Tag Archives: ROP

2004-2014 TSI: AdDept Client: Dick’s

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Chain of sporting goods stores in Pittsburgh. Continue reading →

Dick’s Sporting Goods is as old as I am. It started as small store in Binghamton, NY, that sold fishing equipment. In 1994 it was moved to the Pittsburgh area. In 2022 it had over 850 stores with over 50,000 employees.

TSI and Dick’s had a very long courtship. I am sure that I made several trips to Dick’s before we signed the contract. The first time that I visited the company it was still in its previous building, which was much smaller than the complex that it constructed in Coraopolis, PA.

We never gave up on selling them a system even though many of AdDept’s features would never be of much use to them. I knew that Dick’s IT department was committed to the AS/400 architecture. Therefore, the cost to them would not include the cost of additional hardware, which was often a deal-breaker.

I remember one sales trip in which I was asked to talk about the way that our system handled co-op—ads that feature a single vendor who has agreed to pay a portion of the expenses. I was pretty sure that no one would buy the AdDept system just to handle co-op, but I always tried to do what they asked. I have read through pages and pages of notes about the project of installing AdDept at Dick’s, but I found no subsequent mention of co-op

TSI and Dick’s formally tied the knot in a contract dated March 4, 2003. It was signed by Eileen Gabriel1, who was Dick’s CIO at the time and me. I still have a pdf file of the document. Most of our contracts were far simpler than this one. Their lawyers obviously added quite a bit of language to the one that we submitted. Neither side ever had any difficulty about it during the more than eleven years that it was in force.

At the time that we negotiated the contract I did not understand (or, for that matter have much interest in) why Dick’s, which up until 2003 had always been in the “kicking the tires” column of prospective AdDept users, suddenly was rarin’ to go. I subsequently discovered two factors that probably contributed to the change in attitude: 1) The company went public in 2002. That probably provided a good deal of cash. 2) By then the advertising department had hired several employees who were familiar with what TSI and AdDept could accomplish2. There probably were other favorable conditions that were not evident to me.

Planning for the AdDept system: Dick’s already had several large AS/400’s that were used for other aspects of its business. On one of them were PeopleSoft3 applications designed for the accounting and human resources departments. One of TSI’s major challenges would be to implement an interface between AdDept and PeopleSoft’s A/P and G/L systems. When employees in the advertising department entered expense invoices into the AdDept system they would automatically be sent to the PeopleSoft system for payment and posting to the General Ledger.

  • Paul Marshalek
  • Krista Gianantonio
  • Adam Sembrat

I found a document created by Paul Marshalek4, the first project manager for the AdDept installation. It provided the agenda for a one-day “discovery session” that was held in the Final Four room on April 16, 2004, almost exactly one year after the contract was signed. The scheduled attendees were Krista Fullen5 and Adam Sembrat6 from advertising, Don Steward7 from IT, Joe Oliver8 and Jeff Jones9 from finance, Paul, and myself.

  • Don Steward
  • Joe Oliver
  • Jeff Jones

The agenda includes a dozen items. During my preparation for this entry one caught my attention. I remember spending a lot of time at Dick’s on various aspects of print media from insertion orders (sent via AxN10 from the beginning) to payment of bills to allocation of costs to stores. I did not remember much about broadcast. At the time they used an advertising agency called Empower MediaMarketing11 based in Cincinnati. I could not find any evidence that we ever implemented an interface by which the buys from the agency were uploaded to AdDept. TSI provided this for most AdDept users, but it usually required custom programming or at least some fine-tuning.

Getting the AdDept system operational: It was made very clear to me that TSI’s client was the IT department, and the people in advertising and accounting were the IT department’s clients. So, the IT department made all the calls in this installation. In some ways this made things more difficult for me. I was never sure whether the advertising department was satisfied with our progress. On the other hand, we heard very few complaints, probably because everything that the advertising department really wanted was installed in phase 1, as described below.

Aeolus, god of testing.

Dick’s insisted on having two separate AdDept environments, one for testing of new code and one for production. Both of them were named after Greek gods of wind. Aeolus, the developmental system, was named after the keeper of the winds. Boreas, the production system was named after the personification of the north wind. TSI employees had no credentials for signing on to Boreas and no way to reach it from our office in East Windsor.

Aeolus and Boreas actually resided on the same AS/400, but they were in different partitions designed to make accidental intermixing of the two environments impossible. If separate boxes had been purchased, separate licensing agreements would be required for the operating system and IBM system-level programs. This would have made the installation of upgrades a much more difficult and time-consuming process for the IT department.

This installation involved a large number of interfaces and a great deal of custom programming. When we delivered a new batch of program changes—both routine updates and code specifically for Dick’s—we had to install the new code in Aeolus, implement the required changes to the database, and test them there. Advertising employees would then be required to sign on to Aeolus and make sure that both the new and previously installed AdDept programs worked. If the changes were not ones that they requested, it was difficult to get them to take this seriously.

During the testing and approval period a process that “refreshed” the AdDept system in Aeolus with the programs and data from Boreas needed to be suspended. If the timing of the suspension was not perfect, then all of the changes that we had installed during that period could be wiped out. A few times this happened to us, and it was quite upsetting.

Boreas.

When all of the advertising department asserted that the changes were good to go, the Aeolus system was refreshed, and TSI needed to install the changes again. The people in advertising would spot check what we had done. During this second period the AdDept system on Boreas was frozen. When the advertising people validated the changes, the Boreas system was refreshed with the new code and the transformed data on Aeolus. Only at that point could work resume. The primary purpose of all this was, I suspect, to eliminate the possibility that IT people might be blamed for deleterious outcomes.

This approach was much less efficient than our usual method of delivering code. I routinely installed new code to four or five other AdDept installations every weekend. Most of the time the users did not even know that I had done anything. There were occasional problems, but never anything that we could not address in an hour or so.

I don’t blame Dick’s for insisting that we follow their protocols, but we had had great success at over thirty installations with the approach that we had developed, and we would never have been able accomplish so much if we had been tied to Dick’s approach in all of them.

Inevitably, despite all of the precautions, some bugs slipped through the testing process—both TSI’s and the advertising department’s. Dick’s had a method that allowed us to make emergency changes to address them, but I don’t remember the details of how it worked. We only needed it once or twice.

If there was a problem or a request for new code, the users had to go through the IT department. The people who served as TSI’s primary point of contact—the liaisons—were people who worked in the IT department as project managers.

Perhaps the biggest problem with the enforced separation of the users from the developers was that Dick’s insisted that I do all the training after the initial installation in one of their training rooms. I did not like this at all. Often the people who showed up at these training classes were not the people who would be using the programs that we were installing. Sometimes I did not know what roles were played by some of the people. I did the best that I could under the circumstances.

At other installations—even the ones with AS/400s owned and operated by the IT department—I was allowed direct access to the users. I had a thorough understanding of the administration of retail advertising, a claim that could be made by none of our liaisons. Many times I could address their issues on the spot and direct them to programs or techniques that they were previously unfamiliar with.

