Tuesday, January 09, 2007


Ah, at last I can say it, I TOLD YOU SO! Many years ago I worked at Advanced Marketing Services (ticker MKTS.PK ). On Friday December 29th, they filed for bankruptcy. The reasons for this are many, all ultimately caused by inept senior management. Sometime this year you will find your local Costco or Sam's club with a limited book selection. AMS is the primary supplier for them. For most people, that will be the extent of the effect on their daily lives. If you read specialty books from Publisher Group West (PGW) you may be in for a very rough ride as PGW is wholly owned by AMS and will undoubtedly be negatively affected by this. As for me, I am long gone from them. My stock options are worthless and have been for some time. The reasons for these grants are a whole other story. As to why I knew this was going to happen, and have been expecting it for years, it starts with decisions made in 1998.

Back in '98 AMS was solely a book distributor purchasing pallets from publishers, tagging books individually for retailers, and shipping case lots to them. All of their software (distribution management, ordering, EDI, AP, AR, GL) was custom built for them. The decision was made to start implementing purchased applications capable of supporting a wider range of customers and general business diversification, starting with the financial systems: GL, AP, and AR, using Oracle financial software. Implementing purchased software as a replacement for custom, in theory, was a good idea. In practice it was a disaster from the start. The core problem was the lack of a project lead with both the responsibility and authority needed to complete a successful implementation. The IT department was being held responsible for the implementation, but was not given the authority necessary. Typical example, any one for any reason at any time could walk out of any meeting or simply not attend as they saw fit. When we tried to explain to management (from line managers up to and including the CEO) that the decisions made in these meetings would have a daily impact on the operations and profitability of the company for many years to come, we were (to be blunt) ignored. The reason this was allowed to happen (and this is hearsay) is that the CEO stated that daily operations were more important than the software implementation project. Anyone with any project experience will tell you that yes daily operations can be more critical than an implementation project but they are not more important. The other huge issue with the implementation was that the design of the accounting system done in Oracle closely followed the custom system that had been implemented. Basically, people took a look at how they were performing tasks with the current system and modified the Oracle systems to match them. When implementing purchased software, you always need to look at each process, and determine what needs to be accomplished and then modify the business procedures to suit the software. This fundamental software implementation error and the resulting management philosophy of telling IS to "do it the way we tell you to" was the start of the very long fall from grace of AMS. It was at this point that I left the company, feeling that their next project, to implement a purchased system for the management of the distribution process, was going to ultimately lead to the company's failure. This is what I stated to the CIO when I left. It took 7 years, but it did finally happen.


At 8:04 PM, Blogger dunadi said...

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