Sowing the Seeds of Expansion
K ramer, a Caterpillar equipment dealer based in Regina, Saskatchewan, has doubled its workforce over the past seven years, grown branch operations by more than 28 percent and maintains an international presence — in the Central Asian nation of Kyrgyzstan. All of this expansion has been achieved without straining or changing its basic business and financial software packages. Kramer’s IT systems operate on what information systems manager Rob Nelson describes as “the holy trinity” of software. First there is the Caterpillar-supplied Dealer Business System, or DBS. “Caterpillar must have developed this a hundred years ago,” Nelson says. “It’s old and not pretty, but gets the job done.” Then comes the Coda financial management system “designed to be bolted onto the DBS. It’s best in class when it comes to flexibility.” Rounding out the trio is a warehouse management system from TechIS, primarily for the parts business at the dealership. Nelson says the software runs itself, which “reduces the amount of time you have to spend on the care and feeding of the system.” As a tool, he adds, the system “takes IT concerns and turns them into business concerns.” What minimal IT issues arise, he says, involve such things as updates, patches, anti-virus and anti-spyware downloads associated with widely used platforms like Microsoft Windows. The business concerns that can be more readily addressed include such things as “how the account coding should be done, how the general ledger is structured or how the data flow between systems.”
Diverse usages Kramer began using Coda in 1995, and Coda’s flexibility over the years has “allowed us to open overseas,” Nelson says. “We’ve doubled in size without changing software. Coda has never limited us.” Kramer has been family-owned since the company began in 1944, and business has grown as Caterpillar has broadened its equipment lines to serve a number of industries. Kramer’s business, including new and used sales and rentals, service and replacement parts, has an inventory that covers lifts and trucks as well as specialized equipment for mining, heavy construction, compact construction, energy exploration and production and agriculture. “Diversity has been our savior,” Nelson says. The rental operations, for example, include what Nelson calls the rent-to-rent business, where do-it-yourselfers or small contractors may need specialized machines for weekend projects. At the other end of the spectrum is what Nelson calls “rental conversion” involving pieces of heavy equipment used in road building and pipeline construction; these rentals are typically for several months or longer. With the longer rentals, customers will frequently exercise the option to buy the machines. Kramer’s point-of-sale system is part of the Caterpillar-supplied DBS software, but “we don’t do POS like Walmart does POS,” Nelson says. The parts business is the aspect of the operation most analogous to a general merchandise retailer, where the system can generate statement and invoice histories. Sales, at least equipment sales, are not the driving focus of the business, Nelson explains. “Our business is really parts and supplies. When a customer buys a piece of equipment, we hope they will come back and ask for our help and buy parts from us.”
The overseas expansion occurred when a mining equipment customer became involved with the new government of Kyrgyzstan after the breakup of the Soviet Union in the 1990s. Gold had been discovered in Kyrgyzstan, but the resource remained unexploited under the Soviets, Nelson says. The new government, looking for exportable resources, turned to western companies for help. One was a Kramer customer, and the international mining supply business was established.
The mining segment continued to grow after Caterpillar completed its acquisition of Bucyrus International last July. Bucyrus makes mining equipment that is enormous in scale, often one-of-a-kind machines, and the Caterpillar dealers like Kramer are still getting to know the business.
Despite having its territory limited to Saskatchewan, Nelson says there are still plenty of opportunities for Kramer to grow. One direction could be to expand its rent-to-rent business by acquiring smaller equipment rental shops around the province. Another opportunity might lie in using GPS technology to perform what Nelson calls condition monitoring.
“GPS is a large factor in almost all of the sectors where we’re active,” he says. Through GPS-based condition monitoring, Kramer could advise customers on such things as when filters are ready for cleaning or replacement or when parts are showing so much wear and tear that they are ready to be replaced.
GPS has applications in other areas, like agriculture, where farmers can be advised of local conditions in order to optimize planting and harvesting schedules, or to make more effective use of fertilizers to reduce expenses.
Through all the company’s growth, the scalability of Coda’s financial software “has been phenomenal,” Nelson says. “It has been able to handle whatever we throw at it through sustained double-digit growth.” Nelson says.
With Coda, he says, “our boss, Tim Kramer, assumes we can just do it, that the system can adapt, without worrying about the constraints of the business or the applications. With other solutions, you’d need to reconfigure your business — but why should you retool your business because of your software?"