I am certain that the installation would have proceeded more rapidly and with fewer problems if the IT people had allowed us to use our time-tested methods, but the idea was absolutely anathema to them. The IT department owned the AS/400’s, and they insisted upon their right of ownership. Bypassing this interference from the IT department was the primary reason that we always preferred for the advertising departments to have their own smaller systems that could eventually communicate with the systems running the other aspects of the business.

Our main contact at Dick’s during the installation and for some time afterwards was John Nelko12, an IT employee whose specialty was the workings of the AS/400’s operating system, OS/400. Under his supervision I installed AdDept on Aeolus and built all the files that they would need to use. I also installed IBM’s BASIC compiler and interpreter. That product was no longer supported by IBM, but TSI was authorized to sell and install it. Most of the other IBM software—SQL, query, FTP, faxing, etc.—that would be needed was already on the box.

On that very first day John and I got the faxing to work. I also was able to send an insertion order through AxN to TSI’s server. That required that FTP over the Internet was working. It also required that Dick’s be set up on TSI’s system as a valid sender.

TSI was assigned a user ID on Aeolus called TSIDICKS. I was told that the password was set to expire every sixty days. John worked with Denise Bessette in our office to get the SDLC communication working over the telephone lines. In the beginning that was how we accessed the system from TSI’s office.

There was a little time left over in that first visit for extensive training. My notes reported:

We got through the season table, expense classes, ad types, markets, pubs, rates, and print rates in the first training session. Everyone seemed comfortable with everything. In the second training class we went through the more difficult tables pretty thoroughly and entered a couple of ads.

The pub-store master table for inserts was not set up correctly by the program which13 I wrote to create the table. I fixed it. I used the Saks programs as the basis for DM220RDX and DM230RDX. Adam wants to show the costs on insertion orders. Most of the programs do not do this. I added a column for the Skid Color to the insertion order. I did this all during a long meeting which everyone in advertising attended on Wednesday afternoon.

I remember that the names of the insertion order programs for ROP and inserts began with DM220 and DM230 respectively. The “Skid Color” refers to the color of the tag that was attached to a “skid” (a pallet with no bottom deckboards) on which the inserts were stacked and packaged for delivery. Each version of an insert was assigned a different color.

These were my last few comments on that momentous trip:

Amanda Sembrat, then known as Amanda Greener.

We had a good luncheon meeting about the rest of the project. Steve Manning, the Budgeting Director, attended. They are considering whether to use AdDept to create real purchase orders for all advertising expenses.

I almost made the mistake of going to a Mexican restaurant on Cinco di Mayo.

I showed Krista how to respond to errors. At this point both Adam and Amanda were involved in other things.

I think that Adam overstepped his authority last time when he decreed that we did not need the broadcast interface. Helen said that we may need to revisit this. We had better be careful with Adam. He sounds like he has more authority than he really does.

Request #1 was approved.

They certainly want me to return for the first insertion order run. They may want me sooner than that.

The fact that Dick’s ran so many inserts in so many markets caused some unique challenges that were also mentioned in the notes:

Adam says that about 15 papers have separate rates for flexis, which are also called minis. We need to come up with some way of handling this.

Most of their events start on Sunday. If the paper does not publish on Sunday, they want it to default to Saturday, Monday, Friday (before), Tuesday, Wednesday, and Thursday (after) in that order. I set things up to work this way, I think, but I was not able to test every possibility. For Thursday drops, they want it to default to Wednesday, Friday, Saturday.

They want to use the holiday quantities for Thanksgiving. Is there a good way to do this?

They have some “events” which involve sponsorships with sports teams. The costs are spread over several months. I am thinking that we might use Stage’s amortizing programs for this.

The second trip June 14, 2004: Dick’s was one of the few clients for which a one-day trip was at least somewhat reasonable. USAir had many direct flights between Bradley and Pittsburgh. Because Dick’s was so close to the airport, I could easily get to the office at the same time as the employees.

I did encounter one major problem: I discovered that it was not trivially easy to meet with people in the advertising department.

I got there about 9 a.m., but I had to wait about 30 minutes as they tried to figure out what to do with me. Advertising is in the new building, but the reception desk is in the old building. Eventually they managed to contact Adam, and he showed me into the building.

Here is what happened once I got to the advertising area:

I spent most of the morning making sure that all papers were correctly designated as F for faxing or T for AxN. I called Lucia15 to make sure that we were in agreement concerning every paper.

I met with Adam, Helen, Paul, and Steve about where we stand and what is on the agenda. Steve said that they need to keep track of actuals versus budgets. It took me a while to figure out that he means by category on each book. Right before he left he gave me a list of the categories which they currently use. They also decided that advertising should meet with Jane Walker and the accounting people to make sure that everyone is on the same page.

I helped Adam set up a pub group for all of his insert papers. He also needs one of his main papers. I think that he now knows how to do this.

We put on an ad and printed insertion orders. Adam noticed that only the first 12 characters of the fax number appeared. I fixed this.

The sequence number for the NJS market was incorrect. Adam fixed it.

We discovered that there were no rates for 6-page tabs. They sometimes run 12-page minis (same as flexis) which ordinarily use these rates. I wrote a little program to help Adam key these rates in fast.

I was able to establish an FTP session on TSI270.

Amanda16, who is engaged to Adam, said that she had looked over the quote for the run list. It looked good to her. They would like to have it by 6/28, although, of course, they have not approved it yet.

They were unable to print. The printer which they formerly used is no longer near them. I called John Nelko. He eventually identified the printer. I need to send him a memo telling him which user profiles need to be changed to use the new printer, which is called Ad_Dept.

I think that DM022 should use the text description from the book size file rather than the dimensions for the size on screen #M22A.

We could not fax because the modem was not available. I will send an e-mail to John to try to reserve the modem one day this week. Adam wanted to wait until Friday, but I told him that I would be out of town on Friday.

The rest of the story: An AdDept Progress Report dated October 15, 2004, and prepared by (I think) Paul Marshalek identified phase 1 of the installation as “print media”, which for Dick’s was primarily in the form of newspaper inserts. Phase 2 was much more detailed. It had the following sections:

  • Pub-store allocations, which included implementation of an interface with the system that Dick’s used for sales analysis.
  • Other media: broadcast, magazines, and billboards (which everyone in advertising called “outdoor” even if the signs were in a building).
  • Another interface to “refresh” AdDept’s vendor table so that its data was consistent with PeopleSoft’s.
  • Expense invoices, which in AdDept were divided into media (which were entered against the schedule) and non-media (which were entered by job categories or sub-accounts). This project included the expense payables interface.
  • Media accruals that created the journal entry for the G/L in PeopleSoft. The document notes that the file containing the journal entry for August 2004 was delivered to Jane Walker14 in the IT department.
  • Cost accounting, which in their case meant advertising costs (including overhead) in all media per store.
  • Non-media closing, which included accruals from purchase orders and prepaids.

