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Richard T. Lilly, CEO, Profiled as Software Leader
Managing Automation
June 2001
In the face of all the business-to-business Internet hype last year, Dick Lilly, president and CEO of Lilly Software Associates Inc. (Hampton, NH), did not alter his strategy one bit. Instead, Lilly focused on business as usual: helping small to mid-size manufacturers increase system throughput to wring more profit out of existing equipment and personnel.
Although Lilly Software's then-recently-released Visual Distribution product had business-to-business (B2B) capabilities, Lilly resisted the urge to plow a lot of money into marketing the new features. "Most of our customers were telling us [business-to-business] wasn't necessary-especially on the online purchasing side. They were telling us they were more interested in quality management, some [customer relationship management], and supply chain management," says Lilly, 67. He figures he could have spent $1 million publicizing Lilly as a new economy, B2B player, but he felt it would have been a waste. "We held off, and I'm glad about that.
"We don't have any venture capital. The money we spend is our own. We didn't think this investment would have brought us much," says Lilly, who founded the company in 1992. Instead, Lilly focused his energies on acquiring new customers, a strategy that met with some success.
Lilly Software added about 300 new customers to its stable of 2,700 in 2000, though total enterprise resource planning (ERP) application revenue dropped 14% to $61 million and total corporate revenue dropped from $79 to $68 million. Profit was about 8%, rather than the company's customary 15%, which Lilly attributes to a slower than expected rebound in corporate spending after Y2K. And development work the company did on its supply chain and warehouse management systems also ate into profit levels. Says Lilly, "We spent some money to increase our sales in that area, and it was worth it. Now, we have the end-to-end product." Lilly software now covers everything from order entry and master production scheduling, to inventory management and manufacturing execution systems, to warehouse management, picking and shipping, and the financials, he says.
Return on investment was another Lilly thrust for 2000. If a customer uses Lilly scheduling software for 90 days and fails to see an increase in throughput, the company will give the customer its money back. No customer has ever asked for a refund, according to Lilly. "It's never happened. By getting more out the door, they increase their profit. It's much more exciting than cutting costs," he says. Lilly has also begun offering an ambitious new program. Customers set a productivity increase goal prior to implementing the software and then do not pay for it until they reach that goal. The uncertainty of this highly non-traditional software payment model doesn't bother Lilly. "I'm not up nights worrying about this. I believe [customers] can do it if they want to do it," he says.
Lilly feels good about his company's prospects in 2001. Says Lilly, "The downturn is flattening out and things are coming back again." He's also looking forward to leading the company he built well into the new century. To say that he has no plans to retire is an understatement. Says Lilly, "They'll carry me out of here in a wooden box." MA
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