIFACT, XML), data content, product categorization, and identification.

"The IDEA standards committee has been a big, big help in enabling the process for getting distributors’ specific costs into IDW by helping to expand the standards on the 845, which is the EDI transaction set that is utilized for the manufacturers to provide the data to IDW for the distributor download," Westapher explained. "That has been a very significant step forward. The committee has also been a big contributor in finalizing the standards for the automated ship and debit, which are 844 requests for credit and the corresponding 849 credits. Lastly, distributors use the 845 to load their quotations from their manufacturers and automate that process. These key standards were a direct result of IDEA’s effort."

FAITH IN THE FUTURE

Today, IDEA boasts 600 customers (1,150 including retail); IDW is populated with more than 900 manufacturer brands, which encompass 80% of available electrical industry SKUs; and IDX has just reached its all-time high for traffic in a single month.

The opportunities for success are endless, said Gaylord. "I see a huge appetite for other e-commerce vendors wanting to partner with us," he noted.

Undoubtedly, IDEA has come far: The IDEA E-Biz Forum 2008, held this month in Washington, D.C.-its 10th annual meeting-is a testament to IDEA’s success and vision, and Gaylord is optimistic about the next decade.

"In 10 years, I see IDEA as the industry’s data synchronization service provider, with the services we provide expanding and adjusting to accommodate the needs of the channel," he noted.

"We’re going to move forward. There will be those who, for whatever reason, decide not to come with us. But it’s about those who want to get ahead and do business a different way, a more efficient way and be successful. And that’s who we’re riding with."

"IDEA represents the ability for our industry to become more efficient and to keep up with big trends," said Tom Naber, president of NAED. "The electrical industry is being pressed by their customers-they want more and better services and lower costs. The only way for us to be able to do that is to reduce the back-end costs and eliminate errors. IDEA is our opportunity and the solution to solving their problem. It’s extremely important for the future of this industry."

"IDEA is the only way that we can be truly successful in taking the inefficiencies out of our organizations as they relate to product data standards and communication standards," said Crum."And I believe the peak is still coming."