This list, which resulted from the four-day trip that I made in October of 2004, included some really big programming jobs, but I am pretty sure that they were all eventually implemented.

I met several new people on that trip:

  • Carol Mazza was a media manager who worked for Helen Burkholder. Krista and Erika Crawford worked for her.
  • Linda Weiss was tasked with entering broadcast invoices. She reported to Steve Manning.
  • Dave Derry was an internal auditor.
  • Todd Schultz worked in Expense Payables.
  • Jeff March, who worked at Galyans, a company that Dick’s had recently acquired, was scheduled to start work the next Monday as broadcast manager.
  • Rick Kohout provided me with files that I used to implement the sales interface.17
Krista at her desk.

Most of my time on the October 2004 visit was spent with Krista. I checked over what she had done for ROP and inserts and helped her set up other types of ads. At the time Dick’s was rapidly expanding. New stores were provided with pre-opening and grand opening advertising support. These ads had their own separate G/L accounts, and we had to devise a way of handling them.

My next trip was in April of 2005. I gave a talk to eleven people to explain how AdDept does accounting. The tone of my notes indicates my frustration. Accounting for advertising is complicated. I could not explain it very well in a few minutes in a classroom setting.

I learned that Jeff Jones accrued to plan. Here is what I reported about the reconciliation process:

Jeff explained that he made his “accrual entry.” He actually closes to plan. He takes the planned expenses, subtracts out the invoices paid, and spreads the difference to markets in a spreadsheet.

We got the February accrual to match. This is not really much of an accomplishment. We just matched one AdDept report to another after eliminating all possible sources of error. We got the March accrual to match within .5%. We ran the report by ad so that Jeff could compare it with the list which he used for his accrual.

Accrual to plan is a bogus concept. The whole idea of accruing is to make the expenses and income occur in the appropriate month so that one can isolate problem areas as soon as they develop. Accruing to plan disguises difficulties because the actuals are forced to match budgets. However, it was not my job to explain this.

I came up with a list of eleven things that needed to be changed in the production system. At other installations I would have just fixed them myself, but I was not allowed to touch anything. Denise and I had to come up with ways to circumvent this restriction in each case.

I also listed six or seven small changes that they requested.

I returned to Dick’s on May 31 for one day to look at their pub-store allocation records. I discovered that because someone skipped the step of creating these records, the allocations of costs to stores for 2005 have all been wrong.

I also helped them address the issue of paying bills for ads that ran in 2004. I came up with a Mickey Mouse method that at least got the accounting right at the G/L level.

The notes from my only visit in 2006 are very sketchy. There were a couple of new people whom I do not remember, and someone in advertising asked us to quote a massive database of zip codes to help with ordering insert distributions. Some—but by no means all—newspapers allow specifications of zip codes for insert distribution. Both AdDept and AxN handled this by special instructions.

I remember quoting creating this database, but I don’t think that we ever did it. The notes make no mention of any other media or any accounting issues.

Bob Pecina.

I made one four-day visit in 2007. I met a lot of new people. Included in that group were Carl Abel and Bob Pecina,18 who would be our primary contact for the rest of our relationship.

Among other things I learned that the advertising department had begun using AdDept for billboards and magazines.

They expressed considerable interest in copying all ads from one year to another for planning purposes. This was an important but very complicated task for any retailer. TSI had software to do this. If everything was set up perfectly, or at least nearly so, it could save a lot of time and make for more accurate planning. If anything important about the process was ignored, it could make a gigantic mess.

I knew that it would be a nightmare at Dick’s for more reasons than I could name. I am pretty sure that nothing ever came of this.

I learned that their change reports were essentially useless because they included ads that were created in order to estimate costs under a specific scenario and then deleted. There were a lot of these ads. I think that we put in a Y/N field on the selection screens for change reports to allow them to be excluded.

The last major project that we did for Dicks was to create a separate installation for Golf Galaxy, a retail chain that Dick’s had acquired in 2006. The administrative functions were not moved to Coraopolis until 2008. I decided to create a separate blog entry for the Golf Galaxy project. It can be viewed here.

Mike Krall, CPA, MBA
Mike Krall.

When reading my notes for the two trips that I took in 2008 I discovered that I also spent time with Mike Krall19, a young guy who had been assigned the daunting task of managing the “cost accounting” programs that showed in summary and in detail how expenses were attributable to stores using rules that Dick’s created. The reports depended upon all aspects of the data—media and production costs, sales, store allocations, etc.—being accurate.

Here are some of the notes from the time that I spent with him:

I spent most of the day on Wednesday with Mike Krall. He runs the month end programs in AdDept, but he did not really know what he was doing. He had a detailed set of instructions to follow.

I made some queries in ADVMOQRY for Mike Krall to provide him with net indirect expense (INDNETEXP) and net production expenses for ads in prior months (PRIORMOEXP). I explained that these would only get the data from Dicks. If he wants Golf Galaxy, he should make copies and change the libraries from TSIDATA to TSIDATAG.

Does DX112 expense the indirects? Mike Krall said that he does not create a journal entry for indirects.

The white areas are buildings. The main entrance was in the middle of the top set. The bottom building and most of the parking (grey) areas did not exist when I visited last.

The atmosphere at Dick’s headquarters: Working at Dick’s was unlike anything that I experienced at any other retailer. For the most part the administrative departments of the department store chains that dominated the list of AdDept clients were located on the highest floors of large downtown stores. The ambience in the lower floors was designed to generate excitement. The upper floors were at best boring and sometimes even dingy. Even the offices of retailers that housed their administrative functions elsewhere were mundane.

The gigantic lobby at Dick’s headquarters.

Arrival at Dick’s was not an overwhelmingly pleasant experience. Despite the massive size of the complex—and it is much larger in 2022 than it was in my last visit of 2008—the offices in Coraopolis were not trivially easy to find within the industrial park. The parking was not a bit convenient. In those days there was only one lot, and by the time that I arrived with my rental car only spots that were a long way from the main entrance were available.

I don’t think that I was ever in this room.

From the front door one entered a huge waiting area. No one without an employee badge could get past it without being escorted. My memory may be faulty, but I don’t recall that they ever gave me a temporary badge.

Incidentally, it would not have been a good idea to arrive early to try to claim a better parking space. I would not have been allowed past the lobby until the person or people with whom I was meeting were there.

The cafeteria.

Surrounding the lobby were eight or ten conference rooms. Each was named after famous sporting events—Super Bowl, the Masters, World Series, etc. They were extremely elegant. A few of our early meetings were held in one of them.

Dick’s also had a very nice cafeteria, which was called the Court Street Café. I am pretty sure that I ate there every day—except the time that lunch was delivered to our meeting—on every visit. It’s a good thing, too. There were no restaurant in or near the industrial park in which the headquarters resided.

I remember feeling quite short on one of my first visits there. I was at least six feet tall, but almost everyone I met was quite a bit taller. Later I heard about a volleyball tournament held somewhere inside the facility during the lunch break or maybe right after work. They already had an indoor basketball court when I visited. Now they have that (with a track around it), tennis courts, and a huge workout room.

