Carl Lewis: Welcome to the Connected Enterprise Podcast, where our guests share how they stay connected in their business lives. I'm your host, Carl Lewis from Vision33, and my guest today is Hillel Sackstein from Virtual Graffiti. Hillel, tell us about your background, your business, and your role in the business.
Hillel Sackstein: Hi, Carl. Thanks for having me on your show. My company, Virtual Graffiti, is an IT solution provider. We've been in business for 20 years now. Our headquarters are in southern California, but we sell nationwide. We have a few international offices and sell into the Australian, Middle East, and European markets as well. We offer many products – everything from IT hardware and software-type products like networking equipment, wireless equipment, backup, and storage solutions. We do VoIP solutions and a lot of other miscellaneous products, but our focus and about 75% of the products we sell deal with information security. Security is our focus and we sell firewalls, content filtering, anti-virus solutions – anything to do with securing business networks and business information.
Carl Lewis: That's interesting. As we get further on in our discussions today, I may come back to that topic and ask you a question. But first, this podcast is about what people do in business to stay connected to their business network, whatever that is – customers or suppliers, banking, etc. Today I want to talk about areas in your business you've automated and connected that's delivered value.
Hillel Sackstein: Using information systems to connect with all types of business partners or other components of the business is key. We've spent 10 or so years investing heavily in integration and automation wherever we can, including things like integrating with our customers and vendors. Our customers, for instance – we have tens of thousands of active customers; it’s a large and diverse customer base with businesses of every size.
Hillel Sackstein: On the vendor side, we deal with over 180 companies that develop and manufacture the products we sell. We integrate with those vendors, which includes things like tracking the information about those vendors, the programs and contracts and certifications we hold, and who their distributors are. We provide portals so they can see what we're selling, POS data, and all the information about the business we're doing with them.
Hillel Sackstein: We deal with dozens and dozens of distributors, and we integrate with those distributors in numerous ways as well to get things like product availability and pricing. One of the big initiatives we have going now is EDI and doing electronic transactions with those distributors. We do a lot of business these days, and not only through our own website; we run about 260 websites. We do a lot of sales over the phone and via the marketplaces like Amazon and eBay, and we have extreme integration and automation with those platforms.
Hillel Sackstein: There are many other areas. We use outsourced services for other aspects of our business, like marketing; we use a marketing automation platform. We use an outsourced payroll service. We have our banking and credit card companies. We do large volumes of transactions every day, so manually processing transactions is just not scalable, and we've done a lot of integration with our banking and credit card companies.
Hillel Sackstein: For any process in our business, we analyze it and ask, “Is this something we can integrate?” Obviously, choosing whatever partners we’re doing business with and choosing whatever products we use within our business is very important because how that integrates with that, how we can automate it, how we can reduce the need for human processes is critical to us. That's how we scale. We process very large quantities of transactions and there are a lot logistics, so automation is critical for us to keep growing.
Carl Lewis: It's impressive that you look at all those areas of business. Let's bring it down to just one project. Can you tell us the motivation for the project and how it got started?
Hillel Sackstein: There are so many, but probably the one most relevant to your listeners is how we've integrated with our banking partners and credit card companies. Every business uses bank accounts and, typically, credit cards. We asked, “How do we automate that process to save time and streamline things in our accounting department?” We've done it several ways, for both incoming and outgoing payments. It surprises me that so many of our U.S. customers pay via check.
Hillel Sackstein: It amazes me that so many companies still use printed checks to pay their vendors – it’s very inefficient. You have the headache and cost of printing the checks and signing and mailing the checks; then they get lost in the mail … it takes too long. We no longer use printed checks – we’re 100% paperless on that side. We do a weekly ACH payment run to our vendors, and the whole process is automated.
Hillel Sackstein: Once we've recorded the payments in our ERP system, which we use, the one we purchased from SAP, our process creates a file for us. It's a comma separated list we submit to our bank that sends out those payments to our vendors, along with an email with a pdf attachment showing them the that payment went out and the reason for the payment. It lists every transaction and it's an automated, trackable, and efficient system for paying our vendors.
Hillel Sackstein: On the payables side, we've automated our credit card payments. We get long credit card statements because we do a lot of inventory purchases and supplies purchases and pay for other services with our credit cards every month. Our credit card statements are hundreds, if not thousands, of transactions long! We've automated the reconciliation of those statements every month in the SAP system with an easy-to-use interface that lets us import those statements, essentially matching them to the relevant transactions in our system and even creating the relevant outgoing payments. And doing credit card and bank reconciliations in the system is easier than doing it manually.
Carl Lewis: Absolutely. If you have a staff of folks who are really gifted developers, they can figure a lot of these projects out for you.
