Pair of Local Programmers Making a Name Nationally

Leaving a comfortable position at a Fortune 500 company to venture into the computer field alone is risky business. But two former Dillard’s Inc. programmers say the risk has been worth the rewards.

John Burgess and Mark McClelland, along with a partner who has since left their company and another who still works within, combined their programming know-how and are now using it to help some of the country’s biggest retailers — including Burlington Coat Factory — operate more efficiently.

“We talked about going into business for probably five years before finally taking the plunge,” said McClelland. “Fortunately for us, it turned out to be the right decision at the right time.”

Both worked their way up through the information technology ranks at Dillard’s to managerial positions. They were writing code to improve ordering and receiving procedures and helping to ensure that financial matters for the company were as efficient as they could be.

Through “a friend of a friend,” McClelland said, an opportunity arose to help a Chicago company called Safety Plan better track the containers of hazardous waste it was charged to dispose of. Burgess saw it as an opportunity to track the waste containers using bar codes like those Dillard’s used to track goods in their shipping and receiving centers — a method he helped shore up for the Little Rock retailer.

The expertise that Safety Plan was looking for was exactly what McClelland and Burgess had to offer.

“If you’re looking for that, then we’re you’re guys,” McClelland said. “It filled their niche and guaranteed us six months of work. So as a young company, here we are walking out the door at Dillard’s leaving on a Friday and going to Chicago to start work on a Monday.”

Nearly eight years later, Mainstream Technologies employs 25 people and has recently started a marketing blitz to help guarantee that more projects keep coming its way.

In the Beginning

McClelland and Burgess are skilled in different areas of expertise, which the pair says helps keep their company and the projects it works on stay versatile and fresh.

Burgess’ work at Dillard’s dealt mainly with ordering, shipping and receiving. In fact, he helped the company install wireless bar-code scanners at its many distribution centers, which was a groundbreaking feat among retailers at the time.

“We deployed hundreds of terminals to distribution centers to check in merchandise with UBC codes,” said Burgess. “The list of skills needed on the project we decided to venture out on fit exactly with the tools and software we had used to deploy the project with Dillard’s. It was a technical area that I was very interested in, and it was too good to pass up.”

There was no soliciting investors in the beginning, just four men who chipped in $100 apiece to cover the cost of becoming a state-licensed corporation.

“We made it official, then made our first payroll the following week and we never looked back,” said McClelland. “We have not had any additional investors. It’s incredible how we managed to get out and that all of the planets were simply aligned for us at that time.”

Both men agree that there was one element in their initial contract with Safety Plan that allowed Mainstream Tech to get off its feet.

“They agreed to pay us weekly,” said McClelland. “I don’t think we could’ve covered ourselves without that incentive.”

Burgess said Mainstream Tech got a company credit card and used it to book their initial flights to and from Chicago, which became routine since both had wives and McClelland also had two kids in Little Rock.

“We had only been paid for the first two or three weeks of work when we got our first credit card bill, which was the first check we had to write out of company,” said Burgess. “Actually before payroll we had already been paid by our first customer. I couldn’t look at it and find a better deal.”

Mainstream Tech’s six-month deal with Safety Plan turned into a much larger catch than it was initially supposed to be, which allowed the upstart company some stability and additional resources to better ground itself.

Not only was Mainstream Tech able to open its first office, which Burgess and McClelland decided to put in a strip mall in Maumelle, but the company added nine more programmers to help meet Safety Plan’s technical needs and to shore up smaller projects the company began landing.

“That six months turned out to be six years with Safety Plan,” said McClelland. “We established a great rapport with these people. We probably ended up doing four major projects with them along with some additional minor things. I had myself and nine programmers working to help them converge their system.”

Next Big Thing

Both Burgess and McClelland say that who you know can be as important as what you know.

The pair got back into contact with another ex-Dillard’s employee, Greg Holder, who was involved with a startup company in Houston called Compliance Networks.

Compliance Networks had an innovative idea but didn’t have the technical savvy to realize it. Enter Mainstream Tech.