The Dick’s store at State Line Plaza.

Epilogue: Alone among TSI’s clients, Dick’s still seemed to be thriving in 2022. They even have a store in Enfield next to Costco. A very large percentage of the people with whom I worked in the early twenty-first centuries are still employed there in Coraopolis.

A decision made by Dick’s in late 2013 was the cause of the decision to close down TSI. At the time the income from maintenance fees was not enough to keep the company running. The income from custom programming had also dwindled, and there were no real prospects for sales of new AdDept systems.

We therefore depended on the steady stream of checks from the newspapers that subscribed to the AxN service. Because several of our other largest AxN users had outsourced the buying of their newspaper space to third parties, Dick’s many newspapers accounted for a large percentage of the remaining income. I knew immediately that the decision by Dick’s management to let an advertising agency order its newspaper space was the death knell for TSI. The details are described here.

The people at Dick’s were quite surprised by TSI’s decision. Someone called us and told us that they still wanted to use AdDept. They evidently thought that we had misinterpreted their communication about the agency. We had to explain that the AxN contracts generated a considerable amount of income for us.

Denise Bessette may have made a private arrangement to provide some support for the AdDept system at Dick’s. I was 65 years old when we made the decision to close, and I was not interested in such a venture.

1. I am not sure that I ever met Eileen. If I did, I don’t remember the occasion. Her LinkedIn page is here.

Helen Burkholder.

2. Two people who may have played significant roles behind the scene were Helen Burkholder, an executive in Dick’s advertising department, and Bill Dandy, her boss. I did not spend a lot of time with either of them in this installation, but they were both certainly influential.

I had worked closely with Helen when she was a media manager at Kaufmann’s. The blog entry about the Kaufmann’s installation is posted here. I am not sure what Bill Dandy’s title was. I met him when he took over that job at Michael’s in Irving, TX. That very profitable installation has been chronicled here. Helen’s LinkedIn page is here. Bill’s can be viewed here.

3. In December 2014 PeopleSoft was acquired by Oracle. I am not sure what effect this had on Dick’s. It did not seem to affect the design of the interface.

4. Paul worked in the IT department, not advertising. His LinkedIn page can be viewed here.

5. Krista Gianantonio (née Fullen) was our day-to-day contact in advertising. Her LinkedIn page is here. She was familiar with AdDept and TSI from her previous jobs at Hecht’s (described here) and Kaufmann’s (described here).

6. Adam Sembrat’s LinkedIn page can be found here.

7. I don’t remember Don Steward at all. I don’t think that we had any subsequent dealings with him. He might have been Paul’s boss. His LinkedIn page is here.

8. I don’t remember Joe Oliver. His LinkedIn page is here.

9. Jeff Jones actually worked with the financial side of AdDept. His LinkedIn page is here.

10. Dick’s had stores all over the country, and they advertised in hundreds of newspapers. The fact that the advertising department was excited about electronic delivery of insertion orders gave a big boost to TSI’s efforts to expand the use of the AxN product.

11. In 2022 the company is just called Empower. Its Wikipedia page can be found here.

12. John Nelko’s LinkedIn page can be found here.

13. When researching the notes I definitely realized that I had not yet learned when to use “that” and when to use “which”. This “which” should be a “that”. So should the “which” in the last sentence.

14. Like many of the other people listed in this entry Jane Walker is still employed at Dick’s in 2022. Her LinkedIn page is here.

15. Lucia Hagan was the administrative person at TSI during this period. Her history at TSI is described here.

16. My notes say that Amanda Greener was not actually employed by Dick’s; she actually worked for Dick’s printer. She evidently married Adam. Her LinkedIn page is here.

17. I have only the vaguest recollections of any of these people, but I found LinkedIn pages for several of them: Carol Mazza’s is here. Todd Schultz’s is here. Jeff March’s is here. Rick Kohout’s is here.

18. Bob Pecina’s LinkedIn page is here.

19. Mike Krall left Dick’s in 2011. His LinkedIn page is here.

2005-2013 TSI: The Billion Dollar Idea

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I am not sure when the Billion Dollar Idea began to coalesce in my brain. After the first few years of the twenty-first century it was becoming obvious to me that the rapid consolidation of the number of large retailers … Continue reading →

I am not sure when the Billion Dollar Idea began to coalesce in my brain. After the first few years of the twenty-first century it was becoming obvious to me that the rapid consolidation of the number of large retailers had drastically diminished the prospect for sales of the AdDept system. So, I was constantly on the lookout for ways to apply TSI’s assets in a potentially profitable manner.

Here is a list of what I thought that the company’s most valuable assets were:

  • The ability to deliver high-quality custom programming expeditiously.
  • The proven ability to design functional databases.
  • A good understanding of all forms of advertising except for Internet advertising, which was still experimental and rapidly evolving.
  • A good understanding of retail concepts.
  • A growing understanding of U.S. newspapers.

The market that I had long coveted was the development of a universal database for storing medical histories. Because of the complexities involved in such a task, most software developers would shrink from it. However, even then I could see that there must be many billions of dollars at stake. Maybe TSI could claim at least a small share, which would, of course, not seem small to us. However, in order to make any sensible plans, the company would need some sort of entrée into the market. That is, we would need client #1 first, and I could not imagine how that might come about.

So, I tried to think about where we might use our knowledge of advertising and newspapers. At this point I should explain the sources of profit for newspapers. The revenue from subscriptions and single-issue sales never came close to covering the costs of newspapers. Newspapers have always relied strongly on income from advertising, which mainly came from three sources:

Sunday newspapers were jammed with inserts.
  • Display ads within the text of the newspaper were called “ROP”1, which stood for “run of press”. These ads were billed by the amount of space used, either in pages (or fractions thereof) or in column-inches. Advertisers might pay extra for color or for prime positions, such as in the sports section or the back page of the main section.
  • Classified advertising included help wanted and personal ads.
  • The preprinted flyers that were stuffed into some issues of the paper were called “inserts”. They were billed by the size (number of pages or weight) and the quantity, and the distribution in thousands of copies. Some large papers allowed for selection of distribution by zip code or some other method.

Later, as their circulation numbers dropped, a third option called “polybags” was embraced by many newspapers . These were plastic bags that served as flimsy raincoats for inserts that were delivered willy-nilly to people without subscriptions.Sometimes the inserts were enclosed within an abbreviated edition of the paper that often contained news of mostly local interest.

TSI’s department store clients were almost always the largest purchaser of ROP ads in each of their newspapers. The AdDept installations had required us to learn how to handle the most complicated contracts and ROP strategies. Inserts seemed relatively simple to us. We knew almost nothing about classifieds.

One aspect of inserts struck me. They had nothing to do with the contents of the newspaper. Whereas the ROP ads had to be fitted into the spaces not taken up by news and other articles,2 the inserts were totally independent of the paper’s content and of one another. Therefore, the inserts could just as easily be delivered by any other organization with the infrastructure to do so.

