SURPRISE! SOFTWARE TO HELP YOU MANAGE THESE PROGRAMS SIMPLIFY LIFE BY MAKING IT EASIER TO WRITE EMPLOYEE REVIEWS, FORECAST SALES, AND NEGOTIATE WITH YOUR TOP SUPPLIER.
(FORTUNE Magazine) – If you're a manager in any industry from furniture manufacturing to pharmaceuticals, you probably have a computer on your desk. And unless you're counting the days until retirement, you know how to use it. Need to write a letter? Call up WordPerfect or Microsoft Word. Want to check last year's sales numbers? They're right there in Lotus 1-2-3 or Microsoft Excel. But something strange happens when you move away from straight number crunching and word processing. If you're performing a "soft" management task, say, writing a difficult employee performance review, your computer offers all the assistance of an expensive paperweight.
A new product called MBA-ware, or management software, is starting to change that. Loosely defined, it is software that offers expert guidance in management issues that range from creating a business plan to writing employee policy manuals. Some programs provide little more than a template that the user fills in with the help of sample text and traditional word-processing and spreadsheet tools. Others seek to embody the experience and reasoning of human experts in software form: a sort of consultant-in-a-box. The experts include management savants like Peter Drucker and Michael Porter, as well as anonymous pros in fields such as forecasting and human resources. The expertise comes in the form of coaching; algorithms built into the program that help analyze data or structure work flow; and--sometimes--specific recommendations about what to do next.
Business Insight, for example, helps you decide whether to introduce a new product or service. Its recommendations are based on rules derived from the thinking of more than 30 experts in business planning-and your answers to nearly 500 questions. If the program concludes that customers will take a long time to decide to buy your new product, it may recommend that you get an expert to endorse the product.
Business Insight was created by Kent Ochel, 55, and Jerry Spencer, 47, partners who have been writing software together since the dark ages of mainframes in the 1970s, when their first company was bought by Intel. In 1984, after they had spent several years doing strategic planning for the Intel systems division, Ochel and Spencer decided to create a software program that would incorporate what they'd learned. They also used ideas from the works of Porter and Northwestern University marketing authority Philip Kotler, among others. Ochel calls Business Insight, released in 1990, "a labor of love," adding, "there aren't many people willing to put in the time and effort necessary to create a product like this."
At $495 a copy, Business Insight has only a few thousand customers, but they include powerhouses like Merck, 3M, and Procter & Gamble. Ochel and Spencer, who have ten employees and no plans to grow significantly, say they are happy with their company's progress. "Our objective is to make a lot of money with very few people," explains Ochel. "We've both worked for large companies, and that is not what we want."
The outfits that specialize in one or two MBA-ware products have had trouble getting noticed in a market crowded with software from behemoths like Microsoft and Lotus. That's why 18 such pioneers have banded together to form the Management Software Association (TMSA). Dan Burnstein, 48, chair of the American Bar Association's negotiating skills interest group and president of Negotiator Pro, which makes negotiation software, started TMSA in 1993. The association seeks to educate retailers and the public about MBA-ware; so far members have sold about a million copies of their software. In April, Osborne McGraw-Hill will publish a book called The Digital MBA, a guide to the products of TMSA members; it will come with a CD-ROM that demonstrates the programs.
Not all management software companies have been started by experts eager to translate their insights into bits and bytes. Some entrepreneurs, like Norm Wu, 42, president of Avantos Performance Systems, are motivated by old-fashioned marketing opportunities. Wu, a former partner in Bain & Co.'s technology consulting practice, saw some of his strategic recommendations fail because clients had trouble implementing them. The problems usually had to do with people-management issues, such as lack of accountability, coaching, follow-through, and motivation. Wu decided in 1990 it was time to develop software that could help. Young MBAs who had learned to use computers in school were replacing older, computer-illiterate managers, while downsizing and reengineering at large companies meant that stretched survivors needed new productivity tools. "Nobody was targeting management with software, but we knew that this would change dramatically," says Wu. "This was a great opportunity that just made sense."