“We agreed to put sweat equity into Compliance Networks,” said McClelland. “These guys had a good idea but they didn’t have a lot of capital, so we ventured out there and we wrote the application for a certain amount of sweat equity. Then they went out and started selling it. Their customers are supported entirely by us since they have no IT resources.”

Compliance Networks wanted Mainstream Tech to develop a compliance management system, or CMS, which is a tool retailers can use to make sure vendors are meeting their contractual obligations.

“All vendors have an agreement in place: If you decide to fill a order you are held accountable under certain guidelines, and if you violate that, the customer wishes to recoup the cost associated with the delivery of those goods,” McClelland said. “The objective is not to make money off it; the objective is for the vendor to correct the behavior so everybody is maximizing their efficiency.”

The CMS system Compliance Networks and Mainstream Tech developed works through negative reinforcement.

“We can improve your charge-back amount not necessarily because you want to beat up the vendors, but once you’re visible, vocal and punitive, they will get better,” said McClelland. “It’s incredible across the vendor community the number of problems they have.”

By making the vendors’ problems become more visible to them, retailers will resolve the problems and improve sales efficiency, he said. The market is full of products to analyze sales, he said, but those are “based on what you received. If you can’t at least do a better job of ensuring what you order, then all of the rest of it is useless.”

The CMS system can even be implemented in stages to avoid “freaking out the vendor” who might then raise prices, he said.

From CMS To DMS

Part of Burgess’ expertise lies in warehouse management systems (WMS).

Hundreds of such systems are already in place throughout the world, so coming up with another didn’t initially seem to be the most profitable idea.

That was before Burgess realized that the world-class system he had helped put in place at both Dillard’s and Wal-Mart was the exception.

“As we had been out being consultants for eight years and dealing with retailers, we had a real eye-opening experience about where the state of technology was once we got out of Dillard’s and Wal-Mart,” Burgess said. “We thought every company had the same tools. For the last 15-20 years retailers have been trying to move away from warehousing. They want the vendors to warehouse it and our customers to run distribution centers.”

What Mainstream Tech realized is that out of the thousands of companies that use a WMS, only a handful benefit from having a system in place that is tailored to fit its unique needs.

So Mainstream Tech’s goal became giving them the software that better fits what they do.

Last summer, Mainstream Tech and Compliance Networks rolled out their jointly developed warehouse management system. One of the first retailers to leverage the power of the system was Burlington Coat Factory, a national retailer of clothing, footwear and accessories.

“After extensive research and comparisons of some of the traditional warehouse management solutions, we concluded that none of them provided us with the cost-effective, user-friendly system we found,” said Dave Sanford, vice president of distribution services at Burlington Coat Factory. “This solution goes beyond the normal WMS boundaries with a retail-centric architecture allowing us to manage our entire enterprise.”

Movin’ On Up

Mainstream Tech’s relationship with Compliance Networks has accounted for about 65 percent of the Little Rock company’s business.

Burgess and McClelland attribute much of their success to that relationship, including the ability to move into their west Little Rock office at Corporate Hill.

But the relationship is a difficult one in that it would make much more sense for the two to merge.

“Our relationship is much more complicated now that on one level we’re partners and on another we’re also investors,” said Burgess. “There are some legal and corporate details to get worked out, but I don’t think it’s too far-fetched to say that sometime down the line we could be operating together.”

For now, Mainstream Tech is happy functioning as it is. The company has started trying to get their name out by hiring a marketing specialist, which McClelland hopes will help them become a bigger player locally.

“Here we are having done jobs in Houston, Chicago and California and we can’t even land a job in-state,” he said. “We’ve done some work with Acxiom and (Arkansas Blue Cross and Blue Shield), but that’s almost the extent of our work locally. But we’re evolving from being just programmers to being better businessmen who can also program.”

And as far as the taboo of going into business with a friend, both men say they’ve seen both sides of the spectrum. Burgess and McClelland were able to maintain their relationship both professionally and socially, but they’ve also seen the downside firsthand when an original partner left the company.

“We don’t always see eye to eye with the way we operate individually, but we’ve also been able to hold up that trust level needed to let one another handle things in our own way,” said Burgess, breaking into laughter. “We still like each other, if that’s what you mean.”