The newspaper’s advantages was that it was contracted by the readers’ subscriptions to deliver the papers anyway, and so the papers incurred only minimal additional costs. The printing was done elsewhere. The inserts were just stuffed into the middle of each copy of the newspaper. For the newspaper they were almost pure profit.

On the other hand, many advertisers ran exactly same insert in a very large number of newspapers. ROP ads could be sent electronically to the papers, but the inserts needed to be physically delivered. That process must necessarily be both expensive and subject to errors.

It seemed to me that any organization that had a large number trucks and drivers in every market could potentially compete with the newspapers for the insert business provided that:

  1. The trucks and drivers were available every Sunday, the day that inserts were ordinarily delivered.
  2. The inserts could be packaged in an attractive manner so that they were bound to be opened and read.
  3. By minimizing the number of locations to which the advertiser must deliver, shipping costs for them could be held to a minimum.
  4. Key advertisers could be persuaded that they would receive both lower shipping costs and more targeted marketing for the same cost.
  5. A foolproof system could be devised for online ordering that would automatically do billing or Electronic Funds Transfer. To my knowledge TSI was the only company that had developed a sophisticated system for ordering of newspaper advertising.

It seemed to me that three organizations could surely meet the first four criteria: Federal Express3, United Parcel Service, and the U.S. Postal Service. Adjustments would be necessary, but all of the requirements are close to their core business. I was pretty sure that, with the proper hardware, TSI could handle the fifth item. At least I was willing to consider making such a commitment.

I thought a lot about how such a project could come into being. I would need to set up a meeting with a high-level executive at one or more of the organizations. This was a big stumbling block. Over the years I had dealt with a large number of influential people. Most of those relationships were quite good, but none of them, at least to my knowledge, had much to do with any of those organizations or any other group with a large number of trucks. I could put a letter in the mail, but when no one responded, then what?

I fantasized about getting a meeting with Fred Smith, the founder and CEO of FedEx. I had heard that as a young man he had had a difficult time persuading people of the practicality of his concept of a central hub in Memphis for deliveries all over the country. It was based on a paper that he wrote for an economics class at Yale.4 My idea—of advertisers bringing their inserts to the nearest FedEx office instead of bringing them to every newspaper—was no more off-the-wall than his had been, and he was now worth billions.

I could envision workers wearing red and blue delivering “FedExtra” packages all around the country on Sunday mornings. People would tear open the packages like Christmas presents.

If I did manage to get someone to take a meeting, I would need to make a compelling presentation. It was hard for me to figure out how I would do it. I would need to downplay the difficulty of implementing a delivery system and emphasize (1) the large amount of revenue that was potentially at stake and (2) the importance of a customized ordering system (which we had sort of developed with AxN).

I just could not visualize how I could make this work. I was confident of my abilities to assess whether a system that a potential client described could be feasibly implemented by TSI. However, in this case I had to convince the prospective client that it had the wherewithal to implement part of the system but not a critical aspect of it. If I were in their shoes, I would either dismiss the idea out of hand, or I would ask for more time and then call my IT department to see if they could handle the fifth step.

I was not even sure that I could convince anyone of the feasibility of the project. None of the groups that might be able to pull this off were accustomed to dealing with advertisers who used print media. They would need to locate the people who buy the service from the papers and convince them one at a time of the superiority of the new approach.

Someone would need to provide the capital. I certainly did not have it. I did not even have knowledge sufficient to indicate that $X of capital would be required, and it could likely be made back in Y years. That is what people generally want to hear at the first meeting.

I had a strong suspicion that the companies that distributed flyers that contained lots of manufacturers’ coupons would be key. The other companies would probably want their flyers to be in that package because that was the one that frugal buyers would seek out. We might need to give the coupon distributors a discount.

UPS workers were Teamsters. Gulp.

I could anticipate other difficulties as well. Both the USPS and UPS were heavily unionized. Making deliveries on Sunday would probably be a very big deal. FedEx was not as heavily unionized, but its pilots were, and this project would likely affect them a lot. I could foresee that it would provide the shipping company with a lot of business, but it might complicate its relationship with its labor force. We could be of no help in that regard.

One good aspect was that the project could be rolled out market by market. There was no need for a national launch. When the second market was launched, presumably the national advertisers from the first market would be happy to participate. Only the local advertisers would need to be recruited.

So, I put a lot of thought into this idea but no effort beyond a little research. I still think that the project could probably have been done. I needed to find a partner who had worked at a large newspaper and was familiar with both the difficulties of working with the advertisers and the difficulties involved in obtaining the flyers and assembling them. Together we might be able to construct a presentable business plan. Unfortunately, I never met such an individual and for several years I had my hands full with AxN and AdDept.

A big concern for me at the time was that, if the project succeeded in wresting the insert business away from the newspapers, many of them would go out of business, and the country would lose its major source of investigative journalism. In retrospect it seems risible that I would suppose that turning trees into pulp would always be the principal source of information for people.

When I started thinking about the project I was in my late fifties. A few years later my penchant for finding new worlds to conquer abated.

1. Although ROP is a true acronym and the periods were almost never included when it was written, I never heard anyone pronounce it as a one-syllable word. It was always called “are oh pee”.

2. On a visit to the Springfield Union News/Republican I learned that actually the papers were often laid out the other way—the ads were placed first, and the text was placed in the empty spaces that remained. The editor told me that they once had held a space open for an missing Filene’s ad that right up until the very last minute before press time.

3. I was able to locate no reliable information (both advertisers and newspapers were vague) as to how much money was spent annually on inserts. $20 billion per year was my best estimate.

4. Smith’s paper received a C. The concept must have seemed outrageous in the mid-sixties.

1988-2014 TSI: AdDept: System Structure

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A complicated system. Continue reading →

People who have not worked in retail advertising will probably have trouble understanding this entry. Nevertheless, because the AdDept system was the focus of my life for so many years, I feel obliged to document as much of its structure as I can remember. It did not occur to me that I might want to undertake such a task until very recently. Consequently, when I closed down TSI in 2014 I discarded almost all of the system’s documentation. The few computer files that I have subsequently found are mostly PageMaker documents. I don’t have that software on my computer, and the files are too large for the services that will convert them to pdf files online. So, I must rely on my memory, which is not as reliable as it once was.

AdDept was designed for and implemented in OS/400, the operating system of the AS/400 and its follow-on hardware. Some of the important and unique features of this operating system are described here. Every line of code that we wrote in 1988 still worked in 2014, and I have no reason to expect the code to stop working any time soon.

All programs were originally written in BASIC. Around the turn of the century IBM stopped supporting BASIC, but TSI was authorized to install the product (a compiler, and interpreters of both BASIC commands and BASIC procedures) on any system that use our software. This only caused one major problem, which is documented here. However, Denise Bessette did not like this arrangement and undertook to convert the programs to ILE RPG. I never appreciated the value of that idea, and I never took the time to learn that language, which is supported on no other system.