Avantos released its first product, ManagePro, to immediate acclaim in 1992. The software won product of the year awards from PC Magazine and PC Week and beat Microsoft for a Software Publishers Association award. The program, which helps executives manage people by setting goals and giving feedback and coaching, has sold over 65,000 copies, pushing Avantos's 1994 revenues to about $7 million.
Wu has ambitious plans to follow the success of ManagePro and make Avantos the "category killer" in MBA-ware. His strategy is to identify a management need through extensive market research and then bring in experts to develop a software product. Review Writer, a companion program that works with ManagePro to help managers write employee evaluations, has at least four major contributors, among them William Swan, author of How To Do a Superior Performance Appraisal, and Orrick Herrington & Sutcliffe, a law firm that specializes in labor and employment law.
Some companies use ManagePro to standardize good management practices companywide. Avantos is responding to this trend by providing training and consulting services that tailor its software to the needs of individual corporations.
How to make MBA-ware flexible enough to fit seamlessly with different corporate cultures and individual management styles is only one of the challenges software writers face. Others include explaining the software's logic so that users understand it, and upgrading the programs frequently enough to reflect developments in the subject discipline.
MBA-ware is part of a new class of software, called performance-centered systems, that has arisen over the past five years. Gloria Gery, a consultant and software design expert, helps clients like AT&T and American Express develop proprietary programs that support or automate functions such as customer service and sales. At their best, Gery believes, performance-centered systems offer far more efficient learning than do seminars. They also institutionalize the best practices of a company in a way that benefits all employees. "The difference between the insights of an average person and those of an extraordinary person are tremendous," says Gery. "These programs will narrow that range of performance."
Perhaps the best way to appreciate the benefits of MBA-ware is to look at how people use it. The following stories for a sampling of six programs that help with frequent tasks--negotiating, managing people, evaluating employees, forecasting, and strategic planning--show how management software helps people work smarter and faster than they could on their own.
PERFORMANCE NOW! by KnowledgePoint in Petaluma, California. This software asks users to rate employees on a scale of one to five for skills ranging from "takes responsibility for own actions" to "keeps abreast of current developments in field." Then it generates descriptive text that supports the rating. It builds the review paragraph by paragraph, prompting the user to add specific examples and warning him when his ratings for different performance factors are inconsistent. Kent Withers, director of distribution for CKE Restaurants, the company that runs the Carl's Jr. chain, uses Performance Now! to write reviews for seven employees. "There is no way to tell that the finished product is computer generated," Withers says, "and writing a review using the program takes 30% to 50% less time." Moreover, says Withers, Performance Now! has improved his reviews by making them more consistent and direct. Price: $129.
Employee Appraiser, by Austin-Hayne in Redwood, California. This program takes a slightly different approach. Instead of using a numerical rating, it provides sample text that you can adjust to be more positive or negative using a "writing tuner" function. Employee Appraiser also includes extensive coaching that gives managers ideas on how to improve employee performance between reviews. For example, the program suggests keeping track of writing samples and marking them up with suggestions as a way of improving an employee's writing skills. One user, Ron Frederick, vice president of human resources for International Thomson Publishing, was so impressed with Employee Appraiser that he plans to adopt it in all of Thomson's 30 divisions. Price: $129.
Many software experts think programs like Performance Now! and Employee Appraiser will be the first MBA-ware widely adopted across different industries. "Companies have a fair amount of difficulty getting people to do employee evaluations well, and this software helps them do it a whole lot better," says Jeffrey Tarter, publisher of Softletter, a trade publication.
NEGOTIATOR PRO, from Negotiator Pro Co. in Brookline, Massachusetts. Most managers negotiate all the time, whether by enlisting the help of another department or by seeking the best prices from an outside supplier. But few have had any formal negotiation training. Negotiator Pro helps prepare a psychological profile of you and your opponent, as well as a detailed negotiation plan. The program analyzes your answers to questions about personality type and negotiating style, and gives you general advice on how you and your counterpart across the table are likely to interact. Expert help is available from more than 400 mini-tutorials on topics ranging from handling gender differences to negotiating in foreign countries.