Hillel Sackstein: We do. On that side, for businesses, we look at doing these integrations generally boils down to working with ... There's either built in functionality that our partners would give us. So you think about let's say a, just as an example, maybe a marketplace and we're doing business with, they will have sort of a built-in functionality that will let you extract data or import data.
Hillel Sackstein: There's always some functionality that the products or the services your partners will give you can take advantage of. The second option is usually to purchase some middleware to do these integrations so some company is building that automation for you and that's an off-the-shelf product.
Hillel Sackstein: Or the third option is to custom develop it yourself. And we use all three. Sometimes if there's something that's built in that works for us, we will take advantage of that. A niche example of that could be something like the MRP functionality within SAP. We use that so it can generate purchase orders for us automatically based on what our sales have been and what our future requirements will be. That's a built-in function. That's part of the software we purchased. We've learned how to use it and it works for us. We didn't have to build anything.
Hillel Sackstein: The second option is something like middleware, where somebody else developed a product for us to do integration; for example, the integration we do with our shipping systems. We purchased from Vision33, and it was the your Shipping Module, and it lets us process shipments in UPS Worldship and our other shipping partners using a component you've built for us that integrates with our SAP system.
Hillel Sackstein: And then the third method is to custom develop those integrations. And we've done a massive amount of those. Everything from you know, API integration with our marketplaces to API integration and giving visibility to Alexander portals or distributor portals, things like that. Customer portals, customers can view their own information, see the orders that they've placed to update their own information, such as credit card numbers and shipping addresses and things like that. So it usually falls into one of those three.
Hillel Sackstein: Ideally, the built-in method or even using the middleware components is usually the easier and less expensive way to go. But if something doesn't exist, we have the capabilities to custom develop those applications or integrations.
Carl Lewis: This project you undertook to integrate with banking and payments and receiving payments and things like that, you mentioned that some goals were to reduce overhead, and the accounting staff, they weren't going to be able to keep up with the volumes you were generating. Were there other goals you were trying to get out and how has the project turned up against those goals?
Hillel Sackstein: Well, the projects turned out very well, and absolutely, some of this automation has saved us. It saves us probably hundreds of man hours every month, simply because the system can do a lot of these things that would have had to be manually processed. If we had to manually process our payables every month, it would take a huge amount of work in doing that, in keeping track of things of notifying our customers which payables are going out, in reconciling our credit card transactions and bank transactions. If we had to do it manually using printed bank records or online bank records, it would be hugely time consuming. We'd have to manually go in and record every one of those outgoing payments in the system. Whereas now we simply bring up an interface. It automatically matches the transactions in the system. Whatever's not in there, it lets us at the click of a button, via the API, create those transactions, so it's massively time saving.
Hillel Sackstein: The goals of the project were to automate things; it reduces the manpower we need to concentrate on these things, freeing up our people to focus on more important things as opposed to simple larger volumes of data processing type tasks. And it's allowed us to scale the business without having to add massive volumes of people, which would obviously have their own challenges and costs involved.
Carl Lewis: Yeah, I know some people like looking at numbers all the time, but I can't imagine trying to do a reconciliation of that size manually.
Hillel Sackstein: It's very challenging. And so automation has been a big part of how we've been able to streamline that and get your employees happier as well. Doing a lot of repetitive manual tasks, it's tough to keep people in those roles. They get tired and bored. So having automated processes that make their lives easier is not only good for the business, but it makes for happier employees.
Carl Lewis: That's good. Were there any surprises? Good ones, bad ones?
Hillel Sackstein: There are always surprises. You have challenges. Going back to the different ways we do it, some of the built-in products we use may have limitations. They may be built with a certain design spec to meet the needs of all their customers, but there may be specific things we needed to do and those products don't do them. So there may be limitations to the product and we've got to find workarounds.
Hillel Sackstein: When it comes to middleware type products, companies that are building that integration, there are always challenges there. Sometimes they may not have the full functionality we need. There may be versioning problems as a partner, or one of the interfaces they're working with changes their way of doing things and things stop working and things like that.
Hillel Sackstein: And with our own custom-developed integration, there's always those challenges whenever you're developing your specific software for doing these tasks. Quality issues, you find bugs, you've got to refine these things. Systems sometimes go down.
Hillel Sackstein: There's always challenges you run into, but the benefits are huge. As opposed to doing things manually, you rarely have human error on a transaction level. You may have human error, and some code may not work, but generally once you get it working and tested, it works every time. So the benefits far outweigh the challenge these automations or integration bring to the table.
Carl Lewis: Yeah. A friend of mine said that software is never done, right?
Hillel Sackstein: It is, that's 100% correct is that whatever software you doing, whatever system, there's no such thing as building a product and putting it in place, and it works forever. There are always refinements, and there's always things that can be improved. The technology's always changing. So from, over the years, the product, will need to continue to be evolving. So absolutely, and companies looking at any part of their technology and in making selections of the technology or developing their own technology, remember that and be willing to be in it for the long run. Because absolutely, things are always changing and especially with software, it's got to constantly be evolving.