All data tables and the major programs in AdDept began with the letter D, which stood for department. This was for TSI’s benefit. The ad agency system used a similar structure, but no files or programs began with D. The second letter in AdDept tables was usually A, I, M, or P, which stood for accounting, (loan room) inventory, media, and production. Programs that were used for cleanup, copying, and other miscellaneous tasks began with DX.

All AdDept programs were stored in the same library1. It was usually named TSIPROG. The data was in a library named TSIDATA. A few clients had additional data libraries for additional companies. At these installations we created a separate library called COMMON or TSIDATACOM to hold the tables that were used for both companies. For example, both companies probably used the same ad types and expense classes (major media). The tables used by both were moved from TSIDATA to the common library. A new data library was created for the data files for the second company. In the beginning it contained empty copies of all of the remaining files in TSIDATA.

No two instances of AdDept were the same, but each had the same TSIPROG library. The settings for each installation were designated in two ways: 1) A set of empty one-byte files, the existence of which activated certain features; 2) a file called DASPECS that contained a very large number of switches, descriptions, and system values. The program to maintain the system values was not on a menu, and users were not allowed to run it.

Everyone needed a user ID to sign on to the system. Those connecting through a network could have any number of simultaneous sessions open.

AdDept’s user table, which was also on no menu and could be run only by the AdDept liaison, limited the programs to which the user had access. If the same employee worked with two different data libraries, a second user ID was required. The two user ID’s would have different library lists.This arrangement may sound cumbersome to people who are used to managing hundreds or even thousands of nested folders, but it did not seem strange to the users of a multi-user system. Furthermore, it was absolutely critical that changes not be made on files in the wrong library. All TSI menus displayed the name of the data library to help eliminate confusion.

The retail calendar was accommodated by the season table. The key was a three-digit number. The first two digits were the fiscal year. The third digit was 0, 1, or 2. 0 meant that a standard twelve-month calendar was used. 1 and 2 were used for 4-5-4 retail calendars, which are described here. This table contained the name of the season, the starting date, and the number of weeks in the season.

Ads were classified by three separate codes:

  1. The one-digit insertion code determined which set of screens was used for data entry. This was a fixed set, but more codes could be added for additional media.
  2. The one-digit expense class identified how the ads were categorized for accounting purposes. Later a sub-class code (blank default) was added for one client.
  3. The two-digit ad type was specified when an ad was created. This table held the insertion code and expense class. It also had a binary field to identify whether color charges were applicable.

Media vehicles, such as newspapers, magazines, and broadcast stations and networks (called pubs in AdDept), were identified by a five character codes combined with a two-digit number (usually 0). For newspapers at least one number was reserved for inserts (usually 10). The users specified the days on which the paper published, whether it was AM, PM, or a combo2 and the paper’s depth (maximum number of inches vertically on a page). For direct mail the pubs were usually geographic markets.

Stores could be identified by a five-digit number.

Every pub had a list of stores that were associated with it. There was also a date-sensitive pub-store allocation table that contained the percentages allocated to each store associated with the pub. The key to this table included an effective date. Less than half the AdDept retailers allocated costs to stores, but the ability to do so was very important to those that did.

AdDept users almost never paid the published rates.

Rates for ROP and inserts were date-sensitive. For ROP separate rates could be entered for black-and-white and several different color choices. There were also tables for linage-based discounts and premiums for things like special positioning such as “back of main”—the last page on the first section of a paper. For inserts a table of usual quantities (thousands of copies) could be created, with rates for each.

The system needed to be able to find the right rate to apply whenever an ad was changed or moved. Costs could also be recalculated en masse when a new contract had been negotiated. These were attractive features.

Probably the best idea that I had when designing the system was to allow the definition of pub groups (identified by five-character codes) to specify sets of pubs in which the same ads often ran. Clients could have hundreds of these or none. When a new ad was created, one pub group could be specified. A schedule could automatically be created with all the pubs in the group.

The hierarchy of participating merchants had five levels in AdDept. The lowest (most detailed) was the department. The system called the other four ADMGP, GRPVP, SENVP, and GRSEN to match Macy’s East’s designations. Most retailers had only two: DMM’s and GMM’s. The May company used “CCN numbers” to group related departments. For each level each client determined the descriptions used on screens and reports.

Employees were identified by three-character codes. Employees could be assigned to production jobs. So, an employee could see a list of all of his open assignments.

The traffic system allowed specification of a code for each production job that determined the job’s production schedule. So, black-and-white ROP ads might have a three-week production schedule with eight steps. The number of days for each step could be specified. Then the system would count backwards from the release date to build a schedule of due dates that accounted for weekends and holidays. The completion dates of each could also be entered (an X meant “today”).

This seemed important to several clients, and we built it precisely the way it was described to us. However, the production employees did not like it. For one thing, most of them used Macs for working on the ads, and they found a text-based system clumsy. I don’t honestly think that they would have liked it much better with a GUI (graphical user interface) as the front end.

The accounting tables were similar to those in the GrandAd System (described here) or any other system. They were designed to be consistent with whatever system was used by the accounting department, but AdDept users did not need to memorize the very long codes that were common in those systems. In AdDept the main entity was the sub-account, which was identified by a five-character code. One corporate G/L account was specified for each sub-account.

The vendor table also had a five-character key. The corporate vendor number was specified there. This table was used for merchandise, media, production, and other vendors.

Categories of production costs were identified by three-digit codes, just as in the GrandAd system.

The Ad Files

The system had one major header file for ads of all types and a number of lists that were associated with it. The ads file3 was identified by the season, a five-digit ad number (usually generated by the system using client-specific rules), and a one character version code (usually blank). The ad number could either be entered or generated by the system. Data entry began with the specification of the run date and ad type. A large amount of information was deduced from those two values. The headline and size4 of the ad were then entered on the header screen, which also contained many other fields.

The second step for ads of all types was the media schedule. If the pub group was accurate, nothing had to be entered here for ROP and inserts. For direct mail the quantities by market were entered.

The third step was the list of participants with percentages and co-op commitments.

Expected production costs could either be entered as one lump sum or detailed by category.

Audit Trails

History records were created for any activity that affected planned, committed, or actual costs or income. Reports and screens were written for viewing them. A few custom reports were also written for clients.

Planning

New ads were ordinarily assigned a status of P, which stood for “planned”. When the plan was completely approved, a program could be run to change the status of all status P ads to A (active). At the same time records of the detail of the costs of those ads at that time were recorded in separate files named DAPLAN (by department or group) and DAPLANST (by store).

Changes could still be made to any aspect of any ad, of course. Those values were considered “committed”. The actual costs were based on the measurements and the invoices from the media and production vendors. Actual co-op was based on the “claims” that had been processed.

In subsequent years several AdDept users let the system build the entire schedule based on the previous year. Thus season 951 could be built based on the ads run in 941. This process was called “anniversarying”.

Cost Accounting

What I called “cost accounting” was commonly called BI later.