Jeanne Butler, director of network contracting at Pacific Bell, uses Negotiator Pro to make purchasing agreements with suppliers of equipment like switches and cables. Butler completes her profiles about a month before each negotiation, then shares them with her team. During a particularly tough negotiation, the program advised her to collect more data to support her position, thus making it easier for her counterpart to agree. "In the middle of a negotiation you can forget about the human element," Butler says. "The program helps remind me." Price: $189.
BUSINESS INSIGHT, by Business Resource Software in Austin, Texas. Not all MBA-ware is designed for specific tasks. This program helps managers brainstorm about larger issues such as strategic planning. Bruce Langos, an assistant vice president in AT&T's global information solutions division, relies on Business Insight to figure out the best way to introduce new products and services. Langos first used the program at NCR in 1990 (before the company was acquired by AT&T), when he spearheaded the introduction of the first PC with Intel's 486 chip. After he spent two or three days researching and answering Business Insight's questions on everything from the number of salespeople assigned to the product to the cost of manufacturing it, the program told Langos that he should strengthen his indirect sales channels to compete effectively against new entries. In the face of strong competition during the first year, this strategy helped NCR achieve a 27% market share in 486-based PCs.
Langos uses Business Insight at least once a month to analyze new opportunities and track projects. "It takes time to answer all the questions, but it is well worth it in the end," he says. Price: $495.
FORECAST PRO, from Business Forecast Systems in Belmont, Massachusetts. Product managers and department heads who need to forecast future sales usually have two options: make a guesstimate, or turn to outside consultants or to specialists in their company's forecasting department. Forecast Pro offers another choice; it analyzes data and enables managers who don't have a degree in statistics to run simple forecasts. Anthony Terzis, product manager for professional lawn-care supplies made by Scott Co., uses Forecast Pro Batch to predict demand for more than 300 items ranging from fertilizer spreaders to insecticides. (The basic version of the program, Forecast Pro for Windows, handles just 50 products.)
Terzis began using Forecast Pro Batch about three years ago; before that he predicted demand based on reports from regional salespeople. "Our forecasts have improved significantly every year," he says. "Actual demand is less than 10% off what our forecasts predict. That's pretty good in a highly seasonal business like ours." Prices: Forecast Pro for Windows, $595; Forecast Pro Batch, $4,995.
MANAGEPRO, from Avantos Performance Systems in Emeryville, California. Relying on software to help manage people may sound odd, until you think about the challenge of just keeping track of each employee's performance record, assignments, and progress. ManagePro makes the job easier by letting you create a dynamic database that links goals with the people assigned to meet them, and reminds you to give adequate coaching and feedback.
Kevin Greene, national sales director for John Hancock Funds, manages 20 mutual fund sales VPs across the U.S. He uses ManagePro to set annual performance goals for his managers and to document their progress. Then he transfers the data to Avantos's Review Writer to do year-end reviews. Greene also relies on ManagePro's management advice function for ideas. In one case, the program suggested to Greene that he let a top-performing employee set his own career development goals instead of just giving him a sales quota. As a result, the salesman offered to coach a junior sales manager in his region, something Greene would not have thought of asking him to do. Says Greene: "ManagePro not only saves time, it enhances the quality of the relationships I'm building with my employees." Prices: ManagePro, $279; Review Writer, $129.
The next generation of management software will use multimedia to let managers see and hear experts. A startup called Hands-On Technology is producing CD-ROMs that combine analytic tools with video advice from business stars. The first, featuring marketing guru Regis McKenna, is due out later this year. MBA-ware will also evolve to include groupware, enabling teams of people to work together more effectively. Better programming and faster computers will lead to brain-boosting programs that will "wake up" to assist you when you're having problems and will suggest additional resources. Caveat emptor: As software helps make certain key job skills less demanding, managers must take care not to doze off. The essence of leading is still human skills and relationships. Software can help you with them--but can't take them over.