Carl Lewis: Sure. The biggest surprise is how long it takes, right? That's always the case. So what's next? What's the next big project that you guys are going to be looking at?
Hillel Sackstein: I think for us it will be EDI. We have automation in the fact that our system if we're placing orders with our distributors for instance, the system can automatically, once we've got the purchase order in the system, it can automatically generate a PDF, fire it off to the vendor, and get responses back, etc.
Hillel Sackstein: The next level of integration will be EDI integration with our major distributors and the ones that support us. It will allow us to scale a lot bigger than we are, it'll save them primarily because their processing large volumes of our orders every day. And often it's manually on their end. So us being able to interface with their EDI interfaces and transmit to many documents from orders to getting invoices back and those sorts of things is the next phase and something that we’ll be focusing on in the next year or two.
Carl Lewis: It's EDI, but on the AP side, so a lot of people deal with it from the other perspectives. Orders, sales orders coming to them; but you’ll actually be sending a purchase order to your suppliers. So that's a little different.
Hillel Sackstein: Yes, I think that for us it's looking at the aspects of the business. You cannot just automate, for instance, the sales process and the ordering process because at the back end of that, you have accounting to keep track of. Returns. You have to have the same efficiencies in all those processes. It's no use having a great sales process and a great customer experience when the customer makes the sale, but what about when they want to return something? We want to make sure the functionality in our processes make it easy and efficient for the customer, us, and our suppliers when things like returns happen.
Hillel Sackstein: Even looking at us automating our payments, for me that was a big focus area, because in business, keeping your suppliers happy is critical. If you've got poor processes in your payables and your customers are ... You're missing invoices or you're paying your customers late for whatever reason, even if it's just something that you're too busy or that something got lost in the mail, it doesn't reflect good on you.
Hillel Sackstein: You've got to keep your suppliers and your business partners happy. So automating that whole payables side of our business has resulted now many years later where we get excellent feedback from our suppliers that we're a pleasure to work with. Everything is so efficient on our end. They always get paid. It's such an automated and seamless process for them to do business with us, so you get the benefits of that as well, as compared to our competitors who may be not as efficient as we are on their payables side.
Carl Lewis: Well, hopefully that helps you to negotiate for a better purchasing prices, too.
Hillel Sackstein: It helps the relationship all around, absolutely.
Carl Lewis: One last thing before I let you go today. You mentioned earlier that 70-something percent of your businesses is in network security. If you could give small businesses " You really need to be watching this" advice regarding security, what's top of mind these days?
Hillel Sackstein: Well, there's been a huge shift since we've been in business in the security space, and it's an area of technology that continues to bubble up to being probably the number one concern for businesses these days. Twenty years ago when I got into this industry, it was always an afterthought; in small businesses, they weren't thinking about it. These days, businesses of every size need to be thinking about it. It's critical. It's not a "would-like-to-have" part of a business – it's a requirement. These days, there's so much compliance out there that companies need security solutions and policies to run their business no matter what industry they’re in.
Hillel Sackstein: There are many challenges with security – everything from malware and threats to companies that are completely automated, which is no longer hackers sitting in their room and going out and saying, "Okay, who should we attack today?" These are massive industries that are now completely automated and attacking every business network out there, so you have to be protecting yourself.
Hillel Sackstein: And there are a lot of other things that come into play. Many of the attacks and breaches we see are based on companies then taking advantage of social aspects of your business ... they're coming into your business via your employees. So having policies, training your employees, having solutions that actually monitor how effective those policies are and how at risk you are because of your employees or business partners, is a good part of that strategy.
Hillel Sackstein: It's not buying a product and saying, "Okay, we're secure now." It's making sure you have the correct solution, policies, and monitoring in place. But then there's also a shortage of the right technical skills in security and for making the right decision as to, "Is this something I can manage in house, or do I want to outsource this to professionals?"
Carl Lewis: It seems we find more and more of our customers are affected by ransomware every year.
Hillel Sackstein: Absolutely. It's always those sorts of things; there's obviously different motivations for the threats out there. Ransomware has been a significant revenue stream for the bad guys. It continues to be an issue. Their development and expertise in how to keep building that continues to grow; it's something every company needs to take into account in addition to every other threat out there. Ransomware's just one area where they taking advantage of businesses of all sizes, but there are many others.
Carl Lewis: Well, Hillel, thanks so much today for taking a few minutes out of your day to spend time with us here on the Connected Enterprise Podcast. I'm positive other people will take encouragement from things you've done in your business. And as I like to tell people, I keep these podcasts short and sweet so you can listen on the way to or home from work. And so until next time, thanks Hillel, and everyone else, stay connected.