Most advertising departments were keenly interested in comparing planned, committed, and actual costs by merchant or by store. AdDept had programs that would create detailed records every night by store and/or merchant for all ads in the current season. The merchant records were stored in DACOMMD (committed) and DAPANDL (actual). The records by store were in DACMDST and DAACTST.

Numerous reports were written to allow comparison of planned, committed, and actual costs and income (from co-op). Some users also queried these files on a regular basis using IBM’s Query/400 product.

Interfaces

Broadcast ads could be fed into the system from Doner, the May Company’s ad agency, and from Media Management + files created either internally or by an agency. There may have been one or two others of these.

A couple of clients used ad agencies for their newspaper ads. TSI constructed interfaces to receive the ad schedules from the papers.

Several interfaces were created to send files to feed corporate Accounts Payable and General Ledger systems.

Sales at the department level could be downloaded from the mainframe. Customized reports helped gauge the effectiveness of ads in comparison with the costs.

Backup

It was easy to schedule a backup nightly and to schedule the cost accounting programs to start when the backup was done. The backup would not save files that had record locks. Any time that a record was read from a program that could update that file (as often occurred), the record was locked to prevent one user from accidentally overwriting the work of another. It was sometimes difficult to persuade users either to make sure that everyone had signed off every night or to shut down the interactive subsystem before backing up and restarting it later.

TSI recognized this problem and warned the users about the possibility of lost data if files were not backed up routinely and correctly. We even offered (for a modest fee) to check their backups every day and notify them by telephone if the backup for the previous nights did not complete correctly. Only one client took advantage of this service.

The failure to check backups resulted in one ugly mess that was described here.

Cleanup

By the standards of the day the cost accounting and history files often became extremely large. A menu of programs that permanently deleted records from old seasons was provided.

Other Modules

The Loan Room inventory system was successfully used by Macy’s East for approximately twenty years.

A Photo Shoots system was also designed for Macy’s East, but it was never implemented. I don’t remember why they lost interest in managing the activities of their studio. The location of the studio in Newark may have been a factor.

Many modules were developed for Belk. One that I remember calculated the store’s use tax liability for direct mail pieces for each jurisdiction.

Saks Inc. in 1999 wanted TSI to design a very complicated system for collecting data from the systems of each of its divisions and, eventually, to produce reports that compared divisions. I was very happy that nothing came of this idea.

A special module was created for Radio Shack to manage its advertisements in magazines.

I suspect that there must have been a dozen more of these modules that I cannot recall. We delivered hundreds of custom programs over the years and quoted a similar number that were never approved.

AdDept was a fabulous system. Because it contained so many features, it was somewhat difficult to demo. The screens and most of the reports were ugly. Nevertheless, as soon as prospective clients understood its potential, it was easy to sell to anyone with a budget.

Unfortunately by the time of the Bush-era Great Recession in 2008, Tarot card readings for most major retailers—especially the ones that did a lot of advertising—began with the thirteenth trump card: Death.

1. “Libraries” were a type of object on the AS/400. They were places to store other objects in the same way that folders or directories are used on PC’s. However, it was not possible to build a “tree” of libraries. All other libraries resided in the QUSR library.

2. Yes, a few papers still published two editions per day in the nineties.

3. As far as the OS/400 was concerned, DMADS, the ads file, and the files that contained all of the lists were equivalent to the tables. However, TSI’s organization and documentation drew a useful distinction between the relatively stable tables that were defined at the beginning of the installation and the much more volatile ad files and transaction files.

4. The size for ROP ads was entered in columns and inches. A full-page broadsheet ad was entered as 6×21. The program knew to adjust the inches to match the paper’s depth. The size for inserts was entered in terms of thousands of copies. The size for broadcast ads was the length of the spot in seconds, usually 15 or 30.

1988-2014 TSI: The Nature of Retail Advertising

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A different world. Continue reading →

For retailers that sell a wide array of products and also have stores in a fairly large number of markets, advertising has long been both extremely valuable and very complicated. In the two and a half decades that TSI concentrated its work on the advertising departments of these retailers advertising was expensive. Newspapers in major markets charged over $100 per column-inch for ads, and the department stores and big-box retailers bought their ads1 by the page (126-132 column inches), not the column inch. Therefore, the advertising departments were charged by the management of these retailers with 1) negotiating the best rates possible, 2) using the mix of media that provided the most bang for the buck, and 3) designing and producing the ads that produced the most sales.

Most large retail advertising departments were divided into roughly the same areas with which we had become familiar at advertising agencies: media, production, and finance. The years that we had spent working with advertising agencies helped us understand some of their issues. However, the differences were many and complicated:

  • A primary difference was that retail advertising was event-based rather than campaign-based. Most retail events were the same from one one year to the next: Presidents Day, Easter, Mother’s Day, Father’s Day, etc. The dates might change a little, but the approaches were usually similar.
  • Another fundamental difference was the calendar. Most retailers organized their finances and advertising using a 4-5-4 retail calendar2. The first month of the year was usually February. Most retailers divided the year into two “seasons”, spring and fall. Fall began in August.
  • The large organizations had a separate manager for each major media: newspapers, direct mail, and broadcast. A few also had a magazine manager. Inserts (the pull-out flyers in newspapers) were usually treated like direct mail in the production area, but were ordered by the newspaper area.
  • Newspapers were much more important for retailers than for other types of businesses, especially in the nineties when potential customers still started their day by reading the local newspaper.
    • Each retailer negotiated an annual contract with each paper. The contracts often provided significant discounts for the quantity (column-inches) or nature of the advertising. For example, one retailer got some of its full-page ads in one of its major papers free if it met established criteria for other ads! On the other hand, if a retailer ran too little advertising for the contract period, the penalties could be staggering.
    • Not all newspapers were the same dimensions. There were two basic sizes, tabloid and broadsheet, but the actual dimensions varied somewhat. Sometimes ads were just photo-reduced to fit, sometimes different versions were necessary.
    • Inserts were included in the contract, but the rules as to how they were counted varied.
    • Some ads (called “spreads”) covered two full pages and the marginal area in the middle (“the gutter”).
  • Merchandise suppliers often paid for part of the cost of ads that featured their products. This was called “co-op”.
  • Most large retailers needed to know the net (of co-op) cost of ads for each merchandise area. The bonuses for the merchandise managers depended upon their sales markups less net advertising expenses.
  • Many retailers with a large number of stores needed to know the net (of co-op) cost of ads for each store. This was tricky for markets that included multiple stores.
  • Many chains had more than one logo (name on the front of the store). They required different versions for production purposes.
  • A few chains had more than one financial entity. This was challenging.
  • The financial books absolutely had to be closed within a few days of the end of the month. In some cases, especially in the May Company divisions, a set of corporate reports in specified formats were required every month.
  • No agency that TSI had dealt with had a photo studio, but many of the retailers did.
  • The production area of most of these retailers borrowed merchandise from the selling departments. The merchandise was sent to a photo studio, either in the department or outside. After the shoot the merchandise needed to be returned or at least accounted for. A special area called the “loan room” or “merch room” managed this activity.
  • Most retailers did a high percentage of their business in the second half of November and December. Many of them froze their computer systems (no purchases, no upgrades, no testing) during this period, which might extend in either direction.
  • No law specified that every retailer must follow every tenet listed above. Every AdDept installation required some custom code.

The sales pitch: After only two or three installations I had felt comfortable talking with ad agency executives. They generally knew nothing about computers. For the most part they cared little about efficiency; we could almost never point to a position that could be eliminated. It was therefore difficult to persuade them that the computer would save them money. I generally focused on three things: 1) how careful record-keeping could help them locate which clients were unprofitable; 2) how the GrandAd media system would allow improved cash flow; and 3) how a computer system could help if they got a chance to win a big client. I called the last one of these the “reaching for the brass ring” argument.

These arguments did not translate well when we tried to persuade retail advertisers. Usually the retailer had already decided whether or not to get a system for reasons that we could not control. Something had happened that made the current method of handling the work no longer feasible. Macy’s acquisition of the Gimbles stores overwhelmed the system that the advertising department had been using. Hecht’s was in a similar situation after it acquired John Wanamaker. Belk desperately needed help when they consolidated five divisions into one in Charlotte.

Although this phrase is now popular, I had never heard it before I started using it in the ’90s.

Often I would not be acquainted with the circumstances that motivated the important players. I always emphasized the value of having one central set of data to which everyone could contribute and from which everyone could draw. I called this approach “one version of the truth” by which “everyone could benefit from the work done by others.” Everyone could appreciate these notions, but placing a dollar value on the idea of shared data was difficult. Fairly often I would find something in my talks with employees that was horrendously inefficient or even dangerous or illegal, but I could not count on it.

An equally difficult problem was trying to figure out which individual(s) needed to be convinced. In some cases the IT department might not even participate in the software search, but they may have veto power over the final decision. Finding out where the sale stood often required someone from TSI who was willing and able to spend a great deal of time communicating by mail and phone. This was something that I was definitely loathe to do. Fortunately, I found someone, Doug Pease, who was quite good at it. Much more about him is posted here.

One thing that we did not need to worry about was competition. No other software company was crazy enough to attempt to address this market. A few retailers tried to develop something in-house. They all ended up spending millions of dollars or giving up or both.

Difficulties after the installation: I disliked two things about dealing with advertising agencies as clients: 1) It was sometimes difficult to get them to pay their bills; 2) they tended to go out of business or merge with competitors without warning.

We had no problems with retailers paying their bills except when they declared bankruptcy. The first time that this happened I was totally unprepared. A few smaller clients later closed down entirely, but none of these events was catastrophic to TSI.

An equally vexing problem was when one chain of stores acquired another. If the other chain had no system, this usually worked in our favor. If they both used AdDept (TSI’s administrative system for large retail advertising departments described here), we lost one client, but the remaining one usually became more dependent on our support and services. They often also asked us to help with the transition as well.

In the end, however, most of our biggest clients were acquired by Macy’s. The advertising was all managed by one department in New York. That process spelled doom for AdDept because by the time that it happened, Macy’s no longer used AdDept.

One other trend usually produced a little work on the AdDept side, the outsourcing of newspaper buying. We were usually asked to design and implement interfaces with the company that bought the ads. Unfortunately, this same process had a dire effect on AxN, TSI’s method of delivering and managing insertion orders online. When Dick’s Sporting Goods announced in 2014 that it was outsourcing its buying of newspaper space, we decided to shut down TSI.

Decision-making: The ways that decisions were made in retail advertising departments differed fundamentally differed from the way that entrepreneurs like advertising agency executives did. If I could talk to one of the principals at the agency, I could explain why the GrandAd system could produce positive results that could affect 1) the agency’s bottom line, and 2) the agency’s reputation. The situation was totally different in the advertising departments of large retailers.

The department either had a budget for a system or it did not. These were two entirely different cases. If the department had a budget, it was probably because of some huge external factor involving a merger or a takeover. In that case, the eventual purchase was almost a foregone conclusion. The challenge was to fashion a proposal that was within the budget, but not by much.

If the department was not in that position, the process was completely different. The first step was to find a person who had enough authority to requisition funds. This was usually the advertising director. However, advertising directors seldom requested information from us. Our contacts were generally much lower on the totem pole, usually the manager of the business office in the advertising department. So, we would first need to convince our contact and then convince the advertising director either directly, if possible, or indirectly.

We then depended upon the advertising director to requisition the funds. We might not have any idea who would evaluate the request. Sometimes it was someone in corporate finance, sometimes it was someone in the IT department, and in the large organizations approval might be necessary by a holding company such as the May Company, Federated, or Tandy.

At this point it was important for us to recognize which was the case. I was poor at this part of the job, but Doug Pease was much better. If he could connect me with the right person, I could usually frame the arguments for him or her. If no money was available, of course, we probably would not get the sale anyway. During some periods retailers were all tightening their belts. In tough times nobody in retail considered any capital purchase that did not generate sales.

If the final decision needed approval from the holding company, it was extremely difficult for us to influence them directly. In some cases like the May Company and Tandy, it worked out amazingly well for us. TSI’s problems with Federated are documented in detail here.

I began to appreciate the complexity of the situation when one customer told me that “Christmas only comes once.” He meant that the department had a budget at that point, but it had to spend the entire amount in that fiscal year. After that they would be strapped for cash. In general, that was how things worked.

However, some advertising departments had figured out a way around this. They charged the merchandise managers more than the ads cost. I do not know how they accounted for the difference, but they were sometimes had accumulated enough money in this fashion to circumvent the decision-makers in finance and IT. I know for a fact that the AdDept system was financed this way in a couple of cases.

The finance people generally were not upset when they found out about the unauthorized purchase. It was usually easy to determine that AdDept reducee administrative costs fairly rapidly. The IT department, however, might be more upset, especially if the AS/400 was not on their list of approved hardware systems.

Ancillary expenses: For entrepreneurs like ad agencies all expenses came out of the same checking account. The retail advertising departments had a different perspective. Sales tax and travel expenses probably did not hit the advertising department’s line on the income statement. No one ever complained about either type of billing, and they were always paid promptly.

However, the company may have had some rules about travel expenses. I was once grilled about flying first class for a training session. I had to provide proof that I purchased an economy fare and was upgraded by the airline. Some retailers insisted that I stay at a hotel at which they had a special rate. This was usually folly on their part. I liked to stay at Hampton Inns because of the free breakfast and the Hilton Honors points. Hampton’s rates were almost always lower than the “special rate” of the designated hotel.

1. Display ads in newspapers are always called ROP. It is not an acronym; the three letters, which stand for “run of press”, are always pronounced individually.

2. Every week starts with a Sunday. Every month has four or five weeks (twenty-eight or thirty-five days). The purpose of this arrangement and many examples